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, 2002

                                       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
                             Factory 2\12, Candlebark Court
                       Research, Victoria, 3095 Australia
               ---------------------------------------------------
               (Address of principal executive offices) (zip code)

                                 61 3 9437 1233
                           --------------------------
                           Issuer's Telephone Number:

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

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the last 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X

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.   $286,103

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


<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, 2002;

Common Stock, par value $.0001 per share                   10,617,601
                                                -----------------------------
Documents incorporated by reference:        None


<PAGE>


10KSB
<TABLE>

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

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

ITEM 2. DESCRIPTION OF PROPERTY...............................................8

ITEM 3. LEGAL PROCEEDINGS.....................................................9

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...................9

PART II. .....................................................................9

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS .............9

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.............9

ITEM 7. FINANCIAL STATEMENTS.................................................11

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE.....................................................12

PART III.....................................................................12

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
    COMPLIANCE WITH SECTION 16(A)OF THE EXCHANGE ACT.........................12

ITEM 10. EXECUTIVE COMPENSATION.. ...........................................13

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT......14

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS......................16

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K....................................17


</TABLE>


                                      -1-
<PAGE>


PART I

ITEM 1. DESCRIPTION OF BUSINESS.

THE COMPANY

ASI Entertainment has an authorized capitalization of 100,000,000 shares of
Common Stock, par value of $.0001 per share (the "Common Stock") and
20,000,000 shares of preferred stock, par value $.0001 per share. The main
offices of the Company are located at Factory 2, 12 Candlebark Court,
Research, Victoria, 3095 Australia and its telephone number is 61-3-9437-1028
and fax number is 61-3-9437-1299. The United States offices of the Company are
located at 15200 East Girard Avenue, Suite 3000 Aurora, Colorado 80014.

BUSINESS

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 travelers found that 60 per
cent of business travelers used a laptop computer during flights.

With laptop computers now common place, 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 over a decade developing its expertise and reputation in both
software development and airline industry technologies, as a pioneer of
passenger data communications.  The core of ASI's intellectual property is
software which has evolved over 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.

The opportunity now exists for ASI to capitalize on the airline communications
and E Commerce markets with two unique software programs:

    1. Data3Mail, an airline Emailing system.

    2. AirCommerce, an in-flight web based E Commerce application previously
       designated as ASI-9000.

In August 2001, ASI acquired the marketing and manufacturing rights of
the SecurEtag package tracking technology.  The rights cover both North and
South America and Europe.

2. Data3Mail

Data3Mail, is based on ASI's existing flight proven hardware and software
platform, the SIU (Server Interface Unit), which has been developed and flight
tested in conjunction with INMARSAT, COMSAT and SITA (the major providers of
satellite communications and ground based infrastructure for the airline
industry). With Data3Mail onboard, passengers can send an Email using their
existing Email software and access their Email while in-flight. The system is
designed to accommodate all laptops operating under Windows and Macintosh
platforms, including Windows 3.1, 95, 98, 2000 X/P and Mac System OS7 to OS9.
To send an email is now affordable, as the passenger's will only be charged

                                      -2-
<PAGE>

for the actual amount of data transmitted and there are no subscription fees.
A 350-word email can be sent for less than $2.00. The software displays the
cost of the Email prior to sending and the passengers have the option to
decide which Emails should be delivered to the aircraft. The central server
automatically bills the transactions direct to a credit card and a pre-paid
Data3Mail account can also be established for frequent flyers. The reason
passengers will select Data3Mail is that it is based on existing software,
using their normal Email address. Installation is simple, and it does not
interfere with the normal Email settings.

3. AirCommerce

The AirCommerce program has evolved from the original ASI-9000 concept into a
web based application offering in-flight E Commerce.  The AirCommerce system
provides destination specific, cached web capable content, to passengers in
their seats.  The passengers dial up the Network Server Unit (NSU) from their
laptop and can then navigate to pages of interest using their favorite web
browser. Sponsors and advertisers underwrite the cost of the program and the
surplus revenue is shared between ASI and the airline.

Air Commerce is a template based software module that can be certified for
installation on an aircraft server. The software allows an airline to build a
database of products and services and incorporate destination based
entertainment and information in an interactive web presentation format.

4. Securetag

The SecurEtag system integrates radio frequency identification (RFID),
global positioning system (GPS) and cellular technologies (GSM/CDMA) to
facilitate the tracking and location of packages in either mobile or warehouse
environments.  SecurEtag's unique beam steering technology allows multiple low
cost passive tags to be detected in the field, without the need for batteries
or complicated anti-collision protocols, which increase the cost of the tag
and decrease the reading range.

5.  PRODUCTS

5.1  Hardware - Aircraft Communications and Management System "ACAMS" - Server
Interface Unit  (ACAMS SIU).  The ACAMS SIU 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 in-flight entertainment systems, cockpit
      communication links and satellite telephone and data links.
- - - Fully customized Microsoft compatible software.

The ACAMS SIU system 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 SIU chassis also includes an uninterruptible power supply.

The ACAMS SIU is small, lightweight and easy to install.  The LRU's are
designed to simply plug into the ACAMS SIU chassis allowing for easy removal
and changeover if required.  As a result, the aircraft experiences minimal
downtime when line servicing occurs.

