UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)
x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2009
o	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from to

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~Commission~~For the fiscal year ~~File~~ended ~~Number~~December ~~0-26604~~31, 2015

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

For the transition period from ___________ to __________

Commission file number 000-26604

Allied Security Innovations, Inc.

(Exact ~~name~~ Name of Registrant as ~~specified~~Specified in ~~its charter~~Its Charter)

Delaware	23-2770048
(State of incorporation)	(IRS Employer Identification Number)
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1709 Route 34 South Farmingdale, New Jersey	07727
(Address of principal executive offices)	(Zip Code)

224 Datura St.

~~Registrant's~~West ~~telephone~~Palm ~~number~~Beach, ~~including~~FL ~~area code: (732) 751-1115~~33401

~~Securities registered pursuant to Section 12~~(b) Address of ~~the~~Principal ~~Act:~~Executive ~~None~~Offices)

~~Securities registered pursuant to Section 12(g) of the Act: Common Stock~~561-570-4301

~~Indicate~~(Issuer’s bytelephone ~~checkmark if registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x~~number)

~~Indicate by~~Securities ~~checkmark~~registered ~~if registrant is not required to file reports~~ pursuant to Section 13 ~~or Section 15~~12(db) of the Act~~. Yes o No x~~:

Indicate by ~~checkmark whether the Registrant (1) has filed all reports required to be filed~~ by ~~Section 13 or 15(d) of the Securities Exchange Act of 1934 during the~~ ~~preceding~~check 12mark ~~months~~if ~~(or for such shorter period that~~ the registrant ~~was~~is ~~required to~~a ~~file~~well-known ~~such~~seasoned ~~reports)~~issuer, ~~and~~as ~~(2)~~defined ~~has~~in ~~been~~Rule ~~subject~~405 toof ~~such filing requirements for~~ the ~~past~~Securities ~~90 days~~Act. Yes x ☐ No o☒

~~Check~~Indicate ~~whether~~by ~~the~~check ~~registrant~~mark ~~has submitted electronically and posted on its corporate Website,~~ if ~~any,~~the ~~every~~registrant ~~Interactive~~is ~~Data~~not ~~File~~ required to befile ~~submitted~~reports ~~and posted~~ pursuant to ~~Rule~~Section ~~405~~13 ofor ~~Regulation S-T during the preceding 12 months~~ 15(ord) ~~for~~of ~~such shorter period that~~ the ~~registrant~~Exchange ~~was required to submit and post such files)~~Act. Yes ☒ No x☐

Indicate by check mark ifwhether ~~disclosure~~the ofregistrant: ~~delinquent~~(1) ~~filers~~has ~~pursuant~~filed all reports required to ~~Item~~be ~~405~~filed by Section 13 or 15(d) of the Securities ~~Regulation~~Exchange ~~S-K~~Act isof ~~not~~1934 ~~contained~~during ~~herein,~~the ~~and~~preceding ~~will~~12 ~~not~~months be(or ~~contained,~~for tosuch ~~the~~shorter ~~best of~~period that the ~~Registrant’s~~registrant ~~knowledge,~~was inrequired ~~definitive~~to ~~proxy~~file orsuch reports) ~~information~~and ~~statements incorporated~~(2) byhas ~~reference~~been insubject ~~Part~~to ~~III~~such offiling ~~this~~requirements ~~Form~~for ~~10-K~~the orpast ~~any~~90 ~~amendment~~days. toYes ~~this Form~~☐ ~~10-K. o~~No ☒ *

~~Indicate~~* byThe ~~check~~registrant ~~mark~~is ~~whether~~a ~~the~~voluntary ~~registrant~~filer isof areports ~~large~~required ~~accelerated~~to ~~filer,~~be ~~an accelerated~~filed ~~filer,~~by acertain ~~non-accelerated~~companies ~~filer,~~under orSection a13 ~~small~~or ~~reporting~~15(d) ~~company.~~of ~~See~~the Securities ~~definition~~Exchange Act of ~~“large~~1934 ~~accelerated~~and ~~filer”,~~has ~~“accelerated~~filed ~~filer”,~~all ~~and~~reports ~~“smaller~~that would have been required to have been filed by the registrant during the preceding ~~reporting~~12 ~~company”~~months inhad ~~Rule~~it ~~12b-2~~been ofsubject to such filing requirements during the ~~Exchange~~entirety ~~Act~~of such period.

~~Large~~Indicate ~~accelerated~~by ~~filer~~check omark ~~Accelerated~~whether ~~filer~~the oregistrant has ~~Non~~submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-~~accelerated~~T ~~filer~~(§ 232.405 of othis chapter) during the preceding 12 months (Door ~~not~~for ~~check~~such ifshorter ~~smaller~~period ~~reporting~~that ~~company)~~the ~~Smaller~~registrant ~~reporting~~was ~~company~~required xto submit such files). Yes ☐ No ☒

Indicate by check ~~checkmark~~mark ~~whether~~if ~~the~~disclosure ~~registrant~~of isdelinquent afilers ~~shell~~pursuant ~~company~~to Item 405 of Regulation S-K (as§ ~~defined~~229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in ~~Rule~~definitive ~~12b-2~~proxy or information statements incorporated by reference in Part III of the ~~Securities~~Form ~~Act)~~10-K or any amendment to the Form 10-K. ~~Yes o No~~ x☐

~~The~~Indicate by check mark whether the registrant ~~issuer~~is ~~had~~a ~~revenues~~large ofaccelerated $3filer,~~597~~ an accelerated filer,~~653 for~~ ~~the~~a non-accelerated filer, smaller reporting company, or an emerging growth company. ~~fiscal~~See ~~year~~the ~~ended~~definitions ~~December~~of 31“large accelerated filer,” ~~2009~~“accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

AsLarge ~~of April~~accelerated 7,filer ~~2010,~~☐ ~~90,222,937 shares~~Accelerated offiler ~~the issuer's~~☐ ~~Common~~Non-accelerated ~~Stock~~filer ~~were~~☐ ~~outstanding~~ Smaller reporting company ☒ Emerging growth company ☐

~~The~~If an emerging ~~aggregate~~growth ~~market~~company, ~~value~~indicate ofby ~~the~~check ~~voting~~mark ~~Common~~if ~~Stock~~the ~~held~~registrant byhas ~~non-affiliates~~elected onnot ~~June 30,~~to ~~2009~~use (the ~~last~~extended ~~business~~transition ~~day~~period offor ~~our~~complying ~~most~~with any ~~recently~~new ~~completed~~or ~~second~~revised ~~fiscal quarter)~~financial ~~was~~accounting ~~$331,165~~standards ~~using~~provided ~~the~~pursuant ~~closing~~to ~~price~~Section on13(a) ~~June~~of ~~30,~~the ~~2009~~Exchange Act. ☐

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

As of December 31, 2018, 411,239,719 shares of the issuer's Common Stock were outstanding

The aggregate market value of the voting Common Stock held by non-affiliates on 12/31/2018 was $ 82,248 using the closing price of $0.0002.

PART I

ITEM 1. Business

History

Allied Security Innovations, Inc. ("~~ASSI~~ADSV," the "Company," "us," "we," or "our"), a Delaware corporation incorporated in 1994, formerly known as Digital Descriptor Systems, Inc. which was the successor to Compu-Color, Inc., an Iowa corporation. The operations of DDSI were started as a division of ASI Computer Systems, Inc. of Waterloo, Iowa in 1986. Compu-Color, Inc. was formed in July 1989 and as of July 1, 1989 purchased the assets of the Compu-Color division of ASI Computer Systems, Inc.

Our Business

During 2005 the Company acquired CGM Security Solutions, Inc. as a wholly owned subsidiary and changed its name to CGM Applied Security Technologies, Inc. In conjunction with the acquisition the Company has changed its primary focus from the law enforcement market to the security market in general as it believes that the potential for revenue is much greater.

Description of Business of CGM

CGM-AST is a manufacturer and distributor of indicative and barrier security seals, security tapes and related packaging security systems, protective security products for palletized cargo, physical security systems for tractors, trailers and containers as well as a number of highly specialized ~~authentication~~ authentication products. Focused primarily on “deterrent technologies,” CGM-AST designs and develops customized tamper evident devices which when integrated into a security protocol; provide chain of custody and/or proof of tampering for targeted assets.

The primary factors behind the need for CGM-AST’s products are: (i) the escalation of cargo theft and tampering, (ii) the need for enhanced cargo security because of the fear of terrorism, (iii) damage control of freight and cargo, (iv) the need for security products, (v) brand protection and authentication requirements and (vi) governmental and regulatory requirements.

CGM-AST products are certified by the Customs-Trade Partnership Against Terrorism ("C-TPAT"), a joint initiative between government and business designed to protect the security of cargo entering the United States while improving the flow of trade. C-TPAT requires importers to take steps to assess, evolve ~~and~~ and communicate new practices that ensure tighter security of cargo and enhanced security throughout the entire supply chain. In return, their goods and conveyances will receive expedited processing into the United States. Many of our products are also ISO 17712 compliant, which is a standard for international shipping and container security.

It is estimated that losses from cargo theft each year reach 30-50 billion dollars globally and 12 billion dollars in the US, and that these numbers will continue to rise. Figures taken from L.H. Gray entitled Facing the Growing Problem of Loss and Theft.Products

CGM-AST has Trade Secret protection on its Secure T.R.A.C.® tape, Super Seals, Water Gum Tape, developed a Button Memory Seal and Sentry Sensor®. It also has distribution rights on all NAVATECH products and seals, and owns the rights to the patented ToppClip® pallet security device. In addition, CGM-AST provides authentication technology and products to clients to act as brand protection elements to finished goods. This brand protection technology can help manufacturers reduce the incidences of "knock-offs" that are common in the garment and accessory businesses. CGM-AST’s core products are: CGM-AST Tapes, Self-Wound Security Tape, Void Labels and Void Tape for Bag Closure, SUPERSEALS®, Custom Coated Products, CGM-AST Conductive Inks and Membrane Switch Components, EMAPS®, Locks, Sentry Sensor® and other representative items.

~~CGM-AST has~~SUPERSEAL® ~~Trade~~and ~~Secret~~self-voiding ~~protection~~carton onsealing ~~its~~tape ~~Secure~~known as SECURE T.R.A.C.~~® tape, Super~~(R) ~~Seals,~~show ~~Water~~a ~~Gum~~customized ~~Tape,~~signature ~~developed~~if aattempts ~~Button~~are ~~Memory~~made ~~Seal~~at removing them. If cut and ~~Sentry Sensor~~resealed, SUPERSEAL®. Itfurther ~~also~~shows ~~has~~an ~~distribution~~"opened" ~~rights~~legend on ~~all~~the ~~NAVATECH~~seal's ~~products~~center ~~and~~surface. ~~seals,~~With ~~and~~self-wound ~~owns~~void ~~the rights~~tape, toany ~~the~~attempt ~~patented~~at ~~ToppClip®~~resealing ~~pallet~~is ~~security~~negated ~~device.~~by Inthe ~~addition,~~surface ~~CGM-AST~~coating ~~provides~~on ~~authentication~~the ~~technology~~tape. ~~and~~An ~~products~~"opened" ~~to clients~~legend tois ~~act~~also asleft ~~brand~~on ~~protection~~the ~~elements~~tape toif ~~finished goods~~removed. ~~This~~Since ~~brand protection~~the ~~technology~~products ~~can~~are ~~help~~manufactured in-house, ~~manufacturers~~CGM-AST ~~reduce~~controls ~~the~~all ~~incidences~~features ~~of "knock-offs"~~and ~~that~~has ~~are~~the ~~common~~ability into customize the ~~garment~~products ~~and~~to ~~accessory~~the ~~businesses~~customer's needs. CGM-AST’s also offers ~~core~~converted ~~products~~labels, ~~are:~~seals, and money bags. CGM-AST ~~Tapes,~~manufactures ~~Self-Wound~~a ~~Security~~variety ~~Tape~~of adhesives, ~~Void~~graphics ~~Labels~~ and ~~Void Tape~~die cut label configurations for ~~Bag~~companies ~~Closure,~~whose ~~SUPERSEALS(R),~~logos ~~Custom~~always ~~Coated~~appear ~~Products,~~on ~~CGM-AST~~the ~~Conductive Inks~~tape ~~and~~or ~~Membrane~~label ~~Switch~~for ~~Components,~~security ~~EMAPS(R),~~purposes. ~~Locks,~~No ~~Sentry~~generic ~~Sensor(R)~~product ~~and~~can ~~other~~be substituted for ~~representative~~this ~~items~~product since no one makes an identical product.

SUPERSEAL(R) and self-voiding carton sealing tape known as SECURE T.R.A.C.(R) show a customized signature if attempts are made at removing them. If cut and resealed, SUPERSEAL(R) further shows an "opened" legend on the seal's center surface. With self-wound void tape, any attempt at resealing is negated by the surface coating on the tape. An "opened" legend is also left on the tape if removed. Since the products are manufactured in-house, CGM-AST controls all features and has the ability to customize the products to the customer's needs. CGM-AST also offers converted labels, seals, and money bags. CGM-AST manufactures a variety of adhesives, graphics and die cut label configurations for companies whose logos always appear on the tape or label for security purposes. No generic product can be substituted for this product since no one makes an identical product.1

2Uses for this product and technology include such items as:

~~Uses~~o ~~for this~~Aircraft ~~product~~ and ~~technology~~truck ~~include such items as:~~seals

o ~~Aircraft~~ Fiber and ~~truck~~Steel drum seals

o ~~Fiber and~~Motor ~~Steel~~Vehicle ~~drum~~inspection seals

o ~~Motor Vehicle~~Pharmaceutical ~~inspection seals~~Packaging

o ~~Pharmaceutical~~ ~~Packaging~~Box or container closure seals

o ~~Box~~Cash ~~or container~~bag ~~closure seals~~components

o ~~Cash bag~~Computer ~~components~~seals

o ~~Computer~~ ~~seals~~Validation devices

o ~~Validation~~ ~~devices~~General security products

o ~~General security~~Law ~~products~~Enforcement Agencies

o Once CGM-AST's products are applied to a particular surface, ~~Law~~any ~~Enforcement~~attempt at removal will leave a sign in the form of an indelible word or legend on the tape and a removable or permanent legend ~~Agencies~~on the enclosure. The EMAPS® or Electro-Magnetic Asset Protection System reflects entry by sending an electronic signals if cut. EMAPS® products function without the need to identify a cut visually. Both products, the labels and the scanners, are unique and only manufactured by CGM-AST.

~~Once CGM-AST's~~Production products are applied to a particular surface, any attempt at removal will leave a sign in the form of an indelible word or legend on the tape and a removable or permanent legend on the enclosure. The EMAPS(R) or Electro-Magnetic Asset Protection System reflects entry by sending an electronic signals if cut. EMAPS(R) products function without the need to identify a cut visually. Both products, the labels and the scanners, are unique and only manufactured by CGM-AST.Process

~~Production~~The CGM-AST manufacturing process can best be described as ~~Process~~one of "converting". CGM-AST takes highly processed materials, which are manufactured elsewhere, and converts them into finished products. The Staten Island production facility has been designated as a secure facility for purposes of certain clientele.

~~The~~ CGM-AST ~~manufacturing~~purchases ~~process~~processed ~~can~~materials ~~best~~from be6 ~~described~~to as8 ~~one~~key ~~of "converting".~~suppliers, ~~CGM-AST~~including ~~takes~~DuPont, ~~highly~~Luminite ~~processed materials~~Corp, ~~which~~Adhesive ~~are~~Research, ~~manufactured~~Sun ~~elsewhere~~Chemical, ~~and converts~~Houghton ~~them~~Chemical ~~into~~and ~~finished~~Video ~~products~~Jet. ~~The~~ ~~Staten~~For ~~Island~~Video ~~production~~Jet, for OEM products, ~~facility~~CGM-AST purchases from approximately 15 different companies. CGM-AST has ~~been~~an ~~designated~~exclusive asdistribution arelationship ~~secure~~in ~~facility~~connection with some of these products, while for ~~purposes~~other products CGM-AST is one of ~~certain clientele~~few or many resellers.

~~CGM-AST purchases~~Markets ~~processed~~& materials from 6 to 8 key suppliers, including DuPont, Luminite Corp, Adhesive Research, Sun Chemical, Houghton Chemical and Video Jet. For Video Jet, for OEM products, CGM-AST purchases from approximately 15 different companies. CGM-AST has an exclusive distribution relationship in connection with some of these products, while for other products CGM-AST is one of few or many resellers.Customers

~~Markets~~The primary factors behind the need for CGM-AST’s products &are: ~~Customers~~(i) the escalation of cargo theft and tampering, (ii) the need for enhanced cargo security because of the fear of terrorism, (iii) damage control of freight and cargo, (iv) the need for security products, (v) brand protection and authentication requirements and (vi) governmental and regulatory requirements.

