U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-KSB
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR
15 (d)OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 2000
Commission file number 0-9951
ADVANCED OXYGEN TECHNOLOGIES, INC.
(Name of small business Issuer in its charter)
Delaware 91-1143622
(State of incorporation) (I.R.S. Employer Identification No.)
26883 Ruether Avenue Santa Clarita, CA 91351
(Address of principal executive offices) (Zip Code)
661-298-3333
(Issuer's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $.01 per share
Check whether the Issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [ X ] No[ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this form 10-KSB. [ X ]
For the year ended June 30, 2000, Issuer's revenues were $97,716
The aggregate market value of Common Stock at June 30, 2000 held by non-affiliates approximated $536,847.75 based upon the average bid and asked prices for a share of Common Stock on that date. For purposes of this calculation, persons owning 10% or more of the shares of Common Stock are assumed to be affiliates, although such persons are not necessarily affiliates for any other purpose. As of June 30, 1999, there were 29,640,252 issued and outstanding shares of the registrant's Common Stock, $.01 par value.
Transitional Small Business Disclosure Format (check one):
Yes[ ] No [ X ]
Table of Contents 2
PART I 3
ITEM 1- DESCRIPTION OF BUSINESS 3
THE PATENT SALE 3
STOCK ACQUISITION AGREEMENT, 12/18/97 3
PURCHASE AGREEMENT, 12/18/97 3
WAIVER AGREEMENT, 12/18/97 4
CHANGE OF DIRECTORS 4
TRUST AGREEMENT, 12/18/97 4
ACQUISITION OR DISPOSITION OF ASSETS, MARCH 09,1998. 5
TEUBER EMPLOYMENT AGREEMENT TERMINATION 5
SET OFF OF PROMISSORY NOTE, 9/4/98 5
GAYLORD EMPLOYMENT AGREEMENT TERMINATION 5
CALIFORNIA FACILITIES, 9/30/98 5
DEMAND FOR INDEMNIFICATION, 12/9/98 6
PURCHASE AGREEMENT OF 1/29/99 6
ARTICLES OF INCORPORATION AMENDMENT OF 04/18/2000 6
EMPLOYEES 6
ITEM 2. DESCRIPTION OF PROPERTY 6
ITEM 3. LEGAL PROCEEDINGS 7
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 7
PART II 8
ITEM 5. MARKET OF REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 8
ITEM 6. PLAN OF OPERATION. 8
BUSINESS PLAN 8
CLIENT AND INDUSTRY REPRESENTATION 9
FORWARD LOOKING STATEMENTS 10
ITEM 7. AUDITED FINANCIAL STATEMENTS 11
BALANCE SHEETS 12
STATEMENTS OF INCOME AND ACCUMULATED DEFICIT 13
STATEMENTS OF CASH FLOWS 14
STATEMENTS OF STOCKHOLDERS' EQUITY 15
NOTES TO FINANCIAL STATEMENTS 16
ITEM 8. Changes in and Disagreements with Accounts on Accounting and Financial Disclosure 22
PART III 22
ITEM 9.Directors and Officers of the Registrant 22
ITEM 10. Executive Compensation 22
OPTION GRANTS DURING 1999; VALUE OF OPTIONS AT YEAR-END 23
Compensation Committee Report 23
Compensation Philosophy 23
Base Salary 23
Stock Option Awards 23
Board of Directors Compensation 25
ITEM 11. Security Ownership of Certain Beneficial Owners and Management 25
ITEM 12. Certain Relationships and Related Transactions 26
ITEM 13. Exhibits and Reports on Forms 8-K 26
Exhibits 26
SIGNATURES 28
ITEM 1- DESCRIPTION OF BUSINESS
Advanced Oxygen Technologies, Inc. ("Advanced Oxygen Technologies", "AOXY", "AOT" or the "Company"), incorporated in Delaware in 1981 under the name Aquanautics Corporation, was, from 1985 until May 1995, a development stage specialty materials company producing new oxygen control technologies. From May of 1995 through December of 1997 AOXY had minimal operations and was seeking funding for operations and companies to which it could merge or acquire. In March of 1998 AOXY began operations in California. The business consists of producing and selling CD- ROMS for conference events, advertisement sales on the CD's, database management and event marketing all associated with conference events.
On May 1, 1995, the Company sold its patents, and all related technology and intellectual property rights (collectively the "Patents Rights") to W. R. Grace & Co. Conn., a Connecticut corporation ("Grace"). The price for the Patents Rights was $335,000, in cash, and a royalty until April 30, 2007 of two percent (2%) of the net sales price of (a) all products sold by Grace that include as a component, material that absorbs, bars, climinates, extracts and/or concentrates oxygen that, but for the purchase of the Patents Rights, would fringe the Patents Rights, and (b) any mixture or compound (other than a finished product) which includes as a component material that absorbs, bars, climinates, extracts and/or concentrates oxygen that, but for the purchase of the Patent Rights, would infringe the Patent Rights. Subsequently these royalties and associated liabilities were transferred to a trust (see Trust Agreement 12/18/97 below).
STOCK ACQUISITION AGREEMENT, 12/18/97
Pursuant to a Stock Acquisition Agreement dated as of December 18, 1997, Advanced Oxygen Technologies, Inc. ("AOXY") has issued 23,750,00 shares of its common stock, par value $.01 per share for $60,000 cash plus consulting services rendered valued at $177,500, to Crossland, Ltd., ("Crossland"), Eastern Star, Ltd., ("Eastern Star"), Coastal Oil, Ltd. ("Coastal") and Crossland, Ltd. (Belize) ("CLB"). Crossland and Eastern Star, Ltd. are Bahamas corporations. Coastal Oil and CLB are Belize corporations.
Pursuant to a Purchase Agreement dated as of December 18, 1997, CLB, Triton-International, Ltd., ("Triton"), a Bahamas corporation, and Robert E. Wolfe purchased an aggregate of 800,000 shares of AOXY's common stock from Edelson Technology Partners II, L.P. ("ETPII") for $10,000 cash. AOXY issued 450,000 shares of its capital stock to ETPII in exchange for consulting services to be rendered. The general partner of ETPII is Harry Edelson, Chairman of the Board and Chief Executive Officer of AOXY prior to the transactions resulting in the change of control (the "Transactions"). Prior to the Transactions Mr. Edelson directly or indirectly owned approximately 25% of the issued and outstanding common stock of AOXY, and following the completion of Mr. Edelson's consultancy he will own approximately 1.5%.
| Company/Individual | Number of Shares | Percent Ownership |
| Robert E. Wolfe | 50,000 | 0.17% |
| Crossland (Belize) | 6,312,500 | 21.30% |
| Triton International | 375,000 | 1.26% |
| Coastal Oil, Ltd | 5,9375,500 | 20.03% |
| Crossland Ltd | 5,937,500 | 20.03% |
| Eastern Star, Ltd | 5,937,500 | 20.03% |
The 23,750,000 shares of AOXY common stock sold by AOXY as of December 18, 1997 to Crossland, Eastern, Coastal and CLB pursuant to the Stock Acquisition Agreement (the "Regulation S Shares") were not registered under the Securities Act of 1933, as amended, in reliance on the exemption from registration provided by Rule 903(c)(2) of Regulation S. Consideration for the Regulation S Shares consisted of $60,000 cash and consulting services rendered valued at $177,500. Each of the purchasers of the Regulation S Shares (a "Buyer") has represented to AOXY that (i) it is not a "U.S. Person" as that term is defined in Rule 902 (o) of Regulation S; (ii) the sale of the Regulation S Shares was taking place outside of the United States; (iii) no offer was made in the United States; (iv) it was purchasing the Regulation S Shares for its own account and not as a nominee or for the account of any other person or entity; (v) it had no intention to sell or distribute the shares except in accordance with Regulation S; (vi) it agreed that it would not transfer Regulation S Shares to a U.S. Person before the 41st day from the date the Buyer purchased the Regulation S Shares.
AOXY represented to the Buyers that it had not conducted any "directed selling effort" as defined in Regulation S, and that it had filed all reports required to be filed under the Securities Exchange Act of 1934 during the preceding twelve months.
Pursuant to a Waiver Agreement dated as of December 18, 1997, Emile Battat, Richard Jacobsen, each directors of AOXY prior to the Transactions, Sharon Castle, a former officer of AOXY, and ETPII released AOXY from any liability for repayment of an aggregate of $275,000 of loans plus all interest due thereon previously made by them to AOXY in consideration of an aggregate amount of $60,000 cash paid to them pro rata in proportion to their individual loans outstanding by CLB, Triton and Robert E. Wolfe. The source of funds for the Transactions was working capital and personal funds. To the knowledge of the registrant, no arrangements exist which might subsequently result in a change in control of the registrant.
All of the directors and officers of AOXY resigned in connection with the Transactions on December 18, 1997. Robert E. Wolfe and Joseph N. Noll were elected as directors and Mr. Wolfe was appointed President.
On December 18, 1997, pursuant to a Trust Agreement dated as of November 7, 1997 and an Assignment and Assumption agreement dated as of November 8, 1997, certain royalty rights associated with Grace and liabilities related to technology AOXY sold to a third party in 1995 were transferred to a trust for the benefit of the AOXY shareholders of record at that date. No royalties had been paid or become due with respect to the rights transferred to the Trust, and no value was assigned to such rights on the books of AOXY.
ACQUISITION OR DISPOSITION OF ASSETS, MARCH 09,1998.
On March 9, 1998, pursuant to an Agreement for Purchase and Sale of Specified Business Assets, a Promissory Note, and a Security Agreement all dated March 9, 1998, Advanced Oxygen Technologies, Inc.(the "Company") purchased certain tangible and intangible assets (the "Assets") including goodwill and rights under certain contracts, from Integrated Marketing Agency, Inc., a California Corporation ("IMA"). The assets purchased from IMA consisted primarily of furniture, fixtures, equipment, computers, servers, software and databases previously used by IMA in its full service telemarketing business. The purchase price of $2,000,000 consisted of delivery at closing by the Company of a $10,000 down payment, a Promissory Note in the amount of $550,000 payable to IMA periodically, with final payment due on April 10, 2000 and accruing compounded interest at a rate of nine percent (9%) per annum, and 1,670,000 shares of convertible, preferred stock, par value $.01 per share, of the Company (the "Preferred Stock"). The Preferred Stock is automatically convertible into shares of the Company's common stock, par value $.01 per shares (the "Common Stock"), on March 2, 2000, at a conversion rate which will depend on the average closing price of the Common Stock for a specified period prior thereto. The purchase price was determined based on the fair market value of the purchased assets. The down payment portion of the purchase price was drawn from cash reserves of the Company, and the cash required for payments due under the Promissory Note will be generated by future revenues from the Company's business.
TEUBER EMPLOYMENT AGREEMENT TERMINATION
Pursuant to an employment agreement dated March 09, 1998 between the Company and John Teuber ("Employment Agreement"), on September 04, 1998 the Company terminated John Teuber for cause without relinquishing any of its rights or remedies.
SET OFF OF PROMISSORY NOTE, 9/4/98
Pursuant to the Note, the Purchase Agreement, and the Security Agreement between the Company and ("IMA"), the Company on September 04, 1998 exercised its right of "Set Off" of the Note, as defined therein due to IMA's breach of numerous representations, warranties and covenants contained in the Note and certain ancillary documents. The Company further reserved any and all rights and remedies available to it under the Note, Purchase Agreement and Security Agreement.
GAYLORD EMPLOYMENT AGREEMENT TERMINATION
The Company entered into a two year employment agreement ("NAG Agreement" as contained in Exhibit I of the registrants SEC Form 10-K for the period ending June 30, 1998) with Nancy Gaylord on March 13, 1998. On September 18, 1998, Nancy Gaylord terminated her employment with the Company. The NAG Agreement had no provision for this termination.
CALIFORNIA FACILITIES, 9/30/98
The Company entered into a lease agreement as contained in Exhibit I of the registrants SEC Form 10-QSB for the period ending September 30, 1998 with America-United Enterprises Inc. on October 01, 1998 and took possession of 4,700 s.f. of premises on November 06,1998 in Santa Clarita for its CA location. Currently, this is the only California location of the Company.
DEMAND FOR INDEMNIFICATION, 12/9/98
On December 9, 1998 the company delivered to IMA, "Notification to Indemnifying Party and Demand for Indemnification for $2,251,266." Pursuant to the Note, the Purchase Agreement, the Security Agreement, and the Employment Agreement (collectively the "Agreements"), the Company demanded that IMA pay $2,251,266 or defend the Company against the Liabilities (as defined therein) due to, among other things, IMA's breach, representations, warranties, and violation of the Agreements.