                                      -3-
<PAGE>


5.2  Software Mail Server (ACAMS-SIU)

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 direct connection with a carry-on laptop computer, Network Server
Interface for onboard networks or Wireless access points.

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

5.3 Cabin Crew Access
Cabin crew can access the system via a touch screen on the CDU.  On-screen
large button based on Microsoft Windows software, allow 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 SIU 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 without a laptop to interface
with the ACAMS SIU if so desired.

5.4 Aircraft Installations
The Data3mail and AirCommerce software 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 original ACAMS system was flight tested and certified on
Qantas Airways.


6.  Target Markets

ASI has developed a multi tiered marketing strategy for the Data3mail and
AirCommerce programs that provide the opportunity to generate revenue in three
target markets within the airline industry.

Offering the program to small to medium sized airlines creates
revenue streams in the supply of relevant equipment, the selling of
advertising space and the commissions received from goods and services ordered
by passengers whilst in flight.

With the latest development of its cost efficient Email service, 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.


                                      -4-
<PAGE>


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

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

The Securetag program will be set up first on a trial basis with a transport
company to identify and meet the technical and commercial requirements of the
North American market.  Once this initial stage is completed, the company will
be able to move to a commercial implementation program, probably on a state by
state basis.  The target market for the technology will be companies handling
high value and important parcels and are in markets where a premium price can
be charged for the Securetag service.  As the market develops and the cost of
the components decreases, the broader freight market will be more viable for
the Securetag product.

CERTIFICATION PROCESS AND GOVERNMENT REGULATION

The installation and use of aircraft avionics 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 is generally
accepted by local certifying authorities throughout the world.

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

The ACAMS has been flight tested and installed on Boeing 747-400 and Boeing
767-300 aircraft. The company has also certified programs on other hardware
platforms for Boeing 737-300, 757-200 and the McDonnell-Douglas DC-9-30 and
MD-82. The latest version of the ACAMS SIU, incorporating Data3Mail, has
recently gained FAA approval for installation on Boeing 747-400 with Saudis
Airlines and is also in the process of submitting for approval on Boeing
767-300 for Alitalia

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

PRODUCT DEVELOPMENT

Prior to the company acquiring the intellectual property, ASIT Australia had
spent approximately A$5,000,000 developing the ASI program. The Company has
subsequently invested a further $2,000,000 in developing the latest product
offering. The technology behind the Company's Programs 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 development of the technology was sponsored
by Qantas Airways which required both an interface which would allow the crew
to communicate through the aircraft's satellite and radio communications data

                                      -5-
<PAGE>

link and an interface between the ACAMS datalink and the aircraft's video
systems. This interface evolved into the ASI-9000 computer video.

For this unique core technology and hardware platform, the company has spent
the last 3 years developing the latest Data3Mail and AirCommerce applications.

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

OPERATIONS TO DATE

The company is in the process of installing a Data3mail program on Saudi
Arabian Airlines as part of an AirTV development program. Under the program,
AirTV is paying for the certification and installation of the system. In
addition, ASI has an agreement with AirTV to manage the Email/Internet
development program. It is expected, that the successful installation should
lead to additional installations on new AirTV customer airlines.

SALES AND PRICING

The Company sells both the Data3Mail and AirCommerce system under Supply and
License Agreements under which ASI receives payment, plus a share of the
revenue generated from the programs. ASI supplies equipment on either a sale
basis or alternatively may negotiate to provide the equipment at a discounted
price in exchange for a larger revenue share. The AirCommerce marketing is
based on selling advertising on the programs run on ASI supplied equipment.
The Company believes that the revenue can be enhanced when the Data3mail
communication link is installed, allowing passengers to purchase goods and
services being promoted via the system.

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

The Company will purchase hardware from appropriate suppliers, depending on
the specification requirements of each airline. The Company subcontracts the
production of the ACAMS SIU integration technology.

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

OPERATIONS AND SUPPLIERS

The Company has two offices: an office in Melbourne, Australia and one in
Denver, Colorado. The Company's core component of the Data3Mail and AirCommerce
programs is the ACAMS SIU which as been manufactured to date by ASIT Australia
and Philips Defence Systems Group. In future the Company anticipates that it
will outsource the production of its equipment or will modify equipment from a
suitable aviation certified manufacturer.

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.   The Company will contract with an
installation company to install its equipment on the customer airline.  Once

                                      -6-
<PAGE>

installed, the Company out-sources all of the engineering and technical
support services to ASIT Australia and other suitably certified organizations.

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

MARKETING

After considering the competitive environment of the airline communications
and entertainment industry, the Company has decided on a marketing strategy to
provide the Data3mail and AirCommerce programs on the basis of a system fee
plus a share of the on-going revenue generated from the system. The revenue
share and the sale price of the equipment will be negotiated on a
transaction-by-transaction basis.

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 currently provides services to AirTV Limited, a company which is
developing a global satellite television system that interfaces with existing
in-flight entertainment systems on board aircraft to provide direct television
programming and internet delivery services.  The Company is providing AirTV
with technical marketing services and onboard system integration and airline
program management for an Email/Internet service to be offered to AirTV's
customer airlines.