~~The primary~~CGM-AST ~~factors~~products ~~behind~~are ~~the~~certified ~~need~~by ~~for~~the ~~CGM~~Customs-~~AST’s~~Trade ~~products~~Partnership Against ~~are:~~Terrorism (i"C-TPAT"), ~~the~~a ~~escalation of~~joint ~~cargo~~initiative ~~theft~~between government and ~~tampering,~~business ~~(ii)~~designed ~~the~~to ~~need~~protect ~~for~~the ~~enhanced~~security of cargo ~~security~~entering ~~because of~~the United States while improving the ~~fear~~flow of ~~terrorism~~trade. C-TPAT requires importers to take steps to assess, ~~(iii)~~evolve ~~damage~~and communicate ~~control~~new practices that ensure tighter security of ~~freight~~cargo and ~~cargo,~~enhanced ~~(iv)~~security throughout the ~~need~~ ~~for~~entire ~~security~~supply ~~products,~~chain. ~~(v)~~In ~~brand~~return, their ~~protection~~goods and ~~authentication~~conveyances ~~requirements~~will receive expedited processing into the United States. Many of our products are also ~~and~~ISO ~~(vi)~~17712 ~~governmental~~compliant, which is a standard for international shipping and ~~regulatory~~container ~~requirements~~security.

~~CGM-AST products~~Principal are certified by the Customs-Trade Partnership Against Terrorism ("C-TPAT"), a joint initiative between government and business designed to protect the security of cargo entering the United States while improving the flow of trade. C-TPAT requires importers to take steps to assess, evolve and communicate new practices that ensure tighter security of cargo and enhanced security throughout the entire supply chain. In return, their goods and conveyances will receive expedited processing into the United States. Many of our products are also ISO 17712 compliant, which is a standard for international shipping and container security.Customers

~~Principal~~CGM-AST’s current client base includes over 2000 ~~Customers~~national and international companies, including producers of high value items such as perfumes, computers, silicon chips, jewelry, cash and negotiable documents. The market for tamper evidence includes flavors, fragrances, foodstuffs and components. CGM-AST’s products are used by U.S. Government agencies (e.g.: DOD, TSA, DHS, CBP) and Foreign National Governments, major airlines, pharmaceutical clients for packaging and clinical trials and multiple suppliers of high end electronics. CGM-AST’s products have also been recommended by major insurance companies. All elements of the supply chain, including growers, manufacturers, shippers and retailers are among our clientele.

CGM-AST’s current client base includes over 2000 national and international companies, including producers of high value items such as perfumes, computers, silicon chips, jewelry, cash and negotiable documents. The market for tamper evidence includes flavors, fragrances, foodstuffs and components. CGM-AST’s products are used by U.S. Government agencies (e.g.: DOD, TSA, DHS, CBP) and Foreign National Governments, major airlines, pharmaceutical clients for packaging and clinical trials and multiple suppliers of high end electronics. CGM-AST’s products have also been recommended by major insurance companies. All elements of the supply chain, including growers, manufacturers, shippers and retailers are among our clientele.2

~~The Company’s revenue from one customer accounted for 12.75% of total revenue for the twelve months ended December 31, 2009, which defines them as a major customer.~~Employees

3ADSV develops, assembles, markets and installs computer systems which capture video, digitally captured images and scanned images, digitize the image, link the digitized images to text/data and store the image and text on a computer database which allows for transmitting the image and text by computer or telecommunication links to remote locations.

~~Sales~~Imaging technology enables computers to record, store and retrieve both textual information and visual images. The common problem in imaging technology is how to record, store, process and retrieve information and images within the same system. ADSV's software programs utilize technology to link the textual information with the images so that customers can record and retrieve related text and images. ADSV originally developed the software to address the information retrieval problems of tax assessors. ADSV subsequently adapted the software for use by law enforcement agencies and management of jail facilities. ADSV's software also addresses different information retrieval needs such as reproducing line ups and producing housing badges (jails), bar coded wristbands for identification which facilitates movement within jails and courts and storing and retrieving hand written and computer generated document images within arrest records. The marketplace for this technology has become more of a commodity item than the specialized software it was in the past and the Company has made a decision not to actively pursue this market in the future as the cost of upgrading the software and competing in what we consider to be a very small marketplace does not justify the investment that would be necessary. While we will still support and maintain the existing customer base we will no longer actively solicit new customers.

~~CGM-AST has~~ADSV ~~three~~does ~~direct~~offer ~~salespeople,~~maintenance ~~two independent representatives~~ and 5support ~~distributors~~ for ~~domestic~~their ~~sales~~products. There are over 12 representative distributors for sales abroad managed by an in-house Director for International Channel Management. CGM-AST supplements its sales force with Internet advertising, trade shows, and PR benefits including participation and Chairing of educational programs and committees (e.g. the International Cargo Security Council (ICSC)) and a variety of legislators and key accounts targeted by an Executive level PR campaign.

~~Competition~~Maintenance and Support

~~Several other~~ADSV ~~companies~~offers ~~manufacture~~its ~~products~~customers' ~~that~~ongoing ~~are~~maintenance ~~similar to CGM-AST’s self-voiding label stock. As far as we know those products are limited in scope~~ and dosupport ~~not~~plus ~~adequately~~updates ~~address the issues~~ of ~~“needs based tampering” by virtue of their inability to withstand~~ the ~~normal means of breaching adhesive products. However~~software, ~~new~~ ~~innovations~~for ~~and~~an ~~better~~annual ~~sales/marketing by other companies with a product-solutions market approach could affect our ability to market our products~~fee.

As both a manufacturer and converter, CGM-AST delivers finished goods to users in response to clients’ needs. CGM-AST can modify its products through all phases of its development to make it user friendly and compatible with the needs of its desired application.Marketing

~~CMG-AST has~~Law aEnforcement unique platform of products, designed and customizable to address clients’ needs against individual threats. There are approximately 12 seal manufacturers that offer seals and compete with each other over price. CGM-AST sells through a "needs-based threat-specific" assessment and determines final product design on the basis of functionality.Applications

~~Industry~~ADSV markets its Law Enforcement products through vendors of ~~Trends~~compatible software applications.

~~Employees~~ADSV maintains a continuing relationship with its customers based upon support services and periodic upgrades of the Compu-Capture(R) line and Compu-Sketch(R) software. The major revenue-generating event is presently the support and maintenance of our existing customer base.

~~ASII employs~~Product aLiability ~~total of 14 full time employees and 2 part time employees, of whom 12 are employed by CGM.~~Insurance

~~ASII develops,~~Although ~~assembles,~~ADSV ~~markets~~believes ~~and~~its ~~installs~~products ~~computer~~are ~~systems~~safe, ~~which~~it ~~capture~~may ~~video,~~be subject ~~digitally~~to ~~captured~~product ~~images~~liability ~~and~~claims ~~scanned~~from ~~images,~~persons ~~digitize~~injured through the ~~image~~use of ADSV's marketed products or services. ADSV carries no direct product liability insurance, ~~link~~relying instead on the coverage maintained by its distributors and manufacturing sources from which ~~digitized~~it ~~images~~obtains product. There is no assurance that this insurance will adequately cover any liability claims brought against ADSV. There also can be no assurance that ADSV will be able to ~~text/data~~obtain ~~and~~its ~~store~~own ~~the~~liability ~~image~~insurance ~~and~~(should ~~text~~it seek to do so) on aeconomically feasible ~~computer~~terms. ADSV's failure to maintain its own liability insurance could materially adversely affect its ability to sell its ~~database~~products ~~which~~in ~~allows~~the ~~for~~future. ~~transmitting~~Although no product liability claims have been brought against ADSV to date, if there were any such claims brought against ADSV, the ~~image~~cost of defending against such claims and ~~text~~any damages paid by ~~computer~~ADSV orin connection with such claims could ~~telecommunication~~have ~~links~~a tomaterially ~~remote~~adverse ~~locations~~impact upon ADSV, including its financial position, results of operations and cash flows.

~~Imaging technology enables computers to record~~Patents, ~~store~~Trademarks and retrieve both textual information and visual images. The common problem in imaging technology is how to record, store, process and retrieve information and images within the same system. ASII's software programs utilize technology to link the textual information with the images so that customers can record and retrieve related text and images. ASII originally developed the software to address the information retrieval problems of tax assessors. ASII subsequently adapted the software for use by law enforcement agencies and management of jail facilities. ASII's software also addresses different information retrieval needs such as reproducing line ups and producing housing badges (jails), bar coded wristbands for identification which facilitates movement within jails and courts and storing and retrieving hand written and computer generated document images within arrest records. The marketplace for this technology has become more of a commodity item than the specialized software it was in the past and the Company has made a decision not to actively pursue this market in the future as the cost of upgrading the software and competing in what we consider to be a very small marketplace does not justify the investment that would be necessary. While we will still support and maintain the existing customer base we will no longer actively solicit new customers.Licenses

~~ASII~~ADSV ~~does~~owns the proprietary rights to the software used in the ~~offer~~Compu-Capture(R) ~~maintenance~~programs. In addition, ADSV owns the rights to the trademarks "Compu-Capture(R)," "Compu-Color(R)" and ~~support~~"Compu-Scan(R)," ~~for~~all ~~their~~trademarks ~~products~~have been registered with the United States Patent and Trademark Office.

~~Maintenance and Support~~3

~~ASII offers~~ITEM ~~its customers' ongoing maintenance and support plus updates of the software, for an annual fee~~2. Properties

~~Marketing~~The Company operates at 224 Datura Street, West Palm Beach, Florida, 33401, USA.

~~Law Enforcement~~ITEM ~~Applications~~3. Legal Proceedings

~~ASII markets its Law Enforcement products through vendors of compatible software applications~~None.

~~Customers~~ITEM 4. Submission of Matters to a Vote of Security Holders

~~ASII maintains a continuing relationship with its customers based upon support services and periodic upgrades of the Compu-Capture(R) line and Compu-Sketch(R) software~~None. The major revenue-generating event is presently the support and maintenance of our existing customer base. ASII has one major customer that purchased $458,841 or 12.8% of total sales, with $0 accounts receivable balance at December 31, 2009.

~~Business Alliances~~PART II

~~Our business~~ITEM ~~alliance relationships have changed over the years and we generate very little of our revenue through our relationships with records management and jail management vendors~~8. ~~Since~~Financial ~~these~~Statements vendors have written the necessary integration to use ASII imaging solutions, when a customer is looking to include an imaging system in their program, the vendor will inform ASII of the customers need. ASII is responsible for all marketing and ~~sales~~Supplementary ~~efforts of our imaging solution~~Data. ASII believes a very small portion of its revenue will come through these relationships. The imaging market has changed tremendously over the past 10 years and is not in our opinion a viable avenue of growth for the Company.

~~ASII~~See the ~~supplies~~financial tostatements ~~its~~annexed ~~business~~to ~~partners~~this aannual ~~SDK~~report ~~(software~~immediately ~~developers~~before the ~~kit),~~signature ~~which~~page ~~allows them~~and tobeginning ~~link~~as ~~our~~page “F-1” ~~software~~of tothis ~~their~~Form ~~software~~10-K.

~~Seek Acquisitions~~ITEM 9. Changes in and ~~Alliances~~disagreements with Accountants on Accounting and Financial Disclosure.

ASII management plans to execute an acquisition strategy. The make-up of the targeted acquisitions must include products and markets which complement and expand its present client base. Profitable, niche companies will be integrated into ASII's growth through acquisition strategy. ASII plans to use funding derived from external investors.None

OnITEM ~~March 1, 2005, ASII and CGM Applied Security Technologies, Inc~~9A. ~~("CGM-AST~~Controls ~~Sub"), acquired substantially all of the assets of CGM Security Solutions, Inc., a Florida corporation ("CGM"), for (i) $1,500,000 in cash~~ and (ii) a 2.86% promissory note (the "Note") in the principal amount of $3,500,000, subject to adjustment (the "Acquisition"). The assets of CGM-AST were acquired pursuant to an Asset Purchase Agreement among ASII, CGM-AST Sub and CGM Security Solutions dated as of February 25, 2005.Procedures

~~The principal~~Evaluation ~~amount~~ of ~~the~~disclosure ~~three~~controls ~~year Note is subject to adjustment based upon the average of (i) the gross revenues of CGM-AST Sub for the fiscal year ending December 31, 2009~~ and ~~(ii) an independent valuation of CGM-AST Sub based upon the consolidated audited financial statements of the Company and CGM-AST Sub for the fiscal years ended December 31, 2009 and 2008~~procedures. In addition, the Company has granted CGM-AST a secondary security interest in substantially all of its assets and intellectual property. If the Company is unable to fulfill its obligations pursuant to the Asset Purchase Agreement and the Note, there is a likelihood that CGM Security Solutions, Inc. can declare default and attempt to take back the asset.

~~In connection~~Management ~~with~~of the ~~Acquisition, the~~ Company ~~entered~~has ~~into a letter agreement~~evaluated, with ~~certain~~the participation of ~~its~~the ~~investors~~Chief ~~(the~~Executive ~~"Investors")~~Officer ~~which~~and ~~extended~~Chief ~~the~~Financial ~~maturity~~Officer ~~date~~ of ~~debt~~the ~~instruments issued on November 30~~Company, ~~2004~~the ~~until~~effectiveness ~~March~~of 1,the ~~2008,~~Company's disclosure controls and ~~amended the~~procedures ~~conversion~~(as ~~price~~defined ofin ~~the~~Rules ~~debt~~13a-15(e) ~~that~~or is15d-15(e) ~~held~~promulgated by the ~~Investors~~Securities and Exchange Commission pursuant to the ~~lower~~Securities Exchange Act of ~~(i)~~ ~~$0.0005~~1934, oras amended (iithe "Exchange Act")) ~~60%~~as of the ~~average~~end of the ~~three~~period ~~lowest~~covered by ~~intraday~~this ~~trading prices~~Annual ~~for~~Report ~~the~~on ~~Company's~~Form ~~common~~10-K. ~~stock~~Based ~~during~~on that evaluation, the 20Chief ~~trading~~Executive ~~days~~Officer ~~before,~~and ~~but~~Chief ~~not including,~~Financial ~~the~~Officer ~~conversion~~of ~~date.~~the InCompany had ~~addition,~~concluded that the ~~exercise~~Company's ~~price~~disclosure controls and procedures as of the ~~warrants held~~period covered by ~~the~~this ~~Investors~~Annual ~~was~~Report ~~amended~~on toForm ~~$.001~~10-K were ~~per~~not ~~share.~~effective for the following reasons:

~~On May~~ a) The ~~16,~~deficiency ~~2008~~was identified as the Company's ~~came~~limited tosegregation anof ~~agreement~~duties toamong ~~pay~~the ~~CGM~~Company's ~~Security~~employees ~~Solutions,~~with ~~Inc. and~~respect ~~its~~to ~~owner~~the MrCompany's control activities. ~~Erik~~This ~~Hoffer~~deficiency ~~Five~~is ~~Hundred~~the ~~Thousand~~result ~~Dollars~~of ~~($500,000)~~the ~~and signed~~Company's alimited ~~new~~number ~~note~~of ~~with~~employees. ~~him~~This ~~raising~~deficiency ~~the~~may ~~purchase~~affect ~~price by One Million Dollars~~management's ~~($1,000,000). The~~ability ~~new~~to ~~note~~determine ~~for~~if ~~Four~~errors ~~Million~~or ~~Dollars~~inappropriate isactions ahave ~~three~~taken ~~year note,~~place. ~~maturing~~Management onis ~~May~~required ~~16,~~to ~~2011~~apply ~~and~~its ~~carrying~~judgment anin ~~annual~~evaluating the ~~interest~~cost-benefit ~~rate~~relationship of 7%possible ~~of which~~changes ~~the~~in ~~interest~~our isdisclosure ~~due~~controls ~~quarterly~~and procedures.

~~Sales~~ b) The bydeficiency ~~Geographic~~was ~~Area~~identified in respect to the Company's Board of Directors. This deficiency is the result of the Company's limited number of external board members. This deficiency may give the impression to the investors that the board is not independent from management. Management and the Board of Directors are required to apply their judgment in evaluating the cost-benefit relationship of possible changes in the organization of the Board of Directors.

~~During the~~Management’s ~~fiscal~~Report ~~year~~on ~~ended~~Internal ~~December~~Control ~~31,~~Over ~~2009 the percentage of revenues that ASII~~Financial ~~received from domestic customers has been approximately 82%. Foreign sales for 2009 were $645,778.~~Reporting

~~Suppliers~~Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Management conducted an evaluation of the effectiveness of the Company's internal control over financial reporting as of December 31, 2017. In making this assessment, management used the framework set forth in the report entitled "Internal Control-Integrated Framework" issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO. The COSO framework summarizes each of the components of a Company's internal control system, including (i) the control environment, (ii) risk assessment, (iii) control activities, (iv) information and communication, and (v) monitoring. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer of the Company have concluded, as of the end of the fiscal year covered by this Annual Report on Form 10-K, due to a lack of segregation of duties, that our internal control over financial reporting has not been effective. However, at this time, our resources and size prevent us from being able to employ sufficient resources to enable us to have adequate segregation of duties within our internal control system. The Company intends to remedy the material weakness by hiring additional employees and reallocating duties, including responsibilities for financial reporting, among the Company's employees as soon as the Company has the financial resources to do so. Management is required to apply judgment in evaluating the cost-benefit relationship of possible changes in our disclosure controls and procedures.