On January 29, 1999, pursuant to the Purchase Agreement of 1/28/99, Advanced Oxygen Technologies, Inc. ("AOXY") purchased 1,670,000 shares of convertible preferred stock of Advanced Oxygen Technologies, Inc. ("STOCK") and a $550,000 promissory note issued by Advanced Oxygen Technologies, Inc ("Note") from Integrated Marketing Agency, Inc.("IMA"). The terms of the Purchase Agreement were: AOXY paid $15,000 to IMA, assumed a Citicorp Computer Equipment Lease, #010-0031648-001 from IMA, delivered to IMA certain tangible business property (as listed in Exhibit A of the Purchase Agreement), executed a one year $5,000 promissory note with IMA, and delivered to IMA a Request For Dismissal of case #PS003684 (restraining order) filed in Los Angeles county superior court. IMA sold, transferred, and delivered to AOXY the Stock and the Note. IMA sold, transferred, assigned and delivered the Note and the Stock to AOXY, executed documents with Citicorp Leasing, Inc. to effectuate an express assumption by AOXY of the obligation under lease #010-0031648-001 in the amount of $44,811.26, executed a UCC2 filing releasing UCC-1 filing #9807560696 filed by IMA on March 13, 1998, and delivered such documents as required. In addition, both IMA and AOXY provided mutual liability releases for the other.
ARTICLES OF INCORPORATION AMENDMENT OF 04/18/2000
On April 18, 2000, notice was given that the Board of Directors and persons owning 64.7%, or 19,180,500 shares of common stock of Advanced Oxygen Technologies, Inc. have elected to adopt the following proposals: 1. To amend and restate the Company's Restated Articles of Incorporation to increase the Company's authorized Common Shares from 30,000,000 to 90,000,000 shares, 2. The Board of Directors has approved an amendment to the Company's Certificate of Incorporation to change the name of the Company to AOXY, Inc. The Company's current name was adopted in 1985 when the Company was focused on applications of its technology which it has since disposed of or otherwise abandoned. The Board of Directors believes it would be more appropriate for the Company to utilize a corporate name which more accurately describes the current focus of the Company or is not misleading as to the Company's operations. The above amendments to the Certificate of Incorporation will be filed with the Secretary of State of the State of Delaware, and the Name Change will become effective as of 5:00 p.m. Eastern Time, on the date of such filing.
As of June 30, 2000 the Company had a total of 2 employees.
ITEM 2. DESCRIPTION OF PROPERTY
The assets of the Company consist primarily of furniture, fixtures, equipment, computers, servers, software and databases.
The Company was a party to the following legal proceedings:
On April 30, 1999 NEC America Filed suit against Advanced Oxygen Technologies, Inc. In the Los Angeles Superior Court, North Valley Branch, Case Number PC 023087X alleging default of the Lease Agreement of November, 1998 in the amount of $57,167.28. A judgment against the Company has been filed with the Los Angeles Superior Court.
A previous employee, Tim Rafalovich has filed suit against Advanced Oxygen Technologies, Inc. in the Small Claims court of New Hall, CA alleging that AOXY has not paid approximately $5,000 in wages, case number 99S00761. A judgment was filed against the Company and the Company has subsequently made payments to Mr. Rafalovich.
On June 14, 1999 Airborne Express, Inc. filed suit against Advanced Oxygen Technologies, Inc., case # 99-C00738 in small claims court of Los Angeles CA Municipal district, Newhall Judicial District for $5,093.95, including court costs and attorney's fees alleging monies owed. A judgment was filed against the Company.
On October 08, 1999, Acutrak, Inc. filed suit against the Company in the Municipal Court of Newhall, #99C01251 alleging non payment of invoices of $9.070.45. A judgment was filed on April 3, 2000 against the company.
On September 09, 1998 the Company appeared before the Santa Clarita County small claims court to represent itself in a motion ("Motion") filed by a plaintiff, Alpha Graphics, against John Teuber for a judgment on July 06, 1998 from a case filed May 29,1998, to be amended to the Company. The Motion was denied and the judgment was not amended to reflect the Company as a defendant.
On February 10, 1999 in the Municipal Court of California, county of Los Angeles, Newhall Judicial District, America-United Enterprises, Inc. filed suit against Advanced Oxygen Technologies, Inc, case no. 99U00109, alleging that the February, 1999 rent due on February 01, 1999 had not been paid by Advanced Oxygen Technologies, Inc. The suit has been settled out of court and Advanced Oxygen Technologies, Inc. has tendered the monies owed in full.
On February 19, 1999, Written Communications, Inc. filed suit against Advanced Oxygen Technologies, Inc. in the small claims court in Van Nuys CA Municipal Court, Case no. 99V12825 for unpaid service rendered in the amount of $4,875.00. The company paid the amount in full.
On January 16, 1999, A Better Type filed suit against Advanced Oxygen Technologies, Inc. in the small claims court of the Municipal Court of California, San Diego Judicial District, Case no.691493 alleging non payment for services rendered of $5,000. The Company paid the amount in full.
On March 23, 1999 Corestaff Services filed suit against Advanced Oxygen Technologies, Inc. in the small claims court Newhall CA Judicial district case no 99S00349 for lack of payment in the amount of $4,106. The case was settled out of court and the company has agreed to pay Corestaff $500.00 on the 15th day of each month beginning on June 15, 1999 until any debts owed are paid in full.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On April 18, 2000, notice in the form of Pre 14A, (see exhibits) was given that the Board of Directors and persons owning 64.7%, or 19,180,500 shares of common stock of Advanced Oxygen Technologies, Inc. have elected to adopt the following proposals:
a) To amend and restate the Company's Restated Articles of Incorporation to increase the Company's authorized Common Shares from 30,000,000 to 90,000,000 shares. The above amendments to the Certificate of Incorporation will be filed with the Secretary of State of the State of Delaware, and the Name Change will become effective as of 5:00 p.m. Eastern Time, on the date of such filing.
b) An amendment to the Company's Certificate of Incorporation to change the name of the Company to AOXY, Inc. The Company's current name was adopted in 1985 when the Company was focused on applications of its technology which it has since disposed of or otherwise abandoned. The Board of Directors believes it would be more appropriate for the Company to utilize a corporate name which more accurately describes the current focus of the Company or is not misleading as to the Company's operations. The above amendments to the Certificate of Incorporation will be filed with the Secretary of State of the State of Delaware, and the Name Change will become effective as of 5:00 p.m. Eastern Time, on the date of such filing.
c) The selection of Bernstein, Pinchuk and Kaminsky. LLP as the Company's independent public accountant for the fiscal year ended June 30, 1999 and 2000 and has further directed that management submit the selection of independent public accountants for ratification by the stockholders by written consents. Stockholder ratification of the selection of Bernstein, Pinchuk and Kaminsky, LLP as the Company's independent public accountants is not required by the Company's by-laws or otherwise and the Company had begun using some of their services.
ITEM 5. MARKET OF REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is traded on the Over-The-Counter Bulletin Board. The following table sets forth the range of high and low bid quotations on the Common Stock for the quarterly periods indicated, as reported by the National Quotation Bureau, Inc. The quotations are inter-dealer prices without retail mark-ups, mark downs or commissions and may not represent actual transactions.
| Fiscal Year Ended June 30, 1999 | High | Low |
| First Quarter | 0.220 | 0.055 |
| Second Quarter | 0.470 | 0.015 |
| Third Quarter | 0.031 | 0.015 |
| Fourth Quarter | 0.200 | 0.015 |
| Fiscal Year Ended June 30, 2000 | High | Low |
| First Quarter | 0.078 | 0.015 |
| Second Quarter | 0.125 | 0.031 |
| Third Quarter | 0.328 | 0.031 |
| Fourth Quarter | 0.141 | 0.031 |
At September 30, 2000, the closing bid price of the Company's Common Stock as reported by the National Quotation Bureau, Inc, was $0.05
The Company currently has a location in Santa Clarita, CA and is the location for operations. The Company, during the fiscal year ending June 30, 2000, had four areas of concentration: CD-ROM production/sales, event sales, database management and marketing. Currently, the Company is concentrating on database management.
The Company began producing and selling educational CD-ROMS in March of 1998. The content of the CD-ROMS is derived from conferences, held by clients of the Company. AOXY produces a CD-ROM of the conferences including the audio, video, graphics and/or verbatim transcripts of the conference. AOXY sells CD's direct to the client and public, and/or sells advertisement space on the CD's and produces the CD at no cost to the conference organizer. All CD's are in HTML format and are directly linked to the Internet sites of AOXY and the Client. The sales efforts are conducted on the Internet and in the Santa Clarita CA location. In addition, the Company began selling event registrations for conferences where AOXY is producing CD-ROMS. The Company sells the events through fax broadcasting, direct mail, and telemarketing from Santa Clarita CA.
In March 1998, AOXY began database management which includes managing client databases, assisting clients in effective marketing with databases, providing database information to clients, list rentals, and utilizing and structuring databases for fax broadcasting. Currently the Company has the ability to fax broadcast or email broadcast to a large number of contacts.
During the fiscal year ending June 30, 2000, the Company significantly reduced its expenses, reduced or discontinued unprofitable operations, and concentrated on database management. The Company continues it efforts to raise capital to support operations and growth, and is actively searching acquisition or merger with another company that would compliment AOXY or increase its earnings potential.
CLIENT AND INDUSTRY REPRESENTATION
During this reporting period, 6 client contracts were concluded. There were 3 active clients as of June 30, 2000. Because the company represents a variety of clients in a variety of industries, the operation of each client account is unique. In addition to the CD Production Clients of AOXY, AOXY has 2 active contracts for Database Management. AOXY fulfils these contracts by providing, selling, updating and/or renting database information.
Y2K (YEAR 2000 PROBLEM)
Y2K, or the Year 2000 Problem was a potential problem for computers whereby the system would not recognize the date 2000 as year 2000 but instead as 1900 due to the fact that the computer industry standard for dating was a 2 digit system and not 4 digits. Each date represented was the last two digits of the year, i.e.: 1998 was 98. This problem could render important computer and communication systems inoperable which could have had a significant effect on the Company's operations. The Company's exposure to potential Y2K systems that could have been affected included (but were not limited to): computers, telephones, all forms of electronic communications, switches, routers, software, accounting software, banking, electricity, credit card processors, electronic data exchange, security systems, fax broadcasting software and hardware, database software, archives, data, records, and others.
In an effort to minimize the Company's exposure to the potential Y2K problem, the Company contacted each of its vendors to assess how Y2K would have affected operations as wwell as tested and upgraded all systems of the Company to bring them to compliance. The Company did not directly experience any effect from the Y2K problem, but the suppliers, vendors, clients or other associates of the Company, may have been affected. The Company does not believe that any suppliers, vendors, or clients have had any effect on the Company's operations due to the Y2K problem.
Certain statements contained in this report, including statements concerning the Company's future and financing requirements, the Company's ability to obtain market acceptance of its products and the competitive market for sales of small production business' and other statements contained herein regarding matters that are not historical facts, are forward looking statements; actual results may differ materially from those set forth in the forward looking statements, which statements involve risks and uncertainties, including without limitation to those risks and uncertainties set forth in any of the Company's Registration Statement's under the heading "Risk Factors" or any other such heading. In addition, historical performance of the Company should not be considered as an indicator for future performance, and as such, the future performance of the Company may differ significantly from historical performance.
ITEM 7. AUDITED FINANCIAL STATEMENTS
FINANCIAL STATEMENT
AND REPORT OF
CERTIFIED PUBLIC ACCOUNTANTS
ADVANCED OXYGEN TECHNOLOGIES, INC.
June 30, 2000 and 1999
CONTENTS
Page
Report of Independent Certified Public Accounts 1
Financial Statements
Balance Sheets 2
Statements of Income and Accumulated Deficit 3-4
Statements of Cash Flows 5
Statements of Stockholder's Equity 6
Notes to Financial Statements 7-14
REPORT OF INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS
BOARD OF DIRECTORS AND STOCKHOLDERS
ADVANCED OXYGEN TECHNOLOGIES, INC.
We have audited the accompanying balance sheet of Advanced Oxygen Technologies, Inc. as of June 30, 2000 and 1999 and the related statements of income and accumulated deficit, cash flows and stockholders' equity for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall 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 Advanced Oxygen Technologies, Inc. as of June 30, 2000 and 1999 and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the financial statements, the Company incurred operating losses before extraordinary items of $550,797 and $324,865 respectively during the fiscal years ended June 30, 2000 and 1999, and as of those dates, the Company's current liabilities exceeded its current assets by $411,599 and $198,612 respectively. The foregoing raise substantial doubt about the Company's ability to continue as a going concern. The Company's continuation as a going concern is dependent on the attainment of profitable operations and meeting it obligations on a timely basis. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Bernstein Pinchuk & Kaminsky LLP
New York, NY
September 28, 2000
Advanced Oxygen Technologies, Inc.
| Assets | June 30 2000 | June 30 1999 |
| Current Assets | ||
| Cash | $ 44 | $ 54,788 |
| Database management receivable | 3,786 | 15,315 |
| Accounts receivable, net of allowances of $1295 (Note 3) | 935 | 59,908 |
| Inventory (Note 3) | 13,122 | 6,759 |
| Total Current Assets | 17,887 | 136,770 |
| Property and Equipment-at cost, | ||
| net of accumulated depreciation and | ||
| amortization (Notes 3 & 4) | 325,462 | 748,545 |
| Other Assets | ||
| Security Deposits | 4,093 | 4,093 |
| TOTAL ASSETS | 347,443 | 889,408 |
| LIABILITIES AND STOCKHOLDERS' DEFICIENCY | ||
| CURRENT LIABILITIES | ||
| Accounts payable | 199,952 | 180,690 |
| Payroll and sales taxes payable | 36,225 | 55,299 |
| Corporation taxes payable | 3,960 | 1,900 |
| Employee deferred savings payable | - | 58,226 |
| Accrued salaries and expenses | 6,375 | 108,686 |
| Due to affiliate (Note 7) | 182,974 | 28,399 |
| Total Current Liabilities | 429,486 | 335,382 |
| LONG TERM LIABILITIES | ||
| Capital leas obligation (Note 8) | - | 85,273 |
| Other long term liabilities | 11,886 | 11,886 |
| COMMITMENTS AND CONTINGENCIES (Note 6) | ||
| STOCKHOLDERS; DEFICIENCY- (Notes 1 &2) | ||
| Convertible preferred stock, Series 2, par value $0.01; authorized | ||
| 10,000,000 shares; issued and outstanding 5,000 shares | ||
| liquidating preference $25,000 | 50 | 50 |
| Convertible preferred stock, Series 3, par value $0.01; authorized | ||
| and issued, 1,670,000 shares | 16,700 | 16,700 |
| Convertible preferred stock, Series 4; issued and outstanding, 2 shares |
| Convertible preferred stock, Series 5; issued and outstanding, 1 share | ||
| Common Stock/ par value $0.01; authorized, 30,000,000 shares; | ||
| issued and outstanding, 29,640,252 shares | 296,403 | 296,403 |
| Additional paid in capital | 20,398,631 | 20,398,631 |
| Accumulated deficit | (20,798,430) | (20,247,633) |
| Less treasury stock, at cost-1,670,000 shares of convertible | ||
| preferred stock, Series 3 | (7,284) | (7,284) |
| Total | (93,930) | 456,867 |
| TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY | $347,442 | $889,408 |
See the accompanying accountants' report and notes to financial statements
- 2 -
Advanced Oxygen Technologies, Inc.
