FILER:

     COMPANY DATA:
           COMPANY CONFORMED NAME:            ASI ENTERTAINMENT, INC.
           CENTRAL INDEX KEY:                 1067873
           STANDARD INDUSTRIAL CLASSIFICATION: AIRCRAFT PART & AUXILIARY
                                              EQUIPMENT, NEC [3728]
           IRS NUMBER:                        522101695
           STATE OF INCORPORATION:            DE
           FISCAL YEAR END:                   0630

     FILING VALUES:
           FORM TYPE:                   10KSB
           SEC ACT:                     1934 Act
           SEC FILE NUMBER:             000-27881
           FILM NUMBER:                 544289

     BUSINESS ADDRESS:
           STREET 1:                    15200 EAST GIRARD
           STREET 2:                    SUITE 3000
           CITY:                        AURORA
           STATE:                       CO
           ZIP:                         80014
           BUSINESS PHONE:              970 881 3573

     MAIL ADDRESS:
           STREET 1:                    1/12 CANDLEBARK COURT
           STREET 2:
           CITY:                        RESEARCH
           STATE:                       VICTORIA
           ZIP:                         3095
           COUNTRY:                     AUSTRALIA






































                                UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                 FORM 10-KSB
(Mark One)
[X]        ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
           ACT OF 1934

                                   For the fiscal period ended JUNE 30, 2006


[ ]        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
           EXCHANGE ACT

                                   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           (IRS Employer Identification No.)
incorporation or organization)

C/- ASIQ Pty. Ltd.
1/12 Candlebark Court
Research, Victoria, 3095, Australia
 (Address of principal executive officers)

+61 3 9437 1233
(Issuer's telephone number)


Securities registered under Section 12(g) of the Exchange Act: Common Stock

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the last 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 [ ]

Check if there is no disclosure of delinquent files in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-
KSB or any amendment to this Form 10-KSB. [X]

State issuer's revenues for its most recent fiscal year: 32,298












<PAGE>







State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the common
equity was sold, or the average bid and asked price of such common equity, as
of a specified date within the past 60 days.

State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.

Class                                       Outstanding at June 30, 2006

Common Stock, par value $.0001 per share     23,007,293

Documents incorporated by reference          None
















































<PAGE>








10KSB
<TABLE>

<S>
<C>

PART I........................................................................2

ITEM 1. DESCRIPTION OF BUSINESS...............................................2

ITEM 2. DESCRIPTION OF PROPERTY...............................................9

ITEM 3. LEGAL PROCEEDINGS....................................................10

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..................10

PART II......................................................................11

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS............11

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION............12

ITEM 7. FINANCIAL STATEMENTS.................................................14

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.........................................................13

PART III.....................................................................14

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT............................14

ITEM 10. EXECUTIVE COMPENSATION..............................................16

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT......17

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS......................18

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K....................................20

</TABLE>



















                                    - 1 -
<PAGE>








PART I.
ITEM 1. DESCRIPTION OF BUSINESS.

THE COMPANY

ASI Entertainment has an authorized capitalization of 100,000,000 shares of
Common Stock, par value of $.0001 per share (the "Common Stock") and 20,000,000
shares of preferred stock, par value $.0001 per share. The executive offices of
the Company are located at 1/12 Candlebark Court, Research, Victoria, 3095
Australia and its telephone number is +61-3-9437-1028 and fax number is +61-3-
9437-1299. The United States offices of the Company are located at 15200 East
Girard Avenue, Suite 3000 Aurora, Colorado 80014.

BUSINESS

ASI Entertainment, Inc., ("ASI Entertainment" or the "Company") a Delaware
corporation, listed on the NASDAQ Bulletin Board (NASD Symbol ASIQ) with
offices at ASiQ Pty. Ltd., 1/12 Candlebark Court, Research, Victoria, 3095,
Australia is a world class designer of passenger and crew communications
systems for the airline industry.

ASI Entertainment's wholly owned subsidiary ASiQ Pty Ltd ("ASI") has spent over
a decade developing its expertise and reputation in both software development
and airline industry technologies, as a pioneer of passenger data
communications.  The core of ASI's intellectual property is software which
evolved over years of flight-testing and commercial operation

Airline passengers' identification of Email as a service they want to access
while in flight created the opportunity for ASI to capitalize on airline
communications and e-commerce markets with unique software programs comprising
Email, internet and electronic flight log.  ASI's technology focuses on
providing airlines and their customers with the most affordable solution.

1. Overview

ASI has spent over a decade developing its expertise and reputation in both
software development and airline industry technologies, as a pioneer of
passenger data communications.  The core of ASI intellectual property is
software which has evolved over years of flight-testing and commercial
operation. The hardware platform and technology rights that the Company
acquired (refer section "Certain Transactions") are also unique as they enabled
ASI to pioneer the passenger data link with major international airlines and
were used as the development platform by INMARSAT, the monopoly satellite
service provider for aircraft.  ASI has capitalized on the opportunity with the
development of the following unique programs:

  1. ASiQnet
  ASI's latest product, ASiQnet, is based on it's existing flight proven
  hardware and software platform, the ACAMS Server Interface Unit, which has
  been developed and flight tested in conjunction with INMARSAT and SITA (the
  major providers of satellite communications and ground based infrastructure
  for the airline industry). ASI's software is unique as passengers can send
  an Email using their existing Email software and access their Email while
  in-flight. The system is designed to accommodate all laptops operating under
  Windows and Macintosh platforms. To send an Email is now affordable, as
  passengers will only be charged for the actual amount of data transmitted
  and there are no subscription fees. For as little as $1.00, passengers can
  send or receive Email and with ASI's latest service
  www.freemailconnection.com, they can now access their inbox for free. The
                                    - 2 -
<PAGE>








  software displays the cost of the Email prior to sending, and passengers
  have the option to decide which Emails should be delivered to the aircraft.
  ASI's back office capabilities are now provided under strategic alliances
  with the airlines local ISP.

  ASI's Internet program designated AirCommerce, has evolved from the original
  ASI-9000 concept into a web based application, offering in-flight E
  Commerce. The AirCommerce system provides destination specific, cached web
  capable content to passengers in their seats.  The passengers connect to the
  Network Server Unit (NSU) from their laptop and can then navigate to pages
  of interest using their web browser. Sponsors and advertisers underwrite the
  cost of the program and the surplus revenue is shared between ASI and the
  airline. Air Commerce is a template based software module that can be
  certified for installation on an aircraft server. The software allows an
  airline to build a database of products and services and incorporate
  destination based entertainment and information in an interactive web
  presentation format.

  2. SafeCell
  ASI has recently developed and applied for a patent for "SafeCell", a low
  cost cell phone accessory designed to convert a cell phone into a wireless
  data communicator, for use in-flight.  SafeCell will allow the many airline
  passengers carrying cell phones to send SMS ("short message service"), text
  based Email messages and establish VoIP ("voice over internet protocol")
  with ground networks. SafeCell has been designed to accommodate the
  certification requirements of an in-flight WiFi network.  The SafeCell
  system comprises a software application that is downloadable and installed
  onto the Cell phone handset, and a wireless module named the "SafeCell
  Communicator", that provides the interface between the cell phone and an
  available WiFi network.  The SafeCell communicator can also be marketed as a
  ground based consumer product allowing consumers to communicate across WiFi
  Hotspots.

  3. Electronic Flight Log
  With the evolution of Tablet PC's incorporating handwriting recognition
  technology, combined with the new Global GPRS and G3 high-speed data
  communications network, the process of manual reporting can now be
  eliminated. G3CARS is an Electronic Crew Reporting and Information System,
  which replaces the existing manual system by eliminating the requirement for
  paper. G3CARS improves efficiency and generates cost savings by reducing
  double handling associated with receiving, reviewing, entering and
  distributing paper documents. Up until now, all operational data such as the
  aircraft Log Books are submitted on paper and must be physically collected
  prior to the aircraft's departure. The forms are then manually entered into
  the airline system.  This process is time consuming, unreliable and can
  delay the aircraft's departure.
  G3CARS provides aircrew with a fast and reliable way of submitting airline
  operational documentation, while the aircraft is on the ground. It also
  provides airline management with a low cost Email link into the aircraft and
  a fast reliable way to access important operational data in near real time.

In addition to aviation communication products, ASI's other product/market is:

  4. SecurEtag
  The SecurEtag system integrates radio frequency identification (RFID),
  global positioning system (GPS) and cellular technologies (GSM/CDMA) to
  facilitate the tracking and location of packages in either mobile or
  warehouse environments.  Future development of SecurEtag is reliant on the
  new RFID standard and RFID tag production which are still in the early

                                    - 3 -
<PAGE>








  stages of development and may not suit the long term application for
  SecurEtag.

2. Target Markets

ASI has developed a multi tiered marketing strategy for the programs that
provide the opportunity to generate revenue in three target markets within the
airline industry. Offering the program to small to medium sized airlines
creates revenue streams in the supply of relevant equipment, the selling of
advertising space and the commissions received from goods and services ordered
by passengers whilst in flight.

With the latest development of its cost efficient Email service, ASI is able to
market its services, through strategic alliances, to major airlines around the
world.  These major airlines, as well as some of the smaller airlines, possess
the ability through existing data ports, to allow ASI to deliver a simple and
cost efficient service.