~~ASII's hardware~~This isannual ~~compatible~~report ~~with~~does ~~the~~not ~~IBM~~include ~~AS400~~an ~~and~~attestation report ~~other~~of ~~mainframe~~our ~~and~~registered ~~mini~~public ~~computer manufacturers.~~accounting ~~The~~firm ~~peripheral~~regarding ~~equipment~~internal ~~used~~control inover ~~connection~~financial ~~with~~reporting. ~~ASII~~Management's ~~system,~~report was not ~~such~~subject asto ~~video~~attestation ~~equipment,~~by ~~can~~our beregistered ~~provided~~public ~~with~~accounting afirm ~~wide~~pursuant ~~range~~to temporary rules of ~~manufacturers.~~the AsSecurities and Exchange Commission athat ~~result~~permit ~~ASII~~us isto ~~not~~provide ~~dependent~~only onmanagement's ~~any~~report ~~particular~~in ~~supplier~~this orannual ~~raw material~~report.

~~Government Regulation or Government Approval~~5

~~Most~~Changes ~~law enforcement~~in ~~agencies~~Internal purchasing new or upgraded or expanded systems require that the system meet the requirements of NCIC2000, ANSI-NIST standards and standards issued by the National Crime Information Commission and by the FBIControls. ~~All ASII products and solutions were required to meet these requirements.~~

~~Research~~Management of the Company has evaluated, with the participation of the Chief Executive Officer of the Company, any change in the Company's internal control over financial reporting (as defined in Rules 13a-15(f) and ~~Development~~15d-15(f) under the Exchange Act) that occurred during the fiscal year covered by this Annual Report on Form 10-K. There was no change in the Company's internal control over financial reporting identified in that evaluation that occurred during the fiscal year covered by this Annual Report on Form 10-K that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting, other than what has been reported above

~~ASII spent~~ITEM ~~$88,801 and $94,946, respectively for the years ended December 31, 2009 and 2008 on research and development~~9B. ~~This~~OTHER ~~amount includes amounts spent on outside sources for assistance with Research and Development projects. None of these costs have been borne directly by our customers.~~INFORMATION

5None.

~~Product Liability Insurance~~6

~~Although ASII~~PART believes its products are safe, it may be subject to product liability claims from persons injured through the use of ASII's marketed products or services. ASII carries no direct product liability insurance, relying instead on the coverage maintained by its distributors and manufacturing sources from which it obtains product. There is no assurance that this insurance will adequately cover any liability claims brought against ASII. There also can be no assurance that ASII will be able to obtain its own liability insurance (should it seek to do so) on economically feasible terms. ASII's failure to maintain its own liability insurance could materially adversely affect its ability to sell its products in the future. Although no product liability claims have been brought against ASII to date, if there were any such claims brought against ASII, the cost of defending against such claims and any damages paid by ASII in connection with such claims could have a materially adverse impact upon ASII, including its financial position, results of operations and cash flows.III

~~Patents, Trademarks~~Item 15. Exhibits and ~~Licenses~~Financial Statement Schedules

~~ASII~~Financial owns the proprietary rights to the software used in the Compu-Capture(R) programs. In addition, ASII owns the rights to the trademarks "Compu-Capture(R)," "Compu-Color(R)" and "Compu-Scan(R)," all trademarks have been registered with the United States Patent and Trademark Office.Statements

~~ITEM~~The financial statements are attached 2.immediately ~~Properties~~after the signature page of this Annual Report on Form 10-K.

The Company operates 1709 Route 34, Farmingdale, New Jersey. CGM Applied Security Technologies operates from two locations. The administrative offices are located in Farmingdale, NJ and the production facility is located in Staten Island, NY.Exhibit

ITEM 3. Legal Proceedings

Exhibit No.		Description

31.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.1		Certification of Chief 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 Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

~~None~~7

~~ITEM 4.~~Allied ~~Submission of Matters to a Vote of~~ Security ~~Holders~~Innovations, Inc.

~~None.~~Balance Sheet

~~PART II~~As at December 31, 2015 (Unaudited)

ITEM 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities

		As at December 31, 2015
	Notes	(Unaudited)
		($)
ASSETS
Current Assets
Cash and cash equivalents	4		320,013
Accounts receivable, net	5		349,333
Inventory	6		65,849

Total Current Assets			735,195

Intangible assets, net	7		38,428
Property, plant and equipment, net	8		106,774
Deposits	9		18,419

Total Assets			878,817

EQUITY & LIABILITIES

Current Liabilities
Accounts payables and accrued expense	10		3,094,132
Deferred income	11		120,362
Convertible debentures - current portion	12		6,567,972
Notes payable	13		5,021,676
Derivative liabilities	14		8,747,815

Total Current Liabilities			23,551,957

Convertible Loan			340,000
Long term loan			40,000

Total Liabilities			23,931,957

SHAREHOLDER'S EQUITY

Preferred stock; authorized 250,000,000 shares, par value US$0.01; none issued			–
Common stock; authorized 750,000,000 shares, par value US$0.01;			411,241
Additional paid in capital			19,684,697
Accumulated deficit			(43,129,078	)

Total Shareholders’ Deficit			(23,033,141	)

Total Liabilities and Shareholders’ Equity			898,816

~~ASII's (formerly~~See ~~DDSI~~accompanying ~~quoted~~notes under the symbol “DDSI”) common stock has been quoted on the OTC Bulletin Board since July 7, 1997 and under the symbol "ASVN" since February 2007. As of November 4, 1999 ASII's shares traded on the Pink sheets. ASII returned to ~~trading~~financial ~~on the OTC Bulletin Board effective February 23, 2001, but as of June30, 2003 began trading on the Pink sheets~~statements. Under the “ASVN” symbol, ASII returned to the OTC Bulletin Board in October 2007. The following table sets forth, the high and low bid prices for the common stock for the quarters indicated. As of February 1, 2009 there were approximately 3,200 shareholders of record.

	Common Stock
	Bid Price
	Low		High
Calendar Year 2008
First Quarter	$	0.1250	$	0.3125
Second Quarter	$	0.1250	$	0.1875
Third Quarter	$	0.1250	$	0.1875
Fourth Quarter	$	0.1250	$	0.1875
Calendar Year 2009
First Quarter	$	0.1250	$	0.1250
Second Quarter	$	0.1250	$	0.1250
Third Quarter	$	0.0890	$	0.0090
Fourth Quarter	$	0.0190	$	0.0008

6Allied Security Innovations, Inc.

AsStatement of ~~April~~ 7,Profit ~~2010,~~and ~~90,222,937 shares of the issuer's Common Stock were outstanding.~~loss

WeFor ~~have never~~the ~~declared~~year ~~nor~~ended ~~paid~~December ~~cash~~31, ~~dividends and do not expect to pay dividends in the foreseeable future.~~2015

Recent Issuances of Unregistered Securities

	For the year ended December 31, 2015

	(Amount in $)

Revenue		541,704
Cost of sales		(153,318	)
Gross profit		388,386

Operating expenses
General and administrative		(238,016	)
Sales and marketing		(32,273	)
Research and development		(15,977	)

Income / (Loss) from operations		102,120

Other Income / (expense)
Amortization of debt discount		(2,650	)
Change in fair value of derivative liability		47,485
Interest expense		(177,195	)

Loss from continuing operations before tax		(30,240	)

Income tax		–

Net Loss		(30,240	)

Other Comprehensive income / (loss):		–

Total Comprehensive income / (loss)		(30,240	)

~~During February~~See ~~2009,~~accompanying ~~$3,700~~notes ofto ~~the~~financial ~~convertible debentures issued in September 2001, were converted into 143,126 shares of common stock~~statements.

~~During May 2009, $2,700 of the convertible debentures issued in May 2008, were converted into 30,000 shares of common stock.~~9

~~During June~~Allied ~~2009,~~Security $1Innovations,~~800~~ ~~of the convertible debentures issued in May 2008, were converted into 20,000 shares of common stock~~Inc.

~~During July~~Statement ~~2009 $5,998~~ of ~~the~~Shareholders' ~~convertible debentures issued in May 2008, were converted into 838,599 shares of common stock.~~Equity

~~During August~~As ~~2009~~at ~~$9,855~~December ~~of the convertible debentures issued in May 2008~~31, ~~were converted~~2015 ~~into 1,651,726 shares of common stock.~~(Unaudited)

During September 2009 $6,973 of the convertible debentures issued in May 2008, were converted into 2,101,956 shares of common stock.

	Series A - Preferred Stock				Common Stock				Additional Paid in		Accumulated Profit/			Total Stockholders’
	Shares		Amount		Shares		Par		capital		(Deficit)			Equity
	Amount in $

As at December 31, 2015 (Unaudited)		–		–		411,240,719		411,241		19,684,697		(43,098,838	)		(23,002,900	)

Profit / (loss) for the period												(30,240	)		(30,240	)

As at December 31, 2016 (Unaudited)		–		–		411,240,719		411,241		19,684,697		(43,129,078	)		(23,033,141	)

~~During October~~See ~~2009~~accompanying ~~$6,571~~notes ofto ~~the~~financial ~~convertible debentures issued in May 2008, were converted into 3,763,607 shares of common stock~~statements.

~~During November 2009 $4,702 of the convertible debentures issued in May 2008, were converted into 3,337,818 shares of common stock~~10

~~During December~~Allied ~~2009~~Security $4Innovations,~~728~~ ~~of the convertible debentures issued in May 2008, were converted into 8,170,663 shares of common stock~~Inc.

~~During January~~Statement ~~2008, $7,689~~ of ~~the~~Cash ~~convertible debentures issued in September 2001, were converted into 189,173 shares of common stock.~~Flows

~~During February~~As ~~2008,~~at ~~$7,051~~December ~~of the convertible debentures issued in September 2001~~31, ~~were~~ ~~converted~~2015 ~~into 191,495 shares of common stock.~~(Unaudited)

During March 2008, $7,240 of the convertible debentures issued in September 2001, were converted into 192,196 shares of common stock.


Cash flow from operating activities

(Loss) / profit before income tax		(30,240	)

Adjustment for non cash charges and other items:

Amortization of discount on convertible notes		2,650
Change in fair value of derivative liability		(47,485	)

		(75,075	)
Changes in working capital

Decrease / (increase) in accounts receivables		7,525
Decrease / (increase) in inventory		7,297
(Decrease) / increase in Other payables and accrued expenses		(198,354	)
(Decrease) / increase in deferred income		9,166
		(174,366	)

Cash flow from operating activities		(249,441	)

Cash flow from investing activities

Additions in intangible assets		–
Additions in property, plant and equipment		–

Cash flow from / (used) in investing activities		–

Cash flow from financing activities

Proceeds from long term loan		40,000
Proceeds from issuance of common stock		–
Proceeds from / (payments for) note payable - other		427,135

Cash flow from financing activities		467,135

Increase/(decrease) in cash and cash equivalents		217,694

Cash and cash equivalents at beginning of the period		102,320

Cash and cash equivalents at end of the year	$	320,013

~~During April~~See ~~2008~~accompanying ~~$4,998~~notes ofto ~~the~~financial ~~convertible debentures issued in September 2001, were converted into 124,945 shares of common stock~~statements.

~~During July 2008 $40,618 of the convertible debentures issued in September 2001, were converted into 477,260 shares of common stock.~~11

~~During~~Allied ~~August~~Security ~~2008 $63~~Innovations,~~087~~ ~~of the convertible debentures issued in September 2001, were converted into 734,865 shares of common stock~~Inc.

~~During~~Notes ~~September~~to ~~2008 $34,115 of~~ the ~~convertible~~Financial ~~debentures issued in September 2001, were converted into 379,060 shares of common stock.~~Statements

~~ITEM~~For 6the ~~Selected~~year ~~Financial~~ended ~~Data~~December 31, 2015

~~Not applicable~~1. LEGAL STATUS AND OPERATIONS

7Allied Security Innovations, Inc. (the Company), formerly known as Digital Descriptor Systems, Inc., was incorporated in 1994 as Delaware corporation. The Company was the successor to Compu-Color, Inc., an Iowa corporation. The Company started its operations as a division of ASI Computer Systems, Inc. of Waterloo, Iowa in 1986. During 2005 the Company acquired CGM Security Solutions, Inc. as a wholly owned subsidiary and changed its name to CGM Applied Security Technologies, Inc. In conjunction with the acquisition the Company has changed its primary focus from the law enforcement market to the security market in general as it believes that the potential for revenue is much greater.

~~ITEM 7.~~The ~~Management's~~Company ~~Discussion~~is primarily engaged in manufacturing and ~~Analysis~~distribution of ~~Financial~~indicative ~~Condition~~and barrier security seals, security tapes and ~~Results~~related ofpackaging security systems, protective security products for palletized cargo, physical security systems for ~~Operations~~tractors, trailers and containers as well as a number of highly specialized authentication products.

Except for historical matters contained herein, the matters discussed in this Form 10-K are forward-looking and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 19952. ~~Investors are cautioned that~~ BASIS ~~these~~OF forward-looking statements reflect numerous assumptions, especially as regarding installation schedules and product mix, and involves risks and uncertainties which may affect the Company’s business and prospects and cause actual results to differ materially from these forward-looking statements, including sufficient funds to finance working capital and other financing requirements of the Company’s market acceptance of the Company’s products and competition in the computer industry.PREPARATION

~~Critical~~2.1 Statement ~~Accounting~~of ~~Policies~~compliance

~~ASII's critical~~The ~~accounting~~accompanying ~~policies,~~financial ~~including the assumptions and judgments underlying~~statements ~~them, are disclosed in the Notes to the Financial Statements. These policies~~ have been ~~consistently~~prepared ~~applied~~ in ~~all material respects and address such matters as revenue recognition and depreciation methods. The preparation of the financial statements in~~ conformity with ~~generally accepted~~ accounting principles ~~requires~~ ~~management~~generally toaccepted ~~make~~in ~~estimates and assumptions that affect~~ the ~~reported amounts~~United States of ~~assets~~America and ~~liabilities~~pursuant ~~and~~to the ~~disclosure~~rules ~~of contingent assets~~ and ~~liabilities~~ atregulations ~~the date~~ of the ~~financial~~Securities ~~statements~~ and ~~the~~Exchange ~~reported~~Commission ~~amounts~~("SEC") ~~of revenues~~on ~~and~~a ~~expenses~~going ~~during the reported period~~concern. ~~Actual results could differ from those estimates.~~

~~ASII derives revenue from the sale of hardware, software, post customer support (PCS), and other related services~~2. ~~PCS includes telephone support, bug fixes,~~2 Accounting and rights to upgrades on a when-and-if-available basis. Other related services include basic consulting and training. Included with the hardware is software that is not considered to be incidental. Revenue from transactions with customers where the software component is not considered to be incidental is allocated between the hardware and software components based on the relative fair value of the respective components.Convention

~~ASII~~These ~~also~~financial statements have ~~derives~~been ~~revenue~~prepared ~~from~~on the ~~sale~~basis of ~~software~~'historical ~~without~~cost aconvention ~~related~~using ~~hardware~~accrual ~~component. Revenue~~basis ~~allocable to software components is further allocated to the individual deliverable elements~~ of ~~the~~accounting ~~software~~except ~~portion of the arrangement such~~ as ~~PCS~~otherwise ~~and other~~stated ~~services.~~in ~~In arrangements that include rights to PCS for~~ the ~~software~~respective ~~and/or~~accounting ~~other~~policies services, the software component arrangement fee is allocated among each deliverable based on the relative fair value of each of the deliverables determined using vendor-specific objective evidence, which has been established by the separate sales of these deliverablesnotes.

~~Plan~~Going ~~of Operations~~concern

The accompanying unaudited financial ~~short-term~~statements ~~objective~~have ofbeen ~~ASII~~prepared ison the ~~following:~~assumption that the Company will continue as a going concern. The Company historically has experienced significant losses and negative cash flows from operations. Further, the Company does not have a revolving credit facility with any financial institution. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

o The ~~short-term~~ ~~objective~~ability of ~~ASII~~the isCompany to ~~increase~~continue ~~the~~as ~~market~~a ~~penetration~~going ofconcern ~~the~~is dependent on raising additional capital, negotiating adequate financing ~~product~~arrangements ~~line~~and ofon ~~its~~achieving ~~CGM-AST~~sufficiently ~~subsidiary~~profitable asoperations. The financial statements do not include any adjustments relating to the ~~Company~~recoverability ~~believes~~and ~~this~~classification isof assets or the ~~area where~~amounts and classification of liabilities that might be necessary should the ~~greatest~~Company ~~revenue~~be ~~growth~~unable ~~exists~~to continue as a going concern.

o2.3 Critical ~~Additionally,~~accounting ~~ASII~~estimates ~~plans~~and ~~to execute an acquisition strategy based upon fund availability.~~judgements

~~ASII's~~The preparation of financial statements ~~long-term~~in ~~objective~~conformity iswith asthe ~~follows:~~approved accounting standards require management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

~~o To seek additional products to sell into its basic business market.~~12

~~ASII believes~~The ~~that~~estimates itand ~~will~~underlying ~~not~~assumptions are ~~reach~~reviewed ~~profitability~~on inan ~~the~~ongoing ~~foreseeable future~~basis. ~~Over the~~Revisions ~~next~~to ~~twelve~~accounting ~~months,~~estimates ~~management~~are isrecognised ofin the ~~opinion~~period ~~that~~in ~~sufficient~~which ~~working capital~~the ~~will~~estimates beare ~~obtained from operations and external financing to meet ASII's~~revised ~~liabilities~~if ~~and~~the ~~commitments~~revision asaffects ~~they~~only ~~become~~that ~~payable.~~period, ~~ASII~~or ~~has~~ in the ~~past successfully~~period ~~relied on private placements~~ of ~~common~~the ~~stock~~revision ~~securities, bank debt, loans from private investors~~ and ~~the exercise of common stock warrants in order to sustain operations. If ASII is unable to obtain additional funding in the~~ future, ~~it may be forced to curtail or terminate operations~~periods.

