CONFORMED SUBMISSION TYPE:	10KSB
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20000630
FILED AS OF DATE:		20001013
FILER:

	COMPANY DATA:
		COMPANY CONFORMED NAME:			ASI ENTERTAINMENT INC
		CENTRAL INDEX KEY:			0001067873
		STANDARD INDUSTRIAL CLASSIFICATION:	AIRCRAFT PART & AUXILIARY EQUIPMENT,
                                             NEC [3728]
		IRS NUMBER:				522101695
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0630

	FILING VALUES:
		FORM TYPE:		10KSB
		SEC ACT:
		SEC FILE NUMBER:	000-27881
		FILM NUMBER:		99766951

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

	MAIL ADDRESS:
		STREET 1:		79 TAMI ROAD
		STREET 2:
		CITY:			RED FEATHER LAKES
		STATE:		CO
		ZIP:			80545



===============================================================================

                       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 year ended June 30, 2000

                                       OR

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

        For the transition period from ___________ to ___________

                         Commission file number 0-27881

                             ASI ENTERTAINMENT, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

             Delaware                                     52-2101695
----------------------------------           ----------------------------------
  (State or other jurisdiction              (I.R.S. Employer Identification No.)
of incorporation or organization)

                          Ronald J. Chapman, President
                             Suite 3, 1601 Main Road
                       Research, Victoria, 3095 Australia
               ---------------------------------------------------
               (Address of principal executive offices) (zip code)

                                 613 9 437 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

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.   $___________________.

===============================================================================


<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, 2000;

Common Stock, par value $.0001 per share                   6,242,087
                                                -----------------------------
Documents incorporated by reference:        None


<PAGE>






10KSB
<TABLE>

<S>
<C>
PART I........................................................................2

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

ITEM 2. DESCRIPTION OF PROPERTY..............................................12

ITEM 3. LEGAL PROCEEDINGS....................................................12

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..................12

PART II. ....................................................................12

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS ............12

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION............13

ITEM 7. FINANCIAL STATEMENTS.................................................16

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE.....................................................17

PART III.....................................................................17

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
    COMPLIANCE WITH SECTION 16(A)OF THE EXCHANGE ACT.........................17

ITEM 10. EXECUTIVE COMPENSATION.. ...........................................18

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT......19

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS......................22

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K....................................24
</TABLE>





                                      -1-
<PAGE>



PART I

ITEM 1. DESCRIPTION OF BUSINESS.

THE COMPANY

ASI Entertainment Pty. Ltd. was incorporated in Australia in 1993 as a
subsidiary of ASIT Australia until 1996 when it became an independent
corporation through a corporate restructuring. ASI Entertainment, Inc. (the
"Company" was incorporated in the state of Delaware on April 29, 1998. In order
to change its situs of incorporation, in July, 1998, ASI Entertainment, Inc.
(Delaware) acquired all the outstanding stock of ASI Entertainment Pty. Ltd.,
in exchange for 5,293,990 shares of its Common Stock. ASI Entertainment Pty.
Ltd. purchased the ASI-9000 Program from ASIT Australia and the Company will
acquire the ACAMS hardware from ASIT Australia. The Company subcontracts the
production, installation and maintenance of the ASI-9000 and Data3Mail. ASI
Entertainment, Inc. (Delaware) has three wholly-owned subsidiaries, ASI
Entertainment Pty. Ltd., ASI Media Pty. Ltd. (an Australian corporation), and
ASI Technologies, Inc. (a Delaware corporation). Certain of the officers,
directors and shareholders of the Company are the officers, directors and
shareholders of ASIT Australia.

The Company 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 main offices of the Company
are located at Suite 3, 1601 Main Road, Research, Victoria, 3095 Australia and
its telephone number is 61-3-9437-1233 and its 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

1. Overview

During the last decade, a new era in airline passenger entertainment has
evolved.  A personal video screen at each seat is becoming a standard and an
Official Airline Guide survey of 3000 frequent travellers found that 60 per
cent of business travellers used a laptop computer during flights.

With laptop computers now commonplace, the next wave will be the Internet and
Email.  It is in the area of passenger data communications that ASI has
developed a unique reputation.

ASI has spent 10 years 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 has evolved over 8 years of flight-testing and commercial
operation. The hardware platform is also unique as it enabled ASI to pioneer
the passenger data link with major international airlines and was used as the
development platform by INMARSAT, the monopoly satellite service provider for
aircraft.

                                      -2-
<PAGE>


The opportunity now exists for ASI to capitalize on the airline communications
and entertainment markets with two unique programs designated Data3Mail and
ASI-9000.

2. Data3Mail

Data3Mail, is based on ASI's existing flight proven software and hardware
Platform. The ACAMS (Aircraft Communication and Mail Server) which has been
developed and tested in conjunction with INMARSAT, COMSAT and SITA (the major
providers of satellite communications and ground based infrastructure for the
airline industry).

With the Data3Mail system onboard, passengers can access their email via their
laptop computers without the need for airlines providing wired networks into
each seat to accommodate the system.  The only item required by the passenger
is a Data3Mail smart card, which is inserted into their laptop's PCMCIA slot
to automatically initialise the Data3Mail program.

Data3Mail sends and receives passenger emails via the cockpit satellite data
link rather than the US$10.00 per minute passenger telephone line.  Messages
are prioritized so they cannot interfere with cockpit communications and each
transmission is charged by the kilobit.

Passenger interface with ASI's ACAMS mail server can be by one of two
alternate methods:

    1. A PC data smart card is used as the transport mechanism between the
       passenger's laptop computer and the ACAMS. A passenger prepares
       Email messages to be sent. The PC data card containing the messages
       is then plugged into one of the ACAMS smart card slots which then
       automatically transmits the Email and sends a request to upload the
       passenger's incoming Email.  On completion of the email download,
       the card is delivered back to the passenger.

    2. By wireless smart card, the passenger gains access to the ACAMS
      (mail server) via a wireless network from their seats. With the
       interface in place, the system automatically transmits the email and
       sends a request to upload the passenger's incoming email.

Under either system, the Data3Mail service can accommodate attachments in
various compressed formats.  The passenger's account is billed based on the
amount of data transmitted and is charged direct to their Data3Mail account.

The reason airlines will select Data3mail is that it is the only commercially
viable method of providing Email in an aircraft.  It is based on a flight
proven technology and there is no requirement to run additional wires into each
seat, which is costly, both in terms of installation expense and the additional
weight.  As an extra benefit for the airlines, the Data3Mail service
contributes to a reduction of the cost of cockpit communications as the volume
of communications increases.

                                      -3-
<PAGE>


3. ASI-9000

The ASI-9000 program is designed to enhance the image of small to medium sized
airlines, by upgrading their old analogue Video Tape players with a new
generation Digital Video Server, at little or no cost to the airline.  Sponsors
and advertisers underwrite the cost of the program and the surplus revenue is
shared between ASI and the airline.

The ASI-9000 program comprises hardware, software and a complete business plan
for airlines providing digital in-flight communications and entertainment.
The ASI ACAMS provides the underlying components of the system.

Tailor-made destination information using digital technology (not relying on
messy tapes) as well as on-line ordering, feature in the ASI-9000 program.
The ability to make reservations and alterations to services like
accommodation, car hire and airline tickets, as well as being able to order
goods while in-flight are unique benefits of the ASI-9000 program for airlines
with a satellite data link.  The destination program is integrated with the
moving map display providing an informative and entertaining flight show.

By incorporating the mail server module, the program allows passengers and
cabin crew to send and receive email or messages via the world wide
aeronautical radio and satellite networks.  Transferring data via this method
allows global coverage, and by utilizing ASI's proprietary software,
communications are fast and cost effective.

Additional revenue can be generated by uploading current news and stock
information through the facilities made available by ASI's unique ACAMS server.