STATEMENTS OF INCOME AND ACCUMULATED DEFICIT
| 30-Jun-00 | 30-Jun-99 | |
| Revenues (Note 1) | ||
| California registrations | $45,991 | $277,305 |
| Compact disk sales | 3,867 | 142,617 |
| Commissions | - | 69,099 |
| Sponsor sales | 14,230 | 32,602 |
| Database Management/consulting | 27,628 | 60,058 |
| Total Revenues | 91,716 | 581,681 |
| Costs and expenses | ||
| Cost of products | 10,296 | 2,830 |
| Commissions | 5,127 | 57,483 |
| Sales royalties | - | 16,009 |
| Salaries and wages | 39,836 | 191,696 |
| Advertising | - | 2,207 |
| Professional Fees | 18,309 | 33,012 |
| Rent (Note 6) | 38,826 | 37,293 |
| Computer and equipment lease | 29,638 | 7,788 |
| Transcribing | - | 35,588 |
| Subcontracting | (1,748) | 16,940 |
| Telephone | 25,213 | 53,506 |
| Travel | 13,061 | 15,967 |
| Utilities | 5,235 | 5,658 |
| Payroll and other taxes | 4,256 | 16,950 |
| Depreciation and amortization (Notes 3,4,5) | 337,753 | 347,234 |
| Postage Printing and reproduction | 2,074 | 15,650 |
| Bank and credit card charges | 3,083 | 15,937 |
| Other costs and expenses | 28,866 | 13,090 |
| Total Costs | 559,825 | 884,838 |
| Loss from operations before other income (expenses) | ||
| income tax expense, and extraordinary gain | (468,109) | (303,157) |
| Other income (expenses) | ||
| Interest Expense | (2,435) | (22,148) |
| Bad debt expense | (117,220) | (4,742) |
| Interest income | 24,598 | 68 |
| Other income | 13,169 | 5,914 |
| Total Other income (expense) | (81,888) | (20,908) |
| Loss before income tax expense and extraordinary gain | (549,997) | (324,065) |
| Income tax expense (Note 9) | 800 | 800 |
| Loss before extraordinary gain | (550,797) | (324,865) |
| Extraordinary gain on forgiveness of debt | - | 521,894 |
| NET (LOSS) INCOME | (550,797) | 197,029 |
| Accumulated deficit at beginning of year | (20,247,633) | (20,444,662) |
| Accumulated deficit at end of year | ($20,798,430) | ($20,247,633) |
| -3- | ||
| Basic and diluted earnings per share: | ||
| Loss before extraordinary gain | -0.02 | -0.01 |
| Extraordinary gain on forgiveness of debt | - | 0.02 |
| NET (LOSS) INCOME | -0.02 | 0.01 |
See the accompanying accountants' report and notes to financial statements
See the accompanying accountants' report and notes to financial statements
d) 4 -
Advanced Oxygen Technologies, Inc.
| 30-Jun-00 | 30-Jun-99 | |
| Cash flows from operating activities | ||
| Net (loss) income | ($550,797) | ($197,029) |
| Adjustments to reconcile net income to net cash | ||
| provided by operating activities: | ||
| Depreciation and amortization | 337,753 | 347,234 |
| Extraordinary gain on forgiveness of debt | - | (521,894) |
| Changes in operating assets and liabilities | ||
| Decrease in accounts receivable | 70,502 | 40,287 |
| Increase in inventories | (6,363) | (3,234) |
| Increase in other assets | 57 | (4,093) |
| Increase in accounts payable | 19,262 | 114,200 |
| Increase in payroll and sales taxes payable | (19,074) | 23,717 |
| Decrease in accrued liabilities | (4,493) | (99,536) |
| Increase in income taxes payable | 2,060 | 1,100 |
| Increase in due to affiliate | 154,575 | 2,161 |
| Increase in employee deferred savings payable | (58,226) | - |
| Net cash provided by operating activities | (54,744) | 96,971 |
| Cash flow from investing activities: | ||
| Cash payments for the purchase of property | - | (94,811) |
| Net cash used in investing activities | - | (94,811) |
| Cash flow from financing activities: | ||
| Proceeds from issuance of long-term debt | - | 58,521 |
| Cash payment for purchase of treasury stock | - | (7,284) |
| Proceeds from employee deferred savings | - | 58,226 |
| Net cash provided by financing activities | - | 109,463 |
| NET INCREASE IN CASH | (54,744) | 111,623 |
| Cash and equivalents, beginning of year | 54,788 | (56,835) |
| Cash and equivalents, end of year | 44 | 54,788 |
| Supplemental Disclosures: | ||
| Income Taxes paid | - | - |
| Interest expense paid | - | 20,968 |
See the accompanying accountants' report and notes to financial statements
- 5 -
| Advanced Oxygen Technologies, Inc. |
| STATEMENTS OF STOCKHOLDERS' EQUITY |
| Year ended June 30, 2000 |
| Balances | Purchase of | Balances | |||||
| June 30, 1999 | Preferred Stock | Net | June 30, 2000 |
| Shares | Amount | Shares | Amount | Loss | Shares | Amount | ||||
| Preferred Stock | - Series 2 | 5,000 | $ 50 | 5,000 | $ 50 | |||||
| - Series 3 | 1,670,000 | 16,700 | 1,670,000 | 16,700 | ||||||
| - Series 4 | 2 | - | 2 | - | ||||||
| - Series 5 | 1 | - | 1 | - | ||||||
| Common Stock | 29,640,252 | 296,403 | 29,640,252 | 296,403 | ||||||
| Additional paid-in-capital | 20,398,631 | 20,398,631 |
| Accumulated deficit | (20,247,633) | $ (550,797) | (20,798,430) |
| 464,151 | - | (550,797) | (86,646) | |||||||
| Less cost of preferred | |||||||||
| treasury stock - Series 3 | 1,670,000 | (7,284) | 1,670,000 | (7,284) |
| $ 456,867 | $ - | $ (550,797) | $ (93,930) | |||||||
| Year ended June 30, 1999 |
| Balances | Purchase of | Balances | |||||
| June 30, 1998 | Preferred Stock | Net | June 30, 1999 |
| Shares | Amount | Shares | Amount | Income | Shares | Amount | ||||
| Preferred Stock | - Series 2 | 5,000 | $ 50 | 5,000 | $ 50 | |||||
| - Series 3 | 1,670,000 | 16,700 | 1,670,000 | 16,700 | ||||||
| - Series 4 | 2 | - | 2 | - | ||||||
| - Series 5 | 1 | - | 1 | - | ||||||
| Common Stock | 29,640,252 | 296,403 | 29,640,252 | 296,403 | ||||||
| Additional paid-in-capital | 20,398,631 | 20,398,631 |
| Accumulated deficit | (20,444,662) | $ 197,029 | (20,247,633) |
| 267,122 | - | 197,029 | 464,151 | |||||||
| Less cost of preferred | |||||||||
| treasury stock - Series 3 | - | 1,670,000 | $ (7,284) | 1,670,000 | (7,284) |
| $ 267,122 | $ (7,284) | $ 197,029 | $ 456,867 | |||||||
| See the accompanying accountants' report and notes to financial statements |
| - 6 - |
JUNE 30, 2000 and 1999
NOTE 1 - ORGANIZATION AND LINE OF BUSINESS
ORGANIZATION:
Advanced Oxygen Technologies, Inc. (formerly Aquanautic Corporation) (the "Company") was a specialty materials company in the development stage (as defined by the Financial Accounting
Standards Board ("FASB") in Statement of Financial Accounting Standards ("SFAS") no. 7, "Accounting and Reporting by development Stage Enterprises"). The Company's core technology
consisted of a variety of materials, which have a high affinity for oxygen. Through 1993 the Company also conducted research through funding from various government agencies such as the office of Naval Research and from Small Business Innovative Research ("SBIR") grants, as well as through its own internally generated funds.
The Company's patent Rights and Trademark Rights were sold to W.R. Grace & Company - Connecticut ("Grace") in February 1995 for $236,000, net of applicable selling costs, in cash plus a royalty of 2% of the net sales price of any products sold by Grace which would, the sale of the Patent Rights notwithstanding, cause a patent infringement.
The Company has agreed to indemnify Grace for any out of pocket costs incurred because of the claims, litigation, arbitration, or other proceedings (a) relating to the validity or ownership of the Patent Rights, (b) relating to any infringement by the Patent Rights of any other patent or trademark owned by a third party, (c) relating to any breach by the Company of its representations, warranties, covenants in the Purchase Agreement, or (d) arising from any state of affairs existing at closing which was not this indemnity. The indemnity is for all such costs up to $75,000 and for 50% of such costs over $75,000. Amounts due Grace under the indemnity would be paid by withholding royalties from the Company.
The Company ceased its normal operation described above during 1995 and had dormant operations until March 1998. During 1997, the Company entered into the following agreements in preparation of starting a new line of business:
Stock Acquisition Agreement:
Pursuant to a Stock Acquisition dated as of December 18, 1997, the Company issued 23,750,000 shares of its common stock, par value $0.01 per share, to several investors for $60,000 in cash, plus consulting services with a fair value of $177,500.
Waiver Agreement:
Three of the Company's shareholders paid $60,000 in cash to former directors for the Company's release from liability for repayment of an aggregate of $275,000, plus any interest accrued thereon. In addition, the Company entered into a Trust Agreement (described below) as additional consideration to the former directors.
-7-
NOTE 1 - (Continued)
Trust Agreement:
The Company assigned certain royalty rights and liabilities related to the technology sold to Grace to a trust. As part of the agreement, the trust assumed the obligations of the $275,000 in advances from the former directors.
On March 9, 1998, pursuant to an Agreement of Purchase and Sale of Specified Business Assets ("Purchase Agreement"), a Promissory Note, and a Security Agreement, the Company purchased certain tangible and intangible assets (the "Assets"), including goodwill and rights under certain contracts from Integrated Marketing Agency, Inc. ("IMA"). The assets purchased from IMA consisted primarily of furniture, fixtures, equipment, computers, servers, software, and databases previously used by IMA in its full-service telemarketing business. The purchase price consisted of (a) a cash down payment of $10,000, (b) a note payable of $550,000, and (c) 1,670,000 shares of the Company's Series 3 convertible preferred stock. As described in Note 10, the preferred shares automatically convert into the Company's common shares on March 2, 2000 in a manner that depends on the value of the common stock during the ten trading days immediately prior to March 1, 2000. However, as part of the Purchase Agreement, IMA has the option to redeem the converted shares for the aggregate sum of $500,000 by delivering written notice to redeem the converted shares within ten business days after the conversion date. At the time of the purchase, the fair value of the preferred shares was not clearly evident, even though it appeared to be less than $500,000. Therefore, the purchase price had a fair value of at least $1,060,000. The assets purchased were recorded based upon their fair values.
Pursuant to a Purchase Agreement dated January 28, 1999, the Company purchased the 1,670,000 shares of the Series 3 convertible preferred stock and the promissory note discussed in the preceding paragraph. As part of the agreement, the Company paid $15,000 to IMA, assumed a certain computer equipment lease with remaining obligations totaling $44,811 and executed a one-year $5,000 promissory note to IMA. In addition, both IMA and the Company provided mutual liability releases to each other. (see note 8)
Line of Business:
After the Company purchased the assets of IMA in March 1998, the Company began its current operations of CD-ROM production/sales, database management, and fax broadcasting.
The following is a description of these business activities:
CD-ROM Production/Sales:
The Company produces a CD-ROM of client conferences, including the audio, video, graphics, and verbatim transcripts of the conferences and sells them through telemarketing.