~~ASII~~The isareas involving higher degree ~~doing~~of ~~the~~judgment ~~following~~and incomplexity, ~~its~~or ~~effort~~areas where assumptions and estimates made by the management are significant to ~~reach~~the ~~profitability~~financial statements are as follows:

~~o Cut~~i) Equipment ~~costs~~- inestimated ~~areas~~useful life ~~that~~of ~~add~~property, ~~the~~plant ~~least~~and ~~value~~equipment to(note ~~ASII~~- 3.8)

~~o Concentrate~~ii) Provision onfor ~~increasing~~doubtful ~~the~~debts (note ~~sales~~- ~~of the CGM product line~~3.4)

oiii) Provision ~~Derive funds~~for ~~through~~income ~~investigating~~tax (note ~~business~~- ~~alliances with other companies~~3.1)

~~o Acquire~~3 ~~and~~ SUMMARY ~~effectively~~OF ~~add~~SIGNIFICANT ~~management~~ACCOUNTING ~~support to profitable companies complementary to its broadened target markets.~~POLICIES

83.1 Income tax

~~Results~~The tax expense for the year comprises of ~~Operations~~income tax, and is recognized in the statement of earnings. The income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

~~Year~~Deferred income tax is accounted for using the balance sheet ~~Ended~~liability ~~December~~method ~~31,~~in ~~2009~~respect ~~Compared~~of all temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred income tax liabilities are recognised for all taxable temporary differences and deferred income tax assets are recognised to ~~Year~~the ~~Ended~~extent ~~December~~that ~~31,~~it ~~2008~~is probable that taxable profits will be available against which the deductible temporary differences and unused tax losses can be utilized. Deferred income tax is calculated at the rates that are expected to apply to the period when the differences are expected to be reversed.

~~Revenues for the year ended December 31, 2009 of $~~3~~,597,653 a decrease $1,241,281 or 25~~.~~7% from the year ended December 31, 2008. ASII~~2 Trade ~~generates its revenues through software licenses, hardware, post customer support arrangements~~ and other services. CGM-AST generates its revenue through the manufacturer and distributor of indicative and barrier security seals, security tapes and related packaging security systems, protective security products for palletized cargo, physical security systems for tractors, trailers and containers as well as a number of highly specialized authentication products. The decrease revenue is attributed to the downturn in the economy and Company’s cutting of expenses.payables

~~Revenue from~~Liabilities ~~products sales~~ for ~~the~~trade ~~year~~and ~~ended~~other amounts ~~December~~payable ~~31,~~are ~~2009~~carried ~~and~~at ~~2008 were $3~~cost,~~498,673~~ ~~and~~which ~~$4,626,817,~~is ~~respectively,~~the ~~for~~fair avalue ~~decrease~~ of ~~$1,128,144~~the ~~or 24.4%. Revenue~~consideration ~~from~~to ~~service~~be ~~sales~~paid ~~for~~in ~~the~~future ~~year~~for ~~ended~~goods ~~December 31, 2009~~ and ~~2008~~services ~~were $98~~received,~~980~~ whether ~~and~~or ~~$212,117,~~not ~~respectively~~billed ~~for~~to athe ~~decrease of $113,137 or 53~~Company.~~3%.~~

~~Cost of revenue for the year ended December 31, 2009 was $1,388,782, a decrease of $575,790 or 29.~~3~~% from the prior year~~. Cost of revenue sold as a percentage of revenue for the year ended December 31, 2009 was 38.6% of total revenues, versus 40.6% the year earlier. The decrease cost of revenue was primarily due to decrease in revenue.3 Provisions

~~Operating~~A provision is recognized in ~~expenses~~the ~~decreased~~financial ~~$369,162~~statements when the Company has a legal or ~~7.2%~~constructive ~~during~~obligation ~~the~~as ~~year~~a ~~ended~~result ~~December~~of ~~31,~~past ~~2009~~events and it is probable ~~versus~~that ~~the~~an ~~year~~outflow ~~ended~~of ~~December~~resources ~~31,~~embodying ~~2008.~~economic ~~This~~benefits ~~decrease~~will ~~was~~be ~~primarily attributable~~required to settle the ~~aggressive~~obligation ~~cost~~and ~~savings~~a ~~implemented~~reliable byestimate can ~~management~~be made of the amount of obligation.

~~General and Administrative expenses for the year ended December 31, 2009 were $1,913,398 versus $2,278,188 for the prior year for a decrease of $364,790 or 16~~3.~~0%. This~~4 Accounts ~~decrease was primarily attributable to controls on spending.~~Receivable

~~Sales~~Accounts ~~and~~receivable are non-interest ~~Marketing~~bearing ~~expenses~~obligations ~~for~~due ~~the~~under ~~year~~normal ~~ended~~course ~~December~~of ~~31,~~business. ~~2009~~The ~~were~~management ~~$666,702~~reviews ~~versus~~accounts receivable on a monthly basis to determine ~~$719,927~~if ~~for~~any receivables will be potentially uncollectible. Historical bad debts and current economic trends are used in evaluating the allowance ~~prior~~for ~~year~~doubtful accounts. The Company includes any accounts receivable balances that are determined to be uncollectible in its overall allowance for doubtful accounts. After all attempts to collect a ~~decrease~~receivable ofhave ~~$53~~failed,~~225~~ orthe receivable is written 7off against the allowance.~~4%. This~~ ~~decrease~~Based ~~was~~on ~~primarily~~the ~~attributable~~information toavailable, ~~aggressive cost~~the ~~savings~~Company ~~implemented~~believes byits ~~management~~allowance for doubtful accounts as of period ended is adequate.

Research and development for the year ended December 31, 2009 was $88,801 compared to $94,946 for the same period prior year for a decrease of $6,145 or 6.5%. This decrease is attributable to controls on spending.13

~~The net (loss) for ASII decreased~~ 3.~~3% or $(179,736) for the year ended December 31, 2009 to a net (loss) of $(~~5~~,217,710) from a net (loss) of $(5,397,446) for the~~ ~~year~~ Contingent ~~ended December 31, 2008.~~liabilities

~~Liquidity~~A contingent liability is disclosed ~~and~~when ~~Capital~~the ~~Resources~~Company has a possible obligation as a result of past events, the existence of which will be confirmed only by the occurrence or non-occurrence, of one or more uncertain future events, not wholly within the control of the Company; or when the Company has a present legal or constructive obligation, that arises from past events, but it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation, or the amount of the obligation cannot be measured with sufficient reliability.

~~Net cash (used in) operating activities for the year ended December 31, 2009 and 2008 was $(215,846) and $(158,969) respectively~~3. ~~The increase in net cash used by~~6 ~~operating~~ Financial ~~activities in the year ended December 31, 2009 of $(56,877) was due in part to the change in fair market value of the derivative liability.~~liabilities

~~Net~~Financial ~~cash~~liabilities are recognized ~~used~~when inthe ~~investing~~Company ~~activities~~becomes ~~was~~party ~~$(-0-~~to )the ~~and~~contractual ~~$(24,146)~~provision ~~for~~of the ~~years~~instruments ~~ended~~and the Company loses control of the contractual ~~December~~right ~~31,~~that ~~2009~~comprise ~~and~~the ~~2008~~financial liability when the obligation specified in the contract is discharged, ~~respectively~~cancelled or expired. The ~~decrease~~Company classifies its financial liabilities in ~~cash~~two ~~used~~categories: at fair value through profit or loss and financial liabilities inmeasured ~~investing~~at ~~activities~~amortized incost. The classification depends on the ~~year~~purpose ~~ended~~for ~~December~~which ~~31,~~the ~~2009~~financial ofliabilities ~~$(24,146)~~were ~~was~~incurred. ~~due~~Management todetermines ~~tighter~~the ~~controls~~classification ~~for~~of ~~spending~~its onfinancial ~~new~~liabilities ~~equipment~~at initial recognition.

~~Net cash~~(a) Financial ~~provided~~liabilities byat ~~financing~~fair ~~activities~~value ~~was~~through ~~$55,000~~profit ~~and~~or ~~$10,000 for the years ended December 31, 2009 and 2008, respectively.~~loss

~~ASII's revenues~~Financial ~~have~~liabilities ~~been~~at ~~insufficient to cover the cost of revenues and operating~~fair ~~expenses.~~value ~~Therefore,~~through ~~ASII~~profit ~~has~~or ~~been~~loss ~~dependent~~are onfinancial ~~private~~liabilities ~~placements~~held offor ~~its~~trading. ~~common stock~~A ~~and~~financial ~~issuance~~liability ofis ~~convertible~~classified ~~notes~~ in ~~order~~this tocategory ~~sustain operations. In~~if ~~addition,~~incurred ~~there~~principally ~~can~~for ~~be no assurances that~~ the ~~proceeds~~purpose ~~from private or other capital will continue to be available, or that revenues will increase to meet ASII's cash needs, or that a sufficient amount~~ of ~~ASII's~~trading ~~common stock~~ or ~~other securities~~payment ~~can~~in orthe ~~will~~short-term. beDerivatives ~~sold~~(if orany) ~~that~~are ~~any~~also ~~common~~categorized ~~stock~~as ~~purchase~~held ~~options/warrants~~for ~~will~~trading beunless ~~exercised~~they toare ~~fund~~designated ~~the~~as ~~operating needs of ASII~~hedges.

~~Over the~~(b) Financial ~~next twelve months, management is of the opinion that sufficient working capital will be obtained from operations and external financing to meet ASII's~~ liabilities ~~and~~measured ~~commitments~~at asamortized they become payable. ASII has in the past relied on private placements of common stock securities, and loans from private investors to sustain operations. However, if ASII is unable to obtain additional funding in the future, it may be forced to curtail or terminate operations.cost

~~At December~~These ~~31,~~are ~~2009,~~non-derivative ~~ASII~~financial liabilities ~~had~~with ~~assets~~fixed ofor ~~$718,563~~determinable ~~compared~~payments tothat ~~$3,471,662~~are ~~on December~~not ~~31,~~quoted ~~2008~~in aan ~~decrease~~active ofmarket. ~~$2,753,099~~These ~~and~~are ~~shareholder~~recognized ~~deficit~~initially ofat fair ~~$(38~~value,~~344,582)~~ onnet ~~December~~of ~~31,~~transaction ~~2009~~costs ~~compared~~incurred toand ~~shareholder~~are ~~deficit~~subsequently ~~of $(33,271,043)~~stated onat ~~December~~amortized ~~31,~~cost; ~~2008,~~any andifference ~~increase~~between ofthe ~~$5,073,539.~~proceeds ~~This increase in~~(net ~~shareholder~~of ~~deficit~~transaction ~~for~~costs) and the ~~year~~redemption ~~ended~~value ~~December~~is ~~31,~~recognized ~~2009~~in ~~resulted~~the ~~from~~profit ~~the~~and ~~net~~ loss ~~for the year ended December 31, 2009~~account.

~~As of December 31, 2009, ASII negative working capital was $(20,599,249), a change from negative working capital of $(17,716,423) at December 31, 2008~~3. ~~The~~6.1 Derivative ~~increase~~financial ininstruments ~~negative working capital was primarily a result of the restructuring of debt~~ and anhedge ~~increase in the fair market value of the derivative liabilities.~~accounting

9Derivatives are recognised initially at fair value, any directly attributable transaction costs are recognised in profit or loss as they are incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are generally recognised in profit and loss account.

~~Recent~~The Company also holds derivative financial instruments to hedge its foreign currency exposures. Embedded derivatives are separated ~~Developments~~from the host contract and accounted for separately if certain criteria are met.

~~On March 1, 2005, ASII and its wholly-owned subsidiary, CGM-AST acquired substantially all of the assets of CGM Security Solutions, Inc., a Florida corporation~~ (~~"CGM"), for (i) $1,500,000 in cash and (ii)~~ a ~~2.86% promissory note (the "Note"~~) ~~in the principal amount of $3,500,000, subject to adjustment (the~~ Fair ~~"Acquisition").~~value ~~The assets of CGM were acquired pursuant to an Asset Purchase Agreement among ASII, CGM-AST Sub and CGM Security Solutions dated as of February 25, 2006.~~hedge

~~The principal~~Derivatives ~~amount~~which ofare ~~the three year Note is subject to adjustment based upon the~~designated ~~average~~and ofqualify ~~(i)~~as ~~the~~fair ~~gross~~value ~~revenues of CGM-AST Sub for the fiscal year ended December 31~~hedge, ~~2008~~changes ~~and~~in ~~(ii) an independent valuation of CGM-AST based upon~~ the ~~consolidated~~ ~~audited~~fair ~~financial~~value ~~statements~~ of ~~the~~such ~~Company~~derivatives ~~and~~are ~~CGM-AST~~recorded ~~for~~in the ~~fiscal~~ ~~years~~profit ~~ended December 31, 2009~~ and ~~2008.~~loss ~~In addition~~account, ~~the Company has~~together ~~granted~~with ~~CGM~~any ~~Security~~changes ~~Solutions, Inc. a secondary security interest~~ in ~~substantially~~ ~~all of its assets and intellectual property. If~~ the ~~Company~~ isfair ~~unable~~value toof ~~fulfill its obligations pursuant to~~ the ~~Asset~~hedged ~~Purchase Agreement~~asset ~~and~~or ~~the~~liability ~~Note, there is likelihood~~ that ~~CGM~~are ~~Security~~attributable ~~Solutions, Inc. can declare default and attempt~~ to ~~take back~~ the ~~asset~~hedged risk.

In connection with the Acquisition, the Company entered into a letter agreement with certain of its investors (the "Investors") which extended the maturity date of debt instruments issued on November 30, 2004 until March 1, 2008, and amended the conversion price of the debt that is held by the Investors to the lower of (i) $0.0005 or (ii) 60% of the average of the three lowest intraday trading prices for the Company's common stock during the 20 trading days before, but not including, the conversion date. In addition, the exercise price of the warrants held by the Investors was amended to $.001 per share.14

On(b) Cash ~~December~~flow 19, 2006 a special meeting of the shareholders was held and at the meeting the shareholders passed a resolution to change the name of the Company from Digital Descriptor Systems, Inc. to Applied Security Innovations, Inc. The shareholders also passed a resolution to authorize a 1 for 500 reverse stock split. Both of these events took place on February 5, 2008. In addition the 2006 Incentive Stock Option Plan adopted by The Board of Directors on October 12, 2006 was approved by the shareholders.hedges

OnWhen a derivative is designated ~~October~~as 9,cash ~~2007~~flow hedging instrument, the ~~Company’s~~effective ~~stock~~portion ~~began~~of ~~trading~~changes onin the ~~NASDAQ-over-~~fair value of the~~-counter~~ derivative is recognised in other comprehensive ~~market~~income and accumulated in the hedging reserve. ~~Previously,~~Any ineffective portion of changes in the ~~Company’s~~fair ~~common~~value ~~stock~~of ~~traded~~the onderivative ~~Pink~~is recognised ~~Sheets~~immediately in profit or loss.

~~ITEM~~The amount accumulated in equity is retained in other comprehensive income and reclassified to profit 8.or ~~Financial~~loss ~~Statements~~in the same period or periods during which the hedged item affects profit or loss.

~~The report~~If ofthe hedging instrument no longer meets the ~~independent~~criteria ~~registered~~for ~~public~~hedge accounting, ~~firm~~expires ~~and~~or ~~financial~~is sold, terminated or exercised, or the ~~statements~~designation ~~are~~is ~~set~~revoked, ~~forth~~then hedge accounting is discontinued prospectively. If the forecast transaction is no longer expected to occur, then the amount accumulated in ~~this~~equity ~~report~~is reclassified to profit or loss.

~~ITEM 9~~3. ~~Changes~~7 Property, inplant and ~~disagreements with Accountants on Accounting and Financial Disclosure.~~equipment

~~None~~All equipments are stated at cost less accumulated depreciation and impairment loss. The cost of fixed assets includes its purchase price, import duties and non-refundable purchase taxes and any directly attributable costs of bringing the asset to its working condition and location for its intended use.

~~ITEM~~Depreciation on additions to property, 9Aplant and equipment is charged, using straight line method, on pro rata basis from the month in which the relevant asset is acquired or capitalized, upto the month in which the asset is disposed off. ~~CONTROLS~~Impairment ~~AND~~loss, ~~PROCEDURES~~if any, or its reversal, is also charged to income for the year. Where an impairment loss is recognized, the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less its residual value, over its estimated useful life.

~~Evaluation~~Maintenance and normal repair costs ofare ~~disclosure~~expensed ~~controls~~out as and ~~procedures~~when incurred. Major renewals and improvements are capitalized and assets so replaced, if any are retired.

