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

                                   FORM 10-KSB

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

         For the transition period January 1, 2005 to September 30, 2005

                         Commission file number: 0-6428

                           ASI Technology Corporation
                 (Name of Small Business Issuer in its charter)

                Nevada                                      88-0105586
    (State or other jurisdiction of                      (I.R.S. Employer
    incorporation or organization)                    Identification Number)

                     980 American Pacific Drive, Suite #111
                             Henderson, Nevada 89014
                                 (702) 734-1888
          (Address and telephone number of principal executive offices)

    Securities registered pursuant to Section 12(b) of the Exchange Act: None

      Securities registered pursuant to Section 12(g) of the Exchange Act:
                          Common Stock, par value $0.02

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

Check if there is no disclosure of delinquent  filers 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 ]

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

State issuer's revenues for its most recent fiscal year. $-0-

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
September 30, 2005 (assuming for this purpose that only directors,  officers and
10% or more  shareholders  of  registrant  are  affiliates  of  registrant)  was
$1,668,000.

As  of  December  20,  2005  there  were  7,019,664  shares  of  ASI  Technology
Corporation common stock, par value $0.02, outstanding.

Transitional Small Business Disclosure Format (check one): Yes ___ No _X_

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<PAGE>

<TABLE>
<CAPTION>

                                                 TABLE OF CONTENTS
                                                                                                         Page
                                                      PART I
<S>           <C>                                                                                        <C>
ITEM 1.       Description of Business                                                                     4
ITEM 2.       Description of Property                                                                     9
ITEM 3.       Legal Proceedings                                                                           9
ITEM 4.       Submission of Matters to a Vote of Security Holders                                         9

                                                      PART II

ITEM 5.       Market for Common Equity and Related Stockholder Matters                                    9
ITEM 6.       Management's Discussion and Analysis or Plan of Operation                                  10
ITEM 7.       Financial Statements                                                                       18
ITEM 8.       Changes in and Disagreements with Accountants on Accounting and Financial Disclosure       33
ITEM 8A.      Controls and Procedures                                                                    33
ITEM 8B.      Other Information                                                                          33

                                                     PART III

ITEM 9.       Directors and Executive Officers, Promoters and Control Persons; Compliance with
                Section 16(a) of the Exchange Act                                                        34
ITEM 10.      Executive Compensation                                                                     35
ITEM 11.      Security Ownership of Certain Beneficial Owners and Management and
                Related Stockholder Matters                                                              36
ITEM 12.      Certain Relationships and Related Transactions                                             37
ITEM 13.      Exhibits                                                                                   38
ITEM 14.      Principal Accountant Fees and Services                                                     39
SIGNATURES                                                                                               40
</TABLE>


                           FORWARD-LOOKING STATEMENTS

IN  ADDITION  TO   HISTORICAL   INFORMATION,   THIS   ANNUAL   REPORT   CONTAINS
FORWARD-LOOKING   STATEMENTS  WITHIN  THE  MEANING  OF  THE  PRIVATE  SECURITIES
LITIGATION  REFORM ACT OF 1995 AND THE COMPANY  DESIRES TO TAKE ADVANTAGE OF THE
"SAFE  HARBOR"  PROVISIONS  THEREOF.  THEREFORE,  THE COMPANY IS INCLUDING  THIS
STATEMENT FOR THE EXPRESS  PURPOSE OF AVAILING ITSELF OF THE PROTECTIONS OF SUCH
SAFE  HARBOR  WITH  RESPECT  TO  ALL OF  SUCH  FORWARD-LOOKING  STATEMENTS.  THE
FORWARD-LOOKING  STATEMENTS IN THIS REPORT  REFLECT THE COMPANY'S  CURRENT VIEWS
WITH RESPECT TO FUTURE  EVENTS AND  FINANCIAL  PERFORMANCE.  EXAMPLES OF FORWARD
LOOKING  STATEMENTS  INCLUDE THE EXPECTATIONS OF THE COMPANY WITH RESPECT TO ITS
STRATEGY.  THERE CAN BE NO ASSURANCES THAT THE COMPANY'S FINANCIAL GOALS WILL BE
REALIZED.  THESE  FORWARD-LOOKING  STATEMENTS  ARE SUBJECT TO CERTAIN  RISKS AND
UNCERTAINTIES, INCLUDING THOSE DISCUSSED HEREIN, THAT COULD CAUSE ACTUAL RESULTS
TO DIFFER  MATERIALLY  FROM  HISTORICAL  RESULTS OR THOSE  ANTICIPATED.  IN THIS
REPORT, THE WORDS "ANTICIPATES,"  "ESTIMATES," "BELIEVES," "EXPECTS," "INTENDS,"
"FUTURE,"  "GOAL,"  "OBJECTIVE"  AND  SIMILAR  EXPRESSIONS   GENERALLY  IDENTIFY
FORWARD-LOOKING STATEMENTS.  READERS ARE CAUTIONED TO CONSIDER THE SPECIFIC RISK
FACTORS  DESCRIBED BELOW AND NOT TO PLACE UNDUE RELIANCE ON THE  FORWARD-LOOKING
STATEMENTS CONTAINED HEREIN, WHICH SPEAK ONLY AS OF THE DATE HEREOF. THE COMPANY
UNDERTAKES NO OBLIGATION TO PUBLICLY REVISE THESE FORWARD-LOOKING  STATEMENTS TO
REFLECT EVENTS OR CIRCUMSTANCES THAT MAY ARISE AFTER THE DATE HEREOF.

In this report,  the terms "ASI," "the Company,"  "we," "us," and "our" refer to
ASI Technology Corporation.

                                       2

<PAGE>

                                TRANSITION REPORT

On November  7, 2005 the Board of  Directors  approved  the change of our fiscal
year to September 30. Our previous fiscal year ended on December 31. This report
on Form 10-KSB is for the nine month period ended September 30, 2005.

                                       3

<PAGE>

                                     Part I

ITEM 1. DESCRIPTION OF BUSINESS.

Introduction

ASI Technology  Corporation is a development stage company,  incorporated  under
the laws of the State of Nevada. We purchased patented plasma antenna technology
in August 1999 and purchased patented plasma sound reduction  technology for jet
engines  in  December  2000.  We  acquired  an  exclusive  license  to a  plasma
technology for sterilization and  decontamination  in January 2003. After making
pioneering  developments in plasma antenna  technology between 1999 and 2003, we
sold the  business in 2003 to focus  resources on our plasma  sterilization  and
decontamination technology, still in an early stage of development.

Our  plasma  sterilization  and  decontamination  technology  employs  resistive
electrodes to efficiently  produce high volumes of atmospheric  pressure  plasma
also known as room temperature  plasma or more commonly,  cold plasma.  Our cold
plasma  generation  method  uses low  voltage  to produce  high  volumes of cold
plasma.  Cold  plasma  has been  demonstrated  in  studies  sponsored  by us, in
government sponsored studies and in published research by scientists,  as useful
for sterilization and decontamination. Cold plasma is also routinely employed in
certain high technology industrial processing.  Our plan is to develop prototype
devices  to  validate  and  demonstrate   this  technology  for  government  and
commercial applications and license the technology to others.

In  August  2003,  we  completed  a  study  of the use of  this  technology  for
decontamination  of   forward-deployed   equipment  and  facilities  exposed  to
biological warfare agents for the U.S Air Force. Our experiments  indicated that
effective decontamination can be achieved with this method. During 2004 and 2005
we focused our  development  efforts on improving our plasma  sterilization  and
decontamination   prototypes,   performing  additional  laboratory  testing  and
sponsoring  experiments  reported in  scientific  publications  and others being
prepared for publication. In 2005, we also commenced direct discussions targeted
at prospective licensees of the technology.

We also own a  patented  plasma  sound  reduction  technology.  This  technology
employs  techniques  to  modulate  the  plasma in jet  engines  to reduce  noise
emissions.  Jet engine noise  emissions  are highly  regulated  and airlines and
engine  manufacturers  incur significant  costs to meet  increasingly  stringent
regulations. During 2003, we paid for a research study performed by the National
Center for Physical Acoustics at the University of Mississippi.  We believe this
study  provided  important  experimental  validation of our method of active jet
noise  control.  As we are  focusing  our limited  resources  and efforts on our
plasma sterilization and decontamination technology, we have no current plans to
develop our plasma sound reduction technology.

Our plasma  technologies  are in the early stage of development and there can be
no assurance that commercial viability will be achieved.  Further development is
necessary in order to verify and document the  advantages  and to  commercialize
the  technologies.  There can be no  assurance  that we can  develop  our plasma
technologies and become commercially successful.

ASI was incorporated on January 9, 1931 and has evolved through a number of name
changes and equity reorganizations. Our President, Jerry E. Polis, was appointed
President  and a director in 1973.  ASI had not filed  Exchange Act reports from
about 1982 until March 2001. On September 1, 2000, the Company  changed its name
from  "ASI"  to  "ASI  Technology  Corporation"  in  connection  with a  capital
reorganization  which included a 1 for 10 reverse stock split. All share and per
share data included in this annual  report have been  adjusted to  retroactively
reflect the reverse stock split. The Company has 11,000,000  shares  authorized,
$0.02 par value,  of which  10,000,000  shares are  designated  common stock and
1,000,000  shares are designated  preferred stock. As of the date of this annual
report,  there were  7,019,664  shares of common stock  issued and  outstanding.
There are no shares of preferred stock issued or outstanding.

Our principal executive offices are located at 980 American Pacific Drive, Suite
#111,  Henderson,  Nevada 89014.  Our telephone number is (702) 734-1888 and our
Internet Web site is  www.asiplasma.com.  The information on our Web site is not
part of this annual report.


                                       4
<PAGE>

Recent Developments

In  August  and  September  2005,  we sold  $2,000,000  of  securities.  We sold
$1,000,000 of 7% subordinated  notes  ("Subordinated  Notes") due July 31, 2008.
These  Subordinated Notes were sold as a unit with $1,000,000 of common stock at
$0.35 per share with  warrants to purchase  1,428,571  shares of common stock at
$0.50  per  share   exercisable   until   July  31,   2008   ("Warrants").   Two
officers/directors  purchased  $422,500  of the  Subordinated  Notes,  1,207,142
shares of the common stock and 603,571 Warrants.

In August 2005,  we paid cash of $755,000 for a note  receivable  and in October
2005 paid $985,000 for a second note receivable,  both due from the same limited
liability  company managed by a residential  home builder.  These one year notes
bear  interest  at 15% per annum  payable  monthly  and are  secured  by certain
undeveloped  land in Clark County,  Nevada.  These short-term (one year or less)
loans to an  unrelated  party are  intended  to provide  revenues to finance the
Company's operations and technology development.  Nonpayment of monthly interest
or a default on one or both of these notes could have a material  adverse impact
on our  results  of  operations  and  liquidity  and our  ability  to repay  the
Subordinated Notes when due.

Terms of Technology Agreements

Plasma Sterilization and Decontamination
----------------------------------------

Effective on January 1, 2003,  we entered into an  exclusive  license  agreement
with the inventor of U.S.  Patent  #6,232,723  granting us  worldwide  exclusive
rights to the patent and related technology for  sterilization,  decontamination
and  industrial  processing  for a minimum term of 15 years,  subject to certain
commercialization  performance  requirements after the third year. We believe we
will meet the  commercialization  requirements in 2006 to maintain the exclusive
license.  This  agreement  also  provides  for future  royalty  payments  to the
inventor based on product sales or sublicense fees. The inventor is a consultant
to us on  our  plasma  technologies.  The  licensed  technology  was  originally
developed prior to the consultant's work with us.

Plasma Sound Reduction
----------------------

On December  30,  2000,  we signed a purchase  agreement  (the "Sound  Reduction
Purchase  Agreement")  for our plasma sound  reduction  technology with American
Technology  Corporation  ("ATC"),  an unaffiliated  company.  The patent on this
technology was issued in 1999 and expires in 2017.

We purchased the sound reduction  technology for $200,000,  which has been fully
paid.  We are  obligated to pay royalties of 4% on product sales for the term of
the patent. A royalty of 15% is due on license revenues and a fee of 10% of sale
proceeds is due on the further sale of the technology.

The $200,000  purchase price was expensed as acquired  technology  since:  there
were no other identifiable tangible assets acquired;  technological  feasibility
has not been  established  and no  future  alternative  uses of the  patents  or
technology existed at the time of purchase.

Description of our Plasma Technology

Plasma
------

The different states of matter generally found on earth are solid,  liquid,  and
gas. Sir William  Crookes,  an English  physicist,  identified a fourth state of
matter,  now called  plasma,  in 1879.  Plasma is by far the most common form of
matter.  Plasma in the stars and in the tenuous space between them makes up over
99% of the  visible  universe  and  perhaps  most of that which is not  visible.
Plasmas are created each time a  fluorescent  light is turned on. Jets of plasma
spin and maneuver orbiting  satellites.  Important to our technologies,  plasmas
are  conductive  assemblies  of charged  and neutral  particles  and fields that
exhibit  collective  effects.  Plasmas  carry  electrical  currents and generate
magnetic  fields.  Plasmas have also  demonstrated  effectiveness  in destroying
toxic molecules.

Plasma Sterilization and Decontamination
----------------------------------------

Atmospheric pressure plasmas or room temperature,  non-thermal plasmas generated
at relatively  low energy  levels are known as cold  plasmas.  Cold plasmas have
demonstrated   effectiveness  in  rapid   sterilization,   decontamination   and
industrial  processing.  When generated,  cold plasma is a bluish substance that
resembles a fog like gas. Cold plasma can destroy deadly  microbes lodged on the
skin,  weapons,  medical  instruments  or  clothing.  Independent  research  has
demonstrated that plasma can rapidly break down complex chemicals found in nerve
gas and deadly biological agents like anthrax.


                                       5
<PAGE>

The plasma process produces a sterilization effect using lower concentrations of
sterilant but with a higher  reactivity than is possible with normal gases. This
activity  disappears  quickly  when power is removed,  thereby  dissipating  the
toxicity of the sterilant rapidly.  Atmospheric pressure plasmas allow for rapid
decontamination  of clothing,  equipment and personal gear in military settings,
and for  sterilization  of medical  equipment,  food and packaging in commercial
settings.  Present methods of  decontamination  and sterilization  often require
hours and generate  damaging heat or other toxic side  effects;  cold plasma can
sanitize often in mere minutes without toxic byproducts.

Cold plasmas are also employed in industry,  in semiconductor  manufacturing and
flat screen  televisions.  During the last five to six years, the U.S. Air Force
and other  agencies  have focused  research  dollars on  biological  cold plasma
research.  Historically,  such plasmas have been generated in vacuum  conditions
with other gases or chemicals or with very high power,  making them cost, weight
and size prohibitive for broader or portable applications.

Our  consultant,  Dr. Igor Alexeff,  developed,  tested and patented a low power
plasma discharge  apparatus that operates at atmospheric  pressure to generate a
plasma cloud of  activated  oxygen in air. It produces a cloud of ionized gas at
atmospheric  pressure  and at low  temperatures.  We employ a resistive  barrier
discharge  by using  ceramics  to prevent  unwanted  arcing and achieve an even,
broad,  high volume and efficient  discharge.  The  generated  cold plasma cells
destroy  molecules  using  highly  reactive  free  oxygen  radicals  - atoms  or
molecules that have unpaired  electrons that when paired with bacteria,  rapidly
destroy the targeted  organism.  The cold plasma also contains a large volume of
hydroxyl  ions,  ozone  and  atomic  oxygen to  rapidly  oxidize  most  unwanted
bacteria.  We believe cold plasma  treatment  does not harm the skin or body and
has no effect on fragile plastic or steel instruments or devices.