-8-
NOTE 1 - (continued)
Event Sales:
The Company sells event registrations for conferences for its clients. The Company receives a commission on each registration sold.
Database Management:
The Company consults clients in effective marketing with databases and database management.
Fax Broadcasting:
The Company will fax broadcast or e-mail broadcast to a large number of contacts for its clients.
NOTE 2 - GOING CONCERN AND BASIS OF PRESENTATION:
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. As shown in the financial statements, the Company incurred a large operating loss before extraordinary gain, and had negative working capital at June 30, 2000. These factors raise substantial doubt about the Company's ability to continue as a going concern.
In view of the matters described in the preceding paragraph, continued operations are dependent upon the Company's ability to continue to raise capital and generate positive cash flows from operations. These financial statements do not include any adjustments relating to the classification of recorded asset amounts or amounts and classifications of liabilities that might be necessary should the Company be unable to continue its existence.
Management plans to take the following steps, which it believes will be sufficient to provide the Company with the ability to continue in existence:
- Increase its business volume and customer base.
- Acquire additional debt or equity financing.
- Control its costs in order to achieve its profit goals.
-9-
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Revenue Recognition:
Product Sales:
Revenue is recognized after the reservation has been made and the time period for the registrant to cancel the registration and still receive a refund has expired.
Consulting Income:
Revenue is recognized at the time the consulting work is performed.
Income Taxes:
The Company accounts for income taxes under the asset and liability method of accounting. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is required when it is less likely than not that the Company will be able to realize all or a portion of its deferred tax assets.
Net Earnings per Share:
For the year ended June 30, 1999, the Company adopted SFAS No. 128, "Earnings per Share". Basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of common shares available. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.
Cash and Cash Equivalents:
For purposes of the statement of cash flows, the Company considers all highly-liquid investments purchased with original maturities of three months or less to be cash equivalents.
Inventory:
Inventory is stated at the lower of cost (first-in-first-out method) or market.
Furniture and Equipment:
Furniture and equipment, including capitalized leases, are stated at cost less accumulated
-10-
NOTE 3 - (continued)
depreciation and amortization. The Company provides for depreciation and amortization using the straight-line method over the estimated useful lives or the term of the lease, whichever is shorter, as follows:
Furniture and fixtures 5 years
Office equipment 5 years
Computers and computer equipment 5 years
Capitalized leased equipment 5 years
Capitalized database cost 3 years
Concentration of Credit Risk:
For the year ended June 30, 1999, two of the Company's largest customers accounted for approximately 43 % of the Company's revenue. In addition, one of the customers accounted for approximately 72 % of accounts receivable at June 30, 1999.
Estimates:
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reported period. Actual results could differ from those estimates.
NOTE 4 - FURNITURE AND EQUIPMENT:
Furniture and equipment at June 30, 2000 and 1999 consisted of the following:
| Item | 2000 | 1999 |
| Furniture and Fixtures | $31,869 | $31,869 |
| Office Equipment | $17,882 | $17,882 |
| Computers and computer equip. | $98,858 | $98,858 |
| Capitalized equipment | $25,406 | $120,217 |
| Capitalized database cost | $911,391 | $911,391 |
| Sub Total | $1,085,406 | $1,180,217 |
| Less Accumulated depreciation and amortization | $759,944 | $431,672 |
| Total | $325,462 | $748,545 |
Depreciation and amortization expense for the year ended June 30, 2000 and 1999 was $337,753 and $347,234 respectively.
-11-
NOTE 5 - CAPITALIZED COST OF DATABASE RECORDS
The database records were part of the assets purchased from IMA in the Agreement of Purchase and Sale of Specified Business Assets on March 9, 1998. The records consist of information on individuals for marketing purposes. There were approximately 742,000 individuals included in the database at the time of purchase. The records were recorded at their estimated fair value at the time of purchase, which was $911,391. The cost of the database records is being amortized over a three-year period.
NOTE 6 - COMMITMENTS AND CONTINGENCIES:
Lease:
On October 1, 1998, the Company entered into a non-cancelable lease agreement for its operating facilities in Santa Clarita, California. Monthly rent of $4,038 is due with annual increases starting October 1, 1999. Minimum annual non-cancelable commitments under the lease are as follows:
| Year Ending June 30, | Amount |
| 2001 | $53,204 |
| 2002 | $56,052 |
| 2003 | $58,904 |
| 2004 | $19,952 |
| Total | $188,112 |
Litigation:
The Company is a defendant in various legal proceedings and claims that have arisen in the ordinary course of business. Under current circumstances, no determination can be made as to the ultimate outcome of the legal proceedings and claims or as to the necessity for any provision, in the accompanying financial statements, for any liability that may result from final adjudications.
NOTE 7 - DUE TO AFFILIATE
Due to affiliate at June 30, 2000 and 1999 consisted of advances payable to Crossfields, Inc., a related party, which are uncollateralized, non-interest bearing, and payable upon demand.
-12-
NOTE 8 - CAPITAL LEASE OBLIGATIONS:
In the fiscal year ended June 30, 2000, the Company terminated three leases for equipment which had an expiration date in 2003 and returned all leased equipment covered by such leases to the lessor.
NOTE 9 - INCOME TAXES
The current provision for income taxes is the minimum tax due to the State of California.
As of June 30, 2000, the Company had federal and state net operating loss carry forwards of approximately $18,400,000. These carry forwards are beginning to expire since they are unused. Section 382 of the Internal Revenue Code imposes substantial restrictions on the utilization of net operating loss and tax credit carry forwards when a change in ownership occurs.
The overall effective tax rate differs from the federal statutory tax rate of 34% due to operating losses and other deferred assets not providing benefit for income tax purposes.
NOTE 10 - SHAREHOLDERS' EQUITY:
Preferred Stock
The Company is authorized to issue 10,000,000 shares of $0.01 par value preferred stock. The Company may issue any class of preferred shares in series. The board of directors has the authority to establish and designate series and to fix the number of shares included in each such series.
Series 2 Convertible Preferred Stock
Each Series 2 preferred share is convertible into two shares of common stock at the option of the holder. Each Series 2 preferred share also includes one warrant to purchase two common shares for $5.00. The warrants are exercisable over a three-year period. In the event of the liquidation of the Company, holders of Series 2 preferred stock would be entitled to receive $5.00 per share, plus any unpaid dividends declared on the Series 2 preferred stock from the funds remaining after the Company's creditors, including directors, have been paid. There have been no dividends declared.
During November 1997, 172,000 shares of Series 2 preferred stock were converted into 344,000 shares of the Company's common stock.
-13-
Series 3 Convertible Preferred Stock:
Each share automatically converts on March 2, 2000 into either (a) one (1) share of the Company's common stock if the average closing price of the common stock during the ten trading days immediately prior to March 1, 2000 is equal to or greater than sixty-six cents ($0.66) per share, or (b) one and one-half (1 1/2) shares of common stock if the average closing price of the common stock during the ten trading days immediately prior March 1, 2000 is less than sixty-six cents($0.66) per share. (See Note 1)
ITEM 8. Changes in and Disagreements with Accounts on Accounting and Financial Disclosure
The Company has no disagreements with accountants on accounting and financial disclosure. During this time AOXY has engaged Bernstein Pinchuk & Kaminsky, Llp, Seven Penn Plaza, New York, NY, 10001
ITEM 9.Directors and Officers of the Registrant
Set forth below is information regarding the Company's directors and executive officers, including information furnished by them as to their principal occupations for the last five years, other directorships held by them and their ages as of June 30, 2000. All directors are elected for one-year terms, which expire as of the date of the Company's annual meeting.
| Name | Age | Position | Director Since: |
| Robert E. Wolfe | 37 | Chairman of the Board and CEO | 1997 |
| Joseph N. Noll | 77 | Director | 1997 |
Robert Wolfe has been the Chairman and CEO for AOXY, Inc. since 1997. Concurrently he has been the President and CEO of Crossfield, Inc. and Crossfield Investments, llc , both corporate consulting companies. From 1992-1993 he was Vice President and partner for CFI, NY Ltd. A Subsidiary of Corporate Financial Investments, PLC, London.
Joseph N. Noll has been a director of the Company since 1997.Mr. Noll was president and CEO of Franco Machine Corp (a manufacturer of machine tools) for 25 years. Mr. Noll was the Secretary of the State of Wisconsin department of Labor, Industry and Human Relations, from 1983 to 1985. Mr. Noll was also President and CEO of Columbia Car Company, a manufacturer of golf carts.
ITEM 10. Executive Compensation
Robert Wolfe, Chairman and CEO has waived his $350,000 annual for the year ending June 30, 2000. No officer or director received any compensation from the Company during the last fiscal year. The Company paid no bonuses in the last three fiscal years ended June 30, 2000 to officers or other employees. Prior to the Stock Acquisition of December 12, 1997, the Company's Chief executive officer and Chairman of the Board was Harry Edelson. Mr. Edelson received no compensation during the fiscal year ending June 30, 2000.
The following table sets forth the total compensation paid or accrued to its Chief Executive Officer, Robert E. Wolfe and former Chief Executive officer Harry Edelson during the fiscal year ending June 30, 2000. There were no other corporate officers in any of the last three fiscal years.
Executive Compensation
| Name | Yr. | Salary | Bonus | Other Compensation | Restricted Awards | LTIP Awards | Other |
| Harry Edelson | 1999 | 0 | 0 | 0 | 0 | 0 | 0 |
| Robert E. Wolfe | 1999 | 0 | 0 | 0 | 0 | 0 | 0 |
OPTION GRANTS DURING 1999; VALUE OF OPTIONS AT YEAR-END
The following tables set forth certain information covering the grant of options to the Company's Chief Executive Officer, Mr. Robert E. Wolfe and the former Chief Executive Officer, Mr. Harry Edelson during the fiscal year ended June 30, 2000 and unexercised options held as of that date. Neither Mr. Wolfe or Mr. Edelson exercised any options during fiscal 1999.
| Name | # of Securities | % Total Options | Option Price | Exercise Price | Expiration Date |
| Harry Edelson | 0 | 0 | 0 | 0 | 0 |
| Robert E. Wolfe | 0 | 0 | 0 | 0 | 0 |
The Compensation Committee of the Board of Directors was responsible for reviewing and approving the Company's compensation policies and the compensation paid to executive officers. Mr. Wolfe and Mr. Noll, who comprise the Compensation Committee are employee and non-employee directors respectively.
The general philosophy of the Company's compensation program, which has been reviewed and endorsed by the Committee, was to provide overall competitive compensation based on each executive's individual performance and the Company's overall performance.
There are two basic components in the Company's executive compensation program: (i) base salary and (ii) stock option awards.
Executive Officers' salaries are targeted at the median range for rates paid by competitors in comparably sized companies. The Company recognizes the need to attract and retain highly skilled and motivated executives through a competitive base salary program, while at the same time considering the overall performance of the Company and returns to stockholders.
With respect to executive officers, stock options are generally granted on an annual basis, usually at the commencement of the new fiscal year. Generally, stock options vest ratably over a four-year period and the executive must be employed by the Company in order to vest the options. The Compensation Committee believes that the stock option grants provide an incentive that focuses the executives' attention on managing the Company from the perspective of an owner with an equity stake in the business. The option grants are issued at no less than 85% of the market price of the stock at the date of grant, hence there is incentive on the executive's part to enhance the value of the stock through the overall performance of the Company.
Compensation Pursuant to Plans
The Company has three plans (the "Plans") under which its directors, executive officers and employees may receive compensation. The principal features of the 1981 Long-Term Incentive Plan (the "1981 Plan"), the 1988 Stock Option Plan (the "1988 Plan"), and the Non-Employee Director Plan (the "Director Plan") are described below. During the fiscal year ended June 30, 1994, the Company terminated its tax qualified cash or deferred profit-sharing plan (the "401(k) Plan"). During fiscal 1998, no executive officer received compensation pursuant to any of the Plans except as described below.
The 1981 and 1988 Plans
The purpose of the 1981 Plan and 1988 Plan (the "Option Plans") is to provide an incentive to eligible directors, consultants and employees whose present and potential contributions to the Company are or will be important to the success of the Company by affording them an opportunity to acquire a proprietary interest in the Company and to enable the Company to enlist and retain in its employ the best available talent for the successful conduct of its business.
The 1981 Plan
The 1981 Plan was adopted by the Board of Directors in May 1981 and approved by the Company's stockholders in March 1982. A total of 500,000 shares have been authorized for issuance under the 1981 Plan. With the adoption of the 1988 Plan, no additional awards may be made under the 1981 Plan. As a result, the shares remaining under the 1981 Plan are now available solely under the 1988 Plan. Prior to its termination, the 1981 Plan provided for the grant of the following five types of awards to employees (including officers and directors) of the Company and any subsidiaries: (a) incentive stock rights, (b) incentive stock options, (c) non-statutory stock options, (d) stock appreciation rights, and (e) restricted stock. The 1981 Plan is administered by the Compensation Committee of the Board of Directors.
The 1988 Plan
The 1988 Plan provides for the grant of options to purchase Common Stock to employees (including officers) and consultants of the Company and any parent or subsidiary corporation. The aggregate number of shares which remained available for issuance under the 1981 plan as of the effective date of the 1988 Plan plus an additional 500,000 shares of Common Stock.