4.  PRODUCTS

4.1  ACAMS
The ACAMS System is supplied in several configurations depending on the
program requirements and consists of the following components:
- Touch Screen Display
- Fully self contained 19.5 inch rack Mount
- Credit card Reader and PCMCIA Slots
- Interfaces to all major IFE, ACARS and SATCOM vendors
- Fully customized Microsoft compatible software with touch screen user
  interface

The ACAMS system is fully self-contained and comprises three Line Replaceable
Units 'LRU";
- Control Display Unit (CDU)
- A Hard Drive Unit (HDU), or optional wireless access point.
- An Optional Accessories Unit (OAU)

The ACAMS chassis also includes an uninterruptible power supply.

The ACAMS is small, lightweight and easy to install.  The units are designed
to simply plug into the ACAMS chassis allowing for easy removal and changeover
if required.  As a result, the aircraft experiences no downtime when line
servicing occurs.

                                      -4-
<PAGE>


Passenger and cabin crew services are accessed through a touch screen on the
CDU.  On-screen large button interface, based on Microsoft Windows software,
allows the user effortless access to the features available.  The configurable
ACAMS software is cabin crew tested and requires no special training.

A standard QWERTY keyboard with credit card transaction facilities provides
the finishing touches to a system that has revolutionized airline data
communications.

A Remote Console can be added to the system offering the same features as the
ACAMS unit, also encompassing a touch screen and keyboard with the additional
benefit of positioning the terminal anywhere on the aircraft.  This also
provides the opportunity for passengers to interface with the ACAMS if so
desired.

The ASI-9000 program is run on equipment, which is aviation certified.
Components of the system are currently certified for use on the Boeing
747-400, 757-200, and 737-300, McDonnell Douglas DC-9, and MD 82 and the
Company anticipates that it will be certified for use on the Boeing 767 in the
near future.  The ACAMS system was flight tested and certified on Qantas
Airways.

4.2  Computer Video Interface (CVI)

The system incorporates a Computer Video Interface "CVI" capable of storing
all flights destination and Multimedia promotions.  This unit is capable of
storing digitized audio and video from compressed MPEG & NTSC format.  The
system is fully compatible with all current overhead and in-seat video display
systems on-board aircraft.

The system can be flight programmed to display messages when required during
the flight and has full multi-lingual capability.

4.3  Mail Server

The system incorporates an intelligent mail server database that can
accommodate single or multiple Email transmissions without the need to bundle
communications as proposed by most other systems.  Regardless of whether there
are only one or many emails they are sent automatically.

The ACAMS unit can be equipped for either of ASI's Data3mail systems with
either PC Card reader slots or a wireless transceiver.

The Email system is based on a proprietary software transport medium, a
variation of the POP3/SMTP Email industry standard protocols.

5.  Target Market

ASI has developed a multi tiered marketing strategy that provides the
opportunity to generate revenue in three target markets within the airline
industry.

                                      -5-
<PAGE>


Offering the ASI-9000 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, Data3Mail,
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, posses the ability, through existing data ports, to allow
ASI to provide Data3Mail simply and cost efficiently.

ASI's competitors in this area, are promoting similar services that will
entail extensive and expensive installations for airlines and high service
costs to the passenger.  ASI will provide these services, comparatively, at 5
times the transfer speed, at one tenth of the cost to the passenger and at
little to no cost to the airline.

Once ASI has established Data3Mail onboard there is the further opportunity to
provide the ASI-9000 Program to these major airlines, creating an additional
revenue stream for both ASI and the airline.

Major industry service providers such as COMSAT, INMARSAT, SITA and AirTV will
also be able to utilize the connecting bridge created by ASI's ground breaking
software, allowing them to make more productive use of the bandwidth, which
they provide to the airlines via their satellite networks.

AirTV, who are currently developing a system to deliver live television into
aircrafts while in flight, as an example, will be able to further offer email
and internet services to passengers with ASI benefiting from the revenue
stream generated by these additional services.

ASI will receive revenue through royalties gained from the usage of the data
link established through its software.


CERTIFICATION PROCESS AND GOVERNMENT REGULATION

The installation and use of cabin management systems requires prior
certification and approval by the 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 sets the
standards that are primarily used 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 DO160C for hardware and DO178 for software.

                                      -6-
<PAGE>

Following this step, the ASI-9000 Program must be installed on an aircraft and
tested, including an in-flight test. The Company has received certification for
the ASI-9000 Program on Air Europa aircraft utilizing the CMA-3200 Multi Media
Computer platform. The ACAMS has been flight tested and installed on Boeing
747-400 and Boeing 767-300 aircraft. The CMA-3200 has been flight tested and
installed on the Boeing 737-300, 757-200 and the McDonnell-Douglas DC-9-30 and
MD-82. A second version of the ACAMS, incorporating Data3Mail, is currently
undergoing certification process to achieve the FAA approval for use on
commercial aircraft. The Company anticipates certification approval for the
ACAMS and is prepared to make whatever modifications are required to obtain
such approval.

PRODUCT DEVELOPMENT

Since 1993, ASIT Australia has spent over A$5,000,000 developing the ASI
program. The technology behind the Company's ASI-9000 Program evolved from a
data link aviation communications system, designated the Airline Communications
and Management System ("ACAMS") developed by ASIT Australia in conjunction with
Qantas Airways and Swissair. The technology was sponsored by Qantas Airways with
the objective of using Qantas Airways as a platform to create a product with
export potential. The requirements of this project mandated that ASIT Australia
develop 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. This interface evolved into
the ASI-9000 computer video.

ASIT Australia established a relationship with the Canadian Marconi Company
("CMC") which arranged for the ASI-9000 to be tested on Hawaiian Airlines. The
initial test program was carried out on Hawaiian Airlines in conjunction with
CMC and Hollingsead International, Inc., a manufacturer of after market video
systems. ASIT Australia mounted its software on CMC's CMA-3200 multi media
computer equipment which was installed together with Hollingsead's video
equipment on three aircraft operated by Hawaiian Airlines.  The Data3Mail
service is the next level of development to the existing flight proven
capabilities of the ACAMS communication link.

OPERATIONS TO DATE

Hawaiian Airline Project. ASIT Australia equipped three aircraft operated by
Hawaiian Airlines at a cost of $180,000 per aircraft but was unable to equip
the remaining ten aircraft originally anticipated to be equipped as ASIT
Australia was unable to finance the purchase and installation price of the
video equipment of $50,000 per aircraft charged by Hollingsead International,
Inc. ASIT Australia had secured 14 advertisers for the video program based on
total air time on all 13 aircraft but was not able to receive any funds from
such advertisers for air time as only three aircraft were equipped with the
equipment. ASIT Australia had intended the Hawaiian Airlines project to be a
test program of its "infotainment" program, to prove its feasibility and to
showcase its potential to advertisers. The Company is not currently involved in
the installation of any of its equipment on Hawaiian Airlines.

                                      -7-
<PAGE>


Air Europa Project. The Company acquired the CMA-3200 from ASIT Australia for
an aggregate of A$527,980 and installed nine CMA-3200 units on aircraft
operated by Air Europa. From July 1, 1997 to June 30, 2000, the Company has
received approximately $81,076 in revenues generated from the equipment on the
Air Europa aircraft. The company obtained five major advertisers on the Air
Europa aircraft systems before the program was suspended, pending
re-installation of the equipment in the airline's new 737-800 aircraft.

The Company currently does not have any additional contracts for the
installation of the ASI-9000 program, nor has it signed contracts for the new
Data3Mail program.

SALES AND PRICING

The Company sells both the ASI-9000 and Data3Mail programs under Supply and
License Agreements under which ASI supplies equipment at little or no cost to
the airlines, in exchange for a share of the revenue generated from the
equipment and services.  The ASI-9000 marketing is based on allocating five
minutes of advertising space per flight per hour with additional sponsorship
times available during the safety briefing presented prior to take off. The
Company anticipates that it will work with the airline in developing an
advertising program that suits the airline's image profile.  The price and
number of times the advertisement will run may vary depending on available
space and the flight profile. Currently, the Company anticipates charging US$2
per advertisement to as high as US$10 per advertisement on a large aircraft
where the communications capability is available.  The Company believes that
the revenue will be enhanced when the communication link is installed,
allowing passengers to purchase goods and services being promoted via the ACAMS.