~~Management~~Gains ~~of the Company has evaluated, with the participation of the Chief Executive Officer~~ and ~~Chief~~losses ~~Financial~~on ~~Officer~~disposal of ~~the~~fixed ~~Company~~assets, ~~the~~if ~~effectiveness~~any, ofare ~~the Company's~~recognized ~~disclosure controls and procedures (as defined~~ in ~~Rules~~statement ~~13a-15(e) or 15d-15(e) promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act~~ of ~~1934,~~profit ~~as amended (the "Exchange Act")) as of the end of the period covered by this Annual Report on Form 10-K. Based on that evaluation, the Chief Executive Officer~~ and Chief Financial Officer of the Company had concluded that the Company's disclosure controls and procedures as of the period covered by this Annual Report on Form 10-K were not effective for the following reasons:loss.

~~a) The deficiency was identified as the Company's limited segregation of duties among the Company's employees with respect to the Company's control activities~~3. ~~This~~8 ~~deficiency~~ Cash is the result of the Company's limited number of employees. This deficiency may affect management's ability to determine if errors or inappropriate actions have taken place. Management is required to apply its judgment in evaluating the cost-benefit relationship of possible changes in our disclosure controls and ~~procedures.~~cash equivalents

~~b) The deficiency~~Cash ~~was~~and ~~identified~~cash equivalents include cash in ~~respect~~hand toand ~~the~~deposits ~~Company's~~held ~~Board~~at ofcall ~~Directors~~with banks. ~~This deficiency~~For is the ~~result~~purpose of the ~~Company's~~statement ~~limited number~~ of ~~external~~cash ~~board members.~~flows, ~~This~~cash ~~deficiency~~and ~~may~~cash ~~give~~equivalents ~~the impression to the investors that the board~~bank isbalances ~~not independent from management. Management~~ and ~~the~~short ~~Board~~term ofhighly ~~Directors~~liquid ~~are required~~investments subject to ~~apply~~an ~~their~~insignificant ~~judgment~~risk ~~in evaluating the cost-benefit relationship~~ of ~~possible~~ changes in ~~the~~value ~~organization~~and ofwith ~~the~~maturities ~~Board~~ of ~~Directors~~less than three months.

103.9 Revenue recognition

~~Management’s~~The Company derives revenue ~~Report~~from onthe ~~Internal~~sale ~~Control~~of ~~Over~~hardware, ~~Financial~~software, ~~Reporting~~post customer support, and other related services. Post customer support includes telephone support, virus fixes, and rights to upgrades. Other related services include basic training. CGM derives its revenue from the sale of its tapes, labels and other security devices.

~~Our management~~The isCompany ~~responsible~~recognizes ~~for~~revenue ~~establishing~~when ~~and~~it ~~maintaining adequate internal control over financial reporting, as such term~~ is ~~defined~~realized inor ~~Exchange~~realizable ~~Act Rule 13a-15(f).~~and ~~Management conducted an evaluation of the effectiveness of the Company's internal control over financial reporting as of December 31, 2009~~earned. In making this assessment, management used the framework set forth in the report entitled "Internal Control-Integrated Framework" issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO. The ~~COSO framework summarizes each of the components of a~~ Company's ~~internal~~considers ~~control~~revenue ~~system, including~~realized ~~(i)~~or ~~the control environment, (ii) risk assessment, (iii) control~~realizable ~~activities, (iv) information~~ and ~~communication,~~earned ~~and~~when ~~(v)~~it ~~monitoring.~~has ~~Based~~persuasive ~~on that~~evidence ~~evaluation, the Chief Executive Officer and Chief Financial Officer~~ of ~~the Company~~an ~~have~~arrangement ~~concluded,~~that ~~as of~~ the ~~end~~services ofhave ~~the fiscal year covered by this Annual Report on Form 10-K, due to a lack of segregation of duties, that our internal control over financial reporting has not~~ been ~~effective.~~rendered ~~However, at this time, our resources and size prevent us from being able~~ to ~~employ sufficient resources to enable us to have adequate segregation of duties within our internal control system. The Company intends to remedy~~ the ~~material weakness by hiring additional employees and reallocating duties~~customer, ~~including responsibilities for financial reporting, among~~ the ~~Company's~~sales ~~employees as soon as the Company has the~~price ~~financial~~is ~~resources~~fixed toor dodeterminable, ~~so.~~and ~~Management~~collectability is ~~required~~reasonably ~~to apply judgment in evaluating the cost-benefit relationship of possible changes in our disclosure controls and procedures~~assured.

1115

~~Table of~~3.10 Functional ~~Contents~~and presentation currency

~~This annual~~Items ~~report~~included ~~does~~in ~~not~~the ~~include~~financial statements anare ~~attestation~~measured ~~report~~using ofthe ~~our~~currency ~~registered~~of ~~public accounting~~the ~~firm~~primary ~~regarding~~economic ~~internal~~environment ~~control~~in ~~over~~which ~~financial~~the ~~reporting~~Company operates. ~~Management's~~ ~~report~~The ~~was~~financial ~~not~~statements are ~~subject~~presented toin ~~attestation~~US by(Dollars) ~~our~~which ~~registered~~is ~~public accounting~~the ~~firm~~Company's ~~pursuant~~presentation tocurrency. ~~temporary~~All ~~rules~~financial ofinformation ~~the~~presented ~~Securities~~in ~~and~~US ~~Exchange~~Dollars has ~~Commission~~been ~~that~~rounded ~~permit us~~ to ~~provide~~the ~~only~~nearest ~~management's~~dollar ~~report~~unless inotherwise ~~this annual report~~stated.

~~Changes~~3.11 Foreign incurrency ~~Internal Controls.~~transactions

~~Management of~~Foreign ~~the~~currency ~~Company~~transactions are ~~has~~translated ~~evaluated,~~into ~~with~~ the ~~participation~~functional ofcurrency using the ~~Chief~~exchange ~~Executive Officer~~rate ofprevailing on the ~~Company,~~date ~~any~~of ~~change in~~ the ~~Company's~~transaction. ~~internal~~Monetary ~~control over~~assets ~~financial~~and ~~reporting~~liabilities ~~(as~~denominated ~~defined~~ in ~~Rules~~foreign ~~13a-15(f)~~currencies ~~and~~are ~~15d-15(f)~~translated ~~under~~into ~~the Exchange~~functional ~~Act)~~currency ~~that~~using ~~occurred during~~ the ~~fiscal~~exchange ~~year~~rate ~~covered~~prevailing ~~by this Annual Report~~at ~~on Form 10-K. There was no change in~~ the ~~Company's~~statement ~~internal~~of ~~control over~~ financial ~~reporting~~position ~~identified~~date. inForeign ~~that~~exchange ~~evaluation~~gains ~~that~~and ~~occurred~~losses ~~during~~resulting from the ~~fiscal~~ ~~year~~settlement ~~covered~~of bysuch ~~this~~transactions and ~~Annual~~from ~~Report~~the ontranslation ~~Form~~at 10year-Kend ~~that~~exchange ~~has~~rates ~~materially affected,~~are orrecognized isin ~~reasonably likely to materially affect,~~ the ~~Company's~~profit ~~internal control~~and ~~over~~loss ~~financial reporting, other than what has been reported above~~account.

~~ITEM 9B~~3. ~~OTHER INFORMATION~~12 Contingencies

~~None~~The assessment of the contingencies inherently involves the exercise of significant judgment as the outcome of the future events cannot be predicted with certainty. The Company, based on the availability of the latest information, estimates the value of contingent assets and liabilities, which may differ on the occurrence / non-occurrence of the uncertain future event(s).

~~PART~~3.13 ~~III~~ Stock based compensation

~~ITEM~~The 10Company recognizes compensation expense for stock-based compensation in accordance with generally accepted accounting principles. ~~DIRECTORS~~For employee stock-based awards, fair ~~EXECUTIVE~~value of the award on the date of grant is calculated using the Black-Scholes method and the quoted price of the Company's ~~OFFICERS~~common ~~AND~~stock ~~CORPORATE~~for ~~GOVERNANCE~~stock options and unrestricted shares respectively;

~~Set~~The ~~forth below~~Company isrecognizes ~~certain~~expense ~~information~~over ~~regarding~~the ~~our~~service ~~directors~~period ~~and~~for ~~executive~~awards ~~officers.~~expected ~~Our Board of Directors is comprised of five directors. There are no family relationships between any of our directors or executive officers. Each of our directors is elected~~ to ~~serve until our next annual meeting of our stockholders and until his successor is elected and qualified or until such director's earlier death, removal or termination~~vest.

Name	Age	Position with Company
Anthony Shupin	53	Director, Chief Executive Officer, President
Michael Pellegrino	59	Senior Vice President, CFO and Director
Robert Gowell	39	Director
Vincent Moreno	64	Director

In case of non-employee stock-based awards, fair value of the award on the date of grant is calculated in the same manner as employee awards. However, the awards are revalued at the end of each reporting period and the pro rata compensation expense is adjusted accordingly until such time the nonemployee award is fully vested, at which time the total compensation recognized to date equals the fair value of the stock-based award as calculated on the measurement date, which is the date at which the award recipient’s performance is complete. The estimation of stock-based awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from original estimates, such amounts are recorded as a cumulative adjustment in the period estimates are revised. We consider many factors when estimating expected forfeitures, including types of awards, employee class, and historical experience.

~~Anthony Shupin~~The ~~became~~Black-Scholes ~~CEO~~option ~~and~~valuation ~~President~~model ofis ~~ASII~~used into ~~October~~estimate ~~2003. In November of 2004, he also assumed~~ the ~~position~~fair ofvalue ~~Chairman~~ of the ~~Board~~warrants ofor ~~ASII. His affiliation~~options ~~with ASII began as a member of the Board of Directors in January 2002~~granted. ~~His~~The ~~experience~~model includes ~~over 20 years of executive management, sales and~~ ~~marketing~~subjective ~~management~~input ~~and~~assumptions ~~project~~that ~~and~~can ~~program~~materially ~~management~~affect ~~with~~the ~~technology computing,~~fair ~~aerospace~~value ~~and professional services companies~~estimates. ~~Prior~~The tomodel ~~ASII,~~was ~~Mr. Shupin~~developed ~~served~~for inuse ~~several capacities~~ in estimating the ~~Technology~~fair ~~and~~value ~~Management~~of ~~Consulting field.~~traded Heoptions ~~founded~~or Twarrants. ~~Shupin~~The ~~and~~expected ~~Associates,~~volatility ais ~~management~~estimated ~~consulting~~based ~~firm focused~~ on ~~assisting clients in~~ the ~~areas~~most ofrecent ~~Sales~~historical ~~and~~period ~~Marketing, New Business Start-Up,~~of ~~Operational~~time ~~Analysis~~equal ~~and~~to ~~Business/Technology Synchronization. At Deloitte Consulting, he directed activities as a Business Development Executive in~~ the ~~Communications~~ ~~and~~weighted ~~Media~~average ~~practice.~~life ~~Mr. Shupin's background also includes a role as Director~~ of ~~International Business Development at~~ the ~~world's~~warrants ~~first commercial~~or ~~satellite~~options ~~aerospace Company~~granted. ~~A graduate of Colby College, Waterville, Maine, Mr. Shupin has extended his education at Rutgers University, Cook College in Geographic Information Systems and Remote Sensing training.~~

~~Michael Pellegrino became Senior Vice President and CFO in February 2006~~3. ~~He originally~~14 joined ASII in 1995 as Vice President & Chief Financial Officer. In March 2002, he was appointed President, Chief Executive Officer and Chief Financial Officer, Secretary and a Director of ASII. From 1984 to 1995, Mr. Pellegrino was Vice President and CFO of Software ~~Shop~~Development Systems, Inc. From 1979 to 1984, he was a regional controller for Capital Cities/ABS and from 1972 to 1979 as Director of Financial Systems for ADP. Mr. Pellegrino has a Bachelors degree in accounting from MSU and a Masters in Finance from Rutgers University.cost

~~Robert~~The Company accounts for software ~~Gowell~~development ~~has~~cost ~~been~~in aaccordance ~~director~~with ASC 985-20 whereby cost of ~~the~~developing ~~Company~~software ~~since~~All ~~2001.~~cost Heincurred ~~was~~to ~~the~~establish ~~Company's~~technological ~~Co-Chairman~~feasibility ~~and~~of ~~Chief~~a ~~Executive~~software ~~Officer~~product ~~from~~to ~~January~~be ~~2002~~sold, ~~until~~leased ~~June~~or ~~2002~~otherwise marketed are research and development cost. HeThese iscost are charged ato ~~retired~~expense ~~Deputy~~when Uincurred.S. ~~Marshal~~The ~~who~~technological ~~has~~feasibility ~~worked~~of ~~out~~a ofsoftware product is established when the ~~New~~entity ~~York~~has ~~and~~completed all ~~Pennsylvania~~planning, ~~offices~~designing, ~~from~~coding, ~~1991~~and testing activities that are necessary to ~~2001~~establish that the product can be produced to meet its design specifications including functions, features, and technical performance requirements. HeCost ~~earned~~of ~~his~~producing Bproduct masters incurred subsequent to establishing technological feasibility shall be capitalized.S. inThose ~~Management~~cost include coding and testing performed ~~Finance~~subsequent ~~from~~to ~~the~~establishing ~~City~~technological ~~University~~feasibility. Capitalization of ~~New~~software ~~York.~~cost Heshall iscease ~~currently~~when ~~working~~the onproduct ~~his~~is ~~MBA~~available atfor ~~Kutztown~~general ~~University~~release to customers.

~~Vincent Moreno~~Once ~~has been~~ a ~~director~~project ofreaches the ~~Company~~development ~~since January 2002. Mr. Moreno provides ASII with over 30 years of experience from a technical and business environment~~stage, ~~with~~ the ~~past~~Company 23allocates years at the executive management level. Since 2002, Mr. Moreno has been doing consulting work for various software development firms. From 1998- 2002, he was President and General Manager of PayPlus Software, Inc., a ~~provider~~portion of ~~payroll~~salaries ~~software~~ to ~~the~~ ~~Professional~~be ~~Employer~~capitalized ~~Organization~~based ~~marketplace.~~on ~~He served as Vice President~~estimated ofhours ~~Operations~~spent atdeveloping ~~ASII~~the ~~from 1996 to 1998. From 1989 to 1995, he served as President and CEO of Mainstem Corporation, a national provider of~~ software ~~services~~.

1216

~~Code~~3.15 ~~of Ethics~~ Inventories

~~The Company~~Inventories, ~~has~~except ~~not~~for ~~formally~~stock in ~~adopted~~transit, aare ~~written~~stated ~~code~~at lower of ~~ethics~~cost ~~that~~and ~~governs~~net ~~all~~realizable ~~of our~~value. ~~officers,~~Stock ~~directors~~in ~~and~~transit ~~finance~~is ~~and~~valued ~~accounting~~at ~~employees.~~cost ~~The~~comprising ~~draft~~invoice ~~code~~value ofplus ~~ethics~~other charges thereon. Net realizable value is ~~filed~~the ~~herewith~~estimated asselling ~~Exhibit~~price 14in ordinary course of business less estimated costs of completion and selling expenses.1.

~~Section 16 Beneficial Ownership Compliance.~~4 Cash

~~Section 16(a)~~This ofrepresents ~~the~~cash ~~Securities~~in ~~Exchange Act of 1934 requires ASII's directors and~~hand ~~executive officers,~~ and ~~persons~~cash ~~who~~deposited ~~own more than 10% of a registered class of ASII's equity securities to file with the Securities and Exchange Commission initial reports of ownership and reports of changes~~ in ~~ownership~~bank ofaccounts ~~Common Stock and other equity securities of ASII. Officers, directors and greater than 10% shareholders are required by SEC regulations to furnish ASII with copies of all Section 16~~(acurrent) ~~forms~~by ~~they~~the ~~file~~Company.

To5 Accounts ASII's knowledge, based solely on its review of the copies of such reports furnished to ASII and written representations that no other reports were required during the fiscal year ended December 31, 2009, all Section 16(a) filing requirements applicable to its officers, directors and greater than 10% beneficial owners were complied with, except that the following individuals have filed their Form 3s late: Anthony Shupin, Vincent Moreno and Erik Hoffer and the following individuals have filed their Form 4s late: Michael Pellegrino and Robert Gowell.Receivables

ITEM 11. Executive Compensation

Opening balance	$	356,858
Net movement during the period		(7,525	)
		349,333
Less: Provision		–
Account Receivable - Net	$	349,333

The following table sets forth information concerning the total compensation that we have paid or that has accrued on behalf of our Chief Executive Officer and other executive officers with annual compensation exceeding $100,000 during fiscal 2008and 2008.6 Inventory

									Long Term Compensation
Opening balance	$	73,146
					Annual Compensation				Awards				Payouts
Net movement during the period		(7,297	)
							Other				Securities
	$	65,849
Name and							Annual		Restricted		Underlying				Other
Principal							Compen-		Stock		Options/		LTIP		Compen-
Position	Year		Salary		Bonus		sation($)		Award($)		Sar (#)		Payouts($)		sation ($)
Anthony Shupin	2009		$	227,900		0		0		0		0		0		0
President & CEO	2008		$	227,900		0		0		0		0		0		0
Michael Pellegrino	2009		$	185,500		0		0		0		0		0		0
Senior VP & CFO	2008		$	185,500		0		0		0		0		0

~~Appointment of~~7 Intangible ~~Principal Officers; Compensatory Arrangements of Certain Officers.~~assets

Effective November 13, 2006 the Company granted to each of Anthony Shupin, its President and Chief Executive Officer and Michael Pellegrino, its Chief Financial Officer, 10,000 shares of newly created Series A Preferred Stock ("A Preferred") as recognition for services. On May 11, 2009 the Series A Preferred Stock was cancelled and replaced with 10,000 shares each of newly created Series B Preferred Stock.