The U.S.  Air Force has been a leading  sponsor  of cold  plasma  research.  The
Persian Gulf War in 1991 accelerated the need for rapid means of decontamination
and  sterilization.  By disrupting the integrity of cell membranes,  cold plasma
offers a rapid,  simple and  economical  means of  destroying  even the hardiest
bacterial  spores in  minutes  compared  to the hours  required  by  alternative
methods.  Research  has shown that cold  plasma can rapidly  break down  complex
chemicals found in nerve gas and deadly biological agents like anthrax.

We tested our technology under contract for the U.S. Air Force,  targeting a use
to decontaminate  forward deployed  equipment and facilities.  We are evaluating
commercial   application  and  developing   prototypes  for   demonstration   to
prospective licensees and as a test platform for testing with bacteria and other
agents.

In addition we have  sponsored  Dr.  Alexeff and students at the  University  of
Tennessee,  Knoxville to test our method of  decontamination  and sterilization.
During the nine months ended September 30, 2005,  reports on these  experimental
results evidence to us that:

     o    Concentrations  of E. Coli bacteria can be effectively  killed in 4-10
          minutes with the plasma discharge.

     o    The plasma discharge works away from the generating surface indicating
          the  possibility  of  circulating  the plasma away from the generating
          source.

     o    The  plasma  discharge  is capable of  penetrating  a sealed  standard
          business  envelope  and kill E. Coli  bacteria in a short time without
          any application of heat to the envelope.

     o    The charged particles created in the process have separate  biological
          killing  properties  distinct  from the  ozone  also  included  in the
          discharge (ozone, is a primary commercial decontamination method).


There are several  competing  methods to generate cold plasmas  including  using
electron beams,  corona  discharges,  dielectric barrier  discharges,  pin array
discharges and others. The important distinguishing feature of our method is the
use of ceramic  discharge  electrodes that produce an even diffuse  discharge in
the intended area,  whereas  traditional  materials  often result in a small arc
greatly  minimizing  the discharge  area.  Our  discharge  also results in large
quantities   of  ozone.   Ozone  is  known  as  a   powerful   sterilizing   and
decontamination  agent. As an example,  ozone is used frequently to purify water
that has too much  bacteria to be treated  with  chlorine.  Our recent  research
supports  that cold  plasma is an  effective  bacteria  sterilizer  and that our
method produces bacteria killing agents distinct from ozone.

Plasma Sound Reduction Technology
---------------------------------

The patent we purchased  describes a method of using the internal hot gas plasma
as the speaker  element to create a wave to  interfere  and offset the  acoustic


                                       6
<PAGE>


noise wave inside a jet engine.  The patent also  discusses  methods of possibly
seeding the fuel with chemicals to enhance the  conductivity  in the jet engine.
It is  uncertain  whether  fuel  seeding is  required  for  performance  of this
technology.

Our method has to date only been  tested by  creating  a  plasma-type  flame and
reducing the  perceptible  level of noise.  There can be no assurance  that this
method will function in a jet engine, which is inherently more complex. Further,
there may also be practical  limitations to  implementing  the technology due to
the need to sense noise  waves and couple the  generated  canceling  wave in the
appropriate  section or sections of a multi-stage jet engine.  Theory  suggests,
but we have no experimental  evidence or other support, that our method of sound
reduction may smooth the  turbulence  exiting a jet engine and thereby  possibly
provide  improvement in operating  efficiency or  performance  that could reduce
operating costs.

In  September   2002,  we  entered  into  a  contract  with  the  University  of
Mississippi's  National  Center of  Physical  Acoustics  ("NCPA") to perform the
first phase of experimental work on our method of jet engine noise reduction. We
paid  $103,140 for the work.  We received the final report in August 2003.  This
report  concluded  that the control of internal jet engine noise sources using a
method  described  in our patent  could lead to jet noise  reduction in existing
modern jet aircraft.

We are currently focusing our limited resources on our plasma  sterilization and
decontamination  technology  and have no current  plans to develop our method of
sound  reduction  for jet  engines.  We have no  established  timetable  for the
development  of this  technology  nor do we have an  estimate  of the  necessary
costs.

Market Opportunities and Strategy
Applications of cold plasma include:

     o    Combating bacteria warfare

     o    Sterilization of medical instruments

     o    Rapid room  temperature  sterilization of food,  including  protection
          from Salmonella bacteria

     o    Destroying  allergens  or  decontaminating  homes,  packages,   ships,
          businesses or other environments

     o    Surface  modification  of  materials,  e.g. to cause water or paint to
          stick to plastics

     o    Shielding  craft from radar view or attack by certain  kinds of energy
          weapons

     o    Eliminate  nitrogen oxides  (greenhouse gases) from automobile exhaust
          streams

     o    Biomedicine   for   wound   healing,   tissue   engineering,   surface
          modification of  bio-compatible  materials,  and the  sterilization of
          reusable heat-sensitive medical instruments

Cold plasma has been used in semiconductor manufacturing for more than 15 years.
It is an expensive part of the semiconductor  manufacturing  process. We have no
present plans to address this market.

A primary market for cold plasma generation is for military  decontamination  of
facilities, clothing and weapons. The ability to generate cold plasma on site in
a  portable  and  efficient  manner is a key  advantage.  We  expect to  explore
commercial   markets   focusing   primarily   on   medical,   food  and  package
sterilization.  Again,  portability and efficiency are key  advantages,  but the
lack of heat or steam or toxic side effects offers  additional  advantages  over
some existing methods of sterilization and decontamination.  We also believe our
methods could be adapted to  decontaminate  buildings,  homes,  cruise ships and
other facilities.

We are in early stages of testing our method and  evaluating  opportunities.  We
are  focusing  our  marketing  and  licensing  efforts on the  package  and food
decontamination and the medical  sterilization  market. Our goal is to prove our
method in  military  and  commercial  applications.  Our  strategy is to license
others to manufacture  devices.  Management's efforts are at a preliminary stage
and we do not have a timetable  or an estimate of the cost of  developing  these
applications  and  obtaining  the  necessary  approvals  for  sale or use of any
devices.  There can be no assurance we can develop the plasma  sterilization and
decontamination   technology   successfully  or  that  this  technology  can  be
commercialized.

Competition and Alternatives

The market for  decontamination  and sterilization is highly  competitive,  with
many companies  supplying  equipment for food and facility  decontamination  and
medical  sterilization.  Steam,  chemicals and acids,  radiation and ultraviolet
light  are  just  some  of  the  methods   employed  for   decontamination   and
sterilization.  One example is a plasma system using hydrogen  peroxide that has
been used for a number of years by a division of Johnson & Johnson Medical, Inc.


                                       7
<PAGE>

The many companies engaged in these activities are larger and have substantially
greater resources than we do. We may not be able to compete successfully in this
market.  The  U.S.  government  is  also  sponsoring  cold  plasma  research  by
universities and others.  Others have developed cold plasma  generation  methods
and  systems.  It is possible  that such  organizations  have  developed  or may
develop in the future plasma  generation  methods and systems  superior to those
envisioned by us.

The market for jet engine noise reduction  systems,  both passive and active, is
highly  competitive.  Many companies  produce noise  reduction  systems that are
competitive to the system described in our patent. Engine manufacturers are also
focused on noise  reduction  in the  design and  production  of  engines.  These
organizations are larger and have substantially greater resources than we do. We
may not be able to  compete  successfully  in this  market  should  we  elect to
develop this technology in the future.

Government Regulation

Medical  facilities,  medical equipment and food processing and distribution are
all  highly   regulated.   It  is  likely  that  any  equipment   developed  for
sterilization  or  decontamination   will  be  subject  to  existing  government
regulations  and  require  advance  approval  prior to sale or use.  This  could
increase the costs of development and  commercialization  and extend the time to
market   for  any   devices   developed   with  our  plasma   sterilization   or
decontamination technology.

Intellectual Property Rights

We purchased one U.S. patent on our plasma sound reduction technology.

Dr. Alexeff owns one U.S. patent on the plasma sterilization and decontamination
technology  we have  licensed.  We intend to file and obtain under our exclusive
license  additional  patents on this technology as we progress with development.
No foreign  rights have been applied for to date and we may  therefore be unable
to protect any rights outside of the United States.

We have an ongoing policy of filing patent  applications  to seek protection for
novel features of our technologies. Prior to the filing and granting of patents,
our policy is to disclose  key  features to patent  counsel and  maintain  these
features as trade secrets. There can be no assurance that any additional patents
on our technology will be granted.

In  addition  to  such  factors  as  innovation,   technological  expertise  and
experienced personnel,  we believe that a strong patent position is important to
compete  effectively  through licensing in our proposed markets.  The technology
industry is  characterized  by frequent  litigation  regarding  patent and other
intellectual  property  rights.  Others,  including  academic  institutions  and
competitors, may hold patents in competing areas. Although we do not believe any
existing  patents  would  inhibit our ability to license our plasma  technology,
there can be no  assurance  that  others  will not assert  claims in the future.
There can be no assurance  that such claims,  with or without  merit,  would not
have a  material  adverse  effect  on our  financial  condition  or  results  of
operations.

The  validity  of our  existing  patent,  or that  licensed by us, have not been
adjudicated  by any court.  Competitors  may bring legal action to challenge the
validity of our  existing or future  patents or may  attempt to  circumvent  the
protection  provided by such patents.  There can be no assurance  that either of
such  activities by competitors  would not be successful.  The failure to obtain
patent  protection or the loss of patent  protection on our  technologies or the
circumvention  of our  patents,  by  competitors  could have a material  adverse
effect on our ability to compete successfully.

Our policy is to enter into  nondisclosure  agreements  with each  employee  and
consultant  or  third  party  to  whom  any of our  proprietary  information  is
disclosed.  These agreements prohibit the disclosure of confidential information
to others,  both during and  subsequent  to  employment  or the  duration of the
working  relationship.  They also provide for  assignment  of  inventions to us.
There can be no assurance,  however, that these agreements will not be breached,
that we will have  adequate  remedies  for any breach or that our trade  secrets
will not otherwise become known or be independently developed by competitors.

Research and Development

For the nine months  ended  September  30, 2005 and the year ended  December 31,
2004, we invested $9,376 and $48,883, respectively, on research and development.
In 2004,  we obtained  $45,864  from one  customer  for  sponsored  research and
development.  Future levels of research and development  expenditures  will vary
depending on the timing of further  technology  development and the availability
of funds to carry on  additional  research and  development  on currently  owned
technologies  or in other  areas.  We  currently  have no sources  of  sponsored
research and development.


                                       8
<PAGE>

Employees

We have no  full-time  employees  and our two  executive  officers  provide only
part-time services to the Company. We employ technical  consultants or others on
a  contract  or  project-by-project  basis.  We have  not  experienced  any work
stoppages and are not a party to a collective bargaining agreement.

ITEM 2. DESCRIPTION OF PROPERTY

Our principal executive offices are located at 980 American Pacific Drive, Suite
#111,  Henderson,  Nevada 89014,  which is the principal  business office of our
President,  Jerry E. Polis, who has other business  operations at this location.
We share approximately  2,600 square feet with other businesses  affiliated with
Mr. Polis.  Since 1999 we have paid a company  affiliated  with Mr. Jerry Polis,
our  President  and a  director,  a  month-to-month  fee  for  office  rent  and
bookkeeping and  administrative  services.  Since July 2002 the rate has been an
aggregate of $1,000 per month. We believe these terms are no less favorable than
what could be obtained from outside providers.

ITEM 3. LEGAL PROCEEDINGS

We are not involved in any threatened or pending legal proceedings.


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

No matter was submitted to a vote of security holders during the last quarter of
the fiscal period covered by this report.

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

On April 4, 2002,  our shares of common  stock  commenced  quotation  on the OTC
Electronic  Bulletin  Board  (OTCBB)  under the symbol ASIT.  Prior to that date
there had been no public  trading  market for our  securities  since  1982.  The
market for our common stock has been sporadic and very limited.

The following  table sets forth the high and low bid  quotations  for our common
stock for the year ended  December  31,  2004 and the  transition  period  ended
September 30, 2005:

                                                        Bid Quotations
                                                    High              Low
                                                    ----              ---
Year Ending December 31, 2004
         First Quarter                              $0.34            $0.11
         Second Quarter                             $0.20            $0.16
         Third Quarter                              $0.20            $0.16
         Fourth Quarter                             $0.30            $0.16
Nine Month Period Ending September 30, 2005
         First Quarter                              $0.20            $0.20
         Second Quarter                             $0.35            $0.20
         Third Quarter                              $0.40            $0.22

These quotations reflect inter-dealer prices, without retail mark-up,  mark-down
or commission, and may not represent actual transactions.

We had  1,050  holders  of  record of our  7,019,664  shares of common  stock at
September  30,  2005,  which we believe  approximates  the number of  beneficial
owners. We have never paid a cash dividend on our common stock and do not expect
to pay cash dividends in the foreseeable future. At September 30, 2005 we had an
accumulated  deficit of  approximately  $3.7  million and until this  deficit is
eliminated,  we will be  prohibited  from  paying  dividends  except  out of net
profits.


                                       9
<PAGE>

At  September  30,  2005,  we had one equity  incentive  plan under which equity
securities  are  or  have  been   authorized  for  issuance  to  our  employees,
consultants  or directors:  the 2000 Equity  Incentive  Plan which plan has been
approved  by our  stockholders.  The  following  table gives  information  as of
September 30, 2005:
<TABLE>
<CAPTION>

                                                                                             Number of securities
                                                                                            remaining available for
                                Number of securities to be    Weighted-average exercise      future issuance under
                                  issued upon exercise of       price of outstanding       equity compensation plans
                                   outstanding options,         options, warrants           (excluding securities
        Plan Category               warrants and rights              and rights             reflected in column (a))
                                            (a)                          (b)                          (c)
<S>                                       <C>                           <C>                         <C>
Equity compensation plans
approved by security holders              160,000                       $0.43                       90,000

Equity compensation plans not
approved by security holders                   --                          --                           --
------------------------------  ---------------------------  ----------------------------  ----------------------------
Total                                     160,000                       $0.43                       90,000
==============================  ===========================  ============================  ============================
</TABLE>


Other than the 2000 Equity Incentive Plan, we do not have any stock appreciation
rights  plans in effect,  outstanding  warrants or rights and have no  long-term
incentive  plans,  as  those  terms  are  defined  in  Securities  and  Exchange
Commission regulations.

Recent Sales of Unregistered Securities

No  securities  were sold within the past three  years that were not  registered
under the Securities Act that were not previously  reported in prior  quarterly,
annual or 8-K filings.

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

Except  for  the  historical  information,  the  following  discussion  contains
forward-looking  statements that are subject to risks and uncertainties.  Actual
results may differ  substantially  from those referred to herein due to a number
of factors, including but not limited to risks described in the section entitled
Risk Factors and elsewhere in this Annual Report.