In order to provide an additional incentive for the media agents to procure
advertising, the Company plans on paying its media agents commission on sales
of up to 32% of revenue, two fold the industry standard.

ASI will generate revenue from Data3Mail programs by charging passengersper
kilobit of data transmitted over the air-to-ground link.

The Company purchases from ASIT Australia either the CMA-3200 hardware at
$25,000 per unit or the ACAMS hardware at $30,000 per unit. The Company
subcontracts for the production of the ACAMS integration technology. The cost
to the Company for installation of the ASI-9000 excluding the hardware is
approximately $5,000 per aircraft for installation of units like those
installed on the Air Europa aircraft and up to $10,000 for units in which the
communications link is provided.

OPERATIONS AND SUPPLIERS

The Company has two offices: an office in Melbourne, Australia and one in
Denver, Colorado. The Company's core component of the ASI-9000 and Data3Mail,
the ACAMS Cabin Terminal, has been manufactured to date by ASIT Australia and
Philips Defence Systems Group. While the Company anticipates that it will
install the ASI-9000 Program with the ACAMS in the future, its current

                                      -8-
<PAGE>

contracts employ the CMA-3200 manufactured by Canadian Marconi Company.  The
PC smart cards used for the Data3Mail programs will be outsourced and
manufactured to meet the certification requirements of ASI.

The Company has out-sourced all of its operations to companies and individuals
specializing in either the manufacture and installation of avionics or the
procurement of advertisement sponsors (for ASI-9000).  The Company will
contract with an installation company to install its equipment on the customer
airline.  Once installed, the Company out-sources all of the engineering and
technical support services to ASIT Australia and other suitably certified
organizations.

MARKETING

After considering the competitive environment of the airline entertainment
industry, the Company has decided on a marketing strategy to provide the ASI-
9000 program at little or no cost to a customer airline in consideration for
the Company receiving sole and exclusive rights over the revenue stream
created from the sale of air time to advertisers including destination specific
tourist operators, local, national and foreign corporate advertisers and from
other services provided by the equipment.  A similar marketing strategy will be
adopted for the Data3Mail program.

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 has entered into a Supply and License Agreement with Air Europa
whereby the Company licensed the hardware, software and the operating systems
to Air Europa and installed the ASI-9000 Program utilizing the CMA-3200
computer platform on two B737-300 aircraft and seven B757-200 aircraft. The
contract includes an option to install the ACAMS Cabin Management and
Communications System on another twelve B737's and two B767's. The ACAMS
system is a second generation ACAMS not yet in production and the above
referenced option will only be viable if Air Europa installs a data
communications link on its aircraft.

Pursuant to the current agreement with Air Europa, the Company, through its
subsidiary ASIE, receives a license fee of $3,625 per calendar month and a
maintenance fee of approximately $1,875 for each installed ASI-9000 Program
from the advertising revenues received from the systems. Should the Company not
receive sufficient funds to cover the license and maintenance fees, it will
absorbs the deficiency. Air Europe receives any amounts over the $3,625 license
fee and $1,875 maintenance fee (after deduction of any direct costs, including
payment of commissions, if any, to any media sales representatives).

The license for each ASI-9000 Program unit lasts five years. Upon expiration of
the licensing term, Air Europa will acquire rights to the hardware but not the

                                      -9-
<PAGE>

software or operating systems contemplated in the Supply and Licensing
Agreement.  ASI is currently negotiating an extension of the term of the
current agreement with Air Europa.

COMPETITION

With the ASI-9000 program, the Company competes for both advertising space and
provision of equipment to airlines. The Company believes that it operates in a
market niche where there are no other companies providing both the same
product with a similar price structure. The Company 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. The Company is aware of several
other companies that provide systems that compete with the ASI-9000 Program ,
some of which have been installed on aircraft.  Most of these competitors have
substantially greater financial and other resources than the Company and,
accordingly, may have a significant competitive advantage over the Company.
The Company's principal competitors include Hughes Avicom International, Inc.
and Sony Trans Com (both acquired by Rockwell Collins), Matsushita Avionics
Systems Corporation and Thompson-CSF Sextant.  The Company is also aware of
several other companies that are developing in-flight entertainment systems or
seeking joint ventures in the field.

The Company believes that it will be able to compete with other companies
based on the company's marketing plan that requires only nominal capital
expenditures from the airline.  The Company also believes that it will be able
to compete by targeting specific airlines that will be attracted to this
structure which allows the airline to provide more customer service at little
cost to the airline. The Company believes that although most of the Company's
competitors are producing more technologically advanced entertainment systems,
those competing services are offered at a far greater expense to the airlines
both in the cost of the entertainment system itself and in the operating cost
due to the extra weight of these in-flight systems.

For Dat3Mail, airlines and their passengers have identified Email as a service
which is becoming increasingly desirable.  As a result, a number of companies
are offering internet portal services, most still in the development stage.
In comparison to most, ASI's Data3Mail utilizes the satellite data link which
is cheaper and faster than alternate products using the airborne telephone
connection (not ideally designed for data communication links).  Given the
potential size of the market for Email access in commercial passenger
aircraft, ASI expects there will be continued competition for ASI's products.
Over the past 12 months, at least 6 new start up companies have emerged, most
offering software solutions requiring certified hardware platforms.

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 passengers and airlines will not demand more technologically
advanced communication and entertainment products or that the Company will be
able to compete with other more established sources for advertising.


                                      -10-
<PAGE>

EMPLOYEES

The Company is managed by Ronald Chapman in his capacity as President and Chief
Executive Officer and Philip Shiels in his capacity as Vice President and Chief
Financial Officer. The Company currently has no employees.

INDUSTRY OVERVIEW

The following information was derived from reports of the World Airlines
Entertainment Association Airlines at http://www.waea.com and the Airbus
Industries 1998 Global Market Forecast of April 1998.

Airlines spent 15% more in 1997 than in 1996 on in-flight entertainment. This
increase was due to a continuing increase in the number of wide-body aircraft
installation, a new trend in retrofitting narrow body aircraft with in-flight
entertainment systems, a continuing increase in demand for programming due to
more in-flight entertainment aircraft and more "multi-channel" video systems,
and a trend toward more telephone-equipped aircraft and more telephone units
per aircraft.

In 1998, it is predicted that there will be demand for over 16,700 jetliners of
more than 70 seats to satisfy an average traffic growth of 5 percent per annum
and replace some 8,500 aging aircraft. Passenger traffic growth has been
predicted at 4.9% annually over the next 20 years. To meet this growth,
airlines are expected to add over 17,500 aircraft worth more than $1.1 trillion
to the existing fleets. Approximately half of new aircraft deliveries are
expected to be wide body, long-haul aircraft that the Company believes may
represent a market for the ASI-9000 Program.

Due to the high levels of capacity the airlines are experiencing, many airlines
opt to invest capital in purchasing new aircraft rather than upgrading existing
air planes. The current industry trend in allocating capital primarily to
acquiring new aircraft should not affect the Company because the installation
of the Company's product requires little or no capital outlay from the
airline. The Company installs its systems at nominal cost to the airline with
the goal of acquiring revenues from the sale of advertising space.