Cost - License
Opening balance	$	105,841
Net movement during the period		–
		105,841

Each share of B Preferred is convertible into 200,000 shares of common stock of the Company starting three years from the date of issuance, provided that the closing bid price of the Company's common stock is then $2.00 per share. The shares of B Preferred may be voted with the Company's common stock on an as converted basis on any matters that the common stock is entitled to vote on as a class.

Accumulated Amortization
Opening balance		(67,413	)
Net movement during the period		–
		(67,413	)

Closing Book Value	$	38,428

Unconverted shares of B Preferred will automatically cease to exist, and all rights associated therewith will be terminated upon the earlier of (i) that person's termination of employment with the Company for any reason, or (ii) five years from the date of issuance.17

~~On May 11~~8 Property, ~~2009~~plant ~~the Company filed with the Secretary of State of Delaware a Certificate of Designation of Preferences, Rights~~ and ~~Limitations of Series B Preferred Stock.~~equipment

Options/SAR Grants in Last Fiscal Year

Cost
Opening balance	$	1,217,508
Net movement during the period		–
		1,217,508

Number of

% of Total

Accumulated Depreciation

Securities

Options/SARS

Opening balance

(1,110,734

)

Underlying

Granted to

Net movement during the period

–

Options/SARS

Employees in

Exercise or Base

(1,110,734

)

Name

Granted

Fiscal Year

Price ($/Sh)

Expiration Date

Closing Book Value

106,774

Michael J. Pellegrino, CFO

N/A

Anthony Shupin, President & CEO

N/A

138.1 Property, plant and equipment, as the reporting date, comprises of:

Aggregated Option/SAR Exercises

Furniture and fixtures	$	75,613
Leasehold improvements		159,607
Computers		219,301
Machinery and equipment		762,987
		1,217,508
Less: Accumulated depreciation		(1,110,734	)
Closing balance	$	106,774

~~None exercised.~~9 Deposits

Employment Agreements

Opening balance	$	18,419
Net movement during the period		–
	$	18,419

Anthony R. Shupin, Chairman, President and Chief Executive Officer. Mr. Shupin was re-appointed as Chairman, President and Chief Executive Officer effective February, 2005. On February 25, 2005, ASII entered into a five-year employment agreement with Mr. Shupin, which entitled him to a base salary of $227,900 per year, which may at the Board of Directors discretion adjust his base salary (but not below $227,900 per year). Mr. Shupin is also entitled to participate in the Annual Management Bonus Plan. As a participant in the Annual Management Bonus Plan, Mr. Shupin will be eligible to receive bonuses, based on performance, in any amount from 10% Accounts topayables 200% of the Base Salary. In addition, Mr. Shupin shall participate in the Management Equity Incentive Plan. As a participant in the Management Equity Plan, Mr. Shupin will be eligible to receive options, which vest over a period of time from the date of the option's issue, to purchase common shares of ASII. The Company may grant Mr. Shupin, following the first anniversary of the date hereof and ~~at the sole discretion of the Board of~~ ~~Directors,~~accrued options to purchase common shares of the Company (subject to the vesting and the satisfaction of the other terms and conditions of such options). Mr. Shupin will be entitled to 25 vacations days per year at such times as may be mutually agreed with the Board of Directors. ASII will provide Mr. Shupin a monthly car allowance of One Thousand Dollars ($1,000) along with related car expenses.

Michael J. Pellegrino, Senior Vice President and Chief Financial Officer. Mr. Pellegrino was appointed as Senior Vice President and Chief Financial Officer effective February 25, 2005. On February 25, 2005, ASII entered into a five-year employment agreement with Mr. Pellegrino, which entitled him to a base salary of $185,500 per year which may at the Board of Directors discretion adjust his base salary (but not below $185,500 per year). Mr. Pellegrino is also entitled to participate in the Annual Management Bonus Plan. As a participant in the Annual Management Bonus Plan, Mr. Pellegrino will be eligible to receive bonuses, based on performance, in any amount from 10% to 200% of the Base Salary. In addition, Mr. Pellegrino shall participate in the Management Equity Incentive Plan. As a participant in the Management Equity Incentive Plan, Mr. Pellegrino will be eligible to receive options, which vest over a period of time from the date of the option's issue, to purchase common shares of ASII. ASII may also grant to the Employee, following the first anniversary of the date of the Agreement and at the sole discretion of the Board of Directors, options to purchase common shares of the Company (subject to the vesting and the satisfaction of the other terms and conditions of such options). Mr. Pellegrino will be entitled to 25 vacation days per year at such times as may be mutually agreed with the Board of Directors. ASII shall also furnish Mr. Pellegrino with monthly car allowance of One Thousand Dollars ($1,000) and related car expenses.

Opening balance	$	3,292,486
Net movement during the period		(198,354	)
	$	3,094,132

~~Employee and~~11 Deferred ~~Director Stock Option Plans~~Income

ASII adopted the 2006 Stock Incentive Plan, (the "Plan") in order to attract and retain qualified personnel. This plan was adopted by the Board of Directors on October 12, 2006 and approved by the shareholders on December 19, 2006. The Board of Directors has initially reserved 2,500,000 shares of Common Stock for issuance under the 2006 Incentive Plan. Under the Plan, options may be granted which are intended to qualify as Incentive Stock Options, (ISO’s) under Section 422 of the Internal Revenue Code of 1986 (the “Code”) or which are not (Non-ISO’s) intended to qualify as Incentive Stock Options there under.

Opening balance	$	111,196
Net movement during the period		9,166
	$	120,362

The 2006 Incentive Plan and the right of participants to make purchases there under are intended to qualify as an “employee stock purchase plan” under Section 423 of the internal Revenue Code of 1986, as amended (the “Code”). The 2006 Incentive Plan is not a qualified deferred compensation plan under Sections 401(a) of the Internal Revenue Code and is not subject to the provisions of the Employee Retirement Income Security Act of 1974 (”ERISA”).18

~~The number~~12 Convertible ~~of shares reversed for issuance under the 2006 Incentive Plan accounts for the 1 for 500 reverse stock split.~~Debentures

Compensation of Directors

Opening balance	$	6,565,322
Net movement during the period		2,650
	$	6,567,972

~~Outside Directors~~13 Notes receive compensation of $500 for each meeting attended for their services as members of the Board of Directors. Directors will receive reimbursement for expenses in attending directors meetings where applicable.payable

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Opening balance	$	4,594,541
Net movement during the period		427,135
	$	5,021,676

~~The following~~14 Derivative table lists stock ownership of our common stock as of December 31, 2009. The information includes beneficial ownership by (i) holders of more than 5% of our common stock, (ii) each of our current directors and executive officers and (iii) all of our directors and executive officers as a group. The information is determined in accordance with Rule 13d-3 promulgated under the Exchange Act based upon information furnished by the persons listed or contained in filings made by them with the Commission. Except as noted below, to our knowledge, each person named in the table has sole voting and investment power with respect to all shares of our common stock beneficially owned by them.Liabilities

Percentage of beneficial ownership is based upon 23,176,249, shares of common stock outstanding at December 31, 2009, together with securities exercisable or convertible into shares of common stock within 60 days of December 31, 2009 for each stockholder. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock that are currently exercisable or exercisable within 60 days of December 31, 2009 are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.

Opening balance	$	8,795,300
Net movement during the period		(47,485	)
	$	8,747,815

1415 Revenue

			Beneficial Ownership
Product revenue	$	515,706
Name and Address			of Common Stock
Service revenue		25,998
of Beneficial Owner	Title		No. of Shares			Percent of Class
Net revenue	$	541,704
Anthony R. Shupin	Chairman, CEO and			20	(1)		*
1709 Route 34 Suite 2	President
Farmingdale, NJ 07727
Michael Pellegrino	Senior Vice President,			20	(1)		*
1709 Route 34 Suite 2	Chief Financial Officer
Farmingdale, NJ 07727	& Director
Robert Gowell	Director			1			*
1709 Route 34 Suite 2
Farmingdale, NJ 07727
Vincent Moreno	Director			0			*
1709 Route 34 Suite 2
Farmingdale, NJ 07727
All Officers & Directors				41			*
As a Group

·16 Contingencies ~~less~~and ~~than 1%~~Commitments

~~(1)~~From ~~This~~time to time, the Company may be involved in ~~does~~litigation ~~not~~relating ~~include~~to claims arising out of operations in the ~~2,000,000~~normal ~~shares~~course of ~~common~~business. ~~stock~~As ~~issuable upon conversion~~at ~~10,000~~the ~~shares~~end of ~~Series~~current Breporting ~~Preferred Stock~~period, ~~assigned. The~~there ~~terms~~were ofno ~~the~~pending ~~Series~~or Bthreatened ~~Preferred~~lawsuits ~~Stock~~that ~~permit~~could ~~the holders~~reasonably ~~thereof~~be expected to ~~vote~~have ona ~~all~~material ~~matters~~effect ~~voted~~ on bythe ~~holders~~results of ~~the~~operations and ~~common~~there ~~stock on~~are no proceedings in which any directors, officers or affiliates, or any registered or beneficial stockholder, is an adverse asparty ~~converted~~or ~~basis~~has a material interest adverse to the Company’s interest.

~~There are no arrangements known to ASII that at a later date may result in a change in control of ASII.~~19

~~ITEM 13. Certain Relationships and Related Transaction~~SIGNATURES

~~None~~Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

~~ITEM 14~~Allied Security Innovations, Inc. ~~Principal~~By: ~~Accountant~~/s/ ~~Fees~~Daniel Sobolewski Daniel SobolewskiInterim President, Interim Chief Executive Officer and ~~Services~~Interim Chief Financial Officer

~~Audit Fees.~~Date: January ~~The aggregate fees billed by our independent registered public accounting firm~~10, for professional services rendered for the audit of the Company's annual financial statements for the last two fiscal years and for the reviews of the financial statements included in the Company's Quarterly reports during the last two fiscal years 2009 and 2008 were $122,647 and $138,052, respectively.2019

~~Audit-Related Fees. The Company did not engage its principal accountants to provide assurance or related services during the last two fiscal years.~~20

Tax Fees. The aggregate fees billed by the Company's principal accountants for tax compliance, tax advice and tax planning services rendered to the Company during the last two fiscal years 2009 and 2008 were $7,000 and $7,000, respectively.

All Other Fees. The Company did not engage its principal accountants to render services to the Company during the last two fiscal years, other than as reported above.

Part IV

ITEM 15. Exhibits

31.1	Certification by Chief Executive Officer pursuant to Sarbanes-Oxley Section 302
31.2	Certification by Chief Financial Officer pursuant to Sarbanes-Oxley Section 302
32.1	Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350
32.2	Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350

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.

Allied Security Innovations Inc.

By:	/s/ Anthony Shupin
	Anthony Shupin, Chairman, President, and
	Chief Executive Officer
	Dated: April 12, 2010

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.

Signature Title Date

By: /s/ Anthony Shupin Chairman, President, and Chief, Anthony Shupin Executive Officer By: /s/ Michael Pellegrino Senior Vice President and Chief Michael Pellegrino Financial Officer, Director By: /s/ Vincent Moreno Director Vincent Moreno By: Director Robert Gowell

Allied Security Innovations, Inc. and Subsidiary

Table of Contents

December 31, 2009

	Page(s)
Reports of Independent Registered Public Accounting Firms	20-21
Audited Consolidated Financial Statements:
Balance Sheets as of December 31, 2009 and 2008	22
Statements of Operations for the Years Ended December 31, 2009and December 31, 2008	23
Statement of Stockholders' Deficit for the Years Ended December 31, 2009 and December 31,2008	24
Statements of Cash Flows for the Years Ended December 31, 2009and December 31, 2008	25-26
Notes to Consolidated Financial Statements	27-39

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

Allied Security Innovations, Inc. and Subsidiary

1709 Route 34 South

Farmingdale, New Jersey 07727

We have audited the accompanying consolidated balance sheet of Allied Security Innovations, Inc. and Subsidiary (the “Company”) as of December 31, 2009, and the related consolidated statement of operations, changes in stockholders’ deficit and cash flows for the year ended December 31, 2009. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. The consolidated financial statements of Allied Security Innovations Inc. and Subsidiary as of December 31, 2008 and for each of the two years in the period ended December 31, 2008 were audited by other auditors who have ceased operations. The auditors expressed an unqualified opinion on those financials statements, dated April 13, 2009, and included an explanatory paragraph relating to the existence of substantial doubt about the Company’s ability to continue as a going concern.

We conducted our audit 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 consolidated 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 audit 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 also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides 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 Allied Security Innovations, Inc. and Subsidiary, as of December 31, 2009, and the results of its operations and its cash flows for the year ended December 31, 2009 in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company did not generate sufficient cash flows from revenues during the year ended December 31, 2009, to fund its operations. Also at December 31, 2009, the Company had negative net working capital of $20,599,248. These matters raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plan in regard to these matters is also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Friedman LLP

Friedman LLP

Marlton, NJ 08053

April 14, 2010

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

Allied Security Innovations, Inc. and Subsidiary

Formerly Digital Descriptor Systems, Inc.

1709 Route 34 South

Farmingdale, New Jersey 07727

We have audited the accompanying consolidated balance sheets of Allied Security Innovations, Inc. and Subsidiary (the “Company”) as of December 31, 2008 and 2007, and the related consolidated statements of operations, changes in stockholders’ deficit and cash flows for each of the years in the two-year period ended December 31, 2008. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated 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 audits to obtain reasonable assurance about whether the consolidated 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 also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 consolidated financial position of Allied Security Innovations, Inc., as of December 31, 2008 and 2007, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2008 in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 15 to the consolidated financial statements, the Company did not generate sufficient cash flows from revenues during the year ended December 31, 2008, to fund its operations. Also at December 31, 2008, the Company had negative net working capital of $17,716,423. These matters raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plan in regard to these matters is also described in Note 15. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The report is a copy of the previously issued report.

The predecessor auditor has not reissued the report.

/s/ BAGELL, JOSEPHS, LEVINE & COMPANY, L.L.C.

Bagell, Josephs, Levine & Company, L.L.C.

Marlton, NJ 08053

April 13, 2009

ALLIED SECURITY INNOVATIONS, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2009 AND 2008

	2009			2008
ASSETS
Current Assets:
Cash	$	52,667		$	213,513
Accounts receivable, net		292,453			537,223
Inventory		117,621			238,123
Other Current Assets		3,375			9,346
Total Current Assets		466,116			998,205
Property and equipment, net		209,485			267,594
Other Assets:
Deposits		9,421			12,896
Goodwill		-			2,054,998
Intangible assets, net		33,541			137,969
Total Assets	$	718,563		$	3,471,662
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable	$	319,651		$	142,865
Accrued expenses		160,312			339,079
Accrued payroll expenses		61,748			114,923
Accrued interest		1,552,590			711,684
Deferred income		52,182			10,098
Convertible debentures current portion		25,279			39,078
Note payable		5,000			-
Derivative liabilities		18,888,603			17,356,901
Total Current Liabilities		21,065,365			18,714,628
Note payable		4,000,000			4,000,000
Convertible debentures, net of current portion		13,997,780			14,028,077
Total Liabilities		39,063,145			36,742,705
Stockholders' deficit:
Preferred stock, $.001 par value; 1,000,000 shares authorized, 20,000 issued and outstanding		-			-
Common stock, par value $.001; authorized 9,999,000,000 shares; 23,176,249 and 2,970,593 issued and outstanding at December 31, 209 and 2008, respectively.		23,176			2,971
Additional paid-in capital		20,007,629			19,883,663
Accumulated deficit		(58,375,387	)		(53,157,677	)
Total Stockholders' Deficit		(38,344,582	)		(33,271,043	)
Total Liabilities and Stockholders' Deficit	$	718,563		$	3,471,662

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

ALLIED SECURITY INNOVATIONS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

	2009			2008
INCOME
Product sales	$	3,498,673		$	4,626,817
Service sales		98,980			212,117
Total sales		3,597,653			4,838,934
Cost of revenue		1,388,782			1,964,572
Gross Profit		2,208,871			2,874,362
OPERATING EXPENSES
General and administrative		1,913,398			2,278,188
Sales and marketing		666,702			719,927
Research		88,801			94,946
Impairment of goodwill		2,054,998			2,000,000
Total Operating Expenses		4,723,899			5,093,061
LOSS BEFORE OTHER INCOME (EXPENSE)		(2,515,028	)		(2,218,699	)
OTHER INCOME (EXPENSE)
Loss on extinguishment of debt		-			(7,237,883	)
Interest		(1,130,976	)		(1,203,589	)
Beneficial interest on debt conversions		(73,760	)		(170,673	)
Amortization of debt discount		(16,245	)		(91,346	)
Change in fair market value of derivative liability		(1,481,701	)		5,541,459
Other income and expenses		-			(16,715	)
Total Other Income (Expense)		(2,702,682	)		(3,178,747	)
NET LOSS APPLICABLE TO COMMON SHARES	$	(5,217,710	)	$	(5,397,446	)
NET LOSS PER BASIC AND DILUTED SHARES	$	(0.00	)	$	(0.00	)
Weighted average shares of common stock outstanding, basic and diluted		6,422,710			1,877,405