COMPETITION

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 Companies Products, 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 effect of September 11 has reduced the Company's principal competitors to
only Tenzing and Connexion by Boeing. Companies such as Matsushita Avionics
Systems Corporation and Stratos also offer a short message service (SMS) which
could be perceived as a competitor to Email.  The company is working with both
these organisation to integrate the Data3mail system.

The Company believes that it will be able to compete with other companies
based on the company's marketing plan that provides flexible terms on equipment
and revenue sharing.  The Company targets airlines that will be attracted to
this structure which allows the airline to provide more customised service at
little cost to the airline. The Company believes that although most of the
Company's competitors are marketing more technologically advanced
communication and entertainment systems, those competing services are offered
at a far greater expense to the airlines both in the capital cost and in the
operating costs.

                                      -7-
<PAGE>


For Data3Mail, airlines and their passengers have identified Email as a service
which is becoming highly desirable.  As a result, a number of companies
are offering internet portal services, most still in the development stage.
By comparison, ASI's Data3Mail utilizes the existing Inmarsat satellite data
link which is installed on 1500 aircraft. ASI's Data3mail system 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.

The main competition for the Securetag technology will come from bar-coding
technologies as well as new developments in RFID technologies.  The increasing
rate of theft and the demand of freight customers to know the status of goods
they have shipped will increase demand for technology similar to and that
would compete with the Securetag technology.  Another competitive factor to
determine the success of Securetag will be the time it takes ASI to develop a
market for the product and the alternate products that are developed in that
time.

There is no assurance that the Company's competitors will not offer services
similar to the Company's with a similar business plan. Nor is there an
assurance that 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.
Similarly, there can be no assurances that other tagging technologies will be
developed that will compete with the Securetag technology.

EMPLOYEES

The Company is managed by Ronald Chapman in his capacity as President and
Chief Executive Officer and Philip Shiels in his capacity as Executive
Director and Chief Financial Officer. The Company currently contracts the
engineering team and engages sub-contractors when additional resources are
required.

INDUSTRY OVERVIEW

The events on September 11, 2001 in the USA have had a significant effect on
the airline industry.  Despite this, the longer term growth of the airline
industry is expected to continue.  Boeing are predicting airline passenger
growth of 4.9% per annum over the period 2001 - 2020, 2% above the predicted
worldwide rate of economic growth of 2.9% for the same period (Source Current
Market Outlook 2002, - www.boeing.com/commercial).  At this stage, the
Company's target market has seen minimal change and following the recent World
Airline Entertainment Associations annual conference held in Seattle, Sept.
24 -27  (www.waea.org) interest in Data3mail has remained high.

In regard to SecurEtag, security and tracking of packages was becoming a
higher priority in the transport industry. With the latest events, we may see
increased security requirements for which RFID tagging and tracking provides a
viable solution.

ITEM 2. DESCRIPTION OF PROPERTY.

The Company does not own any property other than its inventory of equipment. The
Company maintains its marketing at the offices of Chapman International Pty.
Ltd and has recently leased Factory 2, 12 Candlebark Court Research to house
its engineering, administration and customer support operations.


                                      -8-
<PAGE>


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 10,617,601 shares of Common Stock issued
and outstanding and no shares of Preferred Stock outstanding.

Since March, 2000 the Company's Common Stock has been quoted on the NASD OTC
Bulletin Board.  Prior to that date, there was no public market for the
Company's securities.  The following table sets out the range of the high and
low sales prices for the Company's securities.
Quarter Ended                                    Common Stock
                                               High         Low
March 31, 2000                                $1.25        $1.25
June 30, 2000                                 $1.00        $1.81
September 30,2000                             $1.50        $0.63
December 31, 2000                             $0.63        $0.28
March 31, 2001                                $0.53        $0.50
June 30, 2001                                 $0.51        $0.51
September 30,2001                             $0.51        $0.51
December 31, 200                              $0.51        $0.51
March 31, 2002                                $0.51        $0.21
June 30, 2002                                 $0.35        $0.21

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

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

                                      -9-
<PAGE>
As the company is now entering an accelerated marketing phase, the marketing
costs are expected to increase. The company is progressively increasing its
operations in North America and anticipates establishing a marketing presence
in Europe.

Because of the 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 had accumulated losses from inception to June 30, 2002 of
$2,312,874. Major components of the loss includes depreciation and amortisation
charges, offering costs, consulting and management fees and foreign currency
translation losses. The Company may be required to make significant additional
expenditures in connection with the development of the Data3Mail, AirCommerce
and Securetag programs and their marketing. The Company's ability to continue
its operations is dependent upon its receiving funds through its anticipated
sources of financing including exercise of Options, revenues from operations,
and proceeds available from its suppliers. However, the Company may be required
to raise additional capital through debt or equity financing.

The Company intends to use future revenues, if any, for the purchase of
equipment for its Data3mail, AirCommerce and Securetag programs  and for capital
expenditures and working capital for its proposed operations, and certain
fees, costs and expenses associated with this offering.

YEAR ENDED JUNE 30, 2002 COMPARED TO YEAR ENDED JUNE 30, 2001

The Company received revenue of $286,103 for the year ending June 30, 2002,
compared to revenue of $232,588 for the year ended June 30, 2001.

Net losses increased from $254,373 in the twelve month period ending June 30,
2001, to $408,429 for the twelve month period ending June 30, 2002, as a
result of increase operating expenses. Expenses increased from $465,843 for
the twelve month period ending June 30, 2001 to $645,348 for the twelve month
period ending June 30, 2002.