OTHER INFORMATION

a) On August 27, 1999, the Company entered into an agreement with Hatfield
Aviation, Inc. ("Hatfield"), a company doing business as an aviation
electrical and overhaul repairer, and the shareholders of Hatfield (the
"Hatfield Shareholders"). Under the terms of the agreement, subject to
conditions precedent to closing, the Company will acquire 100% of the issued
and outstanding common stock of Hatfield. Consideration for the purchase
will be cash and the issuance of shares of ASI's common stock. The terms of
the agreement are currently being renegotiated, and as of the date of this
report, the Company had not made any advance cash payments nor issuances of
common stock to Hatfield. The Company intends to raise capital to close this
transaction through an offering of its equity securities.

b) On December 8, 1999 the Company signed a Heads of Agreement with AirTV
Limited, a company which is developing a global satellite television system

                                      -11-
<PAGE>


that interfaces with existing in-flight entertainment systems on board
aircraft to provide direct television programming. AirTV is seeking to
expand the system by offering an internet service including E-mail and
browser capabilities aboard aircraft equipped with satellite data
communications equipment. Under the Heads of Agreement:

a) ASI will lead the preliminary technical and commercial evaluation of the
proposed internet service under the direction of AirTV.

b) ASI will formulate preliminary specifications of the proposed internet
service which will include the primary components of the system, conduct
a preliminary evaluation of the technical and commercial viability of the
internet service, and develop a list of suppliers for the primary components.

c) Should ASI complete the work to the satisfaction of AirTV, it is the
intent of AirTV to award ASI an initial contract for the development for
AirTV of an on-board browser and to use the ASI ACAMS as a test platform
for such browser. If awarded, ASI will enjoy the status of being a preferred
supplier to AirTV for the development of the system software.


ITEM 2. DESCRIPTION OF PROPERTY.

The Company does not own any property other than its inventory of equipment. The
Company maintains its headquarters at the offices of Chapman International Pty.
Ltd. at which location it also stores its in-flight computer equipment. The
Company does not have any written lease with Chapman International which has
indicated that the Company may use such space as long as it requires.

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.

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER 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 6,242,087 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

                                      -12-
<PAGE>


Company's securities.  The following table sets out the range of the high and
low sales prices for the Company's securities.
Quarter Ended                                    Common Stock
                                               High         Low
March 31, 2000                                $1.25        $1.25
June 30, 2000                                 $1.00        $1.81

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.

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

OVERVIEW

The Company is a development stage company formed to offer to commercial
airlines its ASI-9000 and Data3Mail Programs which provide passenger and crew
communications, passenger information and entertainment, and value-added
services tailored to its respective airline customers' requests.

The Company has a very low cost structure as it has no employees other than its
two officers which are paid a monthly retainer and does not maintain any
manufacturing or production operations.  The Company utilizes office space,
from a company beneficially owned by its President, Ronald Chapman.  The
Company pays commissions to media sales representatives only from revenues
received from the contracts which they place.  Because of such low cost
structure, the Company anticipates that the proceeds from earlier 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 has suffered losses from operations. The Company had accumulated
losses from inception to June 30, 2000 of $1,592,977. Major components of the
loss includes depreciation and amortisation charges, offering costs, and
foreign currency translation losses. The Company may be required to make
significant additional expenditures in connection with the development of the
ASI-9000 and Data3Mail 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 the 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's ASI-9000 Program evolved from seven years of development. The
CMA-3200 was originally installed by ASIT Australia and Canadian Marconi
Company ("CMC") on Hawaiian Airlines as part of a start up plan with the goal
of testing the product's commercial viability. The test program was carried out

                                      -13-
<PAGE>

in conjunction with CMC and Hollingsead International, Inc., a manufacturer of
after market video systems. ASIT Australia mounted its software on CMC's
CMA-3200 multi media computer equipment which was installed together with
Hollingsead's video equipment on three Hawaiian aircraft.

ASIT Australia equipped three aircraft operated by Hawaiian Airlines at a cost
of $180,000 per aircraft but was unable to equip the remaining ten aircraft as
ASIT Australia was unable to finance the purchase and installation price of
$50,000 per aircraft of the video equipment charged by Hollingsead
International, Inc. ASIT Australia had secured 14 advertisers for the video
program based on air time on all 13 aircraft. Because the ASIT Australia was
unable to equip all 13 aircraft with the video system, it was unable to receive
funds from the advertisers for air time on just three aircraft. ASIT Australia
had intended the Hawaiian Airlines project to be a test program of its
"infotainment" program, to prove its feasibility and to showcase its potential
to advertisers. The Company is not currently involved in the installation of
any of its equipment on Hawaiian Airlines.

The Company acquired the CMA-3200 from ASIT Australia for an aggregate of
$418,424 and installed nine CMA-3200 units on aircraft operated by Air Europa.
From July 1, 1997 to June 30, 1998 (the first two years of operations), the
Company has received approximately $81,000 in revenues generated from the
equipment on the Air Europa aircraft. The Company has obtained five major
advertisers for air time on the Air Europa system.

While the Company intends to provide the ASI-9000 Program utilizing the ACAMS
for its future contracts, the Company's present contracts have been filled by
mounting the software on the CMA-3200 manufactured by CMC. The Company does not
currently have any additional contracts for the installation of the ASI-9000.

The Company intends to use future revenues, if any, for the purchase of ASI
ACAMS units and other supporting equipment to be installed on its current and
future customer airlines 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, 2000 COMPARED TO YEAR ENDED JUNE 30, 1999

The Company received no revenue for the year ending June 30, 2000, compared
to revenues of $36,119 for the year ended June 30, 1999. No sales were made for
the twelve month period ending June 30, 2000, pending reinstallation of the
Company's equipment in new Air Europa aircraft.

Net losses increased from $335,615 in the twelve month period ending June 30,
1999, to $484,349 for the twelve month period ending June 30, 2000, primarily
as a result of an increase in expenses and lack of revenue. Expenses increased
from $353,241 for the twelve month period ending June 30, 1999 to $484,349 for
the twelve month period ending June 30, 2000 due to an increase of consulting
and professional fees, corporate administration, engineering and travel costs
but after reduction of accounting and auditing fees and offering costs.

The Company had a foreign currency translation loss of $120,902 for the twelve
month period ending June 30, 2000, compared to a foreign currency translation

                                      -14-
<PAGE>


gain of $92,937 for the twelve month period ending June 30, 1999. As a result,
the Company recorded a comprehensive loss of $605,258 for the twelve months
ended June 30, 2000, compared to a comprehensive loss of $242,678 for the
twelve months ended June 30, 1999.

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 total revenue of
approximately $81,000 under its Air Europa contract but received no revenue
over the fiscal year ended June 30, 2000.

The Company's cash and cash equivalents were increased from $1,100 at June 30,
1999 to $48,718 at June 30, 2000 primarily as a result of sale of the Company's
securities.

The Company had a net loss of $484,349 from operating activities for the period
July 1, 1999 to June 30, 200, primarily consisting of compensation to officers,
Consulting and professional fees, depreciation, amortization, engineering and
office expenses. The net loss from operating activities for such period was
less than the net loss from operating activities for the period July 1, 1998
to June 30, 1999 primarily as a result of an increase of consulting and
professional fees, corporate administration and engineering costs. The Company
had no revenues for the twelve months ending June 30, 2000 as the revenue
generated from the Air Europa contract was suspended while the ASI-9000
Programs were reinstalled on different Air Europa aircraft.

The cash flow of the Company from financing activities for the twelve months
ending June 30, 1999 was from the receipt of capital subscriptions.

The Company's marketing plan anticipates that the Company will install and
maintain the ASI-9000 and Data3Mail programs on commercial airlines with
little or no cost to the airline. The Company will receive revenues data
communications and from the sale of advertising space available on the video
and audio programs as well as other forms as developed. This marketing plan
requires significant initial capital from the Company for the production,
acquisition, installation and maintenance of the ASI-9000 and Data3Mail
programs possibly before any revenues are received. The Company may not have
sufficient funds to purchase or install the equipment in which case the
Company will have to seek additional capital. The Company may raise additional
capital by the sale of its equity securities, through an offering of debt
securities, or from borrowing from a financial institution. The Company does
not have a policy on the amount of borrowing or debt that the Company can
incur. The Company may also attempt to negotiate with vendors or customer
airlines revenue sharing arrangements by which the Company will share the
advertising revenue if the vendor or customer airline provide 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

                                      -15-
<PAGE>

not include adjustments relating to the recoverability of recorded asset
amounts and classification of recorded assets and liabilities. On July 1, 1998,
the Company acquired 100% of ASI Entertainment Pty Ltd., ("ASIE") an Australian
corporation. ASIE has accumulated losses of approximately $1,294,000 at June
30, 2000 and 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, airline revenue sharing arrangements by which the Company
will share the advertising revenue if the vendor or customer airline 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.


