Overview

We acquired two plasma technologies in August 1999 and December 2000, each in an
early stage of  development.  We devoted most of our historical  expenditures to
develop and  commercialize our plasma antenna business that was sold in 2003. In
December 2000, we acquired our jet engine noise reduction technology.  In August
2002,  we began  developing  a third plasma  technology  for  sterilization  and
decontamination invented by one of our consultants.

During 2004 and 2005, we focused our development efforts on improving our plasma
sterilization and decontamination  prototypes,  performing additional laboratory
testing and  sponsoring  experiments  reported in  scientific  publications  and
others  being  prepared  for  publication.  In 2005,  we also  commenced  direct
discussions targeted at prospective licensees of the technology.  Our goal is to
license this  technology for  production of  sterilization  and  decontamination
devices.  Although  we  believe  results  to date are  encouraging  and  warrant
continued  expenditures  and efforts to commercialize  this  technology,  future
commercial  success is uncertain.  Accordingly,  we may also seek other business
opportunities  including  new  investments,  new  research,  technology or other
acquisitions or other business development efforts.

At the  beginning  of 1999,  we commenced  our  strategy  seeking to acquire and
develop  new  technologies  for  licensing.  Because  no  significant  operating
revenues  have  occurred and because we have  devoted most of our efforts  since
1999 to developing new  technology,  we are considered to be in the  development
stage.  Our financial  statements are presented on the basis that we are able to
continue as a going concern,  which  contemplates  the realization of assets and
the satisfaction of liabilities in the normal course of business.  In August and
September  2005,  we  obtained  $2,000,000  of new  capital  from  the  sale  of
subordinated  notes,  common  stock and  warrants  and  invested an aggregate of


                                       10
<PAGE>


$1,740,000  of these  proceeds in August and October  2005 in  short-term  notes
bearing  interest at 15% per annum.  We intend to use income from these notes to
support  limited  research  and  development  of our  plasma  sterilization  and
decontamination   technology  and  to  support  our  administrative  costs.  Our
long-term  continued  existence  may be  dependent  upon our  ability  to obtain
working  capital and financing to meet our  obligations on a timely basis and to
fund the development and commercialization of our technologies. The accompanying
financial  statements  do not include any  adjustments  that would be  necessary
should we be unable to continue as a going  concern and therefore be required to
realize our assets and discharge our liabilities in other than the normal course
of business and at amounts  different from those  reflected in the  accompanying
financial statements.

Critical Accounting Policies and Estimates

We have identified the policies below as critical to our business operations and
the  understandings  of our results of operations.  Our accounting  policies are
more fully described in our financial  statements  located in Item 7 of Part II,
"Financial  Statements."  The impact and any  associated  risks related to these
policies  on our  business  operations  is  discussed  throughout  "Management's
Discussion  and Analysis or Plan of  Operation"  when such  policies  affect our
reported and expected financial results.


The methods, estimates and judgments we use in applying our accounting policies,
in  conformity  with  generally  accepted  accounting  principles  in the United
States,  have a  significant  impact on the  results we report in our  financial
statements.  We base our estimates on historical experience and on various other
assumptions  that we  believe  to be  reasonable  under the  circumstances.  The
estimates affect the carrying values of assets and  liabilities.  Actual results
may differ from these estimates under  different  assumptions or conditions.  We
believe that the following  discussion  addresses  our most critical  accounting
policies,  which are  those  that are most  important  to the  portrayal  of our
financial  condition and results of operations  and require our most  difficult,
subjective,  and  complex  judgments,  often  as a  result  of the  need to make
estimates about the effect of matters that are inherently uncertain.


Revenue Recognition - Revenue resulting from development contracts is recognized
under the percentage-of-completion  method based upon costs incurred relative to
total contract costs which typically coincides with when the related contractual
obligations  have been fulfilled and fees are billable.  Costs  associated  with
development  contracts  are  included in  research  and  development.  We do not
anticipate that costs of contracts will exceed revenues.

Patents - Patent  costs  related to our  acquired  technology  are  expensed  as
incurred  because the technology  being developed has not reached  technological
feasibility and requires further development, refinement and testing.

Investment  Securities - We account for marketable securities in accordance with
Statement of Financial  Accounting  Standards  No. 115  "Accounting  for Certain
Investments in Debt and Equity  Securities"  ("SFAS 115").  SFAS 115 establishes
the  accounting  and  reporting  requirements  for all debt  securities  and for
investments in equity securities that have readily determinable fair values. Our
marketable  securities  related  to shares of common  stock of one  unaffiliated
company received in exchange for the sale of our plasma antenna  business.  They
were  valued at the  quoted  market  price on the  over-the-counter  market.  We
classified these marketable  securities as  available-for-sale  and,  previously
carried the investments at fair value, with unrealized  holding gains and losses
reported in stockholders'  equity as a separate  component of accumulated  other
comprehensive income (loss). During the third quarter of 2004 we determined that
there had been a substantial  decline in the value of the investment  securities
and there was no assurance of future  recovery in value.  Management  determined
the investment  securities were impaired and an impairment loss was recorded and
the cumulative  unrealized loss previously  recorded as a comprehensive  loss in
stockholders' equity was reversed.

Research  and  Development  Costs - These costs are  expensed  as  incurred  and
consist primarily of personnel costs, subcontractor fees and patent costs.

Discontinued Operations

In September  2003 we completed the sale of our plasma  antenna  technology  and
related  government  contracts  but  continued  the  completion  of contracts in
process at that time. We have segregated continuing operations from discontinued
operations  for the periods  presented  and  discontinued  operations  have been
presented  as a single  line item as  discussed  in the  notes to our  financial
statements.  The following details the components of discontinued operations for
the periods presented.


                                       11
<PAGE>
<TABLE>
<CAPTION>

                                                                           From inception
                                                                           of development
                                                                                stage
                                                         Year ended       (January 1, 1999)
                                                         December 31,       December 31,
                                                             2004               2004
                                                         --------------    --------------
<S>                                                      <C>               <C>
Contract revenues                                        $   45,864        $  1,127,958
Proceeds received from sale of antenna component             62,722           1,002,722
                                                         --------------    --------------
                                                            108,586           2,130,680
                                                         --------------    --------------
Research and development                                     31,723           1,562,383
Marketing and promotion                                      25,197             296,186
                                                         --------------    --------------
                                                             56,920           1,858,569
                                                         --------------    --------------
Income from discontinued operations                      $   51,666        $    272,111
                                                         ==============    ==============

</TABLE>


There  was no  discontinued  operations  activity  for  the  nine  months  ended
September 30, 2005. We do not expect further  discontinued  revenues or costs in
2006 resulting from our discontinued segment.

Results of Operations - Nine Months of 2005 vs. Nine Months of 2004

Revenues
--------

Revenues from continuing operations for nine months ended September 30, 2005 and
2004  were  nil.  We  terminated   our  one  outside   license  for  our  plasma
sterilization and decontamination  technology in February 2004 for nonpayment of
monthly  license  fees and obtained no other  sources of revenue  during 2004 or
2005.

There can be no assurance of future revenues from our plasma technologies.


                                       12
<PAGE>

Research and Development
------------------------

Research and development  costs from  continuing  operations for the nine months
ended  September 30, 2005 were $9,376 in  comparable to the $9,680  expended for
the 2004 nine month  period.  These  costs were  expended  on company  sponsored
research on our plasma sterilization and decontamination technology.

Patent costs related to the acquired technology are expensed as incurred because
the technology  being  developed has not reached  technological  feasibility and
requires  further  development,  refinement and testing.  We incurred $3,990 and
$605 in patent costs for the nine months of 2005 and 2004, respectively. In 2005
we  engaged  in  additional   patent  work  on  our  plasma   sterilization  and
decontamination technology.

Research  and  development  costs  vary   significantly   each  period.   Future
expenditures will also depend on the availability of financial resources to fund
research and development.

Marketing and Promotion Costs
-----------------------------

Marketing  and promotion  costs for  continuing  operations  for the nine months
ended September 30, 2005 were $26,479 compared to $20,723 for the same period of
2004.  These costs in 2005 included  $17,176 of travel and $9,000 of contributed
services.

Marketing  and  promotion  costs will vary each period  depending  on  elections
regarding the use of personnel and  consultants and the elections made on travel
to visit prospective customers.

General and Administrative Costs
--------------------------------

General and  administrative  costs for the nine months ended  September 30, 2005
were  $94,537  compared to $78,643  for the same period of 2004.  These costs in
2005  consisted  primarily of legal and  accounting  fees of $47,111,  personnel
costs of $18,000, $9,000 in contributed services, $11,033 of shareholder related
costs  and  $9,000  of  rent  and  administrative  expenses  paid  to a  company
affiliated with our President.

General  and  administrative  costs  vary each  period  depending  on  elections
regarding  changes in personnel and consultants,  legal and accounting costs and
other expenses.

Discontinued Operations
-----------------------

Contract revenues included in discontinued  operations for the nine months ended
September  30,  2004  were  $45,864  and none in 2005.  This  2004  revenue  was
recognized on a 24-month U.S. Government Missile Defense Agency ("MDA") Phase II
contract awarded in April 2002 and completed in April 2004.

Total research and development  costs for  discontinued  operations were $31,723
for the nine months  ended  September  30, 2004 and none for 2005.  The decrease
resulted from the  completion of our final  government  contract and the sale of
the plasma antenna business.

Marketing and promotion costs included in discontinued operations were $2,355 in
2004 and none in 2005. The reduction results from the sale of the plasma antenna
business.

Net Loss
--------

We had an operating  loss of $130,392 for the nine months  ended  September  30,
2005.  Nonoperating items included an unrealized  impairment loss of $143,573 on
investment  securities and the net loss was $266,792 for the nine months.  There
were no discontinued operations in 2005.

For the  comparable  nine month period of 2004 the operating  loss was $109,046,
the  impairment  loss was  $622,821 on  investment  securities  and the net loss
before discontinued operations was $748,249. Discontinued operations contributed
income net of tax of $-0- of $74,508 for a net loss of $673,741. We sold all our
investment  securities in 2005 and expect no further impairments or discontinued
operation items in fiscal 2006.

We  anticipate  we may  incur  future  operating  losses  until  we are  able to
commercialize and license our remaining plasma technologies. The level of future
losses will be dependent on our expenses and future revenues, and elections made
regarding research and development, marketing and administrative costs.


                                       13
<PAGE>

The loss for the period from  inception  of the  development  stage  (January 1,
1999) to September 30, 2005 was $1,541,718.


Liquidity and Capital Resources

As of  September  30,  2005 we had cash of  $1,263,225  compared  to  $94,262 at
December 31, 2004. Net cash used in operating  activities was $96,576 during the
nine months ended  September 30, 2005,  consisting  primarily of a $266,792 loss
from continuing  operations reduced by a $143,573 non-cash  impairment charge on
investment securities.

Our  principal  source of liquidity at September  30, 2005  consisted of cash of
$1,263,225. We have a note receivable of $755,000 due in August 2006. We have no
other unused sources of liquidity at this time.

In August and September  2005 we invested  $755,000 in notes  receivable  and in
October 2005 we invested an additional $985,000 in notes receivable.  We have no
outstanding  commitments  for capital  expenditures.  We are committed to pay 7%
interest on our  subordinated  notes  payable  quarterly or $17,500 per quarter.
Notes  receivable  are  expected to produce  quarterly  income of  approximately
$65,000.  A default on the  interest or  principal  due us would have a material
adverse impact on our operations and cash position.

Based on current expectations and business conditions,  and assuming note income
due us, we  believe  we have  sufficient  financial  resources  to meet our cash
requirements  for  the  next  twelve  months.  However,  we  intend  to  perform
additional   development  on  our  plasma   sterilization  and   decontamination
technology and since management does not have estimates of the amounts or timing
thereof,  we may require additional funds for this purpose.  We may also develop
or acquire other technologies requiring future expenditures. We may also require
additional  funds to pay or finance  operations  should our expectations on cash
requirements change.

Management  has  flexibility  to adjust  the  level of  research  and  marketing
expenditures  based on the  availability  of resources.  However,  reductions in
research and development could delay  development  progress and adversely affect
our ability to generate  future  revenues from our  technologies.  Our business,
expansion or contraction  thereof, is subject to many factors,  some outside our
control or that we are unable to anticipate. Business opportunities may arise or
we may  elect to  increase  our  investments  in  research  and  development  or
marketing  in the  future  on our  existing  technologies  or new  technologies.
Accordingly,  there can be no assurance that our current expectations  regarding
required financial resources will prove to be accurate.

We believe that any  required  funding will be available to us, but there can be
no guarantee  that we will be able to raise funds on terms  acceptable to us, or
at all.  Potential  sources of funds include debt financing or additional equity
offerings.  Any equity issuances could be dilutive to existing  shareholders and
such dilution could be material.

We do not believe  inflation had a significant  impact on our operations  during
2005 or 2004 or that it will have a significant  impact on operations during the
next twelve months.

New Accounting Pronouncements and Issues

In June 2005,  the FASB  issued  SFAS No.  154,  "Accounting  Changes  and Error
Corrections." SFAS No. 154 replaces Accounting  Principles Board Opinion ("APB")
No. 20,  Accounting  Changes,  and SFAS No. 3, Reporting  Accounting  Changes in
Interim Financial Statements.  Among other changes, SFAS No. 154 requires that a
voluntary change in accounting principle be applied retroactively with all prior
period  financial  statements  presented  on the  basis  of the  new  accounting
principle,  unless it is impracticable to do so. SFAS No. 154 also provides that
(1) a change in method of depreciating or amortizing a long-lived  non-financial
asset must be  accounted  for as a change in estimate  (prospectively)  that was
affected by a change in accounting  principle,  and (2)  correction of errors in
previously issued financial statements should be termed a "restatement". The new
standard is effective for  accounting  changes and  correction of errors made in
fiscal years beginning after December 15, 2005.  Early adoption of this standard
is permitted  for  accounting  changes and  correction  of errors made in fiscal
years beginning after June 1, 2005.

In December,  2004, the Financial  Accounting Standards Board ("FASB") finalized
Statement  of Financial  Accounting  Standards  ("SFAS") No. 123 (revised  2004)
("SFAS No.  123R"),  "Share Based  Payments."  SFAS No. 123R  requires  that the
compensation cost relating to share-based payment  transactions be recognized in
financial statements with the cost measured based on the estimated fair value of


                                       14
<PAGE>

the equity or  liability  instruments  issued.  SFAS No.  123R allows for either
prospective  recognition of compensation  expense or retrospective  recognition,
which may be back to the  original  issuance  of SFAS No.  123 or in the year of
adoption.  The effective date of SFAS No. 123R is the first quarter of the first
fiscal year beginning after December 15, 2005.

Tax Loss Carryforwards

As of September  30,  2005,  we had  approximately  $395,000 of federal tax loss
carryforwards.  These  losses  create a deferred tax asset.  We have  recorded a
valuation allowance to reduce the net deferred tax asset to zero because, in our
assessment,  it is more likely than not that the  deferred tax asset will not be
realized.  There  may  also  be  limitations  on the  utilization  of  tax  loss
carryforwards to offset any future taxes.