The Company researches the market and targets selected airlines based on a
commercial and technical evaluation. The Company has formed relationships with
other avionics manufacturers who sell complementary products to the Company's.
The Company anticipates these strategic partners will introduce the Company to
airlines as such target airlines look for ways to enhance the products and
services they purchase from the alliance partner.

The primary target market for ASiQnet is based on wide bodied long haul
aircraft, equipped with the Inmarsat satellite data link which average 8 to 14
hours per flight and 1.65 flights per day. The ASI target market forecast
excludes most USA based airlines and those airlines already involved in other
programs.  A secondary market for international narrow body regional airlines
in Europe, Asia and the Middle East will evolve as airlines expand the service.
New wireless technologies will also open up a market for aircraft that do not
have a telephone data line in the seat. Finally there is a limited market for
VIP and Government organizations that operate large wide body aircraft and have
already installed Inmarsat compatible equipment.

ASI's target is to secure 300 aircraft over the next 3 years.

Once ASI has established the service onboard, there is the potential to provide
the AirCommerce Program to these major airlines, creating an additional revenue
stream for both ASI and the airline.  The AirCommerce program accommodates a
database of destination information and allows in-flight bookings and
reservations.  The Company will receive revenues from data communications and
from the sale of advertising space available on the AirCommerce programs.

For Safecell, the target market is both international and regional airlines as
the system has been designed to provide SMS via the low cost Iridium satellite
network which is suitable for aircraft ranging for 20+ passengers up, and can
be upgraded to provide Voice over Internet via the Inmarsat broadband network,
which is suitable for aircraft ranging from 100+ passengers.

For G3CARS, ASI provides the airline with a recommended list of aviation
certified Electronic Flight Bag (EFB) terminals and commercially available
Tablet PC's. The G3CARS software is licensed to the airline.  The airline is
charged an initial fee to customize the forms and is required to pay for the
onsite training and system setup. The airline pays all communications cost
which are charged by the 3G service providers at a low flat data rate per
month.


                                    - 4 -
<PAGE>








The target market for the SecurEtag program will be companies handling high
value and important parcels and are in markets where a premium price can be
charged for the SecurEtag service. As the market develops and the cost of the
components decreases, the broader freight market will be more viable for the
SecurEtag product.

The high speed global communications market size has been estimated by analysts
to be about US$70 billion over ten years, as detailed in a press release by The
Boeing Company, dated April 27, 2000.  Inmarsat has estimated the aeronautical
market to number approximately 21,000 aircraft including long haul,
medium/short haul, corporate jets and government/military aircraft.
ASI has identified its primary target market within the aeronautical market and
has established its marketing program to be the Email and Internet supplier of
first choice to that primary target market.

CERTIFICATION PROCESS AND GOVERNMENT REGULATION

The installation and use of aircraft avionics requires prior certification and
approval by the Federal Aviation Administration ("FAA") and regulatory
authorities of foreign governments on each aircraft type and for each airline.
The certification process begins with the installation of the system on an
aircraft after which it is certified by an FAA accredited engineer. The
certification is then applicable to similar aircraft types and modified for
other aircraft type. In countries other than the United States, the equivalent
aviation authority procedures will apply to the certification of the system,
but the United States FAA is generally accepted by local certifying authorities
throughout the world.

Prior to certification and approval, the manufacturer must demonstrate that the
system has been designed and manufactured and complies with the appropriate
aviation standards, namely DO160 for hardware and DO178 for software. Following
this step, the system must be installed on an aircraft and tested, including a
ground and flight test.

The ACAMS has been flight tested and installed on Boeing 747-400 and Boeing
767-300 aircraft. The company has also certified programs on other hardware
platforms for Boeing 737-300, 757-200 and the McDonnell-Douglas DC-9-30 and MD-
82. The ACAMS has gained FAA approval for installation on Boeing 747-400 with
Saudis Airlines and Boeing 767-300 for Alitalia.

As the Safecell system integrates with the existing certified WiFi access
points, the only certification requirement will be approval of the shielding
system which is designed to comply with aviation certification standards.

The company will need to invest substantial funds to package and certify the
SecurEtag system to meet the requirements of the Federal Communications
Commission ("FCC").  In the interim, a development platform can be established
under FCC approval which will facilitate the marketing program.

PRODUCT DEVELOPMENT

The technology the Company acquired was a data link aviation communications
system, designated the Airline Communications and Management System ("ACAMS")
and was originally developed in conjunction with Qantas Airways and Swissair.
The development of the technology was sponsored by Qantas Airways which
required both an interface which would allow the crew to communicate through
the aircraft's satellite and radio communications data link and an interface
between the ACAMS datalink and the aircraft's video systems.


                                    - 5 -
<PAGE>








The G3CARS system has been developed based on COTS technologies combining the
latest in TabletPC, handwriting recognition software and the 3G broadband
communications link. The software platform was developed using the .net
environment under the Microsoft development partner program.

The Safecell system is being designed to be a consumer product. The
communicators is based on the latest ARM micro processor technology integrated
with latest in WiFi and Bluetooth single chip technology. The Safecell
shielding system is based on the faraday cage concept for shielding/attenuating
radio signals that are in the frequencies that interfere with aircraft avionics
and ground based cellular networks.

The license to the SecurEtag technology was acquired to expand the operating
base of ASI and to develop further in the area of communications technologies.
Apart from the freight industry, ASI believes there will be applications for
the SecurEtag technology in the aviation industry through the tracking of
packages and other objects both in the aircraft environment and the support
services environment.

OPERATIONS TO DATE

The company has successfully completed flight testing with Alitalia and Saudi
Airlines and as a result, has signed a contract with Saudi Airlines. The
company has signed a contract with AirOne for the G3CARS system.

SALES AND PRICING

ASI sells both the Email and Internet system under Supply and License
Agreements under which ASI receives payment, plus a share of the revenue
generated from the programs. ASI supplies equipment on either a sale basis or
alternatively may negotiate to provide the equipment at a discounted price in
exchange for a larger revenue share. The AirCommerce marketing is based on
selling advertising on the programs run on ASI supplied equipment.  ASI
believes that the revenue can be enhanced when the communication link is
installed, allowing passengers to purchase goods and services being promoted
via the system.

ASI can generate revenue from Email programs by charging passengers per
kilobyte of data transmitted over the air-to-ground link.

ASI can purchase hardware from appropriate suppliers, depending on the
specification requirements of each airline. ASI subcontracts the production of
the ACAMS integration technology. On G3CARS, airlines pay a fixed fee per
fight.

On Safecell it is envisage that the communicator will be sold as a cell phone
accessory, with a target selling price similar to a Bluetooth headset.  The
communicator can be distributed through the retail distribution outlets and the
shielding system can also be offered separately by airlines or in duty free
outlets. The overall sales and pricing strategy is expected to be finalised by
early 2007, however it is envisaged the data communication cost for using the
Safecell service will be the same low cost pricing structure currently
available for the ASiQ services..

While the Company is still formulating the plan for SecurEtag, it expects to be
able to generate revenue either from the sale of RFID tags or through the
management of a loss prevention or detection programs, or from a combination of
both.

OPERATIONS AND SUPPLIERS
                                    - 6 -
<PAGE>









The Company and ASI operate from premises in Australia, which houses
management, engineering, network services, gateway, and administration. ASI
recently opened an office in Malaysia to expand and support the marketing
operations throughout South-East Asia. ASI also has an office in California to
support the strategic alliances being forged with the major aircraft systems
manufacturers.
For those aircraft not equipped with an on-board server, ASI provides for the
Email/Internet programs the ACAMS server which has been manufactured to date by
ASI Technologies Pty Ltd  ("ASIT Australia"). (refer Section "Certain
Relationships And Related Transactions").  In future, ASI anticipates that it
will outsource the production of its equipment or will modify equipment from a
suitable aviation certified manufacturer.

ASI has out-sourced its operations to companies and individuals specializing in
either the manufacture and installation of avionics or the procurement of
advertisement sponsors or the delivery of Internet data services.   ASI will
contract with an installation company to install its equipment on the customer
airline. Once installed, ASI out-sources all of the hardware engineering and
technical support services to ASIT Australia and other suitably certified
organizations.
On Safecell, the intention is to licence the manufacturer of the communicator
and shielding system to organisation that comply with our quality control
standards. On G3CARS the airline sources the hardware platform direct based on
a list of recommended system. ASI provides the software and assists the airline
with the installation contractors and training.

Similarly, the Company will outsource the manufacture and supply of all
equipment and components required for the SecurEtag program.

MARKETING

The Company researches the market and targets selected airlines based on a
commercial and technical evaluation. The Company has formed relationships with
other avionics manufacturers who sell complimentary products to the Company's.
The Company anticipates these strategic partners will introduce the Company to
airlines as such target airlines look for ways to enhance the products and
services they purchase from the alliance partner.

CUSTOMERS

The company signed its first contract with AirOne in May 2004 and its second
contract with Saudi Airlines in April 2005.

COMPETITION

ASI believes that it operates in a market niche offering the lowest cost Email
solution for airlines where there are no other companies providing both the
same product with a similar price structure.  ASI believes, however, that the
market for technologically advanced in-flight entertainment and communications
systems is emerging and that competition to provide such services to the
airlines will be intense. ASI is aware of several other companies that provide
systems that compete with ASI's products, some of which have been installed on
aircraft.  Most of these competitors have substantially greater financial and
other resources than ASI and, accordingly, may have a significant competitive
advantage over ASI.