                                      -16-
<PAGE>












                           ASI ENTERTAINMENT, INC.

                               CONSOLIDATED
                            FINANCIAL STATEMENTS

                            June 30, 1999 & 2000



























<PAGE>



                             ASI ENTERTAINMENT, INC.
                        Consolidated Financial Statements



                               TABLE OF CONTENTS


                                                                  Page

      INDEPENDENT AUDITOR'S REPORT ON
         THE CONSOLIDATED FINANCIAL STATEMENTS                     F-1


      CONSOLIDATED FINANCIAL STATEMENTS

            Consolidated balance sheet                             F-2
            Consolidated statement of operations                   F-3
            Consolidated statement of stockholders' equity         F-4
            Consolidated statement of cash flows                   F-5
            Notes to consolidated financial statements             F-7
































<PAGE>



INDEPENDENT AUDITOR'S REPORT


Board of Directors
ASI Entertainment, Inc.
Melbourne, Australia

I have audited the accompanying consolidated balance sheet of ASI
Entertainment, Inc. as of June 30, 2000 and the related consolidated statements
of operations, stockholders' equity and cash flows for the years ended June
30, 1999 and 2000. 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 generally accepted auditing standards.
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, 2000 and the results of its operations and its cash flows
for the years ended June 30, 1999 and 2000 in conformity with generally
accepted accounting principles.

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.


Aurora, Colorado                                  /S/RONALD R. CHADWICK, P.C.
October 5, 2000                                 RONALD R. CHADWICK, P.C.



                                    F-1
<PAGE>


                          ASI ENTERTAINMENT, INC.
                        CONSOLIDATED BALANCE SHEET
                              June 30, 2000

                                 ASSETS

     Current assets
           Cash                                                 48,718
           Prepaid expenses                                     43,975
                                                            ----------
           Total current assets                                 92,693
                                                            ----------
           Property and equipment, net                       1,024,901
           Investment in media rights, net                     135,920
                                                           -----------
                                                             1,160,821
                                                             ---------
      Total Assets                                        $  1,253,514
                                                             =========

                  LIABILITIES AND STOCKHOLDERS' EQUITY

      Current liabilities
            Accounts payable and accrued expenses               20,878
            Due to related parties                              54,116
                                                              --------
                Total current liabilties                        74,994
                                                               -------
      Total Liabilities                                         74,994
                                                              --------
      Stockholders' Equity
            Preferred stock, $.0001 par value;
             20,000,000 shares authorized; none issued
             and outstanding                                      -
            Common stock, $.0001 par value;
                100,000,000 shares authorized;
                6,242,087 issued and outstanding                   624
            Additional paid in capital                       3,516,343
            Additional paid in capital - discount on shares   (745,470)
            Accumulated deficit                             (1,293,743)
            Accumulated other comprehensive loss              (299,234)
                                                           -----------
      Total Stockholders' Equity                             1,178,520
                                                            ----------
      Total Liabilities and Stockholders' Equity          $  1,253,514
                                                            ==========






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

                                F-2
<PAGE>


                             ASI ENTERTAINMENT, INC.
                       CONSOLIDATED STATEMENT OF OPERATIONS
                    For The Years Ended June 30, 1999 and 2000


                                                     1999           2000
                                                     ----           ----

     Sales, net                                   $  36,119    $      -

     Cost of  sales                                  18,493           -
                                                  ---------    -----------
     Gross margin                                    17,626           -

     Selling, general and administrative expenses   353,241        482,498
                                                 ----------    -----------

     Loss from operations                          (335,615)      (482,498)

      Other income (expense)
           Interest income
           Interest expense                                         (1,851)
                                                 ----------    -----------
      Income (loss) before provision for
          income taxes                             (335,615)      (484,349)

      Provision for income tax                          -               -
                                                  ---------     ----------
      Net income (loss)                           $(335,615)    $ (484,349)

      Other comprehensive income (loss)
      Foreign currency translation gains (losses)    92,937       (120,909)
                                                  ---------     ----------
      Comprehensive loss                          $(242,678)    $ (605,258)
                                                 ==========      =========
      Net income (loss) per share
      (Basic and fully diluted)                   $   (0.06)    $    (0.08)
                                                 ==========     ==========
      Weighted average number of
      common shares outstanding                   5,754,337      5,924,420






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

                                      F-3

<PAGE>



                                  ASI ENTERTAINMENT, INC.
                       CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                         For The Years Ended June 30, 1999 and 2000
<TABLE>
<CAPTION>
                                                                 Paid in                  Accum.
                                     Common Stock                 Capital                  Other       Subscrip-    Stock-
                                                      Paid in    Discount      Accum.     Compre.      tions       holders'
                                 Shares     Amount   Capital     On shares    Deficit    Income/loss   Receivable   Equity
                                ---------   ------   ---------    --------   --------    ----------    ----------  ---------
<S>                             <C>        <C>     <C>           <C>        <C>          <C>           <C>         <C>
Balances at June 30, 1998       5,293,990  $530    $3,062,173    $(745,470) $(473,779)   $(271,262)    $(43,735)   $1,528,457

Recapitalization, July 1, 1998    417,189  42      100                                                             142

Issuance of stock for services     43,158  4       11,368                                                          11,372

Receipt of subscriptions rec.                                                                          26,885      26,885

Foreign currency
    translation gain (loss)                                                              92,937                    92,937

Net gain (loss) for the year
    ended June 30, 1999                                                     (335,615)                              (335,615)
                                ---------  ------  ---------     --------   --------     --------      ----------  ----------
Balances at June 30, 1999       5,754,337  $576    $3,073,641    $(745,470) $(809,394)   $(178,325)    $(16,850)   $1,324,178

Receipt of subscriptions rec.                                                                          16,850      16,850

Issuance of stock for services   110,000   11      64,989                                                          65,000

Sales of common stock            377,750   37      377,713                                                         377,750

Net gain (loss) for the year
    ended June 30, 2000                                                     (484,349)    (120,909)                 (605,258)
                                ---------  ------- ----------    ---------  -----------  ---------     -------     ---------
Balances at June 30, 2000       6,242,087  $624    $3,516,343    $(745,470) $(1,293,743) $(299,234)    $     -     $1,178,520
                                =========  ======= ==========    =========  ===========  =========     =======     ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
                                                      statements.