Business Risks

This report  contains a number of  forward-looking  statements  that reflect our
current  views with respect to future events and  financial  performance.  These
forward-looking  statements  are  subject  to certain  risks and  uncertainties,
including  those  discussed  below,  that could cause  actual  results to differ
materially from historical  results or those  anticipated.  In this report,  the
words  "anticipates,"   "believes,"   "expects,"  "intends,"  "future,"  "goal,"
"objective" and similar expressions identify forward-looking statements. Readers
are cautioned to consider the specific risk factors  described  below and not to
place undue reliance on the forward-looking  statements  contained herein, which
speak only as of the date hereof.  We undertake no obligation to publicly revise
these  forward-looking  statements,  to reflect events or circumstances that may
arise after the date hereof.

     We  are a  start-up  company  and  our  lack  of  operating  history  makes
evaluating our business difficult. Until we acquired the first plasma technology
in  August  1999,  we were  inactive.  As a  result,  we have  limited  relevant
operating  history with which you may evaluate our business.  Our business is in
the early stage of development,  and our proposed  operations are subject to all
of the  risks  inherent  in a  start-up  or  early  stage  business  enterprise,
including the likelihood of continued  operating  losses.  The likelihood of our
success must be  considered in light of the  problems,  expenses,  difficulties,
complications and delays frequently encountered in connection with the growth of
a start-up  business,  the  development  of new  technologies  and  products and
channels  of  licensing,  and  current  and future  development  in several  key
technical  fields,  as well as the  competitive  and regulatory  environments in
which we will operate. You must consider the numerous risks and uncertainties an
early stage  company like ours faces in  attempting  to develop and  establish a
market for new technology. These risks include our ability to:

     o    Develop our technology to commercial viability;

     o    Establish new development and strategic relationships;

     o    Create a commercialization strategy, and

     o    Respond to highly competitive markets for our technology.

     If we are unsuccessful in addressing these risks, we will in all likelihood
be unable to generate  future  revenues.  There can be no assurance that we will
achieve profitability in the future, or that profitability,  if achieved, can be
sustained.

     Our revenues would be adversely affected by non-payment or default on notes
receivable.  We expect  interest from  high-interest  notes due to us to provide
income during the next twelve  months.  Non-payment  of interest or a default on
the notes would  adversely  affect our operations and cash flow and a default on
principal would jeopardize our future ability to repay our subordinated notes in
2008. Notes receivable are concentrated  with one party, and although secured by
a deed of trust on undeveloped land in Clark County,  Nevada, is subject to risk
of nonpayment. Foreclosure or other actions required by us on any default may be
require time and may be costly and there is no  assurance  of adequate  recovery
from any such actions.

     Our  technologies  are in  early  stages  of  development  and  may  not be
successful.  Our business  plan  contemplates  that  virtually all of our future
revenues,  if any, will be  attributable to our plasma  technologies,  which are
still  in the  early  stage of  development.  In  order  to  attract  commercial
interest,  we  believe  we  must  develop  additional  prototypes  in  order  to
demonstrate  commercial viability of our technologies.  Our objective is to sell
or  license  our  technologies  to  companies  that  then must  incorporate  our
technologies into products (we do not intend to manufacture products ourselves).
Even if more  prototypes  can be developed  successfully,  we cannot provide any
assurance that  commercially  viable  technology or products  incorporating  our


                                       15
<PAGE>

technology can be completed, developed, manufactured or sold due to the inherent
risks  of  technology  development,   limitations  on  financing,   competition,
obsolescence, loss of key personnel and other factors. We have generated limited
revenues from our plasma  sterilization  and  decontamination  technology and no
revenues from our plasma sound  technology.  We cannot assure that there will be
future  revenues.   The  development  of  new  technology  is  also  subject  to
significant delays and cost overruns from unforeseen technical hurdles and other
factors. In addition, as discussed below, we will rely on outside consultants to
provide us with the necessary expertise to develop our technology rather than an
in-house staff of technology  developers,  thereby possibly increasing the costs
and risks of technology development.

     We expect to sustain losses during development of our technology. We expect
to incur research,  development and marketing  expenditures without the prospect
of significant operating revenues for the foreseeable future. We may not be able
to generate  revenue from our  technology in the future.  Even if we do generate
operating revenues, we cannot assure that we will be able to generate sufficient
revenue to offset operating costs or to achieve or sustain profitability.

     We may not be able to  obtain  sufficient  funds  to  continue  or grow our
business.  Based on, among other things,  our proposed  plan of  operations  and
certain  assumptions  regarding  availability of note income, we believe we have
sufficient  financing to fund our operations  during the next twelve months.  If
our plans change,  our assumptions  change or prove to be inaccurate,  we may be
required to seek additional financing to fund the costs of operations.  Although
management has been successful in obtaining  required funds in the past, we have
no current commitments or arrangements for additional financing and there can be
no assurance that additional financing will be available on acceptable terms, or
at all. The failure to have adequate  financial  resources could require that we
curtail  or  terminate   development  of  our  technology  and  our  operations.
Consequently,  investors could lose their entire  investment if we are unable to
generate  positive cash flow or raise the additional  capital  necessary to fund
our operations. Even if additional financing is available to us, using equity or
convertible  debt  securities  will  result  in a  reduction  of the  percentage
ownership of our  stockholders  and they may experience  additional  dilution of
their investment.

     If we fail to establish and maintain personnel and strategic relationships,
our  ability  to  develop  our  technology  will  suffer.  We  currently  have a
month-to-month  arrangement  with  Dr.  Igor  Alexeff.  He is a  key  individual
involved  in the  development  and  marketing  of our plasma  sterilization  and
decontamination  technology.  We  depend  on  Dr.  Alexeff  or  other  personnel
relationships   to  continue  the  development  of  our  technology,   implement
intellectual  protection  strategies,  identify  and  manage  the  execution  of
technical development, and market and license our technology. These individuals,
however,  may terminate their  relationship with us at any time. There can be no
assurance,  therefore,  that any individuals  will continue their  relationships
with us for the  time  necessary  to  complete  development  of our  technology.
Although we believe  that there are other  personnel or  consultants  capable of
working on our technology,  the loss or  unavailability  of any individual could
result in delays or added costs of development, materially impede development or
adversely affect our ability to continue in business.

     We also believe that our success  will depend,  in part,  on our ability to
establish  additional personnel or strategic  relationships to develop,  produce
and  market our  technology.  Our  success  will also  depend on our  ability to
develop and maintain  strategic  development  and marketing  relationships  with
producers,  distributors,  end-users and  manufacturers  or entities  engaged in
supplying  or  servicing  targeted  markets.  If we are unable to  develop  such
relationships, our chances for future success will be substantially diminished.

     Our  ability  to  protect  our  intellectual  property  and  technology  is
uncertain.  Our success depends,  and will continue to depend, on our ability to
maintain patent  protection for our technology and to preserve our trade secrets
and to operate  without  infringing  the property  rights of third  parties.  We
cannot  guarantee that existing  patents will be of sufficient scope or strength
to give us  competitive  advantages or that any patents that may be issued to us
will not be  challenged  or  invalidated.  We have not performed any analysis of
patents of others  that may limit our  ability to do  business.  We are aware of
other  parties  that are  currently  conducting  research  in the area of plasma
decontamination and sterilization.

     Despite our efforts to protect our proprietary rights, unauthorized parties
may attempt to copy aspects of our technology or proposed  products or to obtain
and use  information  that we  consider  proprietary.  The  available  means  of
protecting our  proprietary  rights may not be adequate and our  competitors may
independently  develop  similar  technology,  duplicate  our  products or design
around  patents  issued  to us or our  other  intellectual  property.  We cannot
guarantee our intellectual property will provide us meaningful protection or any
commercial advantage.


                                       16
<PAGE>

     Defending against intellectual property claims could be expensive and could
disrupt our business.  The high technology industry is characterized by vigorous
protection  and pursuit of  intellectual  property  rights that have resulted in
significant and often protracted and expensive litigation. There is currently no
pending  intellectual  property  litigation  against  us. We  cannot  guarantee,
however,  that our  technologies  or products do not and will not  infringe  the
patents or  proprietary  rights of third  parties.  The risk of such  claims may
increase as the number of products and competitors in our industry segment grows
and the functionality of products in different industry segments  overlaps.  Any
such claims,  with or without merit, could be  time-consuming,  result in costly
litigation,  cause  product  shipment  delays,  preclude  or hinder new  product
development  or require us to enter into royalty or licensing  agreements.  Such
agreements,  if required,  may not be available on terms  acceptable to us or at
all. A successful  challenge to our plasma  antenna  patents or our plasma sound
reduction  patent  or the cold  plasma  patent  we have  licensed  would  have a
materially  adverse  effect on our  business  prospects.  We are required to pay
certain  royalties to the companies that sold or licensed to us our  technology.
Any dispute that may arise between such entities and us could  adversely  affect
our business.

     Competition and obsolescence could preclude us from realizing revenues. The
markets for our plasma  technologies are extremely  competitive.  Many companies
produce sterilization and decontamination  equipment that are competitive to the
products or systems we intend to develop.  These  companies  are larger and have
substantially  greater  resources  than we do.  We may  not be  able to  compete
successfully  in any of these  markets.  In  addition,  these  companies  expend
significant funds on research and development. They or others may have developed
or may succeed in developing  technology  and products  that are more  effective
than those  proposed by us.  There can be no  assurance  that we will be able to
compete  successfully with such competitors or that additional  competition will
not have a material adverse effect on our business.

     Our markets  are highly  regulated  and we may be subject to  environmental
regulations.   The   sterilization   of  medical   devices  and  food,  and  the
decontamination  of items are  highly  regulated  and  controlled  in most major
markets  throughout  the  world.   Decontamination  and  sterilization  devices,
including our proposed products,  must be manufactured and tested to meet strict
standards and often must be certified for use.  These factors  increase the time
and risk of  introducing  new  technology.  We may not be able to obtain  timely
regulatory  approvals for future  products.  The failure to obtain any necessary
approvals would adversely impact our business.

     Federal,  state  and  local  regulations  impose  various  controls  on the
storage, handling, discharge and disposal of certain substances that may be used
in anticipated plasma sterilizer  manufacturing processes or used as ingredients
in decontamination or sterilization  equipment.  We intend to conform and expect
any contractors or licensees to conform to governmental  regulations  applicable
to operations and  facilities,  including those related to  environmental,  land
use, public utility utilization and fire code matters. There can be no assurance
that such  governmental  regulations  will not  impose  the need for  additional
capital  equipment  or other  process  requirements  or restrict  our ability to
continue or expand our operations.

     We may be subject to product  liability  and recall  claims  exceeding  any
future insurance coverage.  Although we intend to rely on strategic partners for
the manufacture and sale of products or systems incorporating our technology, we
may become subject to product  liability  claims and lawsuits from time to time.
We face risk of  product  liability  claims  in the  event  that the use of such
products results in personal  injury.  We also face the possibility that defects
in the design or manufacture of products or systems might  necessitate a recall.
There can be no  assurance  that we will not  experience  losses  due to product
liability,  claims or  recalls in the  future.  There can be no  assurance  that
insurance  coverage will be available on acceptable terms or at all, or that any
insurance coverage will be adequate to cover such losses. A product liability or
other  judgment  against us in excess of future  insurance  coverage,  if any is
obtained, or a product recall, could adversely affect our business.

     Our officers,  directors and consulting  personnel devote only part-time to
our business  resulting  in possible  conflicts.  Our  officers,  directors  and
consulting  personnel  devote  only  part-time  services to our company and have
other employment and business  interests to which they devote attention and will
continue to do so, resulting in potential conflicts of interest. There can be no
assurance these conflicts or the unavailability of full-time management will not
adversely impact our operations and chances for success.

     We may  issue  additional  shares of  authorized  common  stock and  future
preferred stock. Our Articles of Incorporation authorize up to 11,000,000 shares
of  stock,  par  value of  $0.02  per  share,  of which  10,000,000  shares  are
designated common stock and 1,000,000 shares are designated preferred stock. The
Board of Directors  has the power without  prior  stockholder  approval to issue


                                       17
<PAGE>

additional shares of previously  authorized and unissued common stock and one or
more  series  of  preferred  stock  with  such  rates of  dividends,  redemption
provisions,  liquidation preferences,  voting rights,  conversion privileges and
any other  characteristics  as the Board may deem  necessary.  This power  would
include the right to issue  preferred  stock with  rights to receive  dividends,
liquidating  distributions and other benefits that may be superior to the rights
of holders of common stock.  If any  subsequent  issuance of preferred  stock is
approved, such preferred stock could adversely affect the holders of outstanding
common stock. In addition,  the authority to issue  additional  shares of common
stock and preferred  stock could  discourage,  delay or prevent a takeover of us
and could have a depressive effect on the market price for our securities.

     There is a very limited public market for our common stock. There is a very
limited  public  market for our common stock as trading has been sporadic and of
low volume.  There is no  assurance  that there will be any market  liquidity or
that we can maintain a trading market in the future.

Item 7. Financial Statements

Our financial statements follow.


                                       18
<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



Board of Directors
ASI Technology Corporation
Las Vegas, Nevada

We have audited the accompanying balance sheet of ASI Technology Corporation,  a
development  stage company (the  "Company"),  as of September 30, 2005,  and the
related statements of operations, changes in stockholders' equity and cash flows
for the nine month  period then ended and for the period from  inception  of the
development  stage  (January 1, 1999) through  September 30, 2005. The financial
statements are the responsibility of the Company's management.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  the  audits to  obtain  reasonable  assurance  about  whether  the
financial  statements  are free of  material  misstatement.  The  Company is not
required  to have,  nor were we engaged  to  perform,  an audit of its  internal
control over financial reporting.  Our audits included consideration of internal
control over financial  reporting as a basis for designing audit procedures that
are appropriate in the  circumstances,  but not for the purpose of expressing an
opinion on the  effectiveness  of the Company's  internal control over financial
reporting. Accordingly, we express no such opinion. 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.  We believe that our audits provide a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of ASI Technology  Corporation as
of September 30, 2005,  and the results of its operations and its cash flows for
the nine  month  period  then  ended and for the period  from  inception  of the
development  stage  (January 1, 1999) through  September 30, 2005, in conformity
with accounting principles generally accepted in the United States.


/s/ PIERCY BOWLER TAYLOR & KERN
Certified Public Accountants and Business Advisors, a Professional Corporation


Las Vegas, Nevada
November 22, 2005


                                       19
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Stockholders and Board of Directors
ASI Technology Corporation
Las Vegas, Nevada

We have audited the accompanying  statements of operations and cash flows of ASI
Technology Corporation (a development stage company) for the year ended December
31, 2004 and the statement of comprehensive  loss and stockholders'  equity from
January 1, 1999 (date of inception of  development  stage) to December 31, 2004.
These financial  statements are the responsibility of the Company's  management.
Our responsibility is to express an opinion on these financial  statements based
on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we 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
presentation of the financial statements.  We believe that our audits provided a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the results of ASI Technology  Corporation's  operations
and its cash flows for the periods  indicated  above in  conformity  with United
States generally accepted accounting principles.