The Company had a foreign currency translation gain of $82,778 for the twelve
month period ending June 30, 2002, compared to a foreign currency translation
loss of $171,769 for the twelve month period ending June 30, 2001. As a result,
the Company recorded a comprehensive loss of $325,651 for the twelve months
ended June 30, 2002, compared to a comprehensive loss of $426,142 for the
twelve months ended June 30, 2001.

LIQUIDITY AND CAPITAL RESOURCES

The Company has used the proceeds from the sale of the securities for payment
of operating costs to date. The Company has received revenue totaling $286,103
from its arrangements with AirTV during the fiscal year ended June 30, 2002.

The Company's cash and cash equivalents decreased from $231,706 at June 30,
2001 to $8,482 at June 30, 2002 primarily as a result of operating losses.

The Company had a net loss of $408,429 from operating activities for the
period July 1, 2001 to June 30, 2002, primarily consisting of compensation to
officers, consulting and professional fees, engineering, marketing, travel
costs and amortization. The net loss from operating activities for such period

                                      -10-
<PAGE>

was greater than the net loss from operating activities for the period July 1,
2000 to June 30, 2001 primarily as a result of increased marketing,
engineering, travel and convention costs but after decreased depreciation
charge.  The Company's revenue for the twelve months ending June 30, 2002 was
$286,103, compared to $232,588in the twelve month period to June 30,2001.

The cash flow of the Company from financing activities for the twelve months
ending June 30, 1999 was mainly from loans from related parties.

The Company's marketing plan anticipates that the Company will install and
maintain the Data3Mail and AirCommerce 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
AirCommerce 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 Data3Mail and AirComerce
programs possibly before any revenues are received. Additional funding will
also be required for the certification of the SecurEtag system. The Company
may not have sufficient funds to purchase or install the equipment in which
case the Company will have to seek additional capital. The Company may raise
additional capital by the sale of its equity securities, through an offering
of debt securities, or from borrowing from a financial institution. The
Company does not have a policy on the amount of borrowing or debt that the
Company can incur. The Company may also attempt to negotiate with vendors or
customer airlines revenue sharing arrangements by which the Company will share
the advertising revenue if the vendor or customer airline 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
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 $1,130,000 at June
30, 2002 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, revenue sharing arrangements by which the Company
will share the revenue if the vendor or customers provides capital for the
equipment. Management believes that actions presently being taken to obtain
additional funding provide the opportunity for the Company to continue as a
going concern.

ITEM 7. FINANCIAL STATEMENTS.

                                      -11-
<PAGE>









                                    ASI ENTERTAINMENT, INC.

                                         CONSOLIDATED
                                    FINANCIAL STATEMENTS

                                    June 30, 2001 & 2002




























                                  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











                          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, 2002 and the related consolidated statements
of operations, stockholders' equity and cash flows for the years ended June 30,
2001 and 2002. 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 auditing standards generally accepted
in the United States of America. 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, 2002 and the results of its operations and its cash flows
for the years ended June 30, 2001 and 2002 in conformity with accounting
principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 8 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 8.
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 8, 2002                                       RONALD D. CHADWICK, P.C.







                                        F-1


                                     ASI ENTERTAINMENT, INC.
                                  CONSOLIDATED BALANCE SHEET
                                        June 30, 2002

                                          ASSETS

Current assets
      Cash                                                      $       8,482
      Accounts receivable                                              20,000
      Advances                                                         42,277
      Other                                                             3,329
             Total current assets                                      74,088

      Property and equipment, net                                     917,269
      Investment in media rights, net                                  15,599
                                                                      932,868

Total Assets                                                      $ 1,006,956

                         LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
      Accounts payable and accrued expenses                            45,936
      Due to related parties                                          259,683
          Total current liabilities                                   305,619

Total Liabilities                                                     305,619

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;
          10,617,601 issued and 10,567,601 outstanding                  1,062
      Additional paid in capital                                    3,790,520
      Additional paid in capital - discount on shares                (745,470)
      Treasury stock - par value (50,000 shares)                           (5)
      Accumulated deficit                                          (1,956,545)
      Accumulated other comprehensive loss                           (388,225)
Total Stockholders' Equity                                            701,337

Total Liabilities and Stockholders' Equity                        $ 1,006,956










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

                                        F-2








                               ASI ENTERTAINMENT, INC.
                         CONSOLIDATED STATEMENT OF OPERATIONS
                     For The Years Ended June 30, 2001 and 2002



                                                          2001           2002

Sales, net                                         $   232,588    $   286,103

Cost of  sales                                         (21,118)       (49,184)

Gross margin                                           211,470         236,919

Selling, general and administrative expenses           465,843         645,348

Loss from operations                                  (254,373)       (408,429)

Other income (expense)
     Interest income
     Interest expense

Income (loss) before provision for income taxes       (254,373)       (408,429)

Provision for income tax                                  -                -

Net income (loss)                                  $  (254,373)    $  (408,429)

Other comprehensive income (loss)
Foreign currency translation gains (losses)           (171,769)         82,778

Comprehensive loss                                 $  (426,142)    $  (325,651)