The effect of September 11 has reduced ASI's principal competitors to only
OnAir a new Airbus/SITA venture (previously known as Tenzing), and Connexion by
Boeing. While Connexion has signed up a number of customer airlines, Boeing
                                    - 7 -
<PAGE>








have announced that they are exiting the market.  Companies such as Panasonic
Avionics Corporation (previously known as Matsushita Avionics Systems
Corporation), and Stratos also offer a short message service (SMS) which could
be perceived as a competitor to Email.  ASI is working with both these
organizations to integrate ASiQnet.  A number of companies are currently
marketing "pico cell" technology to enable cellular phones to be used while an
aircraft is in flight.  There are a number of regulatory issues to be resolved
before this technology will be available globally, and while there is an
expectation that approvals will be finally achieved, the cost of implementing
the technology may not warrant the investment by airlines.

ASI believes that it will be able to compete with other companies based on the
company's marketing plan that provides flexible terms on equipment and revenue
sharing.  ASI targets airlines that will be attracted to this structure which
allows the airline to provide more customized service at little cost to the
airline. ASI believes that although most of ASI's competitors are marketing
more technologically advanced communication and entertainment systems, those
competing services are offered at a far greater expense to the airlines both in
the capital cost and in the operating costs.  ASI believes that its SafeCell
product will enable it to offer a competitive alternative to airlines wanting
to provide their passengers with cellular phone based communications.

On G3CARS, ASI has no direct competitors as Boeing and Airbus have been focused
on meeting the demands of major airlines to provide what they have designated
as Electronic Flight bag ("EFB").  EFB is a flight certified system
incorporated into the existing cockpit avionics designed to provide the pilot
with navigational information. The system also provides electronic form storage
and is accessed from the keypad on the flight management computer display.  The
current Boeing offering has been selected by KLM, Pakistan Airways and Thai
Airways and costs approximately $250,000 but is only certified on the B777.
There are also programs in the USA based on wireless 802.11b called Gatelink.
With Gatelink, the airline installs a wireless system at each airport and
connects to a dedicated computer or a laptop in the cockpit. At this stage,
apart from Gatelink programs in the USA, Singapore Airlines has a wireless
system under test on Singapore airport.  Lufthansa tested an earlier wireless
version some years ago and rejected it.

The main competition for the SecurEtag technology will come from bar-coding
technologies as well as new developments in RFID technologies.  The increasing
rate of theft and the demand of freight customers to know the status of goods
they have shipped will increase demand for technology similar to and that would
compete with the SecurEtag technology.  Another competitive factor to determine
the success of SecurEtag will be the time it takes ASI to develop a market for
the product and the alternate products that are developed in that time. There
is no assurance that the Company's competitors will not offer services similar
to the Company's with a similar business plan. Nor is there an assurance that
customers will not demand more technologically advanced tagging products or
that the Company will be able to compete with other more established sources
for RFID technologies.  Similarly, there can be no assurances that other
tagging technologies will not be developed that will compete with the SecurEtag
technology.

EMPLOYEES

The Company is managed by Ronald Chapman in his capacity as President and Chief
Executive Officer and Philip Shiels in his capacity as Executive Director and
Chief Financial Officer. The Company's wholly-owned subsidiary, ASiQ Pty. Ltd.
employs a small team of engineering and administrative staff, and engages sub-
contractors when additional resources as required.

                                    - 8 -
<PAGE>








INDUSTRY OVERVIEW

The events on September 11, 2001 in the USA and the SARS virus had a
significant effect on the airline industry.  Despite this, the longer term
growth of the airline industry is expected to continue.  Boeing are predicting
airline passenger growth of 4.9% per annum over the period 2006 - 2025, 1.8%
above the predicted worldwide rate of economic growth of 3.1% for the same
period (Source Current Market Outlook 2006, - www.boeing.com/commercial).
Recent industry surveys have confirmed that Email/Internet is still a high
priority for airline passengers.

On Safecell recent surveys confirm that globally there are 2.6 Billion cell
phone subscribers and according to the market research firm Instat, by 2010
they predict only 123 million will incorporate WiFi.  Taking into account that
90% of European passengers carry a cell phone, the potential for a device that
makes existing cell phone WiFi compatible should have a considerable market.

As G3CARS requires minimal financial outlay and its justification is based on
improving operational efficiencies, ASI believes their will be strong demand
for this type of product.

In regard to SecurEtag, security and tracking of packages is a higher priority
in the transport industry.  The company expects that the problems associated
with security will not change and that demand for new technologies will
increase as they evolve. Finally, the imminent production of the new low-cost
2nd generation RFID tags will ensure the acceptance of RFID as a long-term
track and trace solution.


ITEM 2. DESCRIPTION OF PROPERTY.

The Company does not own any property other than its inventory of equipment,
office equipment and fittings. The Company maintains its marketing,
engineering, customer support and corporate administration offices at 1/12
Candlebark Court.


ITEM 3. LEGAL PROCEEDINGS.

The Company is not a party to any litigation and management has no knowledge of
any threatened or pending litigation against the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Not applicable.














                                    - 9 -
<PAGE>








PART II.
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS.

The Company has authorized capital of 100,000,000 shares of Common Stock,
$.0001 par value, and 20,000,000 shares of preferred stock, $.0001 par value.
As of the date hereof, the Company has 23,007,293 shares of Common Stock issued
and outstanding and no shares of Preferred Stock outstanding.

Since March, 2000 the Company's Common Stock has been quoted on the NASD OTC
Bulletin Board.  Prior to that date, there was no public market for the
Company's securities.  The following table sets out the range of the high and
low sales prices for the Company's securities.

<TABLE>
<CAPTION>
Quarter Ended                                             Common Stock
                                                          High     Low
<S>                                                       <C>      <C>
March 31, 2000                                            $1.25    $1.25
June 30, 2000                                             $1.81    $1.00
September 30,2000                                         $1.50    $0.63
December 31, 2000                                         $0.63    $0.28
March 31, 2001                                            $0.53    $0.50
June 30, 2001                                             $0.51    $0.51
September 30,2001                                         $0.51    $0.51
December 31, 2001                                         $0.51    $0.51
March 31, 2002                                            $0.51    $0.21
June 30, 2002                                             $0.35    $0.21
September 30,2002                                         $0.42    $0.20
December 31, 2002                                         $0.60    $0.34
March 31, 2003                                            $0.69    $0.34
June 30, 2003                                             $0.51    $0.72
September 30,2003                                         $0.55    $0.37
December 31, 2003                                         $0.51    $0.36
March 31, 2004                                            $0.51    $0.45
June 30, 2005                                             $0.55    $0.40
September 30, 2004                                        $0.55    $0.28
December 31, 2004                                         $0.36    $0.27
March 31, 2005                                            $0.32    $0.23
June 30, 2005                                             $0.31    $0.25
September 30, 2005                                        $0.29    $0.23
December 31, 2005                                         $0.55    $0.24
March 31, 2006                                            $0.50    $0.25
June 30, 2006                                             $0.40    $0.30
</TABLE>

The Company currently intends to retain substantially all of its earnings, if
any, to support the development of its business and has no present intention of
paying any dividends on its Common Stock in the foreseeable future. Any future
determination as to the payment of dividends will be at the discretion of the
Board, and will depend on the Company's financial condition, results of
operations and capital requirements, and such other factors as the Board deems
relevant.
                                   - 10 -
<PAGE>









ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

OVERVIEW

The Company has a very low cost structure as its engineering operations are
based in Australia compared to its competitors who are based in Seattle,
Washington, U.S.A., Gatwick London UK and Geneva Switzerland.. This allows the
company to offer competitive pricing in US Dollars while its cost structure is
based on Australian Dollars.

The company focuses it resources on marketing and software engineering. The
hardware platform was designed to ensure that is could be supported and
manufactured by any aviation certified company. Under arrangements with ASIT
Australia, the Company maintains Australian aviation certification. This allows
the Company to subcontract the production and support of the hardware, which in
turn eliminates the cost of maintaining FAA manufacturing accreditation. The
company has an arrangement with an FAA certified facility to provide hardware
and installation support.

As the company is now entering an accelerated marketing phase, the marketing
costs are expected to increase. The company is progressively increasing its
operations in North America and Asia and anticipates establishing a marketing
presence in Europe.

Because of the low cost structure, the Company anticipates that the proceeds
from stock subscriptions, revenues from any exercise of the Options,
anticipated revenues from operations, and proceeds available from its suppliers
will be sufficient to meet the Company's contemplated operating and capital
requirements for approximately 12 months.

RESULTS AND PLAN OF OPERATIONS

The Company had accumulated losses from inception to June 30, 2006 of
$6,561,284. Major components of the loss include depreciation, amortisation,
stock impairment, consulting and management fees, and operations costs. The
Company may be required to make significant additional expenditures in
connection with the development of the Email/Internet, AirCommerce and
SecurEtag programs and their marketing. The Company's ability to continue its
operations is dependent upon its receiving funds through its anticipated
sources of financing including exercise of Options, revenues from operations,
and proceeds available from its suppliers. However, the Company may be required
to raise additional capital through debt or equity financing.