                                     F-4
<PAGE>



                             ASI ENTERTAINMENT, INC.
                        CONSOLIDATED STATEMENT OF CASH FLOWS
                     For The Years Ended June 30, 1999 and 2000


                                                         1999          2000
                                                         ----          ----
      Cash Flows From Operating Activities:
           Net income (loss)                         $(335,615)    $(484,349)

           Adjustments to reconcile net income to
           net cash provided by (used for)
           operating activities:
                Depreciation                            65,807        66,921
                Amortization                            62,320        63,375
                Compensatory stock issuances            11,429        40,000
                Trade accounts receivable                6,670
                Other receivables                        3,086       (18,975)
                Accounts payable and accrued expenses   (8,222)       20,717
                                                      --------       -------
                     Net cash provided by (used for)
                     operating activities             (194,525)     (312,311)
                                                     ---------      --------
      Cash Flows From Investing Activities:
            Purchase of fixed assets                   $     -       $(3,402)
            Cash acquired through recapitalization      15,453
                                                      --------      --------
                     Net cash provided by (used for)
                     investing activities               15,453        (3,402)
                                                      --------      --------




                      (Continued On Following Page)









  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, 1999 and 2000

                   (Continued From Previous Page)

                                                         1999          2000
                                                         ----          ----

      Cash Flows From Financing Activities:
           Receipts from notes payable                  31,072
           Payments on notes payable                                 (32,956)
           Due to related parties                       57,786        (7,176)
           Proceeds from issuance of common stock       24,928       394,600
                                                       -------      --------
                     Net cash provided by (used for)
                     financing activities              113,786       354,468
                                                      --------      --------
      Effect of exchange rate changes on cash            1,064         8,863
                                                      --------       -------

      Net Increase (Decrease) In Cash                  (64,222)       47,618
      Cash At The Beginning Of The Period               65,322         1,100
                                                      --------       -------
      Cash At The End Of The Period                     $1,100       $48,718
                                                      ========       =======

      Supplemental Disclosure
      -----------------------
      Cash paid for interest expense in 2000: $1,851



















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

                                    F-6-
<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. The Company was formerly, but is no longer,
accounted for as a development stage company. On July 1, 1998 ASI acquired 100%
of the issued and outstanding stock of ASI Entertainment Pty., Ltd. ("ASIE") in
a transaction accounted for as a recapitalization of ASI Entertainment Pty.,
Ltd., with ASI Entertainment Pty., Ltd. considered the predecessor pursuant to
the acquisition. ASIE provides in-flight video and audio entertainment and data
communications to the commercial airline industry and sells advertising time on
its ASI-9000 Programs installed on commercial aircraft. The Company's wholly
owned subsidiary, ASI Technologies, Inc. is an inactive corporation,
incorporated on April 1, 1998 under the laws of Delaware. ASIE's wholly owned
subsidiary, ASI Media Pty., Ltd. ("ASI Media") is an inactive
corporation whose sole purpose is to act as trustee to the ASI Media Unit Trust
(the "Unit Trust"). ASI Entertainment, Inc. and its subsidiaries 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 subsidiaries. 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
ASIE. Adjustments are made to translate the statutory financial statements of
ASIE to United States Generally Accepted Accounting Principles. The financial
statements are expressed in United States dollars. The functional currency of
ASIE 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 the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.



                                    F-7
<PAGE>



                             ASI ENTERTAINMENT, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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, 2000 and June 30, 1999, the Company had net operating loss
carryforwards of approximately $1,200,000 and $798,000 respectively, which
expire under Australian tax law at various dates through the year 2007, in
addition to net operating loss carryforwards of approximately $85,000 for U.S.
tax purposes at June 20, 2000 which begin to expire in 2019. The deferred tax
asset created by this net operating loss has been offset by a 100% valuation
allowance.

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

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 conversion of the Company's preferred
stock are not included in the computation if the effect of such inclusion would
be anti-dilutive and would increase the earnings or decrease loss per share.

Property and equipment
----------------------
Property and equipment are recorded at cost and depreciated under accelerated
methods over an estimated life of five years.



                                    F-8
<PAGE>



                             ASI ENTERTAINMENT, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued


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

Investment in media rights
--------------------------
The investment in media rights is recorded at cost and amortized based on the
straight line method over five years.

Foreign currency translation
----------------------------
The functional currency of ASIE 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.

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 ASIE,
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.






                                    F-9
<PAGE>



                             ASI ENTERTAINMENT, INC.
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued


NOTE 2. RELATED PARTY TRANSACTIONS

As of June 30, 2000 the Company owed officers, directors, and related parties
$54,116 for expenses incurred on behalf of the Company.

The Company during 2000 and 1999 paid $23,608 and $14,957 respectively to a
company affiliated through common stockholders and directors.

The Company has established an agreement with ASI Technologies Pty., Ltd.,
("ASIT"), a company related by stock ownership, giving the Company the sole
right to purchase certain hardware and technical support used in its business
operations.


NOTE 3.  PROPERTY AND EQUIPMENT

On December 16, 1996, the Company purchased from ASI Technologies Pty., Ltd.
("ASIT"), a related party, but not a shareholder at that time, nine CMA-3200
Hardware Platforms (developed and produced by a third party), a component of
the ASI-9000 Program, for a price of $418,424 ($315,204 as translated at June
30, 2000) through the issuance issuance of 659,975 shares of common stock of
the Company. On September 30, 1997, the Company purchased Airline Cabin
Management and Communication Systems ("ACAMS"), which are the next generation
hardware platforms developed by ASIT, and other equipment from ASIT for a price
of $1,081,650 ($895,500 as translated at June 30, 2000) through the issuance of
1,875,000 shares of common stock and 1,875,000 common stock purchase options.
The price of both purchases represents ASIT's original cost in such systems.

The following is a summary of property and equipment at June 30, 2000:

CMA-3200, ACAMS and other                $  1,214,023
Less: Accumulated depreciation              ( 189,122)
                                         ------------
                                         $  1,024,901
                                         ============

The CMA-3200 equipment is depreciated over five years using the straight line
method. Depreciation expense for the years ended June 30, 2000 and 1999 was
$66,921 and $65,807 respectively. As of June 30, 2000 the ACAMS equipment had
not yet been placed in service or depreciated.






                                    F-10
<PAGE>



                             ASI ENTERTAINMENT, INC.
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued


NOTE 4.  INVESTMENT IN MEDIA RIGHTS

The Company through various transactions has acquired the rights to market,
sell and receive revenues from the sale of  advertising and sponsorship related
to the installation of its systems on commercial aircraft. The Company recorded
the cost of these media rights at $373,350 ($298,500 as translated at June 30,
2000). The investment in media rights is amortized over a period of 5 years
using the straight line method. Accumulated amortization at June 30, 2000 was
$162,580. Amortization expense for the years ended June 30, 2000 and 1999 was
$63,375 and $62,320.


NOTE 5.  ACQUISITIONS

On July 1, 1998, the Company acquired all of the issued and outstanding common
stock and stock options of ASIE in exchange for common stock and common stock
options of the Company. Under the terms of the agreement, ASIE's outstanding
shares and options were exchanged at a ratio of one share and one option of the
Company for every eight shares and eight options of ASIE. As a result of the
exchange, ASIE and its wholly owned inactive subsidiary, ASI Media became
wholly owned subsidiaries of the Company, and the shareholders of ASIE received
5,293,990 shares and became shareholders of 92.7% of the Company. Generally
accepted accounting principles require that the Company whose shareholders
retain a majority interest in a combined business be treated as the acquiror
for accounting purposes. As a result, the merger was treated as an acquisition
of the Company by ASIE, and a recapitalization of ASIE. Accordingly, the
Company's balance sheet consists of ASIE's net assets and the Company's net
assets at historical cost, and the statement of operations includes ASIE's
operations for the period presented and the operations of the Company from the
date of acquisition. As a result of the acquisition, the Company obtained
417,189 shares previously issued to the prior shareholders of ASI
Entertainment, Inc., resulting in a total of 5,711,179 shares issued and
outstanding subsequent to the acquisition.












                                    F-11
<PAGE>



                             ASI ENTERTAINMENT, INC.
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued


NOTE 6.  STOCKHOLDERS' EQUITY

Common stock
------------
The Company as of June 30, 2000 had 100,000,000 shares of authorized  common
stock, $.0001 par value, with 6,242,087 shares issued and outstanding.

Preferred stock
---------------
The Company as of June 30, 2000 had 20,000,000 shares of authorized preferred
stock, $.0001 par value, with no shares issued and outstanding.

Stock options
-------------
At June 30, 2000, the Company had stock options outstanding as described below.

Non-employee stock options

The Company accounts for non-employee stock options under SFAS 123, whereby
options 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.