Net income (loss) per share
(Basic and fully diluted)                          $     (0.04)    $     (0.04)

Weighted average number of
common shares outstanding                            6,244,587       9,831,126






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

                                               F-3



                                       ASI ENTERTAINMENT, INC.
                          CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                            For The Years Ended June 30, 2001 and 2002
<TABLE>
<CAPTION>
                                                                     Paid in                               Accum.
                                 Common                              Capital                               Other           Stock-
                                 Stock                  Paid in      Discount   Treasury       Accum.       Compre.      holders'
                                 Shares     Amount      Capital     On shares     Stock       Deficit     Income/loss      Equity
                                 ------     ------      -------     --------     ------       -------     ---------       -------
<S>
<C>                            <C>         <C>       <C>           <C>          <C>       <C>             <C>          <C>
Balances at June 30, 2000      6,242,087   $   624   $3,516,343    $(745,470)    $   -    $(1,293,743)    $(299,234)   $1,178,520

Exercise of stock options          2,500                  1,250                                                             1,250

Issuance of stock for services   100,000        10       99,990                                                           100,000

Acquisition of shares
    into treasury                                       (24,995)                     (5)                                  (25,000)

Foreign currency
    translation gain (loss)                                                                                (171,769)     (171,769)

Net gain (loss) for the year
    ended June 30, 2001                                                                      (254,373)                   (254,373)
                               ---------       ---    --------      --------       ----    ----------       -------       -------
Balances at June 30, 2001      6,344,587       634   $3,592,588    $(745,470)       $(5)  $(1,548,116)    $(471,003)     $828,628

Exercise of stock options          4,167         1        2,083                                                             2,084

Issuance of stock for services    87,500         9       71,267                                                            71,276

Issuance of stock for assets   3,931,347       393         (393)                                                               -
Issuance of stock for
    stock subscription payable   250,000        25      124,975                                                           125,000

Foreign currency
    translation gain (loss)                                                                                  82,778        82,778

Net gain (loss) for the year
    ended June 30, 2002                                                                      (408,429)                   (408,429)
                              ----------     -----    ---------     --------       ----    ----------      --------      --------
Balances at June 30, 2002     10,617,601    $1,062   $3,790,520    $(745,470)     $  (5)  $(1,956,545)    $(388,225)     $701,337
                              ==========     =====    =========     ========       ====    ==========      ========       =======
The accompanying notes are an integral part of the consolidated financial
         statements.
</TABLE>
<PAGE>


                 F-4



                                          ASI ENTERTAINMENT, INC.
                                CONSOLIDATED STATEMENT OF CASH FLOWS
                            For The Years Ended June 30, 2001 and 2002



                                                         2001          2002

Cash Flows From Operating Activities:
     Net income (loss)                               $(254,373)     $(408,429)

     Adjustments to reconcile net income to
     net cash provided by (used for)
     operating activities:
          Depreciation                                  57,419          3,285
          Amortization                                  53,913         52,410
          Compensatory stock issuances                 100,000         71,276
          Trade accounts receivable                    (46,021)        26,021
          Other receivables                             18,478         (2,829)
          Accounts payable and accrued expenses         16,283          8,575
               Net cash provided by (used for)
               operating activities                    (54,301)      (249,691)

Cash Flows From Investing Activities:
      Purchase of fixed assets $    (13,575)
               Net cash provided by (used for)
               investing activities                        -          (13,575)




       (Continued On Following Page)










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

                                         F-5


                                   ASI ENTERTAINMENT, INC.
                           CONSOLIDATED STATEMENT OF CASH FLOWS
                        For The Years Ended June 30, 2001 and 2002

                                 (Continued From Previous Page)

                                                         2001          2002

Cash Flows From Financing Activities:
     Receipts from notes payable
     Payments on notes payable
     Due to related parties                            120,277         53,175
     Exercise of stock options                           1,250          2,084
     Common stock subscription payable                                125,000
               Net cash provided by (used for)
               financing activities                    246,527         55,259

Effect of exchange rate changes on cash                 (9,238)       (15,217)

Net Increase (Decrease) In Cash                        182,988       (223,224)
Cash At The Beginning Of The Period                     48,718        231,706

Cash At The End Of The Period                      $   231,706       $  8,482


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


                              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. 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 Email and E commerce systems for airline passengers
with its Data3mail and AirCommerce products. 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

                               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, 2002 and 2001 the Company had net operating loss carryforwards of
approximately $1,330,000 and $1,160,000 which expire under Austalian tax law
at various dates through the year 2008, in addition to net operating loss
carryforwards of approximately $630,000 and $385,000 for U.S. tax purposes at
June 20, 2002 and 2001 which begin to expire in 2019. The deferred tax asset
created by the Australian and U.S. net operating losses ($245,204 for U.S. tax
purposes) has been offset by a 100% valuation allowance. The change in the
valuation allowance for U.S. tax purposes in 2002 was $95,267.

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

                                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.

Products and services, geographic areas and major customers

Company sales are derived from the sale of in-flight video and audio
entertainment and data communications to the commercial airline industry and
advertising time on its

                        F-9
                                  ASI ENTERTAINMENT, INC.
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued


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

ASI-9000 Programs, are to external customers, and currently originate in and
through the Company's Australian subsidiary ASI Entertainment Pty., Ltd. to
non-domestic customers. The Company had one major customer accounting for 100%
of its sales. In addition to cost of goods sold, the Company incurred direct
marketing expenses of approximately 40% on its sales. The Company's long term
assets are held through ASI Entertainment Pty., Ltd. in Australia.