Options granted under the 1988 Plan may either be immediately exercisable for the full number of shares purchasable thereunder or may become exercisable in cumulative increments over a period of months or years as determined by the Compensation Committee. The exercise price of options granted under the 1988 Plan may not be less than 85% of the fair market value of the Common Stock on the date of the grant and the maximum period during which any option may be paid in cash, in shares if the Company's Common Stock or through a broker-dealer same-day sale program involving a cash-less exercise of the option. One or more optionees may also be allowed to finance their option exercises through Company loans, subject to the approval of the Compensation Committee.
Issuable Shares
As of September 20, 1995, approximately 374,000 shares of Common Stock had been issued upon the exercise of options granted under the Option Plans, no shares of Common Stock were subject to outstanding options under the Options Plans and 626,000 shares of Common Stock were available for issuance under future option grants. From July 1, 1991 to September 20, 1995, options were granted at exercise prices ranging from $1.22 to $8.15 per share. The exercise price of each option was equal to 85% of the closing bid price of Company's Common Stock as reported on the NASDAQ Over the Counter Bulletin Board Exchange. Due to employee terminations, all options became void in August 1995. As of September 30, 2000 1,000,000 shares of Common Stock were available for issuance under future option grants.
Board of Directors Compensation
As of June 30, 2000 the directors did not receive any compensation for serving as members of the Board.
In addition to any cash compensation, non-employee directors also are eligible to participate in the Non-Employee Director Stock Option Plan and to receive automatic option grants thereunder. The Director Plan provides for periodic automatic option grants to non-employee members of the Board. An individual who is first elected or appointed as a non-employee Board member receives an annual automatic grant of 25,000 shares plus the first annual grant of 5,000 shares, and will be eligible for subsequent 5,000 share grants at the second Annual Meeting following the date of his initial election or appointment as a non-employee Board member.
During the fiscal year ended June 30, 1999, no options were granted to non-employee Board members.
ITEM 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the beneficial ownership of the Company's Common Stock as of June 30, 2000, by (i) all those known by the Company to be beneficial owners of more than 5% of its Common Stock; (ii) all directors; and (iii) all officers and directors of the Company as a group.
| Name and Address of Beneficial Owner | Number of Shares fully diluted | Percent ownership |
| Crossland Ltd. Belize
60 Market Square PO Box 364 Belize City, Belize, Central America |
6,312,500 | 21.30% |
| Coastal Oil, Ltd.
40 Santa Rita Road Corazal, Belize, Central America |
5,937,500 | 20.03% |
| Crossland, ltd.
104B Saffrey Square Nassau, Bahamas |
5,937,500 | 20.03% |
| Robert E. Wolfe | 50,000 | 0.17% |
| Joseph N. Noll | 0 | 0.00% |
Note:
AOXY Purchase 1,670,000 Preferred Shares of Advanced Oxygen Technologies, Inc from IMA (see Purchase Agreement, 1/29/99) and includes shares of convertible, preferred stock, par value $.01, having the aggregate value of $1,440,000.00 w/fixed annual dividends of $0.001 per share payable on January 1 of each year; with an automatic conversion on 3/2/2000 of each share of preferred stock into either a) 1 share of common stock, par value $.01 per share if the average closing price of the common stock during the 10 trading days immediately prior to March 1, 2000 is equal to or greater than $0.66 per share or (b) 1 1/2 shares of common stock if the average closing price of the common stock during the 10 trading days immediately prior to March 1, 2000 is less than $0.66 per share. If on the conversion date the aggregate value of the common stock into which the preferred shares are converted is less than $500,000, then the Company could be caused to redeem the converted shares for the aggregate sum of $500,000 upon receiving notice of intention to redeem the converted shares within 10 business day. This stock is now treasury stock.
ITEM 12. Certain Relationships and Related Transactions
The Company's transactions with its officers, directors and affiliates have been and such future transactions will be, on terms no less favorable to the company than could have been realized by the Company in arms-length transactions with non-affiliated persons and will be approved by a majority of the independent disinterested directors.
ITEM 13. Exhibits and Reports on Forms 8-K
Material Contracts
1981 Long-Term Incentive Plan, as amended in September 1988, incorporated herein by reference to Appendix A to the Registrant's 1986 definitive Proxy Statement.
e) 1988 Stock Option Plan, incorporated by reference to the Registrant's 1988 definitive Proxy Statement filed pursuant to Regulation 14A
f) Non-Employee Director Stock Option Plan incorporated by reference to the Registrant's report on Form 10-K for the fiscal year ended June 30, 1993
g) Patent Purchase Agreement between Advanced Oxygen Technologic Inc., and Grace-Conn, dated February 10, 1995 incorporated by reference to the Registrant's 1995 definitive Proxy Statement filed pursuant to Regulation 14A
h) Contingent Plan of Liquidation dated February 10, 1995, incorporated by reference to the Registrant's 1995 definitive Proxy Statement filed pursuant to Regulation 14 A
i) Stock Acquisition Agreement dated December 18, 1997 incorporated by reference to the Registrant's report on form 8-K as Exhibit A
j) Purchase Agreement of December 18, 1997 incorporated by reference to the Registrant's report on form 8-K as Exhibit B
k) Waiver Agreement incorporated by reference to the Registrant's report on form 8-K as Exhibit C
l) Trust Agreement incorporated by reference to the Registrant's report on form 8-K dated, December 18, 1997 as Exhibit D
m) Assignment and Assumption Agreement incorporated by reference to the Registrant's report on form 8-K dated, December 18, 1997 as Exhibit D
n) Agreement For Purchase & Sale Of Specified Business Assets incorporated by reference to the Registrant's report on form 8-K dated March 09, 1998 as Exhibit 1
o) Covenant of Non-Competition incorporated by reference to the Registrant's report on form 8-K dated March 09, 1998 as Exhibit B
p) Promissory Note of March 09, 1998 incorporated by reference to the Registrant's report on form 8-K dated March 09, 1998 as Exhibit C
q) Security Agreement of March 09, 1998 incorporated by reference to the Registrant's report on form 8-K dated March 09, 1998 as Exhibit D
r) Employment Agreement, John Teuber, incorporated by reference to the Registrant's report on form 8-K dated March 09, 1998 as Exhibit F
s) Employment Agreement, Nancy Gaylord, dated March 13, 1998 attached hereto as Exhibit 1
t) America United Lease, dated September 23, 1998 incorporated by reference to the Registrant's report form 10-QSB dated November 16, 1998
u) NEC Lease, date November 10, 1998, incorporated by reference to the Registrant's report form 10-QSB dated January 28, 1999 as Exhibit I.
v) Purchase Agreement of 1/29/99, dated January 29, 1999, incorporated by reference to the Registrant's report form 8-K dated February 17, 1999 as Exhibit I
w) Amendment of the Articles of Incorporation dated April 18, 2000, incorporated by reference to the Registrant's 2000 definitive Proxy Statement filed pursuant to Regulation 14 A attached hereto.
REPORTS ON FORM 8-K
A report on Form 8-K was filed on January 16, 1998 and reported under Item 1 that all directors and officers of AOXY resigned on December 18, 1997 and Robert E. Wolfe and Joseph N. Noll were elected as directors and Mr. Wolfe was appointed president in association with the transaction of December 18, 1997 of the Stock Acquisition Agreement, the Purchase Agreement, the Waiver Agreement and the Trust Agreement (all exhibited thereto). Under Item 2 that certain royalty rights and liabilities related to technology AOXY sold to a third party was transferred to a trust for the benefit of the AOXY shareholders of record of date. Further reported under Item 7 was the sale of 23,750,000 shares of AOXY common stock as of December 18, 1997 that were not registered under the Securities Act of 1933, as amended, in reliance on the exemption from registration provided by Rule 903 ( c ) (2) of Regulation S. for consideration of $60,000 cash and $177,500 in consulting services.
A report on Form 8-K was filed on February 17, 1999 and reported under Item 2 the Purchase of Specified Assets from Integrated Marketing Agency, Inc. The assets purchased consisted of 1,670,000 shares of convertible preferred stock of Advanced Oxygen Technologies, Inc. ("STOCK") and a $550,000 promissory note issued by Advanced Oxygen Technologies, Inc ("Note") from Integrated Marketing Agency, Inc.("IMA"). The terms of the Purchase Agreement were: AOXY paid $15,000 to IMA, assumed a Citicorp Computer Equipment Lease, #010-0031648-001 from IMA, delivered to IMA certain tangible business property (as listed in Exhibit A of the Purchase Agreement), executed a one year $5,000 promissory note with IMA, and delivered to IMA a Request For Dismissal of case #PS003684 (restraining order) filed in Los Angeles county superior court. IMA sold, transferred, and delivered to AOXY the Stock and the Note. IMA sold, transferred, assigned and delivered the Note and the Stock to AOXY, executed documents with Citicorp Leasing, Inc. to effectuate an express assumption by AOXY of the obligation under lease #010-0031648-001 in the amount of $44,811.26, executed a UCC2 filing releasing UCC-1 filing #9807560696 filed by IMA on March 13, 1998, and delivered such documents as required. In addition, both IMA and AOXY provided mutual liability releases for the other.
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.
(Registrant): ADVANCED OXYGEN TECHNOLOGIES, INC.
Date: September 30, 2000 By (Signature and Title):
/s/ Robert E. Wolfe /s/
-----------------
Robert E. Wolfe
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Date: September 30, 2000 By (Signature and title):
/s/Joseph Noll /s/
-------------------------
Joseph N. Noll
Director
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<SEC-DOCUMENT>0000352991-00-000002.txt : 20000509
<SEC-HEADER>0000352991-00-000002.hdr.sgml : 20000509
ACCESSION NUMBER: 0000352991-00-000002
CONFORMED SUBMISSION TYPE: PRE 14A
PUBLIC DOCUMENT COUNT: 1
CONFORMED PERIOD OF REPORT: 20000418
FILED AS OF DATE: 20000508
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: ADVANCED OXYGEN TECHNOLOGIES INC
CENTRAL INDEX KEY: 0000352991
STANDARD INDUSTRIAL CLASSIFICATION: PATENT OWNERS & LESSORS [6794]
IRS NUMBER: 911143622
STATE OF INCORPORATION: DE
FISCAL YEAR END: 0630
FILING VALUES:
FORM TYPE: PRE 14A
SEC ACT:
SEC FILE NUMBER: 000-09951
FILM NUMBER: 621372
BUSINESS ADDRESS:
STREET 1: C/O CORSSFIELD INC
STREET 2: 230 PARK AVE STE 1000
CITY: NEW YORK
STATE: NY
ZIP: 10169
MAIL ADDRESS:
STREET 1: C/O CROSSFIELD INC
STREET 2: 230 PARK AVENUS SUITE 1000
CITY: NEW YORK
STATE: NY
ZIP: 10169
</SEC-HEADER>
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<TEXT>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
ADVANCED OXYGEN TECHNOLOGIES, INC.
------------------------------------------------
(Name of Registrant as Specified in its Charter)
------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
- ------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- ------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
- ------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- ------------------------------------------------
(5) Total fee paid:
- ------------------------------------------------
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by the registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- ------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- ------------------------------------------------
(3) Filing Party:
- ------------------------------------------------
(4) Date Filed:
ADVANCED OXYGEN TECHNOLOGIES, INC.
26883 Ruether Avenue, Santa Clarita, CA 91351
NOTICE OF ADOPTION OF AMENDMENTS:
INFORMATION STATEMENT
To the Shareholders of Advanced Oxygen Technologies, Inc.:
NOTICE IS HEREBY GIVEN that the Board of Directors and persons
owning 64.7%, or 19,180,500 shares of common stock of Advanced Oxygen
Technologies, Inc. have elected to adopt the following proposals:
Proposal 1. To amend and restate the Company's Restated Articles of
Incorporation to increase the Company's authorized Common Shares from
30,000,000 to 90,000,000 shares.
Proposal 2. To change the Company's auditors.
Proposal 3. To change the Company's name.
Your attention is called to the attached Information Statement. A copy of the
Annual Report of the Company for the fiscal year ended June 30, 1999 which
accompanies this notice.
By order of the Board of Directors
/s/Robert E. Wolfe/s/
Robert E. Wolfe
President and Chief Executive Officer
/s/Joseph N. Noll/s/
Joseph N. Noll
Secretary
New York, New York
April 4, 2000
Advanced Oxygen Technologies, Inc.