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

ALLIED SECURITY INNOVATIONS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

										Total
	Common Stock				Additional Paid		Accumulated			Stockholders'
	Shares		Amount		in Capital		Deficit			Deficit
Balance at December 31, 2007		681,600	$	682	$	19,545,800	$	(47,760,231	)	$	(28,213,749	)
Common stock issued in conversion of convertible debentures		2,288,993		2,289		167,190		-			169,479
Beneficial interest on debt conversions		-		-		170,673		-			170,673
											-
Net loss		-		-		-		(5,397,446	)		(5,397,446	)
Balance at December 31, 2008		2,970,593	$	2,971	$	19,883,663	$	(53,157,677	)	$	(33,271,043	)
Common stock issued in conversion of convertible debentures after stock split		20,205,656		20,205		50,206		-			70,411
Beneficial interest on debt conversions		-		-		73,760		-			73,760
											-
Net loss		-		-		-		(5,217,710	)		(5,217,710	)
Balance at December 31, 2009		23,176,249	$	23,176	$	20,007,629	$	(58,375,387	)	$	(38,344,582	)

ALLIED SECURITY INNOVATIONS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

	2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss	$	(5,217,710	)	$	(5,397,446	)
Adjustments to reconcile net loss to net cash (used in) operating activities:
Depreciation and amortization		73,277			77,958
Amortization of debt discount		16,245			91,346
Beneficial interest on debt conversions		73,760			170,673
Loss on debt extinguishment		-			7,237,883
Change in fair value of derivative liability		1,481,701			(5,541,459	)
Impairment of intangible		89,260			-
Impairment of goodwill		2,054,998			2,000,000
Bad debt expense		(9,879	)		59,444
Changes in operating assets and liabilities:
Accounts receivable		254,649			(190,012	)
Inventory		120,502			427,312
Prepaid expenses and other assets		9,445			625
Accounts payable and accrued expenses		795,822			955,186
Deferred income		42,084			(50,479	)
Total Adjustments		5,001,864			5,238,477
Net Cash (Used in) Operating Activities		(215,846	)		(158,969	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment		-			(24,146	)
Net Cash Used in Investing Activities		-			(24,146	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Due to Officer		5,000			-
Proceeds from convertible debentures		50,000			510,000
Payment on note payable		-			(500,000	)
Net Cash Provided by Financing Activities		55,000			10,000
NET DECREASE IN CASH		(160,846	)		(173,115	)
CASH AT BEGINNNING OF YEAR		213,513			386,628
CASH AT END OF YEAR	$	52,667		$	213,513

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

ALLIED SECURITY INNOVATIONS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (CONTINUED)

	2009		2008
Supplemental Disclosure of Cash Flow Information:
Cash Paid For:
Interest Expense		-		-
Income Taxes		-		-
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Common stock issued in conversion of convertible debentures and accrued interest		70,411	$	169,479
Beneficial interest on debt conversions	$	73,760	$	170,673

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

Allied Security Innovations, Inc. and Subsidiary

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2009 and December 31, 2008

Note 1 - Description of Business

On October 9, 2007 the Company’s stock began trading on the OTCBB market. Previously, the Company’s common stock traded on Pink Sheets.

Allied Security Innovations, Inc., incorporated in Delaware in 1994, develops, assembles and markets computer installations consisting of hardware and software, which capture video and scanned images, link the digitized images to test and store the images and text on a computer database and transmit this information to remote locations. The principal product of the Company is the Compu-Capture ® Law Enforcement Program, which is marketed to law enforcement agencies and prison facilities. Substantially all of the Company's revenues are derived from governmental agencies in the United States.

CGM-Applied Security Technology, Inc. (CGM) is a manufacturer and distributor of indicative and barrier security seals, security tapes and related packaging security systems, protective security products for palletized cargo, physical security systems for tractors, trailers and containers as well as a number of highly specialized authentication products.

On July 1, 2007 the offices of Allied Security Innovations, Inc. and the Somerset office of CGM Applied Security Technologies, Inc., the Company’s wholly owned subsidiary, were combined into a new office located in Farmingdale, NJ in a 6,000 square foot combination warehouse /office space. The reason for this was cost savings and improved operational efficiencies.

Note 2 - Summary of Significant Accounting Policies

Significant accounting policies followed by the Company in the preparation of the accompanying consolidated financial statements are summarized below:

Use of Estimates

The preparation of the consolidated 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 consolidated financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.

Revenue Recognition

The Company derives revenue from the sale of hardware, software, post customer support, and other related services. Post customer support includes telephone support, virus fixes, and rights to upgrades. Other related services include basic training. CGM derives its revenue from the sale of its tapes, labels and other security devices. Revenue is recognized when products are shipped or services are rendered, evidence of a contract exists, the price is fixed or reasonably determinable, and collectability is reasonably assured.

The Company recognizes revenue upon delivery of the product to the end-user, when the fee is determinable and collectability is probable. Revenue allocable to post customer support is recognized on a straight-line basis over the period which the service is to be provided.

Deferred Income

Revenue allocable to post customer support is recognized on a straight-line basis over the period which the service is to be provided. Revenue collected for future services is recorded as deferred income. Deferred revenue for the years ended December 31, 2009 and 2008 was $52,182 and $10,098 respectively. Revenue allocable to other services is recognized as the services are provided. The CGM-AST subsidiary recognizes it revenue upon shipment of the product to the customer.

Software Development Costs

All costs incurred in the research and development of new software products and costs incurred prior to the establishment of a technologically feasible product are expensed as incurred. Research and development of software costs were $88,801 and $94,946, respectively, for the years ended December 31, 2009 and 2008.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. The Company had no cash equivalents at December 31, 2009 and 2008. The Company maintains cash balances at financial institutions that are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to federally insured limits. At times balances may exceed FDIC insured limits. The Company has not experienced any losses in such accounts.

Accounts Receivable

Accounts receivable are uncollateralized customer obligations due under normal trade terms requiring payment within 30 days from the invoice date. No interest is charged on any past due accounts. Accounts receivable are stated at the amount billed to the customer.

The carrying amount of accounts receivable is reduced by a valuation allowance that reflects management's best estimate of the amount that will not be collected. Management reviews all accounts receivable balances that exceed 90 days from invoice date and based on assessment of current creditworthiness, estimates the portion, if any that will not be collected. The allowance for doubtful accounts is $138,627 and $148,506 at December 31, 2009 and 2008.

Fixed Assets

Fixed assets are stated at cost. Depreciation is computed primarily using the straight-line method over the estimated useful life of the assets.

Machinery and equipment	7 years
Furniture and fixtures	7 years
Computers	3 years
Leasehold improvements	39 years

Income Taxes

The Company provides for income taxes under the liability method. Deferred income taxes reflect the net tax effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Such differences result from differences in the timing of recognition by the Company of net operating loss carry forwards, certain expenses, and differences in the depreciable lives and depreciation methods for certain assets.

Accounting for Stock Options

The Company has adopted FASB ASC 718-10, “Accounting for Stock-Based Compensation”, which establishes financial accounting and reporting standards for stock-based employee compensation plans. This pronouncement also applies to transactions in which an entity issues its equity instruments to acquire goods or services from non-employees. Those transactions must be accounted for based on the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. For stock options, fair value is determined using an option-pricing model that takes into account the stock price at the grant date, the exercise price, the expected life of the option, the volatility of the underlying stock and the expected dividends on it, and the risk-free interest rate over the expected life of the option.

Net Loss Per Common Share

Basic loss per share is calculated by dividing the net loss by the weighted average common shares outstanding for the period. Diluted loss per share is calculated by dividing the net loss by the weighted average common shares outstanding of the period plus the dilutive effect of common stock equivalents. Common stock equivalents were not included in the computation of diluted earnings per share when the Company reported a loss because to do so would be antidilutive for the years presented.

Concentration of Credit Risk

Financial instruments which potentially subject the Company to a concentration of credit risk principally consist of cash and accounts receivable. The Company does not require collateral from its customers. The Company sells its principal products to end users and distributors principally in the United States. ASII has one major customer that purchased $458,841 or 12.8% of total sales. The accounts receivable at December 31, 2009 for this customer was $0.

Principles of Consolidation and Basis of Presentation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary CGM. All inter-company accounts have been eliminated.

Inventory

Inventories consist principally of inks, adhesives, film and finished goods held in the Company’s warehouse. Inventory is stated at the lower of cost or market, utilizing the first-in, first-out method. The cost of finished goods includes the cost of raw materials, packaging supplies, direct and indirect labor and other indirect manufacturing costs. On a quarterly basis, management reviews inventory for unsalable or obsolete inventory. Obsolete or unsalable inventory write-offs have been immaterial to the financial statements.

Advertising

The Company’s policy is to expense the costs of advertising as incurred. The Company had $105,746 and $109,485 for the years ended December 31, 2009 and 2008 respectively.

Fair Value of Financial Instruments

The carrying amount reported in the consolidated balance sheet for cash and cash equivalents, accounts payable and accrued expenses approximates fair value because of the immediate or short-term maturity of these financial instruments. The carrying amount reported for the convertible debentures and notes payable approximates fair value because, in general, the interest on the underlying instruments fluctuates with market rates.

Goodwill and Other Intangible Assets

In June 2001, the Financial Accounting Standards Board (“FASB”) issued ASC 350 “Goodwill and Other Intangible Assets”. This statement addresses financial accounting and reporting for acquired goodwill and other intangible assets and supersedes APB Opinion No. 17, “Intangible Assets.” It addresses how intangible assets that are acquired individually or with a group of other assets (but not those acquired in a business combination) should be accounted for in financial statements upon their acquisition. This Statement also addresses how goodwill and other intangible assets should be accounted for after they have been initially recognized in the financial statements. Goodwill was acquired upon the purchase of its wholly-owned subsidiary of CGM totaling $4,054,998.

In addition, the Company has acquired licenses, which are included as other intangible assets. The licenses are being amortized over a period of 15 years based on the expected benefits to be consumed or otherwise used up. Goodwill and other intangible assets are tested annually for impairment in the fourth quarter, and are tested for impairment more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value. The Company assesses the recoverability of its goodwill and other intangible assets by comparing the projected undiscounted net cash flows associated with the related asset, over their remaining lives, in comparison to their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets.

In December of 2008 the Company decreased the value of goodwill from $4,054,998 to $2,054,998 and in December 2009 the Company decreased the value of the goodwill to $0.

Derivative Instruments

The Company has an outstanding convertible debt instrument that contains free-standing and embedded derivative features. The Company accounts for these derivatives in accordance with ASC 815, “Accounting for Derivative Instruments and Hedging Activities,” and EITF Issue No. 00-19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company's Own Stock.” In accordance with the provisions of ASC 815 and EITF Issue No. 00-19, the embedded derivatives are required to be bifurcated from the debt instrument and recorded as a liability at fair value on the consolidated balance sheet. Changes in the fair value of the derivatives are recorded at each reporting period and recorded in change in fair market value of derivative liability, a separate component of the other income (expense).

Earnings (Loss) Per Share of Common Stock

Historical net income (loss) per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share (EPS) include additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options and warrants. Common stock equivalents were not included in the computation of diluted earnings per share at December 31, 2009 and 2008 when the Company reported a loss because to do so would be anti-dilutive for years presented.

The following is a reconciliation of the computation for basic and diluted EPS:

	December 31,2009			December 31,2008
Net (Loss)	$	(5,217,710	)	$	(5,397,446	)
Weighted-average common shares outstanding (Basic)		6,422,710			1,877,405
Weighted-average common stock Equivalents:
Stock options		-			-
Warrants		-			-
Weighted-average common shares outstanding (Diluted)		6,422,710			1,877,405

Options and warrants outstanding to purchase stock were not included in the computation of diluted EPS in 2009 and 2008 because inclusion would have been anti-dilutive. There were no options and warrants available at December 31, 2009 and 2008.

Going Concern

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The Company has sustained operating losses and has accumulated large deficits for the year ended December 31, 2009. These factors raise substantial doubt about its ability to continue as a going concern.

Management has formulated and is in the process of implementing its business plan intended to develop steady revenues and income, as well as reducing expenses in the areas of operations. This plan includes the following management objectives:

· Soliciting new customers in the U.S.

· Expanding sales in the international market

· Expanding sales through E-commerce

· Adding new distributors both in the U.S and internationally

· The introduction of new products into the market

· Seeking out possible merger candidates

Presently, the Company cannot ascertain the eventual success of management’s plan with any degree of certainty. Each objective is contingent upon a number of factors and the Company does not represent that any or all of these objectives will occur. The accompanying consolidated financial statements do not include any adjustments that might result from the eventual outcome of the risks and uncertainties described above.

Subsequent Events

In May 2009, the FASB issued FASB ASC 855-10, Subsequent Events, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before the financial statements are issued or are available to be issued. The Company adopted FASB ASC 855-10 effective April 1, 2009 and has evaluated subsequent events after the balance sheet date of December 31, 2009 through the date the financial statements were issued.

Note 3 - Impact of Recent Accounting Pronouncements

In June 2009, the FASB issued ASC 105, Generally Accepted Accounting Principles. This section designates the FASB Accounting Standards Codification (FASC) as the source of authoritative U.S. GAAP. ASC 105 is effective for interim or fiscal periods ending after September 15, 2009. We have used the new guidelines and numbering system prescribed by the FASC when referring to GAAP in our fiscal quarter ending September 30, 2009. The adoption of ASC 105 did not have a material impact on our financial position, results of operation or cash flows.

In June 2009, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles (“SFAS 168”). SFAS 168 will become the single source of authoritative nongovernmental U.S. generally accepted accounting principles (“GAAP”), superseding existing FASB, American Institute of Certified Public Accountants (“AICPA”), Emerging Issues Task Force (“EITF”), and related accounting literature. SFAS 168 reorganizes the thousands of GAAP pronouncements into roughly 90 accounting topics and displays them using a consistent structure. Also included is relevant Securities and Exchange Commission guidance organized using the same topical structure in separate sections. SFAS 168 will be effective for financial statements issued for reporting periods that end after September 15, 2009. All future references to authoritative accounting literature in our financial statements issued for reporting periods that end after September 15, 2009 will be referenced in accordance with SFAS 168.

In May 2009, the FASB issued ASC 855, Subsequent Events. This standard establishes general standards of accounting for and disclosure of events that occur after the balance sheet date, but before financial statements are issued or available to be issued. Specifically, this standard codifies in authoritative GAAP standards the subsequent event guidance that was previously located in auditing standards. ASC 855 is effective for fiscal years and interim periods ended after June 15, 2009 and is applied prospectively. We adopted ASC 855 in our fiscal quarter ended June 30, 2009. The adoption of SFAS 165 did not have a material impact on our financial position, results of operation or cash flows.

In May 2009, the FASB issued Statement of Financial Accounting Standards No. 165, Subsequent Events (“SFAS 165”). SFAS 165 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. SFAS 165 applies prospectively to both interim and annual financial periods ending after June 15, 2009. The adoption of SFAS 165 did not result in any material change to our policies.

In April 2009, the FASB issued FSP No. 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments (“FSP 107-1”). FSP 107-1 amends FASB Statement No. 107, Disclosures about Fair Value of Financial Instruments, and Accounting Principles Board Opinion No. 28, Interim Financial Reporting, to require disclosures about fair value of financial instruments for interim periods of publicly traded companies as well as in annual financial statements. FSP 107-1 is effective for interim reporting periods ending after June 15, 2009. The adoption of FSP 107-1 had no material effect on our disclosures in our financial statements.

From time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies that we adopt as of the specified effective date. Unless otherwise discussed in these financial statements and notes or in our financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2009, we believe the impact of any other recently issued standards that are not yet effective are either not applicable to us at this time or will not have a material impact on our consolidated financial statements upon adoption.

Note 4 – Intangible Assets

Intangible assets consist of the following at December 31, 2009 and 2008:

	2009		2008
Licenses	$	87,076	$	222,076
Accumulated amortization		53,535		84,108
Total	$	33,541	$	137,968

Licenses are being amortized over its estimated useful life of 15 years. Amortization expense for the years ended December 31, 2009 and 2008 was $15,167 and $15,169 respectively. The Licenses are amortized using the straight-line method over the useful life of 15 years.

Based on the results of its most recent annual impairment tests, the Company determined that there would be no future value on the Brake Lock License. Therefore, management authorized the impairment of that asset for a net affect of $89, 260. There was no impairment determined for the other licenses that exist. However, future impairment tests could result in a charge to earnings.