Recent Accounting Pronouncements

In September 2000, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 140, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities
- a replacement of FASB Statement No. 125." The Company has adopted the
provisions of SFAS No. 140 which are effective for periods occurring after
March 31, 2001. The adoption did not have a material effect on the results of
operations of the Company.

In June 2001, the FASB issued SFAS No. 141, "Business Combinations" and SFAS
No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 requires that the
Company account for all business combinations in the scope of the statement
using the purchase method. SFAS No. 142 requires that an intangible asset
acquired either individually or with a group of other assets shall initially be
recognized and measured based on fair value. An intangible asset with a finite
life is amortized over its useful life to the reporting entity; an intangible
asset with an indefinite useful life, including goodwill, is not amortized. All
indefinite lived intangible assets shall be tested for impairment in accordance
with the statement. SFAS No. 141 is effective for business combinations
initiated after June 30, 2001. SFAS No. 142 is effective for fiscal years
beginning after December 15, 2001; however, goodwill and intangible assets
acquired after June 30, 2001 are subject immediately to the nonamortization and
amortization provisions of this statement. The Company has adopted the
provisions of SFAS No. 141 and 142. The adoptions did not have a material
effect on the results of operations of the Company.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets." SFAS No. 144 eliminated the requirement that
discontinued operations be measured at net realizable value or that entities
include losses that have not yet occurred. SFAS No. 144 eliminated the
exception to consolidation for a subsidiary for which control is likely to be
temporary. SFAS No. 144 requires that long-lived assets that are to be disposed
of by sale be measured at the lower of book value or fair value less cost to
sell. An impairment for assets that are not to be disposed of is


                                         F-10

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


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

recognized only if the carrying amounts of long-lived assets are not
recoverable and exceed their fair values. Additionally, SFAS No. 144 expands
the scope of discontinued operations to include all components of an entity
with operations and cash flows that can be distinguished from the rest of the
entity and will be eliminated from the ongoing operations of the entity in a
disposal transaction. The Company has adopted the provisions of SFAS No. 144
which are effective for financial statements issued for fiscal years beginning
after December 15, 2001 and, generally, with its provisions to be applied
prospectively. The adoption did not have a material effect on the results of
operations of the Company.


NOTE 2. RELATED PARTY TRANSACTIONS

As of June 30, 2002 the Company owed officers, directors, and related parties
$259,683 for expenses incurred on behalf of the Company.

The Company in 2002 and 2001 incurred expenses of approximately $109,000 and
$81,000 respectively to a company affiliated through common stockholders and
directors for management expenses.

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. The Company advanced ASIT $42,277 in 2002.

The Company acquired certain intellectual property rights in August, 2001 from
a Company related by common control (see Note 7).


NOTE 3.  LEASE COMMITMENTS

The Company carries a lease for office and storage space in Australia. Terms
are for a two year lease which expires on June 14, 2004, with monthly payments
of $680 plus taxes. Rent expense incurred under this lease in 2002 was
approximately $740. Subsequent to June 30, 2002 future minimum payments under
this lease not including estimated costs for taxes are approximately $15,700.
Subsequent to June 30, 2002 minimum future lease payments for each of the next
two years are approximately $8,200 and $7,500.



                            F-11

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


NOTE 4.  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 ($297,781 as translated at June
30, 2002) through the 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 ($846,000 as translated at June 30, 2002) 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, 2002:

CMA-3200, ACAMS and other                         $  1,159,976
Less: Accumulated depreciation                       ( 242,707)
                                                  ------------
                                                  $    917,269
                                                  ============

The CMA-3200 equipment is fully depreciated with a remaining salvage value of
$59,556. Depreciation expense for the years ended June 30, 2002 and 2001 was
$3,285 and $57,419 respectively. As of June 30, 2002 the ACAMS equipment had
not yet been placed in service or depreciated.

NOTE 5.  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 ($281,850 as translated at June 30,
2002). The investment in media rights is amortized over a period of 5 years
using the straight line method. Accumulated amortization at June 30, 2002 was
$266,251. Amortization expense for the years ended June 30, 2002 and 2001 was
$52,410 and $53,913. Amortization expense in 2003 at current amortization
rates would be approximately $15,600.

NOTE 6.  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


                                       F-12

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


NOTE 6.  ACQUISITIONS (Continued):

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.


NOTE 7.  STOCKHOLDERS' EQUITY

Common stock

The Company as of June 30, 2002 had 100,000,000 shares of authorized  common
stock, $.0001 par value, with 10,617,601 shares issued, 10,567,601 outstanding,
and 50,000 shares in treasury. Treasury shares are accounted for by the par
value method.

The Company acquired in August, 2001 from a Company related by common control,
intellectual property rights to a parcel tracking and delivery system called
"Securetag". The purchase price was 6,000,000 of the Company's common shares.
The Company recorded no value on the transaction. Of the 6,000,000 common
shares called for by the purchase agreement, the Company has issued 3,931,347
common shares, with an additional 2,068,653 common shares to be issued upon
request by the selling party.