The Company intends to use future revenues, if any, for the purchase of
equipment for its Email, G3CARS, AirCommerce and SecurEtag programs and for
capital expenditures and working capital for its proposed operations, and
certain fees, costs and expenses associated with this offering.

YEAR ENDED JUNE 30, 2006 COMPARED WITH YEAR ENDED JUNE 30, 2005

The Company received revenue of $30,938 for the year ending June 30, 2006,
compared to revenue of $62,149 for the year ended June 30, 2005. Revenue for
both years was mainly from government grants.

Net losses increased from $703,489 in the twelve month period ending June 30,
2005, to $1,517,659 for the twelve month period ending June 30, 2006, as a
result of increased consulting fees, wages and salaries, corporate promotion
and marketing expenses, but decreased engineering costs and stock impairment

                                   - 11 -
<PAGE>








charges. Expenses increased from $759,986 for the twelve month period ending
June 30, 2005 to $1,549,957 for the twelve month period ending June 30, 2006.

The Company had a foreign currency translation loss of $8,578 for the twelve
month period ending June 30, 2006, compared to a foreign currency translation
gain of $15,399 for the twelve month period ending June 30, 2005. As a result,
the Company recorded a comprehensive loss of $1,526,237 for the twelve months
ended June 30, 2006, compared to a comprehensive loss of $688,090 for the
twelve months ended June 30, 2005.

LIQUIDITY AND CAPITAL RESOURCES

The Company has used the proceeds from the sale of the securities for payment
of operating costs to date. The Company has received revenue totaling $32,298
during the fiscal year ended June 30, 2006.

The Company's cash and cash equivalents decreased from $106,416 at June 30,
2005 to $953 at June 30, 2006 as a result of operating losses, but after
capital raisings.

The Company had a net loss of $1,517,659 from operating activities for the
period July 1, 2005 to June 30, 2006, primarily consisting of consulting,
management and directors fees, wages and salaries and marketing expenses, The
net loss from operating activities for such period was greater than the net
loss from operating activities for the period July 1, 2004 to June 30, 2005
primarily as a result of increased consulting fees, wages and salaries, and
marketing expenses, but after decreased engineering costs, stock impairment.
The Company's revenue for the twelve months ending June 30, 2006 was $32,298,
compared to $62,149 in the twelve month period to June 30, 2005. The cash flow
of the Company from financing activities for the twelve months ending June 30,
2006 was from the proceeds from issue of common stock and the exchange of debt
for equity with related parties.

The Company's marketing plan anticipates that it will install and maintain the
Email/Internet and AirCommerce programs on commercial airlines. This plan may
require significant initial capital from the Company for the production,
acquisition, installation and maintenance of the Email/Internet and AirCommerce
programs possibly before any revenues are received.  Additional funding will
also be required for the certification of the SecurEtag system. 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 provides capital for the
equipment.

The Company has no commitments for capital expenditures in the near future.


GOING CONCERN QUESTION

The financial statements appearing elsewhere in this report 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 ASiQ Pty Ltd., ("ASI") an Australian corporation.
ASI had accumulated losses of approximately $3,632,721 at June 30, 2006 and
                                   - 12 -
<PAGE>








will be required to make significant expenditures in connection with continuing
engineering and marketing efforts along with 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 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, revenue sharing arrangements by which the Company will
share the revenue if the vendor or customers provides capital for the
equipment. Management believes that actions presently being taken to obtain
additional funding provide the opportunity for the Company to continue as a
going concern.


ITEM 7. FINANCIAL STATEMENTS.

OVERVIEW




































                                   - 13 -
<PAGE>

















                           ASI ENTERTAINMENT, INC.

                                CONSOLIDATED
                            FINANCIAL STATEMENTS

                            June 30, 2005 & 2006













































<PAGE>









                           ASI ENTERTAINMENT, INC.
                      Consolidated Financial Statements



                              TABLE OF CONTENTS



                                                                  Page

REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM                                        F-1, F-2

CONSOLIDATED FINANCIAL STATEMENTS

     Consolidated balance sheet                                    F-3
     Consolidated statement of income and comprehensive income     F-4
     Consolidated statement of stockholders' equity                F-5
     Consolidated statement of cash flows                     F-6, F-7
     Notes to consolidated financial statements              F-8, F-16






































<PAGE>








                          Larry O'Donnell, CPA, P.C.
Telephone (303)745-4545                               2228 South Fraser Street
                                                                Unit 1
                                                     Aurora, Colorado    80014


Report of Independent Registered Public Accounting Firm

Board of Directors
ASI Entertainment, Inc.
Melbourne, Australia

I have audited the accompanying balance sheet of ASI Entertainment, Inc.  as of
June 30, 2006, and the related statements of income and comprehensive income,
stockholders' equity and cash flows for the year ended June 30, 2006.  These
financial statements are the responsibility of the Company's management.  My
responsibility is to express an opinion on these financial statements based on
my audits.

I conducted my audit in accordance with standards of the Public Company
Accounting Oversight Board (United States).  Those standards require that I
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement.  An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.  I believe that my
audit provides a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ASI Entertainment, Inc.  as of
June 30, 2006, and the results of its operations and cash flows for the year
then ended in conformity with accounting principles generally accepted in the
United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 7 to the
financial statements the Company has suffered recurring losses from operations
that raise substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 7. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.


Larry O'Donnell, CPA, P.C.
October 13, 2006
Aurora, Colorado













                                     F-1
<PAGE>








                           RONALD R. CHADWICK, P.C.
                         Certified Public Accountant
                      2851 South Parker Road, Suite 720
                           Aurora, Colorado  80014
                           Telephone (303)306-1967
                              Fax (303)306-1944


           REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


Board of Directors
ASI Entertainment, Inc.
Melbourne, Australia

I  have  audited  the  accompanying  consolidated  balance  sheet  of  ASI
Entertainment, Inc. as of June 30, 2005 and the related consolidated statements
of income and comprehensive income, stockholders' equity and cash flows for the
years ended June 30, 2005. These financial statements are the responsibility of
the Company's management. My responsibility is to express an opinion on these
financial statements based on my audit.

I conducted my audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that I plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial  statement presentation.  I believe that my
audit provides a reasonable basis for my opinion.

In my opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of ASI Entertainment,
Inc. as of June 30, 2005 and the results of its operations and its cash flows
for the years ended June 30, 2005 in conformity with accounting principles
generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 6 to the
financial statements the Company has suffered recurring losses from operations
that raise substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 6. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

Aurora, Colorado                                    Ronald R. Chadwick, P.C.
October 6, 2005                                     RONALD R. CHADWICK, P.C.












                                     F-2
<PAGE>










                           ASI ENTERTAINMENT, INC.
                          CONSOLIDATED BALANCE SHEET
                                JUNE 30, 2006

                          ASSETS

Current Assets
     Cash and cash equivalents                                   $      953
     Other receivables                                                 232
                                                            --------------
           Total Current Assets                                      1,185
                                                            --------------
     Property and equipment, net                                    631,762
                                                            --------------
                                                                   631,762
                                                             --------------
Total Assets                                                       $632,947
                                                             ==============

            LIABILITIES AND SHARHOLDERS' EQUITY

Current Liabilities
     Accounts payable and accrued expenses                   $      104,933
     Due to related parties                                        202,480
                                                            --------------
           Total Current Liabilities                               307,413
                                                            --------------
Total Liabilities                                                   307,413
                                                            --------------

Stockholders' Equity
     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;
           23,007,293 shares issued and 23,007,293
           outstanding                                       $        2,301

     Additional paid-in capital                              $    7,075,823
     Treasury stock -
                    - par value (50,000 shares)              $           (5)
     Accumulated deficit                                     $   (6,561,284)
     Accumulated other comprehensive loss                    $     (191,301)
                                                             --------------
Total Stockholders' Equity                                   $      325,534
                                                             --------------
Total Liabilities and Stockholders' Equity                   $      632,947
                                                             ==============






The accompanying notes are an integral part of the consolidated financial
statements.

                                     F-3
<PAGE>








                           ASI ENTERTAINMENT, INC.
           CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME
            For the Years Ended JUNE 30, 2005 and JUNE 30, 2006


                                                       2005         2006
                                                   -----------   -----------
Sales, net                                         $   62,149    $   32,298

Cost of Sales                                          (5,651)           -
                                                   -----------   -----------
Gross Margin                                           56,498        32,298

Selling, general and administrative expenses           723,108     1,549,089
Option expense                                         36,825            -
                                                   -----------   -----------

Loss from operations                                  (703,435)   (1,516,791)

Other income (expense)
     Interest income
     Interest expense                                    (54)        (868)
     Loss on equipment disposal
                                                   -----------   -----------

Income (loss) before provision for income taxes       (703,489)   (1,517,659)

Provision for income tax                                    -            -

Net income (loss)                                  $ (703,489)  $(1,517,659)

Other comprehensive income (loss) -
                                 - net of tax
Foreign currency translation gains (losses)             15,399        (8,578)
                                                   -----------   -----------

Comprehensive profit (loss)                        $ (688,090)  $(1,526,237)
                                                   ===========   ===========

Net income (loss) per share
(Basic and fully diluted)                           $     (0.05)  $     (0.08)
                                                   ===========   ===========
Weighted average number of
common shares outstanding                           13,874,777    18,863,472
                                                   ===========   ===========













The accompanying notes are an integral part of the consolidated financial
statements.