The accompanying  financial  statements have been prepared  assuming the Company
will  continue as a going  concern.  As  discussed  in Note 11 to the  financial
statements,  the Company has suffered  recurring  losses from  operations and is
likely to require  additional  capital in order to fund the  development  of its
technologies.  This  raises  substantial  doubt about the  Company's  ability to
continue as a going concern.  Management's  plans in regard to these matters are
also  described  in  Note  11.  The  financial  statements  do not  include  any
adjustments that might result from the outcome of this uncertainty.

/s/ McGladrey & Pullen, LLP

Las Vegas, Nevada
February 1, 2005


                                       20
<PAGE>

ASI TECHNOLOGY CORPORATION
(A Development Stage Company)

BALANCE SHEET
September 30, 2005

---------------------------------------------------------------------------

ASSETS
Current assets
  Cash  and cash equivalents                                    $ 1,263,225
  Accounts receivable, less allowance of $22,842                       --
  Note receivable                                                   755,000
  Accrued interest                                                    6,292
                                                                -----------
                                                                $ 2,024,517
                                                                ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
  Accounts payable                                              $    12,962
  Accrued liabilities                                                14,406
                                                                -----------
                                                                     27,368
                                                                -----------

Long-term liabilities
  Subordinated notes, net of note discount of $125,892              874,108
                                                                -----------

Stockholders' equity
  Preferred stock, 1,000,000 shares authorized,
    none issued and outstanding
  Common stock, $.02 par value; 10,000,000 shares authorized,
    issued and outstanding 7,019,664                                140,393
  Additional paid-in capital                                      4,766,051
  Pre-development stage deficit                                  (2,241,685)
  Deficit accumulated in the development stage                   (1,541,718)
                                                                -----------
                                                                  1,123,041
                                                                -----------

                                                                $ 2,024,517
                                                                ===========


See notes to financial statements.


                                       21
<PAGE>

<TABLE>
<CAPTION>

ASI TECHNOLOGY CORPORATION
(A Development Stage Company)

STATEMENTS OF OPERATIONS
For the Nine Months Ended September 30, 2005 and the Year Ended December 31, 2004 and
For the Period from Inception of Development Stage (January 1, 1999) to September 30, 2005


                                                                                                   Comparative
                                                                                                   nine months
                                                                                From inception       ended
                                               September 30,     December 31,   of development     September 30,
                                                   2005              2004           stage              2004
-----------------------------------------------------------      -----------      -----------      -----------
                                                                                                   (Unaudited)
<S>                                             <C>              <C>              <C>              <C>
Contract and license revenues                   $      --        $      --        $    25,000      $      --
                                                -----------      -----------      -----------      -----------

Operating expenses
License fees paid                                      --               --             19,375             --
Research and development                              9,376           17,160          333,051            9,680
Marketing and promotion                              26,479           23,723          130,478           20,723
General and administrative                           94,537          102,898          592,705           78,643
                                                -----------      -----------      -----------      -----------
                                                    130,392          143,781        1,075,609          109,046
                                                -----------      -----------      -----------      -----------

Operating loss                                     (130,392)        (143,781)      (1,050,609)        (109,046)

Nonoperating income (expense)
Interest and other income                            16,275           21,561           72,604              508
Interest expense                                    (16,813)         (22,562)         (77,035)         (16,890)
Gain (loss) on security sales                         7,711          (19,406)         (11,695)            --
Unrealized impairment loss on available-
      for-sale securities                          (143,573)        (603,521)        (747,094)        (622,821)
                                                -----------      -----------      -----------      -----------
Loss from continuing operations,
   net of tax of $-0-                              (266,792)        (767,709)      (1,813,829)        (748,249)
Discontinued operations, net of tax of $-0-
From operations                                        --            (11,056)        (730,611)          11,786
Gain on sale of discontinued component                 --             62,722        1,002,722           62,722
                                                -----------      -----------      -----------      -----------
                                                       --             51,666          272,111           74,508
                                                -----------      -----------      -----------      -----------
Net loss                                        $  (266,792)     $  (716,043)     $(1,541,718)     $  (673,741)
                                                ===========      ===========      ===========      ===========

Basic and diluted income (loss)
  per common share
Continuing operations                           $     (0.07)     $     (0.23)                      $     (0.22)
                                                ===========      ===========                       ===========
Discontinued operations                         $       --       $      0.02                       $      0.02
                                                ===========      ===========                       ===========
Net loss                                        $     (0.07)     $     (0.21)                      $     (0.20)
                                                ===========      ===========                       ===========

Weighted average number of common
shares outstanding                                3,888,364        3,412,522                         3,412,522
                                                ===========      ===========                       ===========
</TABLE>

See notes to financial statements.


                                       22
<PAGE>

<TABLE>
<CAPTION>
ASI TECHNOLOGY CORPORATION
(A Development Stage Company)

STATEMENTS OF COMPREHENSIVE LOSS AND STOCKHOLDERS' EQUITY
For the Nine Months Ended September 30, 2005 and the Year Ended December 31, 2004 and
For the Period from Inception of Development Stage (January 1, 1999) to September 30, 2005

                                                                         Stockholders' Equity
                                            ----------------------------------------------------------------------------------------
                                                                                                             Deficit
                                                                                   Accumulated    Pre-     accumulated
                                               Common Stock                           other   development   during the
                             Comprehensive  -------------------    Additional    comprehensive    stage    development
                                 loss        Shares     Amount   paid-in capital     loss        deficit     stage         Total
                               -----------------------------------------------------------------------------------------------------
<S>       <C>                               <C>       <C>         <C>                       <C>           <C>          <C>
Balance, inception of
 development stage
 (January 1, 1999)                          1,181,664 $1,181,664  $1,087,861          --    $(2,241,685)  $       --   $   27,840
Sale of stock, net of
 offering costs of $15,000                  1,500,000    300,000     435,000          --            --            --      735,000
Stock issued for services                      30,000      6,000       9,000          --            --            --       15,000
1 for 10 reverse stock split                      --  (1,433,431)  1,433,431          --            --            --          --
Stock options issued
 for services                                     --         --        5,500          --            --            --        5,500
Related party demand notes
 converted to stock at $0.50
 per share                                    228,458      4,569     109,660          --            --            --      114,229
Sale of stock at $0.50
 per share                                    406,400      8,128     195,072          --            --            --      203,200
Contributed services                              --         -       132,000          --            --            --      132,000
Stock issued for services at
 $0.50 per share                               66,000      1,320      31,680          --            --            --       33,000
Comprehensive income
   Net loss                    $  (558,883)       --         --          --           --                     (558,883)   (558,883)
   Change in unrealized loss
     on available-for-sale
     securities                   (143,821)       --         --          --      (143,821)          --            --     (143,821)
                               ------------
   Other comprehensive loss       (143,821)
                               ------------
   Comprehensive loss          $  (702,704)
                               ============  ---------------------------------------------------------------------------------------

Balance, December 31, 2003                  3,412,522 $   68,250  $3,439,204    $(143,821)  $(2,241,685)  $  (558,883) $  563,065

Contributed services                              --         --       24,000          --            --            --       24,000
Stock options issued
 for services                                     --         --        4,960          --            --            --        4,960
Comprehensive income
   Net loss                    $  (716,043)       --         --          --           --            --       (716,043)   (716,043)
     Unrealized loss on
        available-for-sale
        securities                (459,700)
     Reclassification
        adjustment for
        impairment loss            603,521
                               ------------
   Other comprehensive
        income                     143,821        --         --          --       143,821           --            --      143,821
                               ------------
   Comprehensive loss           $ (572,222)
                               ============  ---------------------------------------------------------------------------------------

Balance, December 31, 2004                  3,412,522 $   68,250  $3,468,164    $     --    $(2,241,685)  $(1,274,926) $   19,803

Common stock issued on
  conversion of demand
  notes at $.30 per share                     750,000     15,000     210,000          --            --            --      225,000
Sale of common stock at
   $0.35 per share, net of
   offering costs of $4,500                 2,857,142     57,143     938,357          --            --            --      995,500
Value of warrants associated
   with  issuance of debt                         --         --      128,300          --            --            --      128,300
Contributed services                              --         --       18,000          --            --            --       18,000
Stock options issued
   for services                                   --         --        3,230          --            --            --        3,230
Net loss                                          --         --          --           --            --       (266,792)   (266,792)
                                           -----------------------------------------------------------------------------------------
Balance, September 30, 2005                 7,019,664 $  140,393  $4,766,051    $     --    $(2,241,685)  $(1,541,718) $1,123,041
                                           =========================================================================================
</TABLE>


See notes to financial statements.

                                       23

<PAGE>

<TABLE>
<CAPTION>
ASI TECHNOLOGY CORPORATION
(A Development Stage Company)

STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 2005 and the Year Ended December 31, 2004 and
For the Period from Inception of Development Stage (January 1, 1999) to September 30, 2005

                                                                                                                    Comparative
                                                                                                                    nine months
                                                                                                  From inception       ended
                                                                September 30,     December 31,    of development    September 30,
                                                                    2005             2004            stage             2004
-------------------------------------------------------------------------------------------------------------      -----------
                                                                                                                   (Unaudited)
<S>                                                             <C>              <C>              <C>                 <C>
Operating activities
Adjustments to reconcile net loss to net
cash used in operating activities:
Loss from continuing operations                                 $  (266,792)     $  (767,709)     $(1,813,829) $      (748,249)
Contributed services                                                 18,000           24,000          174,000           18,000
(Gain) loss  on security sales                                       (7,711)          19,406           11,695             --
Unrealized impairment loss on available-for-sale securities         143,573          603,521          747,094          622,821
Common stock and options issued for services                          3,230            4,960           61,690             --
Interest paid in common stock                                          --               --              4,229             --
Non-cash interest                                                     2,408             --              2,408             --
Acquired in-process research and development                           --               --            450,000             --
Increase (decrease) in working capital components:
Accounts receivable                                                    --             43,650          (22,842)          43,650
Accrued interest                                                     (6,292)            --             (6,292)            --
Accounts payable                                                      2,602          (89,036)          12,962          (73,212)
Accrued liabilities                                                  14,406          (19,869)          14,406             --
Due to related party                                                   --               --             (5,895)            --
                                                                -----------      -----------      -----------      -----------
Cash used in continuing operations                                  (96,576)        (181,077)        (370,374)        (136,990)
                                                                -----------      -----------      -----------      -----------
Income (loss) from discontinued operations                             --             51,666          272,111           74,508
Non-cash gain on sale of discontinued component                        --            (62,722)      (1,002,722)         (62,722)
Provision for bad debts                                                --             22,842           22,842             --
                                                                -----------      -----------      -----------      -----------
Cash used in discontinued operations                                   --             11,786         (707,769)          11,786
                                                                -----------      -----------      -----------      -----------
Net cash used in operating activities                               (96,576)        (169,291)      (1,078,143)        (125,204)
                                                                -----------      -----------      -----------      -----------

Investing activities
Increase in notes receivable                                       (755,000)            --           (905,000)            --
Payments on note receivable                                            --              6,487          177,339            4,492
Proceeds from security sales                                         25,039           77,894          102,933             --
Cash proceeds from antenna component sale                              --               --            141,000             --
Purchase of in-process research and development                        --               --           (450,000)            --
                                                                -----------      -----------      -----------      -----------
Net cash provided by (used in) investing
activities                                                         (729,961)          84,381         (933,728)           4,492
                                                                -----------      -----------      -----------      -----------

Financing activities
Proceeds from related party loans                                      --               --            435,000             --
Proceeds from subordinated notes                                  1,000,000             --          1,000,000             --
Net proceeds from sale of common stock                              995,500             --          1,833,700             --
                                                                -----------      -----------      -----------      -----------
Net cash provided by financing activities                         1,995,500             --          3,268,700             --
                                                                -----------      -----------      -----------      -----------

Net increase (decrease) in cash
and cash equivalents                                              1,168,963          (84,910)       1,256,829         (120,712)

Cash and cash equivalents, beginning of period                       94,262          179,172            6,396          179,172
                                                                -----------      -----------      -----------      -----------

Cash and cash equivalents, end of period                        $ 1,263,225      $    94,262      $ 1,263,225      $    58,460
                                                                ===========      ===========      ===========      ===========

Supplemental cash flow information
Cash paid during the period for interest                        $      --        $    33,904                       $    11,342
                                                                ===========      ===========                       ===========
Supplemental schedule of noncash investing and
financing activities:
Common stock and stock options issued for services              $     3,230      $      --                         $      --
Demand notes converted to common stock                          $   225,000      $      --                         $      --
Common stock received for antenna business sale                 $      --        $    62,722                       $    62,722

See notes to financial statements.
</TABLE>


                                       24
<PAGE>



ASI TECHNOLOGY CORPORATION
(A Development Stage Company)

Notes to Financial Statements
--------------------------------------------------------------------------------

Note 1.       Nature of Business

Since January 1, 1999, the inception of its  development  stage,  ASI Technology
Corporation  ("Company")  has been  developing and  attempting to  commercialize
plasma   technologies.   It  acquired  and  subsequently   sold  plasma  antenna
technology,  acquired  plasma sound  reduction  technology  (December  2000) and
licensed plasma technology for decontamination and sterilization invented by one
of its consultants  (January  2003).  From 1995 until December 1998, the Company
was  inactive,  engaged  only in  collecting  proceeds  from prior asset  sales,
reducing debts and paying corporate costs.

Because the Company has  devoted  most of its efforts  since  January 1, 1999 to
research  and  development,  and  its  planned  principal  operations  have  not
commenced and no significant licensing revenues have been earned, the Company is
considered  to be in the  development  stage.  All  references  in the financial
statements to shares,  share prices, per share amounts and stock plans have been
adjusted  retroactively for a 1 for 10 reverse stock split effected on September
1, 2000.

Note 2.       Summary of Significant Accounting Policies

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  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

Financial  instruments and  concentration  of credit risk - Notes receivable are
concentrated  with one debtor  and as such is subject to the risk of  nonpayment
which would have a material  adverse impact on the Company.  The Company manages
its credit risk by  investigating  the credit  worthiness of the borrower before
entering into a transaction  and/or by securing  such  borrowings  with deeds of
trusts on real estate.  The carrying values of financial  instruments  including
cash,  accounts and notes receivable,  accounts payable and accrued  liabilities
approximated  fair  market  value  because of the  short-term  maturity of these
instruments.

Revenue  recognition  - Although  the Company is in the  development  stage and,
accordingly,  has not yet realized any  significant  revenue  during the periods
presented,  revenue  resulting  from  development  contracts  is  expected to be
recognized under the  percentage-of-completion  method based upon costs incurred
relative  to total  estimated  contract  costs or when the  related  contractual
obligations  have been  fulfilled  and fees are  billable.  Revenues from plasma
decontamination and sterilization  technology  sublicensing are to be recognized
as  collected  due  to  uncertainty  of  collection  of  amounts  billed.  Costs
associated with development contracts are included in research and development.

Research and  development  costs - Research  and  development  costs,  including
patent  costs  related to acquired  and  developed  technology,  are expensed as
incurred   because  the   technology   being   developed  has  not  yet  reached
technological  feasibility  and requires  further  development,  refinement  and
testing.