Preferred stock

The Company as of June 30, 2002 had 20,000,000 shares of authorized preferred
stock, $.0001 par value, with no shares issued and outstanding.





                                        F-13

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


NOTE 7.  STOCKHOLDERS' EQUITY (Continued):

Stock options

At June 30, 2002, 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, allowing the holder to
purchase one share of common stock per option, exercisable immediately at
$0.50 per share to a consulting company as compensation for services, and
issued 4,384,015 options, allowing the holder to purchase one share of common
stock per option, exercisable immediately at $0.50 per share to option holders
in ASIE in exchange for their outstanding options in ASIE. These options,
totaling 2,951,449 at the beginning of the year, have an extended option term
ending June 30, 2003. During the year ended June 30, 2002, 4,166 options were
exercised. As of June 30, 2002, 2,947,283 of these options remained outstanding
and are exercisable through June 30, 2003.

In March, 2000, the Company granted 100,000 stock options, allowing the holder
to purchase one share of common stock per option, exercisable immediately at
$0.50 per share with the option term running through August 14, 2002, to an
individual for consulting services. In July, 2000 the Company cancelled 50,000
of these options. As of June 30, 2002, 50,000 of these options remained
outstanding.

In May, 2002, the Company granted 250,000 stock options, allowing the holder
to purchase one share of common stock per option, exercisable immediately at
$0.50 per share with the option term running through June 30, 2003, to a
company for consulting services. As of June 30, 2002, 250,000 of these options
remained outstanding. The fair value of this option grant was estimated on the
date of grant using the Black-Scholes option pricing model with the following
assumptions: risk free interest rate of 5%, dividend yield of 0%, expected
life of one year, volatility of 106%. The Company incurred and recorded
compensation expense under these stock options of $27,526.





                                        F-14

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


NOTE 7.  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. 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:

                                                     2001          2002
                                                     ----          ----
Net income (loss)        As reported             $(254,373)    $(408,429)
                         Pro forma               $(254,373)    $(408,429)

Basic and fully diluted     As reported              $(.04)        $(.04)
    earnings per share      Pro forma                $(.04)        $(.04)

The fair value of each option grant for pro forma purposes was estimated on
the date of grant using the Black-Scholes option pricing model with the
following assumptions: risk free interest rate of 5%, dividend yield of 0%,
expected life of two years, volatility of 0%.

In July, 1998, the Company issued 500,000 options, allowing the holder to
purchase one share of common stock per option, exercisable immediately at $.50
per share to certain officers and directors of the Company in exchange for
their outstanding options in ASIE. These options have an extended option term
ending June 30, 2003. As of June 30, 2002, 333,333 of these options remained
outstanding.













                                    F-15

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


NOTE 7.  STOCKHOLDERS' EQUITY (Continued)

A summary of the status of the Company's employee stock options as of June 30,
2002 is presented below:


                                              Weighted Ave.
Options                             Shares   Exercise Price

Outstanding at
      beginning of period          333,333      $ 0.50
Granted                                 -           -
Exercised                               -           -
Forfeited                               -           -
Outstanding at                     -------        ----
      end of period                333,333      $ 0.50
                                   =======
Options exercisable
     at period end                 333,333
Weighted average fair
     value of options
     granted during the
     the period                                 $   -


The following table summarizes information about employee stock options
outstanding at June 30, 2002.

                     Options Outstanding              Options Exercisable
                     -------------------              -------------------
                       Weighted Ave.               Number
Range of  Number       Remaining      Weighted Ave.             Weighted Ave.
Exercise  Outstanding  Contractual    Exercise      Exercisable Exercise
Price     at 6/30/02   Life             Price       at 6/30/02   Price
-------   ----------   -------------  ------------  ----------  ----------
$ 0.50      333,333       1 Year        $ 0.50        333,333     $ 0.50








                                      F-16
                                   ASI ENTERTAINMENT, INC.
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued


NOTE 8.  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-17

<PAGE>



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

Not applicable

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, 50, 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, 57, has been a director of the Company since its inception
and a director of ASIT Australia since 1987. Mr. Chappell has worked in the
aerospace industry for 30 years. Since 1985, Mr. Chappell has operated as the
principal of Chappell Salikin Weil Associates Pty. Ltd. ("Chappell Salikin"),
Victoria, Australia, a private aviation trading and aerospace, technology and
defence industries consultancy company. Chappell Salikin has served as a
consultant to ASIT Australia, ASI Holdings Pty. Ltd. and ASI Entertainment Pty.
Ltd. Mr. Chappell obtained a Diploma of Aeronautical Engineering degree from
the Royal Melbourne Institute of Technology in 1968 and a Masters of Science
(Air Transport Engineering) from Cranfield University in 1974.

PHILIP A. SHIELS, 50, 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

                                      -12-
<PAGE>

services. Shiels & Co. has served as a consultant to ASIT Australia, ASI
Holdings Pty. Ltd. and ASI Entertainment Pty. Ltd. since 1994. Mr Shiels has
served as the Director of Finance for ASI Holdings Pty. Ltd. Mr. Shiels
received a Bachelor of Business (Accountancy) Degree from the Royal Melbourne
Institute of Technology in 1976 and has been an Associate Member of
the Institute of Chartered Accountants in Australia since 1978.