                                     F-4
<PAGE>








                              ASI ENTERTAINMENT, INC.
                   CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
               For the Years Ended JUNE 30, 2005 and JUNE 30, 2006

<TABLE>
<CAPTION>
                                                                                                           Accum.
                                                                                                           Other         Stock
                                            Common Stock          Paid In      Treasury      Accum.       Compre.       holders'
                                         Shares      Amount      Capital       Stock       Deficit     Income/Loss      Equity
<S>                                   <C>         <C>         <C>          <C>          <C>          <C>           <C>
Balances at June 30, 2004              13,659,901  $    1,366   $5,078,428     $    (5) $(4,340,137)   $ (198,122)   $   541,530

Exercise of stock options                 249,751          25      124,851                                               124,876

Issuance of stock for cash                763,725          76      364,999                                               365,075

Issuance of stock for debt
    retirement                             46,275           5       23,132                                                23,137

Compensatory option issuances                                       36,825                                                36,825

Foreign currency
    Translation gain (loss)                                                                                15,399         15,399

Net gain (loss) for the year
    ended June 30, 2005                                                                    (703,489)                    (703,489)
                                       ----------  ----------    ---------  ----------  -----------   -----------   ------------
Balances at June 30, 2005              14,719,652  $    1,472   $5,628,235     $     5) $(5,043,626)   $ (182,723)   $   403,353

Issuance of stock for cash              1,035,000         104      517,397                                               517,500

Issuance of stock for debt
    retirement                            666,326          67      199,831                                               199,898

Compensatory stock issuances            4,517,662         452      721,161                                               721,613

Issuance of stock for assets            2,068,653         207                                                                207

Issuance of stock options                                           (9,200)                                               (9,200)

Foreign currency
    translation gain (loss)                                                                                (8,578)        (8,578)

Net gain (loss) for the year
    ended June 30, 2006                                                                  (1,517,659)                  (1,517,659)
                                       ----------  ----------    ---------  ----------  -----------   -----------   ------------
Balances at June 30, 2006              23,007,293  $    2,301   $7,066,623     $     5) $(6,561,285)   $ (191,301)   $   307,133
                                       ==========  ==========    =========  ==========  ===========   ===========   ============

</TABLE>







The accompanying notes are an integral part of the consolidated
financial statements.

                                        F-5
<PAGE>








                           ASI ENTERTAINMENT, INC.
                     CONSOLIDATED STATEMENT OF CASH FLOWS
            For the Years Ended JUNE 30, 2005 and JUNE 30, 2006

<TABLE>
<CAPTION>
                                                                             2005                2006
                                                                      ------------------   ------------------
<S>                                                                   <C>                 <C>
Cash Flows from Operating Activities:
        Net income/(loss)                                                 $ (703,489)         $(1,517,659)

        Adjustments to reconcile net income to
        net cash provided by (used for)
        operating activities:
                Depreciation                                                   2,600                4,944
                Amortization
                Loss on equipment disposal
                Compensatory stock issuances                                                      721,400
                Compensatory option issuances                                 36,825
                Write down for stock impairment                              114,300
                Trade accounts receivable
                Other Receivables                                              3,668                4,067
                Accounts payable and accrued expenses                         12,318               52,878
                                                                      --------------       --------------
                Net cash provided by (used for) operating
                activities                                                 (533,778)            (734,370)
                                                                      --------------       --------------

Cash Flows from investing activities:
        Purchase of fixed assets                                              (9,602)                451
        Sale of fixed assets
                                                                      --------------       --------------
                Net cash provided by (used in) investing
                activities                                                   (9,602)                451
                                                                      --------------      --------------
</TABLE>


                        (Continued On Following Page)

















The accompanying notes are an integral part of the consolidated financial
statements.

                                     F-6
<PAGE>








                           ASI ENTERTAINMENT, INC.
                     CONSOLIDATED STATEMENT OF CASH FLOWS
            For the Years Ended JUNE 30, 2005 and JUNE 30, 2006

                        (Continued from Previous Page)


<TABLE>
<CAPTION>
                                                                             2005                2006
                                                                      ------------------   ------------------
<S>                                                                   <C>                 <C>
Cash flow from financing activities:
        Increase/(decrease) in amount due to related parties                  164,174               83,139
        Issuance of common stock                                             489,951              517,500
        Issuance of stock options                                                  -                9,200
        Common stock subscription payable                                      (8,926)                  -
                                                                      --------------       --------------
                Net cash provided by (used for)
                financing activities                                        645,199              609,839
                                                                      --------------       --------------

Effect of exchange rate changes on cash                                      (32,537)              18,617
                                                                      --------------       --------------

Net Increase/(Decrease) in cash                                               69,282             (105,463)
CASH AT THE BEGINNING OF THE PERIOD                                           37,134              106,416
                                                                      --------------       --------------

CASH AT THE END OF THE PERIOD                                         $      106,416       $          953
                                                                      ==============       ==============
</TABLE>

Schedule of Non-Cash Investing and Financing Activities

During 2005 the Company issued 46,275 shares of common stock to retire $23,137
in debt to a related party.
During 2006 the Company issued 666,326 shares of common stock to retire
$199,898 in debt to a related party.

                                                       2005          2006
                                                 ------------  ------------
Case paid for interest                           $         54  $        868
Cash paid for income taxes                       $          -  $          -













The accompanying notes are an integral part of the consolidated financial
statements.

                                     F-7
<PAGE>










                           ASI ENTERTAINMENT, INC.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  1.  ORGANIZATION,  OPERATIONS  AND  SUMMARY  OF SIGNIFICANT ACCOUNTING
POLICIES:

ASI Entertainment, Inc. ("ASI", the "Company"), was incorporated in the State
of Delaware on April 29, 1998. ASI provides Email and Ecommerce systems for
airline  passengers  with  its  ASiQnet  and  AirCommerce  products.  ASI
Entertainment, Inc. and its subsidiary are hereinafter referred to as the
"Company".

Principles of consolidation

The accompanying consolidated financial statements include the accounts of ASI
Entertainment, Inc. and its wholly owned subsidiary, ASIQ Pty. Ltd. ("ASIQ").
All  intercompany  accounts  and  transactions  have  been  eliminated  in
consolidation.

Basis of Presentation

The financial statements are prepared in accordance with Generally Accepted
Accounting Principles in the United States of America. The basis of accounting
differs from that used in the Australian statutory financial statements of
ASIQ. Adjustments are made to translate the statutory financial statements of
ASIQ to United States Generally Accepted Accounting Principles. The financial
statements are expressed in United States dollars. The functional currency of
ASIQ is the Australian dollar.

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Cash and cash equivalents

The Company considers all highly liquid investments with an original maturity
of three months or less as cash equivalents.

Accounts receivable

The Company reviews accounts receivable at each balance sheet date and makes
allowance  for  non-recoverability  the  Directors  and  Management  consider
appropriate. An allowance for doubtful accounts has been established, with
accounts over one year old from date of invoicing deemed uncollectible and
written off to bad debt expense. The Company did not have a bad debt expense
during the years ended June 30, 2006 and 2005.






                                     F-8
<PAGE>










                           ASI ENTERTAINMENT, INC.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  1.  ORGANIZATION,  OPERATIONS  AND  SUMMARY  OF SIGNIFICANT ACCOUNTING
POLICIES (Continued):

Income tax

The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109 ("SFAS 109"). Under SFAS 109 deferred taxes are provided on a
liability method whereby deferred tax assets are recognized for deductible
temporary differences and operating loss carryforwards and deferred tax
liabilities are recognized for taxable temporary differences. Temporary
differences are the differences between the reported amounts of assets and
liabilities and their tax bases. Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not that
some portion or all of the deferred tax assets will not be realized. Deferred
tax assets and liabilities are adjusted for the effects of changes in tax laws
and rates on the date of enactment.

At June 30, 2006 the Company had net operating loss carryforwards of
approximately $3,997,000 which expire under Australian tax law at various dates
through the year 2010, in addition to net operating loss carryforwards of
approximately $3,155,000 for U.S. tax purposes at June 30, 2006 which begin to
expire in 2019. The deferred tax asset created by the Australian and U.S. net
operating losses ($1,230,000 for U.S. tax purposes) has been offset by a 100%
valuation allowance. The change in the valuation allowance for U.S. tax
purposes in 2006 was $123,000.

Net income (loss) per share

The net income (loss) per share is computed by dividing the net income (loss)
by the weighted average number of shares of common outstanding. Warrants, stock
options, and common stock issuable upon the conversion of the Company's
preferred stock (if any), are not included in the computation if the effect
would be anti-dilutive and would increase the earnings or decrease loss per
share. 1,291,934 shares in 2005 and 1,169,700 shares in 2006 potentially
issuable  from  stock  options  were  excluded  from  the  earnings  per  share
computations, as their inclusion would have lowered loss per share.

Property and equipment

Property and equipment are recorded at cost and depreciated under accelerated
methods over each item's estimated useful life.














                                     F-9
<PAGE>










                           ASI ENTERTAINMENT, INC.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  1.  ORGANIZATION,  OPERATIONS  AND  SUMMARY  OF SIGNIFICANT ACCOUNTING
POLICIES (Continued):

Foreign currency translation

The functional currency of ASIQ is the Australian dollar. Financial statements
for these entities are translated into United States dollars at year end
exchange rates as to assets and liabilities and weighted average exchange rates
as  to  revenues  and  expenses.  Capital  accounts  are  translated  at  their
historical exchange rates when capital transactions occurred.