In July, 1998 the Company issued 43,158 stock options, exercisable immediately
at $0.50 per share to a consulting company as compensation for services, and
issued 4,384,014 options exercisable immediately at $0.50 per share to option
holders in ASIE in exchange for their outstanding options in ASIE. In March,
2000, the Company granted 100,000 stock options, exercisable immediately at
$0.50 per share to an individual for consulting services. All options remained
unexercised at June 30, 2000, and expire on June 30, 2003, except for the
100,000 shares granted in March of 2000, which expire August 14, 2002. The
Company incurred and has accrued no material compensation expense under these
options.











                                    F-12
<PAGE>



                             ASI ENTERTAINMENT, INC.
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued


NOTE 6.  STOCKHOLDERS' EQUITY (Continued):

Employee 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, nor was any compensation cost
charged against income under its employee stock options in 1998 or 1999. Had
compensation cost for the Company's employee stock option awards and incentive
stock option plan been determined based on the fair value at the grant dates
for awards under the stock option grants and incentive stock option plan
consistent with the method of FASB Statement 123, the Company's net income and
earnings per share would not have changed as indicated in the pro forma amounts
below:

                                                2000            1999
                                                ----            ----
Net income (loss)       As reported       $(   484,349)   $(   335,615)
                        Pro forma         $(   484,349)   $(   335,615)

Basic and fully diluted  As reported             $(.08)          $(.06)
    earnings per share   Pro forma               $(.08)          $(.06)


In July, 1998, the Company issued 500,000 options exercisable immediately at
$.50 per share to certain officers and directors of the Company in exchange for
their outstanding options in ASIE. The options expire on June 30, 2003, and all
remain unexercised at June 30, 2000.















                                       F-13
<PAGE>



                             ASI ENTERTAINMENT, INC.
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued


NOTE 6.  STOCKHOLDERS' EQUITY (Continued)

A summary of the status of the Company's employee stock options as of
June 30, 2000 is presented below:


                                                Weighted Ave.
Options                               Shares   Exercise Price
-------                               ------   --------------
Outstanding at
      beginning of period            500,000       $ 0.50
Granted                                    -            -
Exercised                                  -            -
Forfeited                                  -            -
                                ------------   -------------
Outstanding at
      end of period                  500,000        $ 0.50
                                     =======
Options exercisable
     at period end                   500,000
Weighted average fair
     value of options
     granted during the
     the period                                     $    -


The following table summarizes information about employee stock options
outstanding at June 30, 2000.

                        Options Outstanding            Options Exercisable
           ---------------------------------------    --------------------------
                        Weighted Ave.                  Number
Range of    Number       Remaining    Weighted Ave.  Exercisable
Exercise  Outstanding   Contractual     Exercise        at         Weighted Ave.
Price     at 6/30/00        Life          Price        6/30/00    Exercise Price
--------  ----------   -------------  -------------  -----------  --------------
$ 0.50      500,000       3 Years         $ 0.50       500,000         $ 0.50








                                    F-14
<PAGE>



                             ASI ENTERTAINMENT, INC.
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - 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-15
<PAGE>


ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Ronald R. Chadwick, P.C. has replaced Weinberg & Co. as the Company's auditor
for the year ended June 30, 2000.

There were no disputes or disagreements with Weinberg & Co.

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:
- -----                                  ------

Ronald J. Chapman                      President  and Director

Graham O. Chappell                     Director

Philip A. Shiels                       Executive Director and Chief Financial
                                          Officer
                                       and Director

Richard W. Mason                       Director


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 five directors.
Currently, there are four 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:

RONALD J. CHAPMAN, 48, 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 75% of Chapman International Pty Ltd., a
shareholder of the Company.

GRAHAM O. CHAPPELL, 55, 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"),

                                      -17-
<PAGE>

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, 48, 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. Mr. Shiels has been an Associate Member of the Institute
of Chartered Accountants in Australia since 1978.

RICHARD W. MASON, 67, has been a director of the Company since June, 1998. From
1989 through 1997, Mr. Mason served as president of Global Aviation Associates,
Inc. From June, 1997 to the present, Mr. Mason served as chairman of the Board
of Directors of Global Aviation Company, Aurora, Colorado. Prior to forming
Global Aviation, Mr. Mason held the position of Vice President of Combs Gates,
Inc. (a subsidiary of Gates Learjet, Denver Colorado), a company with which he
was associated twenty years. From 1995 to present, Mr. Mason has served as vice
president of Lasting Treasures Publishing Company, Houston, Texas, a music
publishing company.

ITEM 10. EXECUTIVE COMPENSATION.

The Company does not intend to pay any officer or director annual compensation
exceeding $100,000 during the 12 months following incorporation of the Company.
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 four 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 1997. 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, 1998:


                                      -18-
<PAGE>




SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
NAME AND PRINCIPAL           FISCAL    ANNUAL      COMPENSATION        OTHER
POSITION                     YEAR      SALARY      BONUS/AWARDS     COMPENSATION
                                                                      ALL OTHER

<S>                           <C>       <C>            <C>               <C>
Ronald Chapman,
President                     1999       0              0           A$72,000(1)

Philip Shiels,
Chief Financial Officer       1999       0              0           A$60,000(1)

Richard Mason,
Director                      1999       0              0          US$12,000(2)
</TABLE>

(1) The Company was invoiced A$220,000 by Chapman International Pty. Ltd. for
    management services rendered by Messrs. Chapman and Shiels. The fee was in
    turn allocated to Messrs. Chapman and Shiels for services rendered to the
    Company for the fiscal year ended June 30, 2000 on the basis set out above.
(2) Mr Mason has received advances from the Company of $1,000 per month which
    will be offset against future directors fees.

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 (3)                    3,766,587               47.3%
President and director
160 Silvan Road,
Wattle Glen
Victoria, 3096, Australia

Graham O. Chappell (4)                   1,293,412               18.8%
Director
5 Marine Parade, Suite 2
St.  Kilda,
Victoria, 3148, Australia


                                      -19-
<PAGE>




Philip A. Shiels (5)                     500,000                 7.7%
Chief Financial Officer and director
39 Alta Street
Canterbury, Victoria, 3126,
Australia

Richard W. Mason                         0                       0%
Director
79 Tami Road
Red Feather Lakes, Colorado 80013

Chapman International Pty. Ltd. (6)      950,000                 14.1%
160 Silvan Road
Wattle Glen, Victoria, 3096,
Australia

ASI Technologies Pty. Ltd. (7)           616,575                  9.9%
3/1601 Main Road
Research, Victoria, 3095,
Australia

Research No. 1 Trust (8)                 1,950,000               26.6%
4th Floor
136 Broadway, Newmarket
Auckland 1 New Zealand

Wardour Consultants Ltd. (9)             1,562,500               22.4%
Nine Queens Road
Suite 605-6
Central, Hong Kong

Swiss Time Australia                     537,500                  8.3%
Pty. Ltd. (10)
2C Dudley Street
Brighton, Victoria, 3186
Australia

Research No. 2 Trust (11)                500,000                 7.7%
4th Floor
136 Broadway, Newmarket
Auckland 1 New Zealand

Heatherwood Pty. Ltd. (12)               442,006                 6.8%
16 Severn Street
Moonee Ponds,  Victoria, 3039
Australia


                                      -20-
<PAGE>



Pierce Mill Associates, Inc. (13)        417,189                 6.7%
1504 R Street N.W.
Washington, D.C. 20009

Maxwell Grant Productions                337,500                 5.2%
Pty Ltd.(14)
P.O. Box 103
Burnley, Victoria, 3121
Australia

Vision, Inc.(15)                         312,500                 5.0%
c/o Tramontana Accountants
Level 1 501 LaTrobe Street
Melbourne, Victoria, 3000
Australia

All the officers and directors
as a group (4 persons)                   5,559,999              62.9%