The following is a listing of the estimated amortization expense for the next five years:

Year ended December 31,

2010	$	6,168
2011		6,168
2012		6,168
2013		6,168
2014		6,168

Note 5- Property and Equipment

Property and Equipment consist of the following at December 31, 2009 and 2008:

	2009			2008
Furniture and Fixtures	$	75,613		$	75,613
Leasehold Improvements		159,607			159,607
Computers		219,301			219,301
Machinery and Equipment		762,987			762,987
		1,217,508			1,217,508
Less: Accumulated depreciation		(1,008,023	)		(949,914	)
Net	$	209,485		$	267,594

Depreciation expense for the years ended December 31, 2009 and 2008 was $58,109 and $62,789, respectively.

Note 6 - Convertible Debentures

Based on the guidance ASC 815, the Company concluded that the conversion features of its convertible debentures were required to be accounted for as derivatives. The imbedded conversion feature was bi-furcated and the fair market value was determined using a convertible bond valuation model. The derivative instruments are recorded at fair market value with changes in value recognized during the period of change.

On May 16, 2008 convertible debentures in the net amount of $5,832,483 were satisfied.

On May 16, 2008, the Company issued sixteen convertible notes for an aggregate amount of $14,165,899. The debentures are collateralized by substantially all of the Company's assets. The debentures accrue interest at the rate of 6% per annum.

The fair market value of the conversion feature is shown as a derivative liability on the Company’s balance sheet and is being adjusted to fair market value each reporting period with the change being reported as “other income and expenses” in the statement of operations.

The expected payment of principal over the life of the note assuming no principal is converted is as follows:

Year	Principal Payment
2010	$	25,279
2011		13,997,780

During January 2009, the Company issued 5 convertible notes for an aggregate amount of $50,000. The debentures are collateralized by substantially all of the Company's assets. The debentures accrue interest at the rate of 6% per annum with terms of three years.

We recorded a derivative liability related to these convertible debentures. The fair market value of the conversion feature is shown as a derivative liability on the Company’s balance sheet and is adjusted to fair market value each reporting period with the change being reported as “other income and expenses” in the statement of income.

Note 7 – Derivative Liability

In accordance with ASC 815and EITF 00-19, the conversion feature associated with the Secured Convertible Debentures represents embedded derivatives. As such, the Company had recognized embedded derivatives as a liability in the accompanying consolidated balance sheet, and it was measured at its estimated fair value of $18,888,603 and $17,356,901 as of December 31, 2009 and 2008, respectively. The estimated fair value of the embedded derivative has been calculated based on a Black-Scholes pricing model using the following assumptions:

	2009			2008
Fair market value of stock	$	0.0012		$	0.0001
Exercise price	$	0.0003 to 0 .0009		$	0.00007
Dividend yield		0.00	%		0.00	%
Risk free interest rate	0.81 % to 2.03%				1.07	%
Expected volatility	254% to 356%				478.0	%
Expected life	1 to 2 Years			2.5 Years

Note 8 - Income Taxes

At December 31, 2009 and 2008, the Company had federal net operating loss carry forwards of approximately $18,800,000 and $11,900,000, respectively to offset future federal taxable income expiring in various years through 2029. The Company also has state net operating loss carry forwards in various states, which approximate the federal amount to offset future state taxable income expiring in various years, generally 7 to 10 years following the year the loss was incurred.

The timing and extent in which the Company can utilize future tax deductions in any year may be limited by provisions of the Internal Revenue Code regarding changes in ownership of corporations due to certain ownership changes of the Company.

The differences between income tax provisions in the financial statements and the tax expense (benefit) computed at the U.S. Federal Statutory rate are as follows:

	Year Ended December 31,
	2009			2008
Federal Income Tax Rate		(34.0	)%		(34.0	)%
State Income Tax, Net of Federal Benefit		(5.94	)%		(5.94	)%
Effective Income Tax Rate		(39.94	)%		(39.94	)%
Effect on valuation allowance		(39.94	)%		(39.94	)%
Effective Income Tax Rate		0.0	%		0.0	%

The tax effects of temporary differences that give rise to significant portions of deferred tax assets at December 31, 2009 and December 31, 2008 follows:

	2009			2008
Deferred tax asset
Net approximate operating loss carry forward	$	6,588,000		$	4,165,000
Bad debt reserves		—			—
Deferred tax assets		6,588,000		$	4,165,000
Valuation allowance		(6,588,000	)		(4,165,000	)
Net deferred tax asset	$	—		$	—

Note 9 - Commitments and Contingencies

Operating Lease

CGM-AST leases one facility in Staten Island, New York under non-cancelable lease agreements that end in December 2008. Company still occupies the space on a month to month basis.

On June 1, 2007 the offices of Allied Security Innovations, Inc. and the Somerset office of CGM-AST Applied Security Technologies, Inc. were combined into a new office located in Farmingdale, NJ in a 6,000 square foot combination warehouse /office space. The reason for this was cost savings and improved operational efficiencies. The lease is a 5 year lease ending May 12, 2012 with a 5 year renewal option. The Company is required to pay utilities, insurance and other costs relating to the lease facility. The following is a schedule by years of future minimum rental payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year as of December 31, 2009:

	Per Year
2010	$	58,529
2011		60,285
2012		30,588
Thereafter		-0-
Total Minimum Payrment required	$	149,402

Employment Agreements

Anthony R. Shupin, Chairman, President and Chief Executive Officer. Mr. Shupin was re-appointed as Chairman, President and Chief Executive Officer effective February, 2005. On February 25, 2005, ASII entered into a five-year employment agreement with Mr. Shupin, which entitled him to a base salary of $227,900 per year. The Board of Directors may adjust his base salary at their discretion but it may not be adjusted below $215,000 per year. Mr. Shupin is also entitled to participate in the Annual Management Bonus Plan. As a participant in the Annual Management Bonus Plan, Mr. Shupin will be eligible to receive bonuses, based on performance, in any amount from 10% to 200% of the Base Salary. In addition, Mr. Shupin shall participate in the Management Equity Incentive Plan. As a participant in the the Management Equity Incentive Plan, Mr. Shupin will be eligible to receive options, which vest over a period of time from the date of the option's issue, to purchase common shares of ASII. The Company may grant Mr. Shupin, following the first anniversary of the date hereof and at the sole discretion of the Board of Directors, options to purchase common shares of the Company (subject to the vesting and the satisfaction of the other terms and conditions of such options). Mr. Shupin will be entitled to 25 vacations days per year at such times as may be mutually agreed with the Board of Directors. ASII will provide Mr. Shupin a monthly car allowance of One Thousand Dollars ($1,000) along with related car expenses.

Michael J. Pellegrino, Senior Vice President and Chief Financial Officer. Mr. Pellegrino was appointed as Senior Vice President and Chief Financial Officer effective February 25, 2005. On February 25, 2005, ASII entered into a five-year employment agreement with Mr. Pellegrino, which entitled him to a base salary of $185,500 per year. The Board of Directors may adjust his base salary at their discretion but it may not be adjusted below $175,000 per year. Mr. Pellegrino is also entitled to participate in the Annual Management Bonus Plan. As a participant in the Annual Management Bonus Plan, Mr. Pellegrino will be eligible to receive bonuses, based on performance, in any amount from 10% to 200% of the Base Salary. In addition, Mr. Pellegrino shall participate in the Management Equity Incentive Plan. As a participant in the Management Equity Incentive Plan, Mr. Pellegrino will be eligible to receive options, which vest over a period of time from the date of the option's issue, to purchase common shares of ASII. ASII may also grant to the Employee, following the first anniversary of the date of the Agreement and at the sole discretion of the Board of Directors, options to purchase common shares of the Company (subject to the vesting and the satisfaction of the other terms and conditions of such options). Mr. Pellegrino will be entitled to 25 vacation days per year at such times as may be mutually agreed with the Board of Directors. ASII shall also furnish Mr. Pellegrino with monthly car allowance of One Thousand Dollars ($1,000) and related car expenses.

Note 10 - Stock Option and Other Plans

On May 11, 2009 the Company filed with the Secretary of State of Delaware a Certificate of Designation of Preferences, Rights and Limitations of Series B Preferred Stock.

The Company maintains the 1994 Restated Stock Option Plan (the 1994 Plan) pursuant to which the Company reserved 5,000,000 shares of common stock. The options granted have a term of ten years and are issued at or above the fair market value of the underlying shares on the grant date. The Company also maintains the 1996 Director Option Plan (the Director Plan) pursuant to which the Company reserved 200,000 shares of common stock. Options granted under the Director Plan are issued at or above the fair market value of the underlying shares on the grant date. A portion of the first option vests at the six-month anniversary of the date of the grant and continues over a four-year period. Subsequent options vest on the first anniversary of the grant date. The options expire ten years from the date of the grant or 90 days after termination of employment, whichever comes first.

The following is a summary of option activity under all plans:

	1994 Plan		1996 Director Plan		Nonqualified		Total Number of Options		Weighted Average ExercisePrice
Outstanding at December 31, 2008		0		—		—		00		0
Outstanding at December 31, 2009		0						0		0

Note 11 - Contingency

There were two holders of convertible notes dated December 31, 2001 who could potentially seek damages from the Company. Should they seek these damages, the Company could incur an additional expense of $71,668. Management feels however, that the likelihood that the other holders will seek the damages is remote, and therefore, no provision for this expense has been made in the accompanying consolidated financial statements.

Note 12 – Acquisitions and Note Payable

On March 1, 2005, the Company acquired substantially all of the assets of CGM Security Solutions, Inc., a Florida corporation ("CGM"), for (i) $1,500,000 in cash and (ii) a 2.86% promissory note (the "Note") in the principal amount of $3,500,000, subject to adjustment (the "Acquisition"). The assets of CGM Security Solutions, Inc. were acquired pursuant to an Asset Purchase Agreement among the Company and CGM Security Solutions, Inc. dated as of February 25, 2005. In connection with the acquisition, the Company and CGM-AST each entered into an employment agreement with Erik Hoffer (the "Employment Agreement"). CGM Security Solutions, Inc is a manufacturer and distributor of barrier security seals, security tapes and related packaging security systems, protective security products for palletized cargo, physical security systems for tractors, trailers and containers.

The principal amount of the three year Note is subject to adjustment based upon the average of (i) the gross revenues of CGM-AST for the fiscal year ending December 31, 2009 and (ii) an independent valuation of CGM-AST Sub based upon the audited consolidated financial statements of the Company and CGM-AST Sub for the fiscal years ending December 31, 2007 and 2008. In addition, the Company has granted CGM-AST a secondary security interest in substantially all of its assets and intellectual property. If the Company is unable to fulfill its obligations pursuant to the Asset Purchase Agreement and the Note, there is a likelihood that CGM Security Solutions, Inc. can declare default and attempt to take back the asset.

In connection with the Acquisition, the Company entered into a letter agreement with certain of its investors (the "Investors") which extended the maturity date of debt instruments issued on November 30, 2004 until September 1, 2008, and amended the conversion price of the debt that is held by the Investors to the lower of (i) $0.0005 or (ii) 40% of the average of the three lowest intraday trading prices for the Company's common stock during the 20 trading days before, but not including, the conversion date. In addition, the exercise price of the warrants held by the Investors was amended to $.001 per share.

Whereas the Company did not have sufficient funds to satisfy this obligation and was not able to raise the required payment when due the Company came to an agreement to pay CGM Security Solutions, Inc. and its owner Mr. Erik Hoffer Five Hundred Thousand Dollars ($500,000) and signed a new note with him raising the purchase price by One Million Dollars ($1,000,000). The new note for Four Million Dollars is a three year note due on May 15, 2011 carrying an annual interest rate of 7% of which the interest is due quarterly.

Note 13 – Loss on extinguishment of debt

The Statements of Operations reports a loss on extinguishment of debt in the amount of $7,237,883. This amount is represented by the following:

Convertible debentures as of May 15, 2008	$	5,832,481
Accrued interest as of May 15, 2008		1,585,533
		7,418,014
Convertible debt balance after refinancing		13,655,897
Convertible debt balance after refinancing Hoffer*		1,000,000
		14,655,897
Total Loss on Extinguishment of Debt	$	(7,237,883	)

*In order to determine the accounting for the modification of the terms of the Amended Asset Purchase Agreement and Amended 7% Secured Convertible Promissory Note (increase in both the principal and interest), the Company had to consider if the creditor has granted any concessions to the debtor. In this case, the modifications to the Hoffer debt has resulted in an increase in interest rate, which went from 2.68% to 7% and an increase in principal from $3.5 mill to $4.5 mill, therefore, under the guidance set forth in EITF 02-04 Determining whether a debtor’s modification or exchange of debt instrument is within the Scope of FAS 15, there is no concessions granted to the debtor. By default this modification of debt does not result in a troubled debt transaction, and it falls out of the scope of FAS 15 –Accounting by Debtor’s and Creditors for troubled debt restructuring. This test ruled out the debt being troubled debt transaction, therefore we follow the guidance promulgated by EITF 96-19, Debtor’s Accounting for Modification or Exchange of Debt Instrument

EITF 96-19 Debtor’s Accounting for Modification or Exchange of Debt Instruments provides that by modifying the terms of the agreement, one can achieve the same economic effect as extinguishments; therefore, the debt modification transaction should be accounted and recorded as if it was extinguishments. The EITF also discusses “substantially” modified and how to account for fees paid or received by a debtor and costs incurred by a debtor with third party as past of an exchange or modification.

From the debtor's perspective, an exchange of debt instruments between or a modification of a debt instrument by a debtor and a creditor in a non-troubled debt situation is deemed to have been accomplished with debt instruments that are substantially different if any of the following three conditions are met:

1. The present value of the cash flows under the terms of the new debt instrument is at least 10 percent different from the present value of the remaining cash flows under the terms of the original instrument.

2. A modification or an exchange that affects the terms of an embedded conversion option, from which the change in the fair value of the embedded conversion option (calculated as the difference between the fair value of the embedded conversion option immediately before and after the modification or exchange) is at least 10 percent of the carrying amount of the original debt instrument immediately prior to the modification or exchange.

3. A modification or an exchange of debt instruments that adds a substantive conversion option or eliminates a conversion option that was substantive at the date of the modification or exchange.

Conclusion: We have considered the accounting guidance aforementioned, and have determined that the present value of the cash flows do exceeded 10%, therefore, the modification is substantial. Since this modification is substantial, the new debt instrument is recorded at fair value (the interest rate of 7% on this note is several basis points greater then LIBOR, therefore the face amount of the note is deemed to approximate its fair value) and the amount should be used to determine the debt extinguishments gain or loss to be recognized and the new effective rate of the new instrument. However, due to the economics of the transaction, we believe that the increase in the loan was more of an “inducement” or penalty; therefore we will record the loss to “Interest Expense”.

Note 14 -Fair Value Measurements

On January 1, 2008, the Company adopted ASC 820 “Fair Value Measurements”. ASC 820 defines fair value, provides a consistent framework for measuring fair value under Generally Accepted Accounting Principles and expands fair value financial statement disclosure requirements. ASC 820’s valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. ASC 820 classifies these inputs into the following hierarchy:

Level 1 Inputs– Quoted prices for identical instruments in active markets.

Level 2 Inputs– Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 Inputs– Instruments with primarily unobservable value drivers.

The following table represents the fair value hierarchy for those financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2009.

Fair Value Measurements on a Recurring Basis as of December 31, 2009

Assets	Level I		Level II		Level III		Total
Assets	$	-		-	$	-	$	-
Total Assets	$	-	$	-	$	-	$	-
Liabilities		-	$	36,916,662		-	$	36,916,662
Total Liabilities	$	-	$	36,916,662	$	-	$	36,916,662

Note 15 - Subsequent Event

On March 2, 2010 the Company signed a six month promissory note in the amount of Seventy Thousand Dollars ($70,000) which carries and interest rate of 12% and is due in 5 monthly installments of $7,000 with a balloon payment in the sixth month of $38,242.

On March 2, 2010, the Company entered into a rescission agreement (the “Rescission Agreement”) with each of AJW Partners, LLC, AJW Master Fund, Ltd., New Millennium Capital Partners II, LLC and AJW Offshore, Ltd. as holders (the “Holders”) of the Company’s Callable Secured Convertible Notes (the “New Notes”). Under the terms of the Rescission Agreement, the parties agreed to rescind a recapitalization agreement dated May 16, 2008 among the Company and the Holders (the “Recapitalization Agreement”). Under the Recapitalization Agreement, certain convertible debt securities previously held by the Holders (the “Old Notes”) were exchanged for the New Notes.

Under the Rescission Agreement, the New Notes are deemed void as if they were never issued by the Company to the Holders and the Old Notes were returned to the Holders as if they had never been exchanged for the New Notes pursuant to the Recapitalization Agreement. As a result of the rescission, the Company is able to reduce its long term liabilities by approximately $8,000,000.

The Company considered all subsequent events through April 12, 2010, the date the financial statements were available to be issued.

No.
31.1		Certification of Chief Executive Officer pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Chief Financial Officer pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes- Oxley Act of 2002

SIGNATURES

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

	ALLIED SECURITY INNOVATIONS, INC.
	(Registrant)
Date: April 14, 2010	By:	/s/ ANTHONY SHUPIN
		Anthony Shupin
		(President, Chief Executive Officer)
		(Chairman)
Date: April 14, 2010	By:	/s/ MICHAEL J. PELLEGRINO
		Michael J. Pellegrino
		Senior Vice President & CFO
		(Principal Financial and Accounting Officer)

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