Revenue recognition

Revenue is recognized on an accrual basis as earned under contract terms.
Specifically, revenue from the sale of equipment is recognized as equipment is
delivered and invoiced. Revenue from ongoing services is recognized when
invoiced monthly.

Comprehensive income (loss)

The Company accounts for comprehensive income (loss) under Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS
130").  SFAS  130  establishes  standards  for  reporting  and  display  of
comprehensive income and its components. The foreign currency translation gains
(losses) resulting from the translation of the financial statements of ASIQ,
expressed in Australian dollars, to United States dollars are reported as Other
Comprehensive Income (Loss) in the Statement of Operations and as Accumulated
Other Comprehensive Income (Loss) in Stockholders' Equity.

Financial instruments

The carrying value of the Company's financial instruments, including cash and
cash equivalents, accounts payable, and due to related parties, as reported in
the accompanying balance sheet, approximates fair value.

Products and services, and geographic areas

Company sales are derived from the sale of communications equipment and
services to the commercial airline industry, are to external customers, and
currently originate in and through the Company's Australian subsidiary ASIQ
Pty. Ltd. to non-domestic customers. The Company's long term assets are held
through ASIQ Pty. Ltd. in Australia.

Stock Options

The Company applies APB Opinion 25 and Related Interpretations in accounting
for  employee  stock  options.  Accordingly,  no  compensation  cost  has  been
recognized for its employee stock options (none were granted in 2005 and 2006).






                                    F-10
<PAGE>










                           ASI ENTERTAINMENT, INC.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  1.  ORGANIZATION,  OPERATIONS  AND  SUMMARY  OF SIGNIFICANT ACCOUNTING
POLICIES (Continued):

Recent Accounting Pronouncements

In May 2005, the FASB issued SFAS No. 154,  "Accounting Changes and Error - an
amendment of APB Opinion No. 29." This Statement applies to all voluntary
changes in accounting principle. It also applies to changes required by an
accounting pronouncement in the usual instance that the pronouncement does not
include specific transition provisions.  When a pronouncement includes specific
transition provisions, those provisions should be followed.  Opinion 20
previously required that most voluntary changes in accounting principle be
recognized by including in net income of the period of the change the
cumulative effect of  changing to the new accounting principle.  This Statement
requires retrospective application to prior periods financial statements of
changes in accounting principle, unless it is impracticable to determine either
the period-specific effects of the cumulative effect of the change. This
Statement is effective for  accounting changes and corrections of errors made
in fiscal years beginning after December 15, 2005. The Company does not expect
application of SFAS No. 154 to have a material affect on its financial
statements.

In February 2006, the FASB issued SFAS No. 155.  This Statement amends FASB
Statements  No.  133,  Accounting  for  Derivative  Instruments  and  Hedging
Activities, and No. 140, Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities. This Statement resolves issues
addressed in Statement 133 Implementation Issue No. D1, "Application of
Statement 133 to Beneficial Interests in Securitized Financial Assets."  The
Company does not expect application of SFAS No. 155 to have a material affect
on its financial statements.

In March 2006, the FASB issued SFAS No. 156.  This Statement amends FASB
Statement No. 140, Accounting for Transfers and Servicing of Financial Assets
and  Extinguishments  of  Liabilities,  with  respect  to  the  accounting  for
separately  recognized  servicing  assets  and  servicing  liabilities.  This
Statement  is effective as of the beginning of its first fiscal year that
begins after September 15, 2006.  An entity should apply the requirements for
recognition  and  initial  measurement  of  servicing  assets  and  servicing
liabilities prospectively to all transactions after the effective date of this
Statement.  The Company does not expect  application of SFAS No. 156 to have a
material affect on its financial statements.













                                    F-11
<PAGE>










                           ASI ENTERTAINMENT, INC.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  1.  ORGANIZATION,  OPERATIONS  AND  SUMMARY  OF SIGNIFICANT ACCOUNTING
POLICIES (Continued):

In September 2006, the FASB issued SFAS No. 157, Fair  Value Measurements.
This  Statement  is effective as of the beginning of its first fiscal year that
begins  after  November  15,  2007.      This  Statement  defines  fair  value,
establishes  a  framework  for  measuring  fair  value  in  generally  accepted
accounting  principles  (GAAP),  and  expands  disclosures  about  fair  value
measurements. This Statement applies under other accounting pronouncements that
require  or  permit  fair  value  measurements,  the  Board  having  previously
concluded in those accounting pronouncements that fair value is the relevant
measurement attribute. Accordingly, this Statement does not require any new
fair value measurements. However, for some entities, the application of this
Statement  will  change  current  practice.    The  Company  does  not  expect
application of SFAS No. 157 to have a material affect on its financial
statements.

In September 2006, the FASB issued SFAS No. 158 Employers' Accounting for
Defined Benefit Pension and Other Postretirement Plans.  This Statement amends
FASB Statements No. 87, 88, 106, and 132(R). This Statement is effective as of
the beginning of its first fiscal year that begins after December 15, 2006, but
before June 16, 2007.   This Statement improves financial reporting by
requiring an employer to recognize the overfunded or underfunded status of a
defined benefit postretirement plan (other than a multiemployer plan) as an
asset or liability in its statement of financial position and to recognize
changes in that funded status in the year in which the changes occur through
comprehensive income of a business entity or changes in unrestricted net assets
of a not-for-profit organization.  The Company does not expect application of
SFAS No. 158 to have a material affect on its financial statements.

Long-Lived Assets

In accordance with Statement of Financial Accounting Standard 144 "Accounting
for the Impairment or Disposal of Long-Lived Assets", the Company regularly
reviews the carrying value of intangible and other long-lived assets for the
existence of facts or circumstances, both internally and externally, that may
suggest impairment. If impairment testing indicates a lack of recoverability,
an impairment loss is recognized by the Company if the carrying amount of a
long-lived asset exceeds its fair value.















                                    F-12
<PAGE>










                           ASI ENTERTAINMENT, INC.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2. RELATED PARTY TRANSACTIONS

As of June 30, 2006 the Company owed officers, directors, and related parties
$202,480.

The Company in 2005 and 2006 incurred expenses of approximately $150,000 and
$125,000 respectively to a company affiliated through common stockholders and
directors  for  management  expenses.  These  expenses  normally  remain  as  a
liability until paid, but in 2005 $23,137 of the debt was converted to equity
at $0.50 per share, resulting in the issuance of 46,275 shares, and in 2006
$199,898 of the debt was converted to equity at $0.30 per share, resulting in
the issuance of 666,326 shares.


NOTE 3. LEASE COMMITMENTS

The Company carries operating leases for office space and equipment in
Australia. The equipment leases expire in 2007. The office lease was continued
from April 2006 on an on-going basis, subject to three months notice of
termination. Combined payments under all leases are approximately $1,150 per
month plus taxes. Rent expense incurred under the leases in 2005 and 2006 was
approximately $16,700 and $14,900. Subsequent to June 30, 2006 minimum future
lease payments for each of the next three years are approximately $15,200,
$11,500 and $9,000.


NOTE 4. INVENTORY

The  Company's  inventory  consists  of  its  Airline  Cabin  Management  and
Communications Systems ("ACAMS") hardware platform equipment. The ACAMS are
network servers that link passenger notebook computers with the satellite
communication system on an aircraft. The Company has conducted certification
and  flight  demonstrations  of  ACAMS,  and  has  received  Federal  Aviation
Administration approval for certain airlines and aircraft.

The Company tested its Airline Cabin Management and Communications Systems
("ACAMS") hardware platform equipment at the end of 2004 for impairment, as the
equipment had not yet been placed in service for several years. The cost basis
of the ACAMS equipment as translated was $1,035,450 at June 30, 2004. The
Company took an impairment write down on the equipment in 2004 of 20% ($214,155
as translated at June 30, 2004) as having not been placed in service for
several years, the equipment was vulnerable to technological changes and
airline industry economic downturns. In the first half of 2005 the Company took
an impairment write down on the ACAMS equipment of $113,028. In the second half
of 2005 the Company secured a contractual agreement with an airline to install
and use the ACAMS equipment, and therefore ceased impairment write downs. The
cost basis of the ACAMS equipment as translated was $1,143,000 at June 30,
2005, and $571,500 net of write downs. The write downs of $214,155 and $113,028
in  2004  and  2005  are  listed  under  the  caption "selling,  general  and
administrative  expenses"  on  the  consolidated  statement  of  income  and
comprehensive income.



                                    F-13
<PAGE>










                           ASI ENTERTAINMENT, INC.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 5. PROPERTY AND EQUIPMENT

The following is a summary of property and equipment at June 30, 2006:

                                            Estimated
Asset                                       Useful Life     Cost

ACAMS                                       5 yrs              $      547,575
CMA platforms
  (computer hardware)                       5 yrs              $      385,478
Office equipment                             5 yrs                      17,479
Other                                       5 yrs                       2,555
                                                               --------------
Total                                                          $      953,087
Less: Accumulated depreciation                                       (321,325)
                                                               --------------
                                                               $      631,762
                                                               ==============

Depreciation expense for the years ended June 30, 2005 and 2006 was $2,571 and
$4,944 respectively.