(1)  Assumes 6,242,087 shares of Common Stock outstanding and assumes exercise
     of options held by named security holder.
(2)  Assumes sale of all the Securities offered by the Selling Securityholders.
(3)  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 which owns
     616,575 Shares and Mr. Chapman is the majority shareholder thereof and may
     be deemed to be the beneficial owner of such Shares. Mr. Chapman holds the
     power of attorney for the trustee of the Research No. 1 Trust which holds
     850,000 Shares. The listed share holdings also include the Options to
     purchase 500,000 Option Shares held by Chapman International Pty. Ltd.,
     Options to purchase 125,006 Option Shares held directly by Mr. Chapman, and
     Options to purchase 1,100,000 Options Shares held by the Research No. 1
     Trust.
(4)  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 625,006 Shares and
     625,006 Option Shares held by it. Mr. Chappell is the sole shareholder of
     International Aviation Services Pty. Ltd. which owns 43,400 shares (all of
     which are registered herein) of which Mr. Chappell is considered the
     beneficial owner. Chappell Salikin Weil Associates Pty. Ltd. is 20%
     shareholder of ASI Holdings Pty. Ltd. which holds 61.5% of ASIT Australia.
     Mr. Chappell is not deemed to be a beneficial holder thereof.
(5)  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 250,000 Shares and


                                      -21-
<PAGE>



     250,000 Options. Mr. Shiels is a 25% shareholder of Chapman International
     Pty. Ltd. which owns 55% of ASI Holdings Pty. Ltd. which, in turn, holds
     61.5% of ASIT Australia. Mr. Shiels is not deemed to be a beneficial owner
     thereof.
(6)  Includes 450,000 Shares and 500,000 Options. Ronald J. Chapman, President
     and a director of the Company is the managing director (president) and
     majority shareholder of Chapman International Pty. Ltd., and Philip A.
     Shiels, Chief Financial Officer and a director of the Company, is a 25%
     shareholder of Chapman International Pty. Ltd.
(7)  ASIT Technologies is owned 61.5% by ASI Holdings Pty. Ltd., 25% by Chappell
     Salikin Weil Associates Pty. Ltd. and the remainder by two unaffiliated
     entities. ASI Holdings Pty. Ltd. is owned 55% by Chapman International Pty.
     (see preceding footnote), 20% by Chappell Salikin Weil Associates, and the
     remainder by unaffiliated entities. Chappell Salikin Weil Associates is
     solely owned by Graham O. Chappell, a director of the Company.
(8)  Includes 850,000 Shares and 1,100,000 Options. 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 850,000 Shares.
(9)  Includes 812,500 Shares and 750,000 Options. Lim Tjoei Hoat is the
     beneficial owner of Wardour Consultants, an unrelated independent entity.
(10) Includes 268,750 Shares and 268,750 Options. Eric van der Griend and Joanne
     van der Griend are the beneficial owners of Swiss Time Australia Pty. Ltd.,
     an unrelated independent entity.
(11) Includes 250,000 Shares and 250,000 Options. Philip A. Shiels, Chief
     Financial Officer and a director of the Company, is the trustee and
     beneficial shareholder of the 250,000 Shares and 250,000 Options owned by
     Research No. 2 Trust.
(12) Includes 217,003 Shares and 225,003 Options. Heatherwood Pty. Ltd. is the
     corporate trustee of The Traftrams Trust and is an unrelated independent
     entity.
(13) Pierce Mill Associates, Inc. is an affiliate of Cassidy & Associates, the
     law firm which prepared the Company's registration statement and of which
     James M. Cassidy is a principal. James Cassidy is the sole shareholder of
     Pierce Mill Associates. Mr. Cassidy owns 100% of Pierce Mill Associates and
     is principal of Cassidy & Associates, a Washington, D.C. securities law
     firm, and is considered the beneficial owner of the Shares issued to it.
(14) Includes 106,250 Shares and 231,250 Options. Maxwell Grant is the
     beneficial owner of Maxwell Grant Productions Pty. Ltd., an unrelated
     independent entity.
(15) Frank Flammea is the beneficial owner of Vision, Inc., an unrelated
     independent entity.

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
equipment and the ASI-9000 technology. Ronald J. Chapman, President and a
director of the Company, controls Chapman International Pty. Ltd. which owns 55%
of ASI Holdings Pty. Ltd. ASIT Australia which, in turn, owns 61.5% of ASI
Australia. Philip A. Shiels, Chief Financial Officer and a director of the
Company, is a 25% shareholder of Chapman International Pty. Ltd. Graham O.

                                      -22-
<PAGE>

Chappell, a director of the Company, is the managing director (president) and
Sole shareholder of Chappell Salikin Weil Associates Pty. Ltd. which is a 20%
shareholder of ASI Holdings Pty. Ltd. and 25% shareholder in ASIT Australia.

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 Graham Chappell are the
directors and officers of ASIT Australia.

Chapman International Pty. Ltd. will likely provide management services to the
Company. Ronald J. Chapman, President and a director of the Company, is the
beneficial owner of 75% of Chapman International Pty. Ltd. and Philip A. Shiels,
a director of the Company, is the owner of the remaining 25%.

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") for the purchase price of $894,450, among other items, 40
outstanding shares of ASI Media Pty. Ltd., 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 purchase price was
paid by the issuance of 1,500,000 shares of ASI Entertainment, Inc. common
stock. 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 for use in the ASI-9000 at
$30,000 each, or such lesser price as mutually agreed from time to time, and
that ASI Australia shall provide all necessary technical support services,
including training, to ASI Entertainment Pty Ltd. or its customers in regard to
such terminals. The Reseller Agreement has 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 of December 16, 1996, ASI Entertainment Pty. Ltd. (prior to
becoming a subsidiary of the Company) purchased from ASIT Australia for the
purchase price of $418,358, the hardware and equipment, including aircraft
certification on the Boeing 737 and Boeing 757, relating to the Passenger Video
Systems which had been installed on certain aircraft operated by Air Europa
including 9 moving map displays (the CMA 3200), 9 cabin control units, 9
installation kits and 8 Sony 8.6" monitors. The purchase price was paid by the
issuance of 659,975 shares of ASI Entertainment, Inc. common stock.

On September 30, 1997, ASI Entertainment Pty. Ltd. (prior to becoming a
subsidiary of the Company) and ASIT Australia executed an agreement where ASI
Entertainment Pty. Ltd. purchased certain communications systems and stocks,
including but not limited to, 36 ACAMS I systems, two ACAMS prototype systems,
and 2 VI-4000 Satellite News Units, in exchange for a purchase price of
$1,081,650 payable by the issuance of 1,875,000 shares of common stock of ASI
Entertainment, Inc. and options to acquire 1,875,000 shares of ASI
Entertainment, Inc. common stock for $0.50 per share. These shares were
subsequently assigned by ASIT Australia to certain debtors in payment of
outstanding liabilities owed by ASIT Australia.


                                      -23-
<PAGE>


On October 9, 1997, ASI Entertainment Pty. Ltd. (prior to becoming a subsidiary
of the Company) and ASI Media Pty. Ltd. executed an agreement where ASI
Entertainment Pty. Ltd. acquired for a purchase price of $328,945 all of ASIM's
right, title and interest to the Media Agreement and the Media Agreement was
canceled and voided. The purchase price was paid by distribution of 375,000
shares to all the beneficiaries of the ASIM Trust except ASI Entertainment Pty.
Ltd. As a result, 375,000 shares of ASI Entertainment, Inc. were issued to
Vision, Inc. and Australian Authorised Investments, Ltd. as the beneficiaries of
the ASIM Trust.

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

(NOTE: Share numbers referred to in this section reflect the post merger
equivalent of ASI Entertainment, Inc. shares, rather than the numbers of ASI
Entertainment Pty. Ltd. shares originally issued)

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
         None


                                      -24-
<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/ Ronald J. Chapman                     Director                  10/13/00
- --------------------------------
      Ronald J. Chapman


/s/ Graham O. Chappell                    Director                  10/13/00
- --------------------------------
     Graham O. Chappell


/s/ Philip A. Shiels                      Director                  10/13/00
- --------------------------------
     Philip A.  Shiels


                                          Director
- --------------------------------
     Richard Mason

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