Employee stock options - The Company applies Accounting Principles Board Opinion
No. 25,  "Accounting  for Stock Issued to  Employees,"  in accounting  for stock
options  issued to  employees  which  requires  recognition  of expense when the
option price is less than the fair value of the  underlying  common stock at the
date of grant.

To provide the required pro forma information for employees under the provisions
of  Statement  of  Financial  Accounting  Standards  (SFAS)  Statement  No. 123,
Accounting for Stock-Based Compensation, the Company estimates the fair value of
each stock  option at the grant date by using the  Black-Scholes  option-pricing
model. Had compensation cost for the Company's  stock-based  compensation  plans
been  recorded  based on the fair  value at the  grant  dates  for  awards,  the
Company's net loss would have been increased to the pro forma amounts  indicated
below:


                                       25
<PAGE>

                                                   Nine months
                                                      ended        Year ended
                                                   September 30,   December 31,
                                                       2005           2004
                                                    ---------      ----------
Net loss
      As reported                                   $(266,792)     $(716,043)
             Less: Total employee stock-based
             compensation determine fair
             value based method                        (3,230)        (9,920)
                                                    ---------      ---------
      Pro forma                                     $(270,022)     $(725,963)
                                                    =========      =========

Basic and diluted income (loss) per share:
      As reported                                   $   (0.07)     $   (0.21)
                                                    =========      =========
      Pro forma                                     $   (0.07)     $   (0.21)
                                                    =========      =========


In December,  2004, the Financial  Accounting Standards Board finalized SFAS No.
123R Share Based  Payments.  The effective date of SFAS No. 123R for the Company
will be the quarter  ended  December  31,  2006.  The Company does not expect to
experience any  significant  effect of adopting SFAS No. 123R because of limited
option activity.

Cash  equivalents - For purposes of the financial  statement of cash flows,  the
Company  considers  all highly  liquid  investments  purchased  with an original
maturity of three months or less to be cash equivalents.

Income  (loss) per common share - Basic  income  (loss) per share is computed by
dividing income (loss) available to common stockholders, by the weighted average
number of common  shares  outstanding  for the year.  Diluted  income (loss) per
share  reflects the  potential  dilution of  securities  that could share in the
income of an entity.  The Company has no  dilutive  securities  other than stock
options and warrants which are not included because of the anti-dilutive  effect
due to net losses for the periods  ended  September  30, 2005 and  December  31,
2004.

Investment  securities - The Company's marketable  investment securities related
to shares of common stock of one  unaffiliated  company received in exchange for
the sale of the  plasma  antenna  business.  The  Company  owned  less than five
percent  of the  company  and did not  exercise  influence  over  operating  and
financial  policies.  These securities were valued at the quoted market price on
the over-the-counter market. The Company classified its marketable securities as
available-for-sale  and,  previously carried the investments at fair value, with
unrealized  holding  gains and  losses  reported  in  stockholders'  equity as a
separate component of accumulated other comprehensive income (loss). There was a
substantial  decline  in the value of the  Company's  investment  securities  in
fiscal 2004 and there was no assurance of future  recovery in value.  Consistent
with the provisions of FASB Statement No. 115 and SEC Staff Accounting  Bulletin
59, "Other Than Temporary  Impairment of Certain  Investments in Debt and Equity
Securities," an impairment loss was recorded and the cumulative  unrealized loss
previously recorded as a comprehensive loss in stockholders' equity was reversed
in fiscal 2004.

Reclassifications - Certain items have been reclassified from amounts previously
reported to conform to the presentation at September 30, 2005.


                                       26
<PAGE>


Note 3.       Acquisition and Disposition of Plasma Technologies

In 1999,  the Company  acquired  plasma  antenna  technology for a cash purchase
price of  $250,000  that was  expensed  at the time  since  there  were no other
identifiable assets acquired,  commercial  feasibility had not been established,
there were no current cash flows  generated  from the  technology  and no future
alternative uses of the patents or technology existed.

In 2003,  the  Company  sold to Markland  Technologies,  Inc.  ("Markland")  the
Company's patents,  patent applications,  equipment,  government contract rights
and other  intellectual  property rights comprising the Company's plasma antenna
business for cash and Markland common stock. In March 2004, the Company received
additional  shares of Markland  common stock valued at $62,722 as  consideration
for a failure to timely register shares previously received.

Markland began managing the Company's government contracts in 2003. Markland was
responsible  for contract and plasma antenna  related costs.  The Company's last
government  contract  under this  arrangement  was  completed in April 2004 and,
accordingly,  the Company  does not expect  future  revenues  from  discontinued
operations.  At the conclusion of the contract,  the Company accrued $9,658 as a
net fee (excess of contract revenues owed to Markland over  reimbursable  costs)
to Markland and recorded  administrative fees earned of $32,500 for a net amount
due the  Company  by  Markland  of  $22,842.  Collectibility  of this  amount is
uncertain and, therefore,  an allowance for doubtful accounts in this amount has
been recorded.

The sale of the plasma antenna  technology and government  contracts to Markland
resulted in the discontinuation of the plasma antenna technology business of the
Company.  The plasma antenna technology  component  generated  substantially all
revenues during 2004. The Company segregated continuing  operations  (commercial
sterilization  and  decontamination  technology  and plasma  noise  cancellation
technology) from  discontinued  operations  (plasma antenna  technology) for the
periods  presented and  discontinued  operations have been presented as a single
line  item,  net of tax.  The  components  of this line item for the year  ended
December 31, 2004,  and from  inception of the  development  stage on January 1,
1999,  to December  31,  2004,  including  contract  revenues  and  research and
development expenses attributable to Markland, are as follows:


<TABLE>
<CAPTION>

                                                                           From inception
                                                                           of development
                                                                                stage
                                                         Year ended       (January 1, 1999)
                                                         December 31,       December 31,
                                                             2004               2004
                                                         --------------    --------------
<S>                                                      <C>               <C>
Contract revenues                                        $   45,864        $  1,127,958
Proceeds received from sale of antenna component             62,722           1,002,722
                                                         --------------    --------------
                                                            108,586           2,130,680
                                                         --------------    --------------
Research and development                                     31,723           1,562,383
Marketing and promotion                                      25,197             296,186
                                                         --------------    --------------
                                                             56,920           1,858,569
                                                         --------------    --------------
Income from discontinued operations                      $   51,666        $    272,111
                                                         ==============    ==============


</TABLE>

There was no  activity  for the  discontinued  component  during the nine months
ended September 30, 2005.


                                       27
<PAGE>


Note 3.       Acquisition and Disposition of Plasma Technologies (continued)

Sound  reduction  technology - In 2000,  the Company  acquired  sound  reduction
technology for jet engines.  The purchase price was expensed since there were no
other  identifiable  assets  acquired,   commercial  feasibility  had  not  been
established, there were no current cash flows generated from this technology and
no future alternative uses of the patents or technology  existed.  Management is
presently  unable to determine  the fair value,  if any, of the sound  reduction
technology  since  traditional  valuation  methods rely on the market  values of
similar  assets,  replacement  costs or projections of future  earnings and cash
flows, there is no ready market for these patents or technology,  which is still
in the early stages of development,  and management does not have an estimate of
the likely future cost of developing  the  technology to the point of commercial
viability or how long such  development  may take. The Company's sound reduction
technology will require further development before it can be commercialized into
products  or licensed to others and there can be no  assurance  that  commercial
viability  will be  achieved.  As a result,  future  earnings and cash flows are
highly  uncertain.  Management  believes  this  technology is unique and that no
alternative future uses of the technology exist.

In  connection  with its  acquisition  of this  technology,  the Company  became
obligated to pay royalties starting at 6% of product revenues in the first year,
5% in the second year and 4% thereafter  for the term of the initial  patent.  A
royalty of 15% is due on license revenues, if any, to be received by the Company
and a fee of 10% of sale  proceeds  will be due in the event of any further sale
of the technology. There are no minimum royalties.


Plasma  Sterilization  and  Decontamination  Technology  - In 2003  the  Company
entered  into a license  agreement  with a minimum  term of 15 years  subject to
certain  commercialization  performance  requirements after the third year. This
agreement  granted  the  Company  worldwide  exclusive  rights to one patent and
related  technology  for a  certain  plasma  sterilization  and  decontamination
method. The agreement provides for future royalty payments to the licensor based
on product sales or sublicense fees. The licensor is a consultant to the Company
on its plasma technologies.


Note 4.       Investment Securities

The Company received a total of 306,284 common shares of Markland  Technologies,
Inc. a public  company  traded over the counter in 2003 and 2004. The cost basis
of the securities was $861,722.  The securities were originally  carried at fair
value,  with unrealized gains and losses reported in  stockholders'  equity as a
separate  component of accumulated  other  comprehensive  loss. As a result of a
substantial  decline in the value of the  securities  and with no  assurance  of
future  recovery in value the  Company  recorded a $603,821  unrealized  loss on
available-for-sale  securities  in  2004.  The  Company  reversed  a  cumulative
unrealized  loss of  $143,821  previously  recorded as a  comprehensive  loss in
stockholders'  equity  in 2003.  As the  value  of the  securities  had  further
declined in 2005 and there was no  assurance  of future  recovery in value,  the
Company recorded an additional unrealized loss on available-for-sale  securities
of  $143,573  prior to the sale of the  balance  of the  securities.  A total of
100,000  shares were sold during 2004 for proceeds of $77,894 and the balance of
206,284 shares were sold in August 2005 for $25,039.

Note 5.       Note Receivable

In August 2005 the Company  made a $755,000  cash loan  evidenced  by a one-year
note secured by 2.5 acres of  undeveloped  land.  The note bears interest of 15%
per annum payable monthly.

Subsequent to September  30, 2005 the Company made an  additional  $985,000 cash
loan to the same  party  evidenced  by a  one-year  note  secured  by 6 acres of
undeveloped  land.  This  note also  bears  interest  of 15% per  annum  payable
monthly.

The Company had an unsecured note receivable from the prior sale of assets. This
9% note was due in monthly  installments  of principal  and interest of $500 and
matured and was paid in full in 2004.


                                       28
<PAGE>

Note 6.       Subordinated Notes Payable

In August and  September  2005 the Company sold  $2,000,000 of  securities.  The
Company sold $1,000,000 of 7% subordinated notes ("Subordinated Notes") due July
31, 2008. Interest is payable quarterly. These Subordinated Notes were sold as a
unit with $1,000,000  (2,857,142 shares) of common stock at $0.35 per share (see
Note 8) and with the issuance of warrants to purchase 1,428,571 shares of common
stock at $0.50 per share  exercisable  until  July 31,  2008  ("Warrants").  Two
officers/directors  purchased  $422,500  of the  Subordinated  Notes,  1,207,142
shares of the common stock and 603,571 Warrants.

The  Company  determined  that  50% of the  Warrants  were  associated  with the
Subordinated  Notes  and  has  recorded  the  $128,300  value  of the 50% of the
Warrants issued as debt discount and paid-in-capital. The debt discount is being
amortized as additional  non-cash  interest  over the terms of the  Subordinated
Notes.


Note 7.       Stockholders' Equity

In 2000 the Company's  shareholders  approved a reorganization  of the Company's
share  capital,  whereby each ten shares of common stock were reverse split into
one share of common stock of $0.02 par value. This  reorganization  was effected
on September 1, 2000 with the filing of restated  articles of  incorporation  in
the  State of  Nevada.  As a result of this  share  capital  reorganization  the
Company has 11,000,000 shares  authorized,  $0.02 par value, of which 10,000,000
are designated common stock and 1,000,000 shares are designated preferred stock.
No shares of preferred stock have been issued.

In 1999, the Company  completed the sale of 1,500,000  shares of common stock at
$0.50 per share for gross  proceeds of $750,000.  Officers and  directors of the
Company purchased an aggregate of 275,000 of these shares and the Company issued
30,000 shares of common stock to three  consultants  for services.  These shares
were valued at $15,000.

In 2001,  the Company  completed  the sale of 367,600  shares of common stock at
$0.50 per share for gross  proceeds of $183,800.  Officers and  directors of the
Company  purchased  an aggregate  of 100,000 of these  shares.  The Company also
completed a  conversion  of debt to equity in 2001 for 228,458  shares of common
stock at $0.50  per  share  for  total  debt of  $114,229,  including  $4,229 of
interest.  An  officer/director  of the Company converted debt of $36,407 for an
aggregate of 72,814 of these shares.

In 2002 one officer and  director  purchased  38,800  shares of common  stock at
$0.50 per share for total  proceeds  of $19,400 in cash and the  Company  issued
66,000 shares of common stock at $0.50 per share for services.

In June 2005, the principal  balances of $225,000 of demand notes were converted
into 750,000 shares of common stock at $0.30 per share.  In August and September
2005 the Company sold  2,857,142  shares of common stock in unit  offering  with
notes and warrants (see Note 6) at $0.35 per share for net proceeds of $995,500.
Two officers/directors purchased 1,207,142 of these shares.

During the nine  months  ended  September  30,  2005 and for the year 2004,  one
officer  contributed  services  to  the  Company  without  compensation.   These
services,  valued at $18,000 and $24,000,  respectively,  have been expensed and
treated as capital contributions.

Note 8.       Stock Option Plan

Under the 2000 Equity  Incentive  Plan (the "Plan") the Company is authorized to
grant incentive and  nonstatutory  stock options to acquire up to 250,000 shares
of the Company's common stock to employees and consultants. The term of the Plan
is ten years and the term of options  granted  may not exceed ten years from the
date of grant.  Options  may be granted at a price no less than 100% of the fair
market value and vest immediately unless otherwise designated at grant.


                                       29
<PAGE>

The  following  table  summarizes  option  activity  for the nine  months  ended
September 30, 2005,  the year ended  December 31, 2004 and from the inception of
the development stage:



                                       30
<PAGE>

Note 8.       Stock Option Plan (continued)

<TABLE>
<CAPTION>

                                                                                                  From inception of
                                             2005                               2004              development stage
                                        ------------------------   ------------------------  --------------------------
                                                       Weighted-                  Weighted-                    Weighted
                                                       Average                    Average                     Average
                                                       Exercise                   Exercise                    Exercise
                                           Shares        Price        Shares        Price                       Price
                                           ------        -----        ------        -----                       -----
<S>                                         <C>        <C>              <C>       <C>        <C>               <C>
Outstanding at beginning
   of period                                140,000    $    0.44        90,000    $   0.50           --        $   --
Granted                                      20,000         0.35        60,000        0.35       180,000          0.43
Exercised                                       --           --            --          --            --            --
Cancelled                                       --           --        (10,000)       0.50       (20,000)         0.50
                                        -----------                -----------               -----------
Outstanding at end of period                160,000         0.43       140,000        0.44       160,000          0.43
                                        ===========                ===========               ===========
Options exercisable at period-end           160,000         0.43       140,000        0.44       160,000          0.43
Weighted-average fair value of
   options granted during the period    $      0.32                $      0.25               $      0.18
                                        ===========                ===========               ===========
</TABLE>


During the nine months ended  September 30, 2005 the Company  granted options on
20,000 common shares exercisable at $0.35 per share until September 8, 2010. The
Company  recorded  $3,230 as the fair  value of 10,000  options  granted  to one
research  consultant.  The amount  recorded was determined  using the fair value
method under the Black-Scholes  option-pricing  model assuming a 3.60% risk free
interest  rate,  a 5-year  expected  life,  a  volatility  rate of 154% and a 0%
dividend rate. At the grant date, the fair value per option granted was $0.32.