NOTE 6.  STOCKHOLDERS' EQUITY

Common stock

The Company as of June 30, 2005 had 100,000,000 shares of authorized common
stock, $.0001 par value, with 14,719,652 shares issued, 14,669,652 outstanding,
and 50,000 shares in treasury. Treasury shares are accounted for by the par
value method.

The Company as of June 30, 2006 had 100,000,000 shares of authorized common
stock, $.0001 par value, with 23,007,293 shares issued or committed to be
issued, 23,007,293 outstanding, and 50,000 shares in treasury. Treasury shares
are accounted for by the par value method.

Preferred stock

The Company as of June 30, 2006 had 20,000,000 shares of authorized preferred
stock, $.0001 par value, with no shares issued and outstanding.

Stock options

At June 30, 2005 and 2006 the Company had stock options outstanding as
described below.








                                    F-14
<PAGE>










                           ASI ENTERTAINMENT, INC.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 6.  STOCKHOLDERS' EQUITY (Continued):

Non-employee stock options

The Company accounts for non-employee stock options under SFAS 123, whereby
option costs are recorded based on the fair value of the consideration received
or the fair value of the equity instruments issued, whichever is more reliably
measurable.

At the beginning of fiscal year 2005, the Company had 4,132,406 non-employee
stock options outstanding. During 2005 the Company issued 4,941,649 options,
249,751 options were exercised, and 7,514,263 options expired, leaving a 2005
year end outstanding balance of 1,310,041 non-employee stock options. The
options have an exercise price of $0.50 and all expire in 2006.

As noted above, the Company in 2005 granted 4,941,649 stock options, allowing
the holder to purchase one share of common stock per option, exercisable
immediately at $0.50 per share with the option terms expiring in 2005 and 2006,
to individuals for consulting services and as other compensation. 4,313,121 of
these options expired in fiscal year 2005. As of June 30, 2005, 628,528 of
these options remained outstanding. The fair value of these option grants were
estimated on the date of grant using the Black-Scholes option pricing model
with the following assumptions: risk free interest rate of 1.9 - 3.2%, dividend
yield of 0%, expected lives ranging from one-half to one and one-half years,
volatility from 28 - 64%. The Company incurred and recorded compensation
expense under these stock options of $36,825 in 2005.

At the beginning of fiscal year 2006, the Company had 628,528 non-employee
stock options outstanding. During 2006 the Company issued 1,169,700 options,
none were exercised, and 628,528 options expired, leaving a 2006 year end
outstanding balance of 1,169,700 non-employee stock options. The options have
an exercise price of $1 and $0.50.  The options expire as follows: 2006
419,000; 2007 409,200 and 2008 341,500

As noted above, the Company in 2005 granted 1,169,700 stock options, allowing
the holder to purchase one share of common stock per option, exercisable
immediately at $1 to $0.50 per share with the option terms expiring in 2007 and
2008, to individuals for consulting services and as other compensation. As of
June 30, 2006, 1,169,700 of these options remained outstanding. The fair value
of these option grants were estimated on the date of grant using the Black-
Scholes option pricing model with the following assumptions: risk free interest
rate of 1.9 - 3.2%, dividend yield of 0%, expected lives ranging from one-half
to one and one-half years, volatility from 28 - 64%. The Company incurred and
recorded compensation expense under these stock options of $9,200 in 2006.

Employee stock options

During 2005 and 2006 the Company issued no employee stock options.






                                    F-15
<PAGE>










                           ASI ENTERTAINMENT, INC.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 6.  STOCKHOLDERS' EQUITY (Continued):

NOTE 7.  GOING CONCERN

The Company has suffered recurring losses from operations and in all likelihood
will be required to make significant future expenditures in connection with
continuing engineering, installation, maintenance and marketing efforts along
with general administrative expenses. These conditions raise substantial doubt
about the Company's ability to continue as a going concern.

The Company may raise additional capital through the sale of its equity
securities, through an offering of debt securities, or through borrowings from
financial institutions. In addition, the Company may also attempt to negotiate
revenue sharing arrangements with vendors or customer airlines whereby the
Company will share its advertising revenues in exchange for capital to cover
equipment or installation costs. The Company also expects additional contracts
with airlines to install its equipment in the near future. Management believes
that actions presently being taken to obtain additional funding provide the
opportunity for the Company to continue as a going concern.


































                                    F-16
<PAGE>








ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

Not applicable






















































                                   - 13 -
<PAGE>








PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

The officers and directors of the Company are as follows:

Name:                          Title:
----                           -----
Richard Lukso                  Chairman and Director

Ronald J. Chapman              President and Director

Graham O. Chappell             Director

Philip A. Shiels               Chief Financial Officer and Director

Mr Thomas Henderson retired from the Board, effective February 1, 2006.

All directors of the Company hold office until the next annual meeting of
shareholders or until their successors are elected and qualified. At present,
the Company's Bylaws provide for not less than one nor more than seven
directors. Currently, there are seven directors of the Company. The Bylaws
permit the Board of Directors to fill any vacancy and such director may serve
until the next annual meeting of shareholders or until his successor is elected
and qualified. Officers serve at the discretion of the Board of Directors.

The principal occupation and business experience for each officer and director
of the Company, for at least the last five years are as follows:

RICHARD LUKSO, 73, is the Chairman and Director of the Company. Mr Lukso
commenced his career in aviation in 1953 at USMC in the Marine Air Wing.  His
career has included senior executive positions with Lear Inc., Garrett
Airesearch and Learjet. In 1988, Mr Lukso joined Securaplane Technologies Inc.
as President and General Manager and co-owner. The company has since grown from
5 employees and one product to 100 employees and five innovative products
serving airlines and general aviation. In 2000, Mr Lukso sold Securaplane
Technologies Inc. to Danaher Corporation and remains as President.

RONALD J. CHAPMAN, 54, serves as President and a director of the Company.
Commencing in 1985, Mr. Chapman founded and remains the managing director of
ASI Holdings Pty. Ltd., ASI Australia, ASI Entertainment Pty. Ltd., and ASI
Media Pty. Ltd. ASI Entertainment Pty. Ltd. and ASI Media Pty. Ltd. are
subsidiaries of the Company. Since inception, Mr Chapman has overseen the
product development and coordinated the marketing for ASIT Australia. Mr.
Chapman is also managing director and the beneficial owner of 100% of Chapman
International Pty Ltd., a shareholder of the Company.













                                   - 14 -
<PAGE>








GRAHAM O. CHAPPELL, 61, has been a director of the Company since its inception
and a director of ASIT Australia since 1987. Mr. Chappell has worked in the
aerospace industry for 30 years. Since 1985, Mr. Chappell has operated as the
principal of Chappell Salikin Weil Associates Pty. Ltd. ("Chappell Salikin"),
Victoria, Australia, a private aviation trading and aerospace, technology and
defence industries consultancy company. Chappell Salikin has served as a
consultant to ASIT Australia, ASI Holdings Pty. Ltd. and ASI Entertainment Pty.
Ltd. Mr. Chappell obtained a Diploma of Aeronautical Engineering degree from
the Royal Melbourne Institute of Technology in 1968 and a Masters of Science
(Air Transport Engineering) from Cranfield University in 1974.

PHILIP A. SHIELS, 54, has been a director of the Company since 1996. From 1992
to the present, Mr. Shiels has operated Shiels & Co., Victoria, Australia, a
private consulting practice providing management and corporate advisory
services. Shiels & Co. has served as a consultant to ASIT Australia, ASI
Holdings Pty. Ltd. and ASI Entertainment Pty. Ltd. since 1994. Mr Shiels has
served as the Director of Finance for ASI Holdings Pty. Ltd. Mr. Shiels
received a Bachelor of Business (Accountancy) Degree from the Royal Melbourne
Institute of Technology in 1976 and has been an Associate Member of the
Institute of Chartered Accountants in Australia since 1978.







































                                   - 15 -
<PAGE>








ITEM 10. EXECUTIVE COMPENSATION.

The Company has not entered into any employment agreements with its executive
officers or directors nor has it obtained any key-man life insurance.

Each director is entitled to receive reasonable expenses incurred in attending
meetings of the Board of Directors of the Company. The members of the Board of
Directors intend to meet at least quarterly during the Company's fiscal year,
and at such other times duly called. The Company presently has six directors.

The following table sets forth the total compensation paid or accrued by the
Company on behalf of the Chief Executive Officer and President of the Company
during 2005. No officer of the Company received a salary and bonus in excess of
$100,000 for services rendered during the fiscal year ended June 30, 2006:

SUMMARY COMPENSATION TABLE

NAME AND PRINCIPAL           FISCAL   ANNUAL   COMPENSATION       OTHER
POSITION                      YEAR    SALARY   BONUS/AWARDS    COMPENSATION
                                                               ALL OTHER

Richard Lukso                 2006                               $15,000 (1)
Chairman

Ronald Chapman,
President                     2005       0           0           $36,270 (1)

Philip Shiels,
Chief Financial Officer       2005       0           0           $46,303 (1)

Graham Chappell               2006                               $33,000 (1)
Director

Thomas Henderson
Director                      2005       0           0           $14,000 (1)


1. Directors fees

2. The Company was invoiced $125,529 for management services rendered by
Research No.1 Trust.

















                                   - 16 -
<PAGE>








ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The following table sets forth certain information as of the date of this
Report regarding the beneficial ownership of the Company's Common Stock by
each officer and director of the Company and by each person who owns in excess
of five percent of the Company's Common Stock giving effect to the exercise of
warrants or options held by the named security holder.