RICHARD W. MASON, 69, 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 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 2002. 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, 2002:

SUMMARY COMPENSATION TABLE

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


Ronald Chapman,
President                     2002       0              0          A$72,000 (1)

Graham Chappell
Director

Philip Shiels,
Chief Financial Officer       2002       0              0          A$60,000 (1)

Richard Mason,
Director                      2002       0              0          US$2,500(2)


1. Directors Fees

2. Mr Mason has received advances from the Company which will be offset
    against future directors fees.

3. The Company was invoiced A$170,000 for management services rendered by
Chapman International Pty Ltd.

                                      -13-
<PAGE>


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

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

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

Ronald J. Chapman (3)                    4,318,507              35.9%
President and director
160 Silvan Road,
Wattle Glen
Victoria, 3096, Australia

Graham O. Chappell (4)                   1,248,077              11.0%
Director
5 Marine Parade, Suite 2
St. Kilda,
Victoria, 3148, Australia

Philip A. Shiels (5)                       918,689               8.3%
Chief Financial Officer and director
39 Alta Street
Canterbury, Victoria, 3126,
Australia

Richard W. Mason                            50,000               0.5%
Director
79 Tami Road
Red Feather Lakes, Colorado 80013

Chapman International Pty. Ltd. (6)        783,333               7.0%
160 Silvan Road
Wattle Glen, Victoria, 3096,
Australia

Research No. 1 Trust (7)                 3,060,255              26.4%
4th Floor
136 Broadway, Newmarket
Auckland 1 New Zealand

Wardour Consultants Ltd. (8)             1,312,500              11.5%
Nine Queens Road
Suite 605-6
Central, Hong Kong

Research No. 2 Trust (9)                   918,689               8.3%
4th Floor
136 Broadway, Newmarket
Auckland 1 New Zealand


                                      -14-
<PAGE>


Glasser Limited. (10)                     801,056               7.4%
Suite 803  Luk Yu Building
24 - 26 Stanley St.,
Central Hong Kong
Hong Kong

Chappell Salikin Weil
Associates Pty. Ltd.(11)                  788,006              10.7%
5 Marine Parade, Suite 2
St. Kilda,
Victoria, 3148, Australia

All the officers and directors
as a group (4 persons)                   6,535,272              51.8%


(1)  Assumes 10,880,101 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
     266,575 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
     2,326,922 Shares. The listed share holdings also include the Options to
     purchase 333,333 Option Shares held by Chapman International Pty. Ltd.,
     Options to purchase 83,337 Option Shares held directly by Mr. Chapman, and
     Options to purchase 733,333 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 788,006 Shares and
     416,671 Option Shares held by it. Mr. Chappell is the sole shareholder of
     International Aviation Services Pty. Ltd. which owns 43,400 shares of
     which Mr. Chappell is considered the beneficial owner.
(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 752,022 Shares and
     166,667 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 333,333 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)  Includes  2,326,922 Shares and 733,333 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 2,326,922 Shares.
(8)  Includes 812,500 Shares and 500,000 Options. Lim Tjoei Hoat is the
     beneficial owner of Wardour Consultants, an unrelated independent entity.
(9)  Includes 752,022 Shares and 166,667 Options. Philip A. Shiels, Chief
     Financial Officer and a director of the Company, is the trustee and
     beneficial shareholder of the 752,022 Shares and 166,667 Options owned by
     Research No. 2 Trust.

                                      -15-
<PAGE>


(10) Ronald Charles Banks is the beneficial owner of Glasser Limited, an
     unrelated independent entity which holds 801,056 shares.
(11) Includes 788,006 Shares and 416,671 Options. Mr Graham O. Chappell is the
     managing director (president) and sole shareholder of Chappell Salikin
     Weil Associates Pty. Ltd. and is considered the beneficial owner.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The Company has purchased the intellectual property of the ACAMS/ASI-9000 from
ASI Australia and has contracted to purchase the ACAMS, when available, from
ASIT Australia. ASIT Australia provides maintenance and servicing of the ACAMS
Hardware. Ronald J. Chapman, President and a director of the Company, controls
Chapman International Pty. Ltd. which owns 55% of ASI Holdings Pty. Ltd. 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. Chappell, a director of the Company,
is the managing director (president) and Sole shareholder of Chappell Salikin
Weil Associates Pty. Ltd.

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

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,

                                      -16-
<PAGE>


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.

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.

By an agreement dated August 16, 2001, the Company purchased the marketing and
manufacturing rights to the Securetag technology from the Research Trust No. 1.
Mr Ron Chapman, the President and a director of the Company, holds a power of
attorney for the trustee of the Research No. 1 Trust. The terms of agreement
provide that the purchase is to be satisfied by the issue of 6,000,000 shares
of the Company's common stock.

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

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


                                      -17-
<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                  10/11/02
- - - --------------------------------
      Ronald J. Chapman


/s/ Graham O. Chappell                    Director                  10/11/02
- - - --------------------------------
     Graham O. Chappell


/s/ Philip A. Shiels                      Director                  10/11/02
- - - --------------------------------
     Philip A.  Shiels


                                          Director                  10/11/02
- - - --------------------------------
     Richard Mason















                                      -18-
<PAGE>