26883 Ruether Avenue
Santa Clarita, CA 91351
INFORMATION STATEMENT
MEETING OF THE BOARD OF DIRECTORS
APRIL 18, 2000
GENERAL INFORMATION . . . . . . . . . . . . . . . . . .5
SOLICITATION . . . . . . . . . . . . . . . . . . 6
VOTING SECURITIES AND PRINCIPAL HOLDERS . . . . . . . .6
VOTING RIGHTS AND OUTSTANDING SHARES . . . . . . 6
PRINCIPAL HOLDERS OF THE COMPANY'S VOTING SECURITIES .6
BIOGRAPHICAL INFORMATION . . . . . . . . . . . . . . .7
THE PATENT SALE AND CESSATION OF BUSINESS . . . 7
CONTINGENT PLAN OF LIQUIDATION . . . . . . . . . 9
STOCK ACQUISITION AGREEMENT, 12/18/97 . . . . .11
PURCHASE AGREEMENT, 12/18/97 . . . . . . . . . .11
WAIVER AGREEMENT, 12/18/97 . . . . . . . . . . .12
CHANGE OF DIRECTORS . . . . . . . . . . . . . .12
TRUST AGREEMENT, 12/18/97 . . . . . . . . . . .13
ACQUISITION OR DISPOSITION OF ASSETS, MARCH 09,1998 . 13
TEUBER EMPLOYMENT AGREEMENT TERMINATION . . . .13
SET OFF OF PROMISSORY NOTE, 9/4/98 . . . . . . .13
GAYLORD EMPLOYMENT AGREEMENT TERMINATION . . . .14
CALIFORNIA FACILITIES, 9/30/98 . . . . . . . . .14
DEMAND FOR INDEMNIFICATION, 12/9/98 . . . . . .14
PURCHASE AGREEMENT OF 1/29/99 . . . . . . . . .14
EMPLOYEES . . . . . . . . . . . . . . . . . . .15
ITEM 2. DESCRIPTION OF PROPERTY 15
ITEM 3. LEGAL PROCEEDINGS 15
ITEM 4. SUBMISSION OF MATTERS TO
VOTE, SECURITY HOLDERS. . . . . . . . . . . . . . . . 17
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS . . 17
EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . 18
SUMMARY COMPENSATION TABLE . . . . . . . . . . .18
STOCK OPTIONS. . . . . . . . . . . . . . . . . .18
PERFORMANCE GRAPH . . . . . . . . . . . . . . . . . . 19
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE19
PROPOSAL I APPROVAL OF AMENDMENT TO ARTICLES OF
INCORPORATION TO INCREASE AUTHORIZED COMMON SHARES . 21
GENERAL . . . . . . . . . . . . . . . . . . . .21
PURPOSES OF THE AMENDMENT . . . . . . . . . . .21
VOTE REQUIRED . . . . . . . . . . . . . . . . .21
PROPOSAL II APPROVAL TO CHANGE AUDITORS . . . . . . 22
INDEPENDENT ACCOUNTANTS . . . . . . . . . . . .22
PROPOSAL III NAME CHANGE . . . . . . . . . . . . . . 22
PURPOSES OF THE AMENDMENT . . . . . . . . . . .23
BOARD OF DIRECTORS PROXY FOR ANNUAL MEETING APRIL 18, 200024
THE VOTING PAGE FOR ADVANCED OXYGEN TECHNOLOGIES, INC .25
RESTATED ARTICLES OF INCORPORATION . . . . . . . . . 26
FORM 10-KSB . . . . . . . . . . . . . . . . . . . . . 29
GENERAL INFORMATION
THIS INFORMATION STATEMENT IS FURNISHED IN CONNECTION WITH
THE SOLICITATION OF PROXIES BY THE BOARD OF DIRECTORS OF
ADVANCED OXYGEN TECHNOLOGIES, INC. (THE "COMPANY") FOR THE
PURPOSES SET FORTH IN THE ACCOMPANYING NOTICE. THE MAILING OF
THIS INFORMATION STATEMENT WILL TAKE PLACE ON OR ABOUT
FEBRUARY 16, 1998.
SOLICITATION
THE COMPANY WILL BEAR THE ENTIRE COST OF SOLICITATION OF
NOTICES IN THE ENCLOSED FORM, INCLUDING THE PREPARATION,
ASSEMBLY, PRINTING AND MAILING OF THIS INFORMATION STATEMENT,
THE ACCOMPANYING MATERIAL AND ANY ADDITIONAL INFORMATION
FURNISHED TO SHAREHOLDERS. NO ADDITIONAL COMPENSATION WILL
BE PAID TO DIRECTORS, OFFICERS OR OTHER REGULAR EMPLOYEES FOR
SUCH SERVICES. BROKERS, NOMINEES AND OTHER SIMILAR RECORD
HOLDERS WILL BE REQUESTED TO FORWARD SOLICITING MATERIAL
AND WILL BE REIMBURSED BY THE COMPANY UPON REQUEST FOR THEIR
OUT-OF-POCKET EXPENSES.
VOTING SECURITIES AND PRINCIPAL HOLDERS
VOTING RIGHTS AND OUTSTANDING SHARES
ONLY SHAREHOLDERS OF RECORD AT THE CLOSE OF BUSINESS ON
FEBRUARY 16, 2000 WILL BE ENTITLED TO NOTICE OF, AND, EFFECTED BY
THIS NOTICE. AS OF THE CLOSE OF BUSINESS ON FEBRUARY 16, 2000, THE
COMPANY HAD 29,640,252 OUTSTANDING COMMON SHARES, $0.01 PAR
VALUE ("COMMON SHARES?), THE ONLY CLASS OF STOCK
OUTSTANDING AND ENTITLED TO VOTE.
EACH COMMON SHARE IS ENTITLED TO ONE VOTE ON EACH
MATTER SUBMITTED IN THIS NOTICE. THE PRESENCE, IN
PERSON OR BY PROXY, OF THE HOLDERS OF RECORD OF A
MAJORITY OF THE OUTSTANDING COMMON SHARES
ENTITLED TO VOTE, OR 19,180,500 SHARES, HAS VOTED TO
ADOPT ALL THE PROPOSALS IN THIS INFORMATION
STATEMENT, WHICH WAS NECESSARY TO CONSTITUTE A
QUORUM FOR THE TRANSACTION OF BUSINESS AS DESCRIBED
HEREIN.
PRINCIPAL HOLDERS OF THE COMPANY'S VOTING
SECURITIES
AS OF FEBRUARY 16, 2000, CROSSLAND LTD. (BELIZE),
CROSSLAND LTD., AND EASTERN STAR, LTD. HAVE MORE
THAN 5% OF THE COMPANY?S COMMON SHARES. CROSSLAND
LTD., (BELIZE) HAS THE HIGHEST PERCENTAGE WHICH IS
21.30%. CROSSLAND LTD., AND EASTERN STAR, LTD.,. HAVE
THE SAME PERCENTAGE OF COMMON SHARES WHICH IS
20.03%. ROBERT E. WOLFE HAS A 0.017% OF THE COMPANY?S
COMMON SHARES. EACH OF THE ABOVE PRINCIPAL HOLDERS
HAS VOTED, AND TENDERED THEIR EXECUTED VOTE TO THE
COMPANY IN FAVOR OF ALL OF THE PROPOSALS IN THIS
INFORMATION STATEMENT.
BIOGRAPHICAL INFORMATION
THE PATENT SALE AND CESSATION OF BUSINESS
ADVANCED OXYGEN TECHNOLOGIES, INC. ("ADVANCED
OXYGEN TECHNOLOGIES", "AOT" OR THE "COMPANY"),
INCORPORATED IN DELAWARE IN 1981 UNDER THE NAME
AQUANAUTICS CORPORATION, WAS, FROM 1985 UNTIL MAY
1995, A DEVELOPMENT STAGE SPECIALTY MATERIALS
COMPANY PRODUCING NEW OXYGEN CONTROL
TECHNOLOGIES. ON MAY 1, 1995, THE COMPANY SOLD ITS
PATENTS, AND ALL RELATED TECHNOLOGY AND
INTELLECTUAL PROPERTY RIGHTS (COLLECTIVELY THE
"PATENTS RIGHTS") TO W. R. GRACE & CO. CONN., A
CONNECTICUT CORPORATION ("GRACE"). THE PRICE FOR
THE PATENTS RIGHTS WAS $335,000, IN CASH, AND A ROYALTY
AS DESCRIBED BELOW. OF THE CASH, $100,000 WAS PAID TO
THE COMPANY PRIOR TO THE CLOSING AND USED TO COVER
THE PATENT SALE'S TRANSACTIONAL COSTS AND TO
PRESERVE THE PATENT RIGHTS. THE REMAINING $235,000
WAS PAID AT THE CLOSING OF THE SALE OF THE PATENT
RIGHTS (THE "PATENT SALE").
IN ADDITION TO THE $335,000, THE COMPANY IS TO RECEIVE A
ROYALTY UNTIL APRIL 30, 2007 OF TWO PERCENT (2%) OF THE
NET SALES PRICE OF (A) ALL PRODUCTS SOLD BY GRACE THAT
INCLUDE AS A COMPONENT, MATERIAL THAT ABSORBS, BARS,
CLIMINATES, EXTRACTS AND/OR CONCENTRATES OXYGEN
THAT, BUT FOR THE PURCHASE OF THE PATENTS RIGHTS,
WOULD FRINGE THE PATENTS RIGHTS, AND (B) ANY MIXTURE
OR COMPOUND (OTHER THAN A FINISHED PRODUCT) WHICH
INCLUDES AS A COMPONENT MATERIAL THAT ABSORBS,
BARS, CLIMINATES, EXTRACTS AND/OR CONCENTRATES
OXYGEN THAT, BUT FOR THE PURCHASE OF THE PATENT
RIGHTS, WOULD INFRINGE THE PATENT RIGHTS. IF GRACE
LICENSES THE PATENT RIGHTS DURING THE FIRST THREE
YEARS AFTER THE CLOSING TO A THIRD PARTY (OTHER THAN
A GRACE AFFILIATE), THE COMPANY WILL RECEIVE 50% OF
THE ROYALTIES RECEIVED BY GRACE FORM SUCH THIRD
PARTY BUT WILL NOT RECEIVE THE 2% ROYALTY ON EITHER
PRODUCTS OR MATERIAL SOLD BY OR TO THAT THIRD PARTY.
THE COMPANY HAS AGREED TO INDEMNIFY GRACE FOR ANY
OUT OF POCKET COSTS INCURRED BECAUSE OF CLAIMS,
LITIGATION, ARBITRATION OR OTHER PROCEEDINGS (A)
RELATING TO THE VALIDITY OR OWNERSHIP OF THE PATENT
RIGHTS, (B) ANY INFRINGEMENT BY THE PATENT RIGHTS OF
ANY OTHER PATENT OR TRADEMARK OWNED BY A THIRD
PARTY, (C) ANY BREACH BY COMPANY OF ITS
REPRESENTATIONS, WARRANTIES, COVENANTS IN THE
PURCHASE AGREEMENT OR (D) ARISING FROM ANY STATE OF
AFFAIRS EXISTING AT CLOSING WHICH WAS NOT DISCLOSED
BY THE COMPANY TO GRACE. IF IN ANY ONE YEAR GRACE
INCURS COSTS COVERED BY THIS INDEMNITY, THE
INDEMNITY IS FOR ALL SUCH COSTS UP TO $75,000 AND FOR
50% OF SUCH COSTS OVER $75,000. AMOUNTS DUE GRACE
UNDER THE INDEMNITY WOULD BE PAID BY WITHHOLDING
ROYALTIES FORM COMPANY.
IN AUGUST 1994, IN ORDER TO RETAIN SENIOR MANAGEMENT,
THE COMPANY AGREED TO PAY MR. KOPETZ, MS. CASTLE,
AND DAVID OVERMYER, THE COMPANY'S THEN CONTROLLER,
A BONUS IF THE COMPANY SUCCESSFULLY COMPLETED A
SALE OF THE COMPANY OR ITS TECHNOLOGY BY MAY 31, 1995.
THE BONUS WAS EQUAL TO 5% OF THE FIRST MILLION
DOLLARS OF THE GROSS PROCEEDS FROM SUCH SALE, 4% OF
THE NEXT MILLION DOLLARS OF SUCH GROSS PROCEEDS, 3%
OF THE THIRD MILLION, 2% OF THE FOURTH MILLION AND 1%
OF ALL AMOUNTS RECEIVED FROM THE SALE OF OVER $4
MILLION. THIS BONUS WAS SHARED EQUALLY BY MR.
KOPETZ, MS. CASTLE, AND DAVID OVERMYER. UPON THE
CLOSING, THEY RECEIVED AN AGGREGATE OF $16,750, OR
$5,583.33 EACH.
IN ADDITION, CERTAIN OF THE DIRECTORS ADVANCED
$275,000 TO THE COMPANY IN AUGUST 1994 (THE "DIRECTORS
LOANS"). NONE OF THESE ADVANCES HAS BEEN REPAID.
THEY WILL BE REPAID FROM THE ROYALTIES, IF ANY.
THE PATENT SALE MAY NOT NECESSARILY RESULT IN THE
DISSOLUTION AND LIQUIDATION OF THE COMPANY. SINCE
THE PATENT SALE, THE BOARD CONTINUED TO EXPLORE THE
POSSIBILITY OF DERIVING VALUE FROM THE COMPANY'S
TWO REMAINING NON-CONTINGENT ASSETS, ITS PUBLICLY
HELD CORPORATE SHELL AND ITS NET OPERATING LOSS
CARRY FORWARDS. UNLESS THAT IS ACCOMPLISHED, THE
COMPANY MAY HAVE TO BE DISSOLVED AND LIQUIDATED.