During 2004 the Company granted  options on 60,000 common shares  exercisable at
$0.35 per share until December 6, 2009. The Company  recorded $4,960 as the fair
value of 20,000  options  granted to two  consultants  for services  rendered in
2004. The amount  recorded was determined  using the fair value method under the
Black-Scholes  option-pricing  model assuming a 3.91% risk free interest rate, a
5-year  expected  life, a volatility  rate of 89% and a 0% dividend rate. At the
grant date, the fair value per option granted was $0.25.

Note 9.  Income Taxes

Deferred  tax assets at September  30, 2005 and December 31, 2004 were  $395,000
and  $331,000,  respectively.  The  2005  balance  includes  $134,000  from  net
operating loss  carryforwards  and $261,000 of capital loss  carryforwards.  The
2004  amount  resulted  primarily  from net  operating  loss  carryforwards  and
investment writedowns.  A valuation allowance is required for those deferred tax
assets that are not likely to be realized.  Realization is dependent upon future
earnings  during the period loss  carryforwards  are  expected to be  available.
Because of the uncertain  nature of the ultimate  realization  of tax losses,  a
100% valuation allowance is recorded against the deferred tax asset arising from
net operating losses.

The Company has loss  carryforwards  available to reduce  future tax income,  if
any, of  approximately  $395,000 as of  September  30, 2005 that expire  between
December 31, 2021 and  September  30, 2025.  The  Company's  utilization  of its
available net operating loss carryforwards  against future taxable income may be
restricted  pursuant  to the "change in  ownership"  rules in Section 382 of the
Internal  Revenue Code.  These rules in general provide that an ownership change
occurs when the percentage  shareholdings of 5% direct or indirect  shareholders
of a loss  corporation  have in aggregate  increased by more than 50% during the
immediately preceding three years.

The income tax  provision  differs from the amount of income tax  determined  by
applying  the U.S.  federal  income  tax rate to  pretax  loss  from  continuing
operations  for the periods  ended  September  30, 2005 and December 31, 2004 as
follows:


                                       31
<PAGE>


Note 9.  Income Taxes (continued)

<TABLE>
<CAPTION>

                                                  2005        %        2004          %
                                             ---------------------  --------------------
<S>                                          <C>             <C>    <C>            <C>
Computed "expected" tax benefit              $  (91,000)     (34%)  $ (250,000)    (34%)
Increase (decrease) in income taxes
resulting from:
Increase (decrease) in valuation allowance       64,000       24%      239,000      32%
Nondeductible compensation and other             27,000       10%       11,000       2%
                                             ---------------------  --------------------
                                             $      --       --     $      --       --
                                             =====================  ====================
</TABLE>

Note 10.      Related Party Transactions

The Company pays an affiliated  company controlled by its President an aggregate
of $1,000 per month for office rent,  bookkeeping  and  administrative  services
with such payments  aggregating  $9,000 for the nine months ended  September 30,
2005 and $12,000 in 2004. In addition during the nine months ended September 30,
2005 and for the year ended December 31, 2004, the Company also paid  affiliated
companies   controlled   by  its  President  a  total  of  $16,088  and  $7,632,
respectively, as reimbursements for travel and related costs.

During the nine months ended  September 30, 2005 and for the year ended December
31, 2004 the Company incurred  interest of $6,136 and $7,500,  respectively,  in
connection  with  short-term  loans and  Subordinated  Notes from  officers  and
directors.

Note 11.      Management's Plans

The Company's financial statements have been presented on the basis that it will
be able to continue as a going concern,  which  contemplates  the realization of
assets and the satisfaction of liabilities in the normal course of business.

The  Company  has  incurred  losses  in  connection  with  the  acquisition  and
development of its  technology and has limited funds with which to operate.  The
only current source of revenues is interest being earned from notes  receivable.
While management believes that its cash resources will be sufficient to meet its
obligations when due for the next twelve months,  additional  capital  resources
may be required to further develop the Company's technologies to the point where
they are  commercially  viable.  However  management  does not presently have an
estimate of the additional  capital necessary to develop its technologies to the
point of  commercial  viability.  The  Company  also plans to use  resources  to
strengthen and expand its patents, establish certain strategic relationships and
develop market opportunities. Shortly thereafter, the Company expects to license
its technologies, which management believes will generate sufficient revenue and
cash flows to continue the Company's operations.  However, there is no assurance
that the Company will be able to successfully  commercialize its technologies or
be able to generate  sufficient cash flow or revenue from investments or through
the licensing of its technologies to provide sufficient working capital.

The accompanying financial statements do not include any adjustments which would
be  necessary  should the Company be unable to  continue as a going  concern and
therefore be required to realize its assets and  discharge  its  liabilities  in
other than the normal  course of business  and at amounts  different  from those
reflected in the accompanying financial statements.


                                       32
<PAGE>


Item  8.  Changes  In and  Disagreements  With  Accountants  on  Accounting  and
Financial Disclosure

On April 29, 2005,  McGladrey & Pullen, LLP declined to stand~ for reappointment
as our independent accountants due to the restrictions imposed by Section 208(a)
of the  Sarbanes-Oxley  Act  of  2002  and  the  rules  and  regulations  of the
Securities  Exchange  Commission that prohibit  partners on the audit engagement
team from providing audit services to the issuer for more than five  consecutive
years and from  returning  to audit  services  with the same issuer  within five
years.  During the years ended  December 31, 2004 and 2003 and through April 29,
2005, there were no disagreements  with McGladrey & Pullen, LLP on any matter of
accounting principles or practices,  financial statement disclosure, or auditing
scope  or  procedure  which,  if not  resolved  to  McGladrey  &  Pullen,  LLP's
satisfaction,  would have caused them to make reference to the subject matter of
such  disagreements in connection with their report on our financial  statements
for such years.

We  appointed  the  firm  of  Piercy  Bowler  Taylor  & Kern,  Certified  Public
Accountants  and  Business  Advisors,  a  Professional  Corporation  to serve as
independent  public  accountants  for the transition  period ended September 30,
2005.

Item 8A. Controls and Procedures

(a) Evaluation of disclosure controls and procedures.

In accordance  with Rule 13a-15(b) of the  Securities  Exchange Act of 1934 (the
"Exchange  Act"), an evaluation was carried out by the Company's Chief Executive
Officer and Chief  Financial  Officer,  of the  effectiveness  of the design and
operation of the Company's  disclosure  controls and  procedures  (as defined in
Rule 13a-14(c) and 15d-14(c) under the Exchange Act) as of the end of the period
covered by this report.

In  connection  with the  completion  of its audit of,  and the  issuance  of an
unqualified report on, our financial  statements for the year ended December 31,
2004, our former independent accountants,  McGladrey & Pullen, LLP, communicated
to our  Board of  Directors  that the lack of  segregation  of  duties  with one
individual having significant control over and responsibility for our accounting
system  was  a  material  weakness  and a  reportable  condition.  A  reportable
condition is a matter  coming to the  attention of our  independent  accountants
that,  in its  judgment,  relate to a  significant  deficiency  in the design or
operation of internal controls and could adversely affect our ability to record,
process,  summarize and report  financial data consistent with the assertions of
management  in the  financial  statements.  This lack of  segregation  of duties
resulted  in a clerical  error in the  Statements  of  Comprehensive  Income and
Stockholders'  Equity and the Balance Sheets at December 31, 2004 and an amended
Form 10-KSB filed April 25, 2005.

Management  is aware  that there is a lack of  segregation  of duties due to the
limited number of Company  employees  engaged in the  authorization,  recording,
processing  and  reporting  of  transactions.  The Company has assessed the cost
versus  benefit  of adding the  resources  that would  remedy or  mitigate  this
situation and currently, does not consider the benefits to outweigh the costs of
adding  additional staff in light of the limited number of transactions  related
to the  Company's  operations.  Executive  officers  will continue to review and
monitor transactions and financial reports to mitigate this material weakness.

Other than for the matters  discussed  above,  our Chief  Executive  Officer and
Chief  Financial  Officer  have  concluded  that  the  disclosure  controls  and
procedures were effective as of the end of the period covered by this report, to
ensure that material  information relating to the Company was made known to them
particularly  during the period for which this transitional report on Form 10KSB
was being prepared.

(b) Changes in internal controls over financial reporting.

There was not any  change in the  Company's  internal  controls  over  financial
reporting  that  occurred  during the  transition  period to which  this  report
relates that has  materially  affected,  or is  reasonably  likely to materially
affect, the Company's internal control over financial reporting.

Item 8B. Other Information

None.


                                       33
<PAGE>


                                    PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act

Directors and Officers
----------------------
The  following  table sets forth  information  with respect to each director and
executive officer of ASI as of November 30, 2005:

<TABLE>
<CAPTION>

    Name                     Age       Position
    ----                     ---       --------
<S>                          <C>       <C>
    Jerry E. Polis           73        President and Director since 1973
    Eric M. Polis            35        Secretary, Treasurer and Director since August 2000
    Dawayne R. Jacobs        63        Director since August 2000
    Gerald L. Ehrens         66        Director since September 2005
</TABLE>

There is no arrangement  between any of the directors or executive  officers and
any other person or persons,  pursuant to which he was or is to be selected as a
director or  executive  officer.  Jerry E. Polis is the father of Eric M. Polis.
There is no other blood relationship between or among the directors or executive
officers of ASI.

Each director  serves until the next annual meeting or until their  successor is
elected or appointed. The Company does not have an audit or any other committees
of the board of directors.

          Jerry E. Polis has been  President  and a director  since 1973.  Since
          1963 he has been  self-employed  primarily in real estate  investment,
          and from 1964 to 2002 he owned and operated Polis Realty. From 1968 to
          the sale of his ownership in January 1997, he was active as a co-owner
          of the Taco Bell  franchises for the State of Nevada  (operated  under
          privately  owned  Las  Cal   Corporation).   In  1994,  he  co-founded
          Commercial Bank of Nevada,  an unlisted publicly owned bank located in
          Las  Vegas,  Nevada,  which  was sold  through a merger to a NYSE bank
          group in June 1998. He was a director of Commercial Bank from 1994 and
          Chairman from May 1996 until its sale.  Mr. Polis  graduated from Penn
          State University with a B.A. Degree in Commerce in 1953.

          Eric M. Polis has been  Secretary of the Company since July 2000. As a
          Nevada licensed real estate agent,  he served as property  manager and
          leasing  agent for Polis  Realty  from  1993 to 2002.  Mr.  Polis is a
          private  investor  and  serves  on the  board  of  several  Las  Vegas
          non-profit   organizations.   He   obtained   a   B.S.   in   Business
          Administration from the University of Arizona in 1993.

          Dawayne R. Jacobs founded Jacobs Marketing Inc., a general merchandise
          manufacturing  representative  firm located in Plymouth,  Minnesota in
          1982.  He has  served as its  President  and CEO since  1982.  He also
          founded The Accessory Group, Henderson, Nevada in 1995, a manufacturer
          and national  distributor of proprietary  products,  and serves as its
          Chief Executive  Officer.  In 1993 he founded  International  Rainwear
          Inc.,  Henderson,  Nevada, a national distributor of rainwear that was
          sold in 1997.

          Gerald L. Ehrens has been a self-employed private investor since 1994.
          From 1992 to 1994 he was Chief  Operating  Officer of Inamed Corp.,  a
          Nasdaq medical  device  company.  Previously he held senior  executive
          positions at E.I.  Dupont and Union  Carbide with his last position at
          Union   Carbide  in  1992  being  Vice   President   of  New  Business
          Development.  In 1996,  he was  appointed  as a director  of  unlisted
          publicly  owned  Commercial  Bank of Nevada and served  until its sale
          through merger to a NYSE bank group in June 1998. He currently  serves
          as a director of SouthwestUSA  Bank in Las Vegas,  Nevada.  Mr. Ehrens
          received a BS in Chemical  Engineering  from  Princeton  University in
          1961 and a MS in  Industrial  Administration  from  George  Washington
          University in 1965.

Other Significant Personnel
---------------------------
During 2004 we used the following key personnel in our business:

          Dr. Igor Alexeff is past President of the Nuclear and Plasma  Sciences
          Society  of the  Institute  of  Electrical  and  Electronic  Engineers
          ("IEEE") and a past  chairman of the Plasma  Science and  Applications
          Committee  ("PSAC").  He is a Professor  Emeritus at the University of


                                       34
<PAGE>


          Tennessee  Electrical  and Computer  Engineering  department.  He is a
          plasma scientist,  inventor,  publisher and researcher and has led the
          prototyping  work on our plasma  antennas  and is the  inventor of our
          plasma decontamination and sterilization method.

Dr. Alexeff is engaged as a consultant on a month-to-month project basis.

Conflicts of Interest
---------------------
Certain  conflicts of interest now exist and will  continue to exist  between us
and certain of our officers, directors and consultants due to the fact that they
have other employment or business  interests to which they devote some attention
and they are expected to continue to do so. We have not established  policies or
procedures  for the  resolution  of current or  potential  conflicts of interest
between us and management,  consultants or affiliated entities.  There can be no
assurance  that members of management  will resolve all conflicts of interest in
our favor.  Our officers and directors are  accountable to us as fiduciaries and
are required to adhere to our Code of Business  Conduct and Ethics,  which means
that they are legally obligated to exercise good faith and integrity in handling
our affairs.  Failure by them to conduct our business in our best  interests may
result in liability to them.

It is  conceivable  that our areas of interest  could  overlap or conflict  with
other business  interests of our management or our consultants.  We believe that
our areas of focus,  products and technology  directions are unique and distinct
from other  businesses in which our management and  consultants  may be involved
such that no conflict in business  lines or loyalties  will  result.  Because of
this unlikelihood,  no steps have been taken to resolve possible conflicts,  and
any such  conflicts,  should they arise,  will be addressed  at the  appropriate
time.

Code of Ethics
--------------
We have  adopted  a code of  ethics  that  applies  to our  principal  executive
officer, principal financial officer and principal accounting officer or persons
performing  similar functions (as well as its other employees and directors).  A
copy of the Code Ethics for Senior  Officers is posted on our  Internet  site at
www.asiplasma.com.  In the event we make any amendments to, or grant any waivers
of, a  provision  of the Code  Ethics for Senior  Officers  that  applies to the
principal   executive  officer,   principal   financial  officer,  or  principal
accounting  officer that requires  disclosure  under  applicable  SEC rules,  we
intend to disclose such  amendment or waiver and the reasons  therefor on a Form
8-K or on our next periodic report.

Section 16(a) Beneficial Ownership Reporting Compliance
-------------------------------------------------------
Section 16(a) of the  Securities  Exchange Act of 1934 (the "Act")  requires the
Company's  officers,  directors  and persons who own more than 10% of a class of
the  Company's  securities  registered  under  Section  12(g) of the Act to file
reports of ownership and changes in ownership  with the  Securities and Exchange
Commission  ("SEC").  Officers,  directors and greater than 10% stockholders are
required by SEC  regulation  to furnish  the Company  with copies of all Section
16(a) forms they file.