                                        Shares of Common
                                        Stock Beneficially   Percentage of
Name, Position and Address               Owned                Shares Owned

Ronald J. Chapman (2)                               3,174,618          12.13%
President and director
160 Silvan Road,
Wattle Glen
Victoria, 3096, Australia

Graham O. Chappell (3)                                831,406           3.61%
Director
5 Marine Parade, Suite 2
St. Kilda,
Victoria, 3148, Australia

Philip A. Shiels (4)                                1,198,522           5.21%
Chief Financial Officer and director
39 Alta Street
Canterbury, Victoria, 3126,
Australia

Richard Lukso                                        200,000           0.87%
Director
5610 Via Arbolado
Tucson, AZ, 85750

Chapman International Pty. Ltd. (5)                   450,000           1.96%
160 Silvan Road
Wattle Glen, Victoria, 3096,
Australia

Research No. 1 Trust (6)                            2,548,422          11.08%
4th Floor
136 Broadway, Newmarket
Auckland 1 New Zealand

Chappell Salikin Weil
Associates Pty. Ltd.(8)                               788,006           3.43%
5 Marine Parade, Suite 2
St. Kilda, Victoria, 3148,
Australia

Research No. 2 Trust (7)                            1,198,522           5.21%
4th Floor
136 Broadway, Newmarket
Auckland 1 New Zealand
                                   - 17 -
<PAGE>









Cudd & Co. (9)                                      1,250,000           5.43%
C/- JPMorgan Chase
4 New York Plaza
New York, NY. 10004
U.S.A.

All the officers and directors
as a group (4 persons)                              5,404,546          23.49%


(1)  Assumes 23,007,293 shares of Common Stock issued and outstanding, or
     committed and to be issued.
(2)  Ronald J. Chapman, President and a director of the Company, owns 125,006
     shares directly and is the managing director (president) and majority
     shareholder of Chapman International Pty. Ltd., and may be considered the
     beneficial owner of the 450,000 Shares owned by it. Chapman International
     Pty. Ltd. is the controlling shareholder of ASIT Australia through which
     Mr. Chapman is the beneficial owner of 51,190 Shares. Mr. Chapman holds
     the power of attorney for the trustee of the Research No. 1 Trust which
     holds 2,548,422 Shares.
(3)  Graham O. Chappell, a director of the Company, is the managing director
     (president) and sole shareholder of Chappell Salikin Weil Associates Pty.
     Ltd. and is considered the beneficial owner of the 788,006 Shares. Mr.
     Chappell is the sole shareholder of International Aviation Services Pty.
     Ltd. which owns 43,400 shares of which Mr. Chappell is considered the
     beneficial owner.
(4)  Philip A. Shiels, Chief Financial Officer and a director of the Company,
     holds the power of attorney for the trustee of the Research No. 2 Trust
     which holds 1,198,522 Shares.
(5)  Ronald J. Chapman, President and a director of the Company is the
     managing director (president) and majority shareholder of Chapman
     International Pty. Ltd. which holds 450,000 Shares.
(6)  Ronald J. Chapman, President and a director of the Company, holds the
     power of attorney for the trustee of the Research No. 1 Trust which holds
     2,548,522 Shares.
(7)  Philip A. Shiels, Chief Financial Officer and a director of the Company,
     is the trustee and beneficial shareholder of the 1,198,522 Shares owned
     by Research No. 2 Trust.
(8)  Mr Graham O. Chappell is the managing director (president) and sole
     shareholder of Chappell Salikin Weil Associates Pty. Ltd. and is
     considered the beneficial owner of 788,006 Shares.
(9)  Cudd & Co. is the trustee for LURF Pty. Ltd. and is considered the
     beneficial owner of 1,250,000 Shares.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The Company has purchased the intellectual property of the ASI-9000 from ASI
Australia and has contracted to purchase the ACAMS, when available, from ASIT
Australia. ASIT Australia provides maintenance and servicing of the ACAMS
Hardware. Ronald J. Chapman, President and a director of the Company, controls
Chapman International Pty. Ltd. which owns 55% of ASI Holdings Pty. Ltd. which,
in turn, owns 61.5% of ASIT Australia. Philip A. Shiels, Chief Financial
Officer and a director of the Company, is a 45% shareholder of ASI (Holdings)
Pty. Ltd.

Graham O. Chappell, a director of the Company, is the managing director
(president) and sole shareholder of Chappell Salikin Weil Associates Pty. Ltd.
                                   - 18 -
<PAGE>









Ronald Chapman, Graham Chappell, and Philip Shiels are directors of the Company
and directors of the Company's subsidiaries ASI Entertainment Pty. Ltd. ("ASIE
Australia") and ASI Media Pty. Ltd. Ronald Chapman and Philip Shiels are the
directors and officers of ASIT Australia.

Research Trust No, 1 will likely provide management services to the Company.
Ronald J. Chapman, President and a director of the Company, holds the power of
attorney for the trustee of the Research No. 1 Trust.

By an agreement of January 9, 1996, ASI Entertainment Pty. Ltd. (prior to
becoming a subsidiary of the Company) purchased from ASI Technologies Pty. Ltd.
("ASIT Australia") among other items, the intellectual property of the ASI-9000
Program, and all rights contained in the exclusive Reseller Agreement for the
ACAMS Cabin Management and Communications System. The exclusive Reseller
Agreement provides, among other matters, that ASI Entertainment Pty. Ltd. shall
have the sole and exclusive right on a world wide basis to purchase ACAMS
terminals from ASI Australia and that ASI Australia shall provide all necessary
technical support services. The Reseller Agreement was for a term of 5 years
from the date of execution (January 9, 1996) with an automatic 5 year renewal
at the option of ASI Entertainment Pty. Ltd.

By an agreement dated August 16, 2001, the Company purchased the marketing and
manufacturing rights to the SecurEtag technology from the Research Trust No. 1.
Mr Ron Chapman, the President and a director of the Company, holds a power of
attorney for the trustee of the Research No. 1 Trust.

The Company has in the past and plans to continue in the future to purchase
products and services from ASIT Australia.






























                                   - 19 -
<PAGE>








ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

Nil























































                                   - 20 -
<PAGE>








                                 SIGNATURES

           Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly authorized.

                                   ASI ENTERTAINMENT, INC.


                                   By:  /s/ Ronald J. Chapman
                                        ------------------------------------
                                            Ronald J. Chapman, President

                                   By:  /s/ Philip A. Shiels
                                        ------------------------------------
                                            Principal Financial Officer

           Pursuant to the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.

Signature                                Title                      Date
- - - - ---------                        -----                      ----


/s/ Richard Lukso                        Director                  10/11/06
- - - - --------------------------------
     Richard Lukso


/s/ Ronald J. Chapman                    Director                  10/11/06
- - - - --------------------------------
     Ronald J. Chapman


/s/ Graham O. Chappell                   Director                  10/11/06
- - - - --------------------------------
     Graham O. Chappell


/s/ Philip A. Shiels                     Director                  10/11/06
- - - - --------------------------------
     Philip A.  Shiels

















                                   - 21 -
<PAGE>








                               CERTIFICATIONS
EX-31.1   CERTIFICATIONS OF CEO PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY
ACT OF 2002

I, Ronald J. Chapman, certify that:

1. I have reviewed this annual report on Form 10-KSB of ASI Entertainment,
Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.

Date: October 11, 2006

/s/ Ronald J. Chapman

Ronald J. Chapman
Chief Executive Officer
                                   - 22 -
<PAGE>








EX-31.2  CERTIFICATIONS OF CFO PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY
ACT OF 2002

I, Philip A. Shiels, certify that:

1. I have reviewed this annual report on Form 10-KSB of ASI Entertainment,
Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.

Date: October 11, 2006

/s/ Philip A. Shiels

Philip A. Shiels
Chief Financial Officer


<PAGE>









                          CERTIFICATION PURSUANT TO
                SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
                          (18 U.S.C. SECTION 1350)


In connection with the Annual Report of ASI Entertainment, Inc., a Delaware
corporation (the "Company"), on Form 10-KSB for the period ending June 30,
2006, as filed with the Securities and Exchange Commission (the "Report"),
Ronald J. Chapman, Chief Executive Officer of the Company and Philip A. Shiels,
Chief Financial Officer of the Company, respectively, do each hereby certify,
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section
1350), that to his knowledge:

     (1) The Report fully complies with the requirements of section 13(a) or
         15(d) of the Securities Exchange Act of 1934; and

     (2) The information contained in the Report fairly presents, in all
         material respects, the financial condition and result of operations
         of the Company.


/s/    Ronald J. Chapman

Ronald J. Chapman
Chief Executive Officer
October 11, 2006


/s/    Philip A. Shiels

Philip A. Shiels
Chief Financial Officer
October 11, 2006

[A signed original of this written statement required by Section 906 has been
provided ASI Entertainment, Inc. and will be retained by ASI Entertainment,
Inc. and furnished to the Securities and Exchange Commission or its staff upon
request.]


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