THE BOARD MAY DECIDE IN THAT CONNECTION, OR
ALTERNATIVELY, THAT IT IS IN THE BEST INTERESTS OF THE
STOCKHOLDERS TO ASSIGN THE POTENTIAL (OR ACTUAL, IF
IT DEVELOPS) ROYALTY STREAM FROM THE PATENT SALE TO
AN AGENT FOR THE STOCKHOLDERS (THE "AGENT"). IN THIS
EVENT, THE AGENT WOULD COLLECT THE ROYALTIES
RECEIVED FROM GRACE, IF ANY, AND DISBURSE THEM, AFTER
PAYING ANY ONGOING EXPENSES AND ANY REMAINING
LIABILITIES, INCLUDING THE DIRECTOR LOANS, TO THE
FORMER STOCKHOLDERS, PRO RATA ACCORDING TO THEIR
STOCK OWNERSHIP AS OF THE DATE OF THE ASSIGNMENT.
WHETHER THE AGGREGATE LIQUIDATION PREFERENCES OF
THE PREFERRED STOCK WOULD HAVE TO BE SATISFIED
BEFORE DISTRIBUTIONS OF THE ROYALTY STREAM COULD BE
MADE ON COMMON SHARES WOULD DEPEND ON THE FORM
OF THE TRANSACTIONS, I.E., WHETHER THE COMPANY WAS
BEING LIQUIDATED. IN THE EVENT OF SUCH AN ASSIGNMENT
OF ROYALTIES, EACH STOCKHOLDER WOULD HAVE A
BENEFICIAL INTEREST IN THE ROYALTIES, WHICH INTEREST
WILL NOT BE TRANSFERABLE OTHER THAN BY OPERATION OF
LAW (E.G., UPON DEATH). THE PROHIBITION AGAINST
TRANSFER, OTHER THAN BY OPERATION OF LAW, IS A
CONDITION TO ENSURE THAT THE AGENT IS NOT A
REPORTING COMPANY FOR SECURITIES EXCHANGE ACT OF
1934 PURPOSES. SUCH OTHER CONDITIONS AS ARE, IN THE
BOARD'S OPINION, NECESSARY TO ENSURE THAT THE AGENT
WOULD NOT BE A REPORTING ENTITY WILL ALSO BE
IMPOSED. WHETHER THE BOARD DECIDES TO ASSIGN THE
ROYALTIES TO THE AGENT WILL DEPEND ON SEVERAL
CORPORATE, TAX AND SECURITIES LAW ISSUES, MANY OF
WHICH CANNOT BE ANTICIPATED AT THIS TIME.
UNCERTAINTIES AS TO THE AGGREGATE AMOUNT OF
ROYALTIES, IF ANY, THAT WILL BE RECEIVED BY THE
COMPANY (OR THE AGENT) MAKE IT IMPRACTICAL TO
PREDICT THE TOTAL AMOUNT THAT ULTIMATELY MAY BE
RECEIVED BY STOCKHOLDERS. CLAIMS, LIABILITIES AND
EXPENSES FROM OPERATIONS (INCLUDING OPERATING
COSTS, SALARIES AND MISCELLANEOUS EXPENSES) WILL
CONTINUE TO ACCRUE OR BE INCURRED DURING THE
TWELVE-YEAR ROYALTY PERIOD, WHICH WILL REDUCE THE
AMOUNT AVAILABLE FOR ULTIMATE DISTRIBUTION.
THE COMPANY'S BOARD OF DIRECTORS HAS DECIDED THAT,
DEPENDING ON THE OUTCOME OF ITS EFFORTS TO REALIZE
VALUE FROM THE COMPANY'S STATUS AS A PUBLICLY HELD
CORPORATE SHELL AND ITS NET OPERATING LOSS CARRY
FORWARD, IT MAY BE IN THE BEST INTERESTS OF THE
COMPANY AND ITS STOCKHOLDERS TO DISSOLVE AND
LIQUIDATE THE COMPANY. THE BOARD AND THE COMPANY'S
STOCKHOLDERS ACCORDINGLY APPROVED A CONTINGENT
PLAN OF LIQUIDATION ( THE "CONTINGENT PLAN") TO BE
IMPLEMENTED IF THE BOARD, IN ITS SOLE DISCRETION,
DEEMS IMPLEMENTATION TO BE IN THE BEST INTERESTS OF
THE COMPANY AND ITS STOCKHOLDERS.
THE COMPANY DOES NOT HAVE SUFFICIENT RESOURCES TO
CONTINUE TO EXIST FOR MORE THAN A LIMITED TIME. AS A
PUBLICLY HELD COMPANY, THE COMPANY IS SUBJECT TO
COSTLY ONGOING REPORTING AND COMPLIANCE
REQUIREMENTS, AND ABSENT THE POSSIBILITY OF DERIVING
VALUE FROM THE PUBLICLY HELD CORPORATE SHELL AND
THE NET OPERATING LOSS CARRY FORWARDS, THE BOARD
WOULD HAVE RECOMMENDED TO THE STOCKHOLDERS THAT
THE COMPANY LIQUIDATE AND DISSOLVE IMMEDIATELY AND
TRANSFER THE ROYALTIES TO A LIQUIDATING TRUST.
THE BOARD RETAINED FOR THE COMPANY $57,000 FROM THE
PROCEEDS OF THE PATENT SALE SO THAT THE COMPANY
COULD EXIST FOR A PERIOD OF TIME TO ALLOW IT TO
SEARCH FOR AND NEGOTIATE WITH POSSIBLE ACQUIRES OF
THE CORPORATE SHELL AND/OR ITS NET OPERATING LOSS
CARRY FORWARDS. IF THAT PROCESS IS NOT SUCCESSFUL,
THE BOARD INTENDS TO IMPLEMENT THE CONTINGENT PLAN.
IF THAT PROCESS IS SUCCESSFUL, IT IS UNCLEAR WHETHER
THE BOARD WOULD IMPLEMENT THE CONTINGENT PLAN,
BECAUSE SUCH A DETERMINATION WOULD DEPEND ON THE
FORM OF THE TRANSACTION.
CONTINGENT PLAN OF LIQUIDATION
A CONTINGENT PLAN OF LIQUIDATION (THE "CONTINGENT
PLAN") WAS ADOPTED BY THE STOCKHOLDERS OF THE
COMPANY BY WRITTEN CONSENTS PURSUANT TO A PROXY
STATEMENT DATED APRIL 3, 1995. THE CONTINGENT PLAN
PROVIDES FOR THE DISSOLUTION OF THE COMPANY
PURSUANT TO THE PROVISIONS OF THE DELAWARE GENERAL
CORPORATION LAW. THE CONTINGENT PLAN IS TO BE
CARRIED OUT ONLY UPON SUBSEQUENT IMPLEMENTATION
BY ACTION OF THE BOARD OF DIRECTORS. IF THE BOARD OF
DIRECTORS ACTS TO IMPLEMENT THE CONTINGENT PLAN,
THE COMPANY WILL FILE A CERTIFICATE OF DISSOLUTION
WITH THE DELAWARE SECRETARY OF STATE. THE COMPANY
WILL CONTINUE TO EXIST, BUT ONLY TO LIQUIDATE ITS
ASSETS, WIND UP ITS BUSINESS AFFAIRS, PAY ITS LIABILITIES
AND DISTRIBUTE ITS REMAINING ASSETS, IF ANY. APPROVAL
OF THE CONTINGENT PLAN AUTHORIZED THE BOARD OF
DIRECTORS TO SELL OR OTHERWISE DISPOSE OF THE ASSETS
OF THE COMPANY ON SUCH TERMS AND CONDITIONS AND
FOR SUCH CONSIDERATION AS IT DEEMS ADVISABLE,
WITHOUT ANY FURTHER STOCKHOLDER APPROVAL.
THE CONTINGENT PLAN CONTEMPLATES THAT UPON IT
BEING MADE EFFECTIVE BY THE BOARD, IF THERE ARE ANY
ACCRUED AND CONTINGENT LIABILITIES OF OR CLAIMS
AGAINST THE COMPANY, PAYMENT OR PROVISION FOR
PAYMENT THEREOF MUST BE MADE OUT OF THE COMPANY'S
ASSETS. AFTER THAT, ANY ASSETS REMAINING WOULD BE
DISTRIBUTED TO STOCKHOLDERS AS PROMPTLY AS
POSSIBLE. THE CONTINGENT PLAN AUTHORIZES THE BOARD
OF DIRECTORS TO ABANDON THE DISSOLUTION OF THE
COMPANY ANY TIME BEFORE THE CERTIFICATE OF
DISSOLUTION IS FILED, IF THE BOARD OF DIRECTORS DEEMS
SUCH ACTION TO BE IN THE BEST INTEREST OF THE
COMPANY. THE BOARD OF DIRECTORS HAS NOT CONSIDERED
THE SPECIFIC CIRCUMSTANCES, IF ANY, UNDER WHICH IT
MIGHT ABANDON THE DISSOLUTION OF THE COMPANY NOR
DOES IT PRESENTLY HAVE ANY EXPECTATIONS TO ABANDON
THE DISSOLUTION, SHOULD THE CONTINGENT PLAN BE
IMPLEMENTED.
UNDER THE CONTINGENT PLAN, THE BOARD OF DIRECTORS
MAY CHOOSE TO TRANSFER THE ASSETS OF THE COMPANY
TO A LIQUIDATING TRUST TO (I) RETAIN AND RECEIVE THE
COMPANY'S ASSETS, INCLUDING THE ROYALTIES, (II) SATISFY
THE COMPANY'S LIABILITIES, WHETHER KNOWN, UNKNOWN,
CONTINGENT OR OTHERWISE, (III)M RETAIN ANY ASSET ON
BEHALF OF STOCKHOLDERS WHO CANNOT BE LOCATED AND
(IV) DISTRIBUTE REMAINING ASSETS TO STOCKHOLDERS,
AFTER SATISFYING ANY LIQUIDATION PREFERENCES OF THE
COMPANY'S SERIES 2 PREFERRED STOCK WHICH
PREFERENCES AGGREGATE $885,000. ALL DETERMINATIONS
AS TO THE AMOUNT, TIME AND FORM OF LIQUIDATING
DISTRIBUTIONS (INCLUDING THE TRANSFER TO THE
LIQUIDATING TRUST) WILL BE MADE IN THE ABSOLUTE
DISCRETION OF THE BOARD OF DIRECTORS. ALTHOUGH THE
BOARD IS AUTHORIZED TO MAKE DISTRIBUTIONS TO THE
STOCKHOLDERS IN STOCK OR OTHER ASSETS, IT IS NOT
PRESENTLY ANTICIPATED THAT, EXCEPT FOR THE
DISTRIBUTION OF THE ROYALTY STREAM TO A LIQUIDATING
TRUST, ANY DISTRIBUTIONS WILL BE MADE.
IF THERE IS A LIQUIDATING DISTRIBUTION TO A LIQUIDATING
TRUST, THEN THE STOCKHOLDERS MUST SURRENDER THEIR
COMMON STOCK CERTIFICATES TO THE COMPANY FOR
CANCELLATION AS A CONDITION TO ENTITLEMENT TO
RECEIVE DISTRIBUTIONS FROM THE TRUST. IF A
STOCKHOLDER FAILS TO SURRENDER HIS CERTIFICATES, HIS
SHARE OF ANY DISTRIBUTION WILL BE RETAINED UNTIL HIS
CERTIFICATES IS SURRENDERED OR UNTIL HE FURNISHES AN
INDEMNITY BOND IN CASE OF LOSS OR DESTRUCTION OF THE
CERTIFICATES. NO INTEREST WILL BE PAID OR ACCRUED ON
THE CASH OR OTHER ASSETS PAYABLE UPON SURRENDER OF
COMPANY STOCK CERTIFICATES. THE STOCKHOLDERS OF
THE COMPANY WILL BE NOTIFIED AS PROMPTLY AS POSSIBLE
OF THE PROCEDURE FOR SURRENDER OF THEIR
CERTIFICATES IN EXCHANGE FOR THEIR BENEFICIAL
INTEREST IN THE TRUST. IF THE CONTINGENT PLAN OF
LIQUIDATION IS ULTIMATELY IMPLEMENTED BY THE BOARD
OF DIRECTORS, THE AGENT WILL MOST LIKELY BE A
LIQUIDATING TRUST.
NO ESTIMATE OF THE AMOUNT AVAILABLE FOR
DISTRIBUTION TO STOCKHOLDERS IS POSSIBLE. IT IS
IMPOSSIBLE TO PREDICT EITHER (I) WHAT ROYALTIES MIGHT
BE RECEIVED FROM THE PATENT SALE OR WHEN (II)
WHETHER VALUE WILL BE DERIVED FROM THE COMPANY'S
PUBLIC CORPORATE SHELL OR ITS NET OPERATING LOSS
CARRY FORWARDS.
IF THE CONTINGENT PLAN IS IMPLEMENTED BY THE BOARD
OF DIRECTORS, THE STOCK TRANSFER BOOKS OF THE
COMPANY WILL BE CLOSED AS OF THE CLOSE OF BUSINESS
ON THE DATE THE CERTIFICATE OF DISSOLUTION IS FILED.
AFTER THAT, NO ASSIGNMENT OR TRANSFERS OF SHARES OF
STOCK OF THE COMPANY (EXCEPT THOSE OCCURRING BY
WILL, INTESTATE SUCCESSION OR OPERATION OF LAW) WILL
BE RECORDED.