Based solely on a review of copies of such reports  furnished to the Company and
written   representations  that  no  other  reports  were  required  during  the
transition  period ended  September  30,  2005,  the Company  believes  that all
persons  subject to the reporting  requirements  pursuant to Section 16(a) filed
the required reports on a timely basis with the SEC.

Audit Committee
---------------
The Company has no formal audit committee with the board of directors serving in
such capacity. The board has determined that Gerald L. Ehrens would qualify as a
financial expert.  Mr. Ehrens would be deemed  "independent" if we were a listed
company or quoted on Nasdaq.

Item 10. Executive Compensation

There is shown below information  concerning the compensation of Jerry E. Polis,
our chief executive officer (the "Named Executive Officer"), for the nine months
ended  September 30, 2005  (transition  period) and the years ended December 31,
2004 and 2003. No other executive  officer's salary and bonus exceeded  $100,000
during any fiscal year or period.


                                       35
<PAGE>

<TABLE>
<CAPTION>

                                            Summary Compensation Table
                                            --------------------------
                                                                                         Long Term
                                            Annual Compensation                          Compensation
                                            -------------------                          ------------
                                                                                    Securities Underlying
Name and                        Fiscal                             Other Annual            Options
Principal Position              Period      Salary        Bonus    Compensation          (# of Shares)
------------------              ------      ------        -----    ------------          -------------
<S>                              <C>        <C>            <C>         <C>                      <C>
Jerry E. Polis, President        2005       $-0- (1)       $-0-        $ -0-                   -0-
                                 2004       $-0- (1)       $-0-        $200 (1)            10,000
                                 2003       $-0- (1)       $-0-        $ -0-                   -0-

<FN>
          (1)  Director fees. Mr. Polis received no  compensation  as an officer
               of the Company for any period.  The Company  recorded  $24,000 in
               2003 and 2004 and  $18,000 in 2005 (nine  months) as  contributed
               services for Mr. Polis.
</FN>
</TABLE>

Option Grants

There were no grants of stock options to the Named Executive  Officer  reflected
in the  Summary  Compensation  Table  shown  above  for the  nine  months  ended
September 30, 2005.

Option Exercises and Fiscal Period-End Option Values

There were no options exercised by Mr. Polis or any other person during the nine
months ended September 30, 2005.
<TABLE>
<CAPTION>

                                   Aggregated Option Exercises and Fiscal Period-End Values
                                   --------------------------------------------------------
                                                       Number of Unexercised          Value of Unexercised
                             Shares                       Options Held At            In-The-Money Options At
                           Acquired      Value          September 30, 2005            September 30, 2005(1)
       Name              On Exercise    Realized     Exercisable  Unexercisable     Exercisable    Unexercisable
       ----              -----------    --------     -----------  -------------     -----------    -------------
<S>                          <C>          <C>           <C>             <C>          <C>                <C>
       Jerry E. Polis       -0-          -0-            20,000         -0-           $ 500             -0-

<FN>
    (1) Based on the closing bid price on September 30, 2005 of $0.40 per share.
</FN>
</TABLE>

On August 16, 2000,  the  shareholders  approved the 2000 Equity  Incentive Plan
reserving an aggregate of 250,000  shares of common stock for issuance under the
plan. At September 30, 2005, there were 160,000 options outstanding.

Other than the 2000 Equity Incentive Plan, we do not have any stock appreciation
rights plans in effect and have no long-term incentive plans, as those terms are
defined in Securities and Exchange Commission regulations.

Director Compensation

The directors  receive  compensation  of $100 per meeting for their  services as
directors and Mr. Jerry E. Polis,  Chairman of the Board, receives $200 for each
meeting.  None of the  officers  currently  receive any  compensation  for their
services as officers of the Company.  We may begin compensating  management at a
future  date.  There are no  employment  contracts  with any of our  officers or
directors.

Item 11.  Security  Ownership of Certain  Beneficial  Owners and  Management and
Related Stockholder Matters.

The  following  table sets forth,  as of December  20,  2005,  the Common  Stock
ownership of each of our directors and officers,  all of our executive  officers
and directors as a group,  and each person known by us to be a beneficial  owner
of 5% or more of our Common Stock. Except as otherwise noted, each person listed
below is the sole  beneficial  owner of the shares and has sole  investment  and
voting power as to such shares.

     Name and Address                          Amount & Nature
     of Beneficial                               of Beneficial        Percent
        Owner                                    Ownership           of Class
        -----                                    ---------           --------
     Jerry E. Polis                             2,876,024 (1)          37.8%
     President and Director
     980 American Pacific Drive, #111
     Henderson, Nevada 89014


                                       36
<PAGE>

     Eric M. Polis                                146,000 (2)           2.1%
     Secretary, Treasurer and Director
     980 American Pacific Drive, #111
     Henderson, Nevada 89014

     Dawayne R. Jacobs                            120,000 (3)           1.7%
     Director
     980 American Pacific Drive, #111
     Henderson, Nevada 89014

     Gerald L. Ehrens                             235,000 (4)           3.3%
     Director
     980 American Pacific Drive, #111
     Henderson, Nevada 89014

     James A. Barnes                              630,281 (5)           9.0%
     8617 Canyon View Drive
     Las Vegas, NV 89117

     Elwood G. Norris                             447,905 (6)           6.3%
     14486 Southern Hills Lane
     Poway, CA 92064

     All directors and officers as a group      3,377,024 (7)          43.5%
       (4 persons)
____________________________

(1)  Includes 1,784,156 shares held by the Polis Family Trust and 363,000 shares
     held by  Davric  Corporation,  a  company  controlled  by Mr.  Polis.  Also
     includes currently exercisable options on 20,000 shares of common stock and
     warrants on 578,571 shares of common stock.

(2)  Shares held by family trust. Also includes currently exercisable options on
     20,000  shares of  common  stock and  warrants  on 25,000  shares of common
     stock.

(3)  Includes currently exercisable options on 20,000 shares of common stock.

(4)  Consists  of  150,000  shares  held by  family  limited  partnership.  Also
     includes currently exercisable options on 10,000 shares of common stock and
     warrants on 75,000 shares of common stock.

(5)  Includes 435,281 shares held by Sunrise Capital, Inc., a company controlled
     by Mr.  Barnes,  and 100,000  shares held by a family trust.  Also includes
     currently exercisable options on 20,000 shares of common stock and warrants
     on 25,000 shares of common stock.

(6)  Shares held by family trust. Also includes currently exercisable options on
     20,000  shares of  common  stock and  warrants  on 25,000  shares of common
     stock.

(7)  Includes currently exercisable options on 70,000 shares of common stock and
     warrants on 678,571 shares of common stock.

See Item 5 above for information regarding our 2000 Equity Incentive Plan.

Item 12. Certain Relationships and Related Transactions

In August and September 2005, Jerry E. Polis, an officer and director, purchased
through his family trust and a controlled  corporation 1,157,142 shares of stock
at $0.35 per share,  $405,000 of 7% subordinated  notes due July 31, 2008 and as
part of the units received 578,571 warrants exercisable at $0.50 per share until
July 31, 2008. In August 2005, Eric M. Polis, an officer and director, purchased
through his family trust 50,000  shares of stock at $0.35 per share,  $17,500 of
7% subordinated notes due July 31, 2008 and as part of the units received 25,000
warrants  exercisable  at $0.50 per share until July 31,  2008.  In August 2005,
prior to being appointed a director,  Gerald L. Ehrens purchased  150,000 shares
of stock at $0.35 per share,  $52,500 of 7% subordinated notes due July 31, 2008


                                       37
<PAGE>

and as part of the units received 75,000 warrants exercisable at $0.50 per share
until July 31,  2008.  David A. Polis,  the son of Jerry E. Polis and brother of
Eric M. Polis,  in  September  2005  purchased  through his family  trust 50,000
shares of stock at $0.35 per share,  $17,500 of 7%  subordinated  notes due July
31, 2008 and as part of the units received 25,000 warrants  exercisable at $0.50
per share until July 31, 2008.

In June 2005 Jerry E. Polis  exchanged  $75,000  principal  amount of 10% demand
notes for 250,000  shares of common  stock.  This demand note  represented  cash
advanced in 2002.

We  recorded  $24,000 in 2004 and $18,000 in 2005 (nine  months) as  contributed
services  for Jerry E.  Polis.  No common  stock or other value is due for these
contributed services.

We currently share office space with Davric Corporation, an entity controlled by
Mr. Jerry E. Polis. We are paying Davric Corporation $1,000 per month for use of
this space and  associated  administrative  costs.  We paid  $12,000 in 2004 and
$9,000 in 2005 (nine months) in such costs.

Item 13. Exhibits and Reports on Form 8-K

     Exhibit
     Number                     Description of Exhibit
     ------                     ----------------------

     3.1*      Restated Articles of Incorporation of ASI Technology  Corporation
               as filed with the  Secretary  of State of Nevada on  September 1,
               2000.

     3.2*      Bylaws of the Company.

     4.1*      Form of Certificate evidencing common stock of the Company.

     4.2       # Form of Securities  Purchase  Agreement between the Company and
               private placees.

     4.3       # Form of 7%  Subordinated  Promissory Note issued by the Company
               to noteholders.

     4.4       # Form of Stock Purchase Warrant for Common Stock  Exercisable at
               $0.50 per share until July 31, 2008.

     10.1*     2000 Equity Incentive Plan ratified by the shareholders on August
               1, 2000.

     10.1.1*   Standard  form of stock  option  agreement  under the 2000 Equity
               Incentive Plan.

     10.2*     Purchase  Agreement dated August 20, 1999 between the Company and
               Patriot Scientific Corporation.

     10.3*     Purchase  Agreement  dated  December 29, 2000 between the Company
               and American Technology Corporation.

     10.4**    Patent License  Agreement  effective  January 1, 2003 between the
               Company and Igor Alexeff.  Portions of this exhibit (indicated by
               asterisks)   have  been   omitted   pursuant  to  a  request  for
               confidential  treatment  pursuant to Rule 24b-2 of the Securities
               Exchange Act of 1934.

     10.5***   Technology  Purchase  Agreement  dated March 19, 2003 between the
               Company and Markland Technologies, Inc.

     10.6****  Promissory  Note  between  the Company  and  Concordia  Homes for
               $755,000 dated August 10, 2005.

     31.1      Certification  of  Principal   Executive  Officer,   Pursuant  to
               Exchange Act Rule 13a-14(a),  as Adopted  Pursuant to Section 302
               of the Sarbanes-Oxley Act of 2002.

     31.2      Certification  of  Principal   Financial  Officer,   Pursuant  to
               Exchange Act Rule 13a-14(a),  as Adopted  Pursuant to Section 302
               of the Sarbanes-Oxley Act of 2002.

     32.1      Certification  of  Principal  Executive  Officer,  Pursuant to 18
               U.S.C.  Section 1350,  as Adopted  Pursuant to Section 906 of the
               Sarbanes-Oxley Act of 2002.

     32.2      Certification  of  Principal  Financial  Officer,  Pursuant to 18
               U.S.C.  Section 1350,  as Adopted  Pursuant to Section 906 of the
               Sarbanes-Oxley Act of 2002.


*         Exhibit  incorporated  by  reference to the exhibit of the same number
          previously  filed by us in our 2000 Annual Report on Form 10-KSB filed
          on March 23, 2001.

**        Exhibit  incorporated  by  reference to the exhibit of the same number
          previously filed by us on Form 8-K dated February 11, 2003.


                                       38
<PAGE>

***       Exhibit  incorporated  by  reference to the Exhibit 2.1 filed by us on
          Form 8-K dated March 25, 2003.

****      Exhibit  incorporated by reference to Exhibit 99.1 filed by us on Form
          8-K dated August 16, 2005.

#         Exhibit  incorporated  by  reference to exhibits  10.6,  10.7 and 10.8
          filed by us on Form 8-K dated August 31, 2005.

________________________________


Item 14. Principal Accountant Fees and Services

The  Company  does  not have an  Audit  Committee  and  therefore  the  Board of
Directors  reviews  and  approves  audit  and  permissible   non-audit  services
performed by the principal  accountants  as well as the fees for such  services.
McGladrey & Pullen, LLP served as principal accountant for the fiscal year ended
December 31, 2004 and until April 29, 2005.  Subsequently  as reported on May 3,
2005  Piercy  Bowler  Taylor & Kern was  appointed  as the  Company's  principal
accountant.  In its review of  non-audit  service fees and its  appointments  of
McGladrey  &  Pullen,  LLP and  Piercy  Bowler  Taylor  & Kern as the  Company's
independent accountants, the Board of Directors considered whether the provision
of such services is compatible with  maintaining  McGladrey & Pullen,  LLP's and
Piercy Bowler Taylor & Kern's independence.

AUDIT FEES. The aggregate fees billed by Piercy Bowler Taylor & Kern to the date
of this  report  for  professional  services  for the audit of the  transitional
financial  statements of the Company and the reviews of the financial statements
included in the Company's quarterly reports on Form 10-QSB for 2005 were $22,380
including expenses.

AUDIT-RELATED  FEES. There were no other fees billed by the Company's  principal
accountants  during the fiscal year ended  December  31, 2004 or the  transition
period ended  September 30, 2005 for  assurance  and related  services that were
reasonably  related to the  performance  of the audit or review of the Company's
financial statements and not reported under "Audit Fees" above.

TAX FEES.  There  were no fees  billed by the  Company's  principal  accountants
during the last two fiscal  years for  professional  services  rendered  for tax
compliance, tax advice and tax planning.

ALL OTHER FEES FOR PRODUCTS AND SERVICES. There were no other fees billed by the
Company's  principal  accountants during the fiscal year ended December 31, 2004
or the  transition  period ended  September 30, 2005 for  professional  services
rendered for other products or services.

The Audit Committee  (consisting of the entire Board of Directors)  pre-approved
all audit,  audit-related  and non-audit  services  performed by our independent
registered public accounting firm and subsequently  reviewed the actual fees and
expenses paid to Piercy Bowler Taylor & Kern. The Audit Committee has determined
that the fees paid to Piercy  Bowler  Taylor & Kern for  non-audit  services are
compatible with  maintaining  Piercy Bowler Taylor & Kern's  independence as our
independent registered public accounting firm.


                                       39
<PAGE>

                                   SIGNATURES

In  accordance  with  Section 13 or 15(d) of the Exchange  Act,  the  registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                          ASI TECHNOLOGY CORPORATION

                                          By:    /s/ JERRY E. POLIS
                                             -----------------------------
                                                Jerry E. Polis
                                                President

Date:  December 27, 2005

In  accordance  with the Exchange  Act, this report has been signed below by the
following  persons on behalf of the  registrant and in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>

         Name                             Position                              Date
         ----                             --------                              ----
<S>                              <C>                                            <C>
/s/ JERRY E. POLIS               President                                      December 27, 2005
    Jerry E. Polis               and Director
                                 (principal executive officer)

/s/ ERIC M. POLIS                Secretary, Treasurer and Director              December 27, 2005
    Eric M. Polis                (principal financial and accounting officer)


/s/ DAWAYNE R. JACOBS            Director                                       December 27, 2005
    Dawayne R. Jacobs

/s/ GERALD L. EHRENS             Director                                       December 27, 2005
    Gerald L. Ehrens
</TABLE>


                                       40