STOCK ACQUISITION AGREEMENT, 12/18/97
PURSUANT TO A STOCK ACQUISITION AGREEMENT DATED AS
OF DECEMBER 18, 1997,(EXHIBIT C), ADVANCED OXYGEN
TECHNOLOGIES, INC. (?AOXY?) HAS ISSUED 23,750,00 SHARES
OF ITS COMMON STOCK, PAR VALUE $.01 PER SHARE FOR
$60,000 CASH PLUS CONSULTING SERVICES RENDERED
VALUED AT $177,500, TO CROSSLAND, LTD., (?CROSSLAND?),
EASTERN STAR, LTD., (?EASTERN STAR?), COASTAL OIL, LTD.
(?COASTAL?) AND CROSSLAND, LTD. (BELIZE) (?CLB?).
CROSSLAND AND EASTERN STAR, LTD. ARE BAHAMAS
CORPORATIONS. COASTAL OIL AND CLB ARE BELIZE
CORPORATIONS.
PURCHASE AGREEMENT, 12/18/97
PURSUANT TO A PURCHASE AGREEMENT DATED AS OF
DECEMBER 18, 1997, (EXHIBIT D), CLB, TRITON-
INTERNATIONAL, LTD., (?TRITON?), A BAHAMAS
CORPORATION, AND ROBERT E. WOLFE PURCHASED AN
AGGREGATE OF 800,000 SHARES OF AOXY?S COMMON STOCK
FROM EDELSON TECHNOLOGY PARTNERS II, L.P. (?ETPII?)
FOR $10,000 CASH. AOXY ISSUED 450,000 SHARES OF ITS
CAPITAL STOCK TO ETPII IN EXCHANGE FOR CONSULTING
SERVICES TO BE RENDERED. THE GENERAL PARTNER OF
ETPII IS HARRY EDELSON, CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER OF AOXY PRIOR TO THE
TRANSACTIONS RESULTING IN THE CHANGE OF CONTROL
(THE ?TRANSACTIONS?). PRIOR TO THE TRANSACTIONS MR.
EDELSON DIRECTLY OR INDIRECTLY OWNED
APPROXIMATELY 25% OF THE ISSUED AND OUTSTANDING
COMMON STOCK OF AOXY, AND FOLLOWING THE
COMPLETION OF MR. EDELSON?S CONSULTANCY HE WILL
OWN APPROXIMATELY 1.5%.
STOCK OF AOXY PURCHASED IN THE TRANSACTIONS IS
OWNED AS FOLLOWS:
# OF SHARES % OF
COMPANY
ROBERT E. WOLFE 50,000 SHARES 0.17 %
TRITON-INTERNATIONAL 375,000 SHARES 1.26%
CROSSLAND, LTD. (BELIZE) 6,312,500 SHARES 21.30%
CROSSLAND, LTD. 5,937,500 SHARES 20.03%
COASTAL OIL, LTD. 5,937,500 SHARES 20.03%
EASTERN STAR, LTD. 5,937,500 SHARES 20.03%
THE 23,750,000 SHARES OF AOXY COMMON STOCK SOLD BY
AOXY AS OF DECEMBER 18, 1997 TO CROSSLAND, EASTERN,
COASTAL AND CLB PURSUANT TO THE STOCK ACQUISITION
AGREEMENT (THE ?REGULATION S SHARES?) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, IN RELIANCE ON THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 903(C)(2) OF REGULATION
S. CONSIDERATION FOR THE REGULATION S SHARES
CONSISTED OF $60,000 CASH AND CONSULTING SERVICES
RENDERED VALUED AT $177,500.
EACH OF THE PURCHASERS OF THE REGULATION S SHARES (A
?BUYER?) HAS REPRESENTED TO AOXY THAT (I) IT IS NOT A
?U.S. PERSON? AS THAT TERM IS DEFINED IN RULE 902 (O) OF
REGULATION S; (II) THE SALE OF THE REGULATION S SHARES
WAS TAKING PLACE OUTSIDE OF THE UNITED STATES; (III) NO
OFFER WAS MADE IN THE UNITED STATES; (IV) IT WAS
PURCHASING THE REGULATION S SHARES FOR ITS OWN
ACCOUNT AND NOT AS A NOMINEE OR FOR THE ACCOUNT OF
ANY OTHER PERSON OR ENTITY; (V) IT HAD NO INTENTION TO
SELL OR DISTRIBUTE THE SHARES EXCEPT IN ACCORDANCE
WITH REGULATION S; (VI) IT AGREED THAT IT WOULD NOT
TRANSFER REGULATION S SHARES TO A U.S. PERSON BEFORE
THE 41ST DAY FROM THE DATE THE BUYER PURCHASED THE
REGULATION S SHARES.
AOXY REPRESENTED TO THE BUYERS THAT IT HAD NOT
CONDUCTED ANY ?DIRECTED SELLING EFFORT? AS DEFINED
IN REGULATION S, AND THAT IT HAD FILED ALL REPORTS
REQUIRED TO BE FILED UNDER THE SECURITIES EXCHANGE
ACT OF 1934 DURING THE PRECEDING TWELVE MONTHS.
WAIVER AGREEMENT, 12/18/97
PURSUANT TO A WAIVER AGREEMENT DATED AS OF
DECEMBER 18, 1997 (EXHIBIT E), EMILE BATTAT, RICHARD
JACOBSEN, EACH DIRECTORS OF AOXY PRIOR TO THE
TRANSACTIONS, SHARON CASTLE, A FORMER OFFICER OF
AOXY, AND ETPII RELEASED AOXY FROM ANY LIABILITY FOR
REPAYMENT OF AN AGGREGATE OF $275,000 OF LOANS PLUS
ALL INTEREST DUE THEREON PREVIOUSLY MADE BY THEM
TO AOXY IN CONSIDERATION OF AN AGGREGATE AMOUNT OF
$60,000 CASH PAID TO THEM PRO RATA IN PROPORTION TO
THEIR INDIVIDUAL LOANS OUTSTANDING BY CLB, TRITON
AND ROBERT E. WOLFE.
THE SOURCE OF FUNDS FOR THE TRANSACTIONS WAS
WORKING CAPITAL AND PERSONAL FUNDS. TO THE
KNOWLEDGE OF THE REGISTRANT, NO ARRANGEMENTS
EXIST WHICH MIGHT SUBSEQUENTLY RESULT IN A CHANGE
IN CONTROL OF THE REGISTRANT.
CHANGE OF DIRECTORS
ALL OF THE DIRECTORS AND OFFICERS OF AOXY RESIGNED IN
CONNECTION WITH THE TRANSACTIONS ON DECEMBER 18,
1997. ROBERT E. WOLFE AND JOSEPH N. NOLL WERE ELECTED
AS DIRECTORS AND MR. WOLFE WAS APPOINTED PRESIDENT.
TRUST AGREEMENT, 12/18/97
ON DECEMBER 18, 1997, PURSUANT TO A TRUST AGREEMENT
DATED AS OF NOVEMBER 7, 1997 AND AN ASSIGNMENT AND
ASSUMPTION AGREEMENT DATED AS OF NOVEMBER 8, 1997,
(TOGETHER, EXHIBIT F) CERTAIN ROYALTY RIGHTS AND
LIABILITIES RELATED TO TECHNOLOGY AOXY SOLD TO A
THIRD PARTY IN 1995 WERE TRANSFERRED TO A TRUST FOR
THE BENEFIT OF THE AOXY SHAREHOLDERS. NO ROYALTIES
HAD BEEN PAID OR BECOME DUE WITH RESPECT TO THE
RIGHTS TRANSFERRED TO THE TRUST, AND NO VALUE WAS
ASSIGNED TO SUCH RIGHTS ON THE BOOKS OF AOXY.
ACQUISITION OR DISPOSITION OF ASSETS, MARCH 09,1998.
" \l 2
On March 9, 1998, pursuant to an Agreement for Purchase and Sale of
Specified Business Assets, a Promissory Note, and a Security Agreement all
dated March 9, 1998, Advanced Oxygen Technologies, Inc.(the "Company")
purchased certain tangible and intangible assets (the "Assets") including
goodwill and rights under certain contracts, from Integrated Marketing
Agency, Inc., a California Corporation ("IMA"). The assets purchased from
IMA consisted primarily of furniture, fixtures, equipment, computers, servers,
software and databases previously used by IMA in its full service
telemarketing business. The purchase price of $2,000,000 consisted of
delivery at closing by the Company of a $10,000 down payment, a Promissory
Note in the amount of $550,000 payable to IMA periodically, with final
payment due on April 10, 2000 and accruing compounded interest at a rate
of nine percent (9%) per annum, and 1,670,000 shares of convertible,
preferred stock, par value $.01 per share, of the Company (the "Preferred
Stock"). The Preferred Stock is automatically convertible into shares of the
Company's common stock, par value $.01 per shares (the "Common Stock"),
on March 2, 2000, at a conversion rate which will depend on the average
closing price of the Common Stock for a specified period prior thereto. The
purchase price was determined based on the fair market value of the
purchased assets. The down payment portion of the purchase price was drawn
from cash reserves of the Company, and the cash required for payments due
under the Promissory Note will be generated by future revenues from the
Company's business.
TEUBER EMPLOYMENT AGREEMENT TERMINATION
Pursuant to an employment agreement dated March 09, 1998 between the
Company and John Teuber ("Employment Agreement"), on September 04,
1998 the Company terminated John Teuber for cause without relinquishing
any of its rights or remedies.
SET OFF OF PROMISSORY NOTE, 9/4/98
Pursuant to the Note, the Purchase Agreement, and the Security Agreement
between the Company and ("IMA"), the Company on September 04, 1998
exercised its right of "Set Off" of the Note, as defined therein due to IMA's
breach of numerous representations, warranties and covenants contained in
the Note and certain ancillary documents. The Company further reserved any
and all rights and remedies available to it under the Note, Purchase Agreement
and Security Agreement.
GAYLORD EMPLOYMENT AGREEMENT TERMINATION
The Company entered into a two year employment agreement ("NAG
Agreement" as contained in Exhibit I of the registrants SEC Form 10-K for
the period ending June 30, 1998) with Nancy Gaylord on March 13, 1998.
On September 18, 1998, Nancy Gaylord terminated her employment with the
Company. The NAG Agreement had no provision for this termination.
CALIFORNIA FACILITIES, 9/30/98
The Company entered into a lease agreement as contained in Exhibit I of the
registrants SEC Form 10-QSB for the period ending September 30, 1998 with
America-United Enterprises Inc. on October 01, 1998 and took possession of
4,700 s.f. of premises on November 06,1998 in Santa Clarita for its CA
location. Currently, this is the only California location of the Company.
DEMAND FOR INDEMNIFICATION, 12/9/98
On December 9, 1998 the company delivered to IMA, "Notification to
Indemnifying Party and Demand for Indemnification for $2,251,266."
Pursuant to the Note, the Purchase Agreement, the Security Agreement, and
the Employment Agreement (collectively the "Agreements"), the Company
demanded that IMA pay $2,251,266 or defend the Company against the
Liabilities (as defined therein) due to, among other things, IMA's breach,
representations, warranties, and violation of the Agreements.
PURCHASE AGREEMENT OF 1/29/99
On January 29, 1999, pursuant to the Purchase Agreement of 1/28/99,
Advanced Oxygen Technologies, Inc. ("AOXY") purchased 1,670,000 shares
of convertible preferred stock of Advanced Oxygen Technologies, Inc.
("STOCK") and a $550,000 promissory note issued by Advanced Oxygen
Technologies, Inc ("Note") from Integrated Marketing Agency, Inc.("IMA").
The terms of the Purchase Agreement were: AOXY payed $15,000 to IMA,
assumed a Citicorp Computer Equipment Lease, #010-0031648-001 from
IMA, delivered to IMA certain tangible business property (as listed in Exhibit
A of the Purchase Agreement), executed a one year $5,000 promissory note
with IMA, and delivered to IMA a Request For Dismissal of case #PS003684
(restraining order) filed in Los Angeles county superior court. IMA sold,
transferred, and delivered to AOXY the Stock and the Note. IMA sold,
transferred, assigned and delivered the Note and the Stock to AOXY,
executed documents with Citicorp Leasing, Inc. to effectuate an express
assumption by AOXY of the obligation under lease #010-0031648-001 in the
amount of $44,811.26, executed a UCC2 filing releasing UCC-1 filing
#9807560696 filed by IMA on March 13, 1998, and delivered such
documents as required. In addition, both IMA and AOXY provided mutual
liability releases for the other.
EMPLOYEES
The Company had 7 employees during the fiscal year ended June 30, 1999 and
at the date of the Annual Report on Form 10-KSB enclosed herein.
ITEM 2. DESCRIPTION OF PROPERTY
The Company leases facilities in Santa Clarita CA, and owns furniture fixtures
and equipment used in its operations as described in its annual report attached
hereto.
ITEM 3. LEGAL PROCEEDINGS
The Company was/is a party to the following legal proceedings:
1. On April 30, 1999 NEC America Filed suit against Advanced
Oxygen Technologies, Inc. In the Los Angeles Superior
Court, North Valley Branch, Case Number PC 023087X
alleging default of the Lease Agreement of November,
1998 in the amount of $57,167.28. AOXY has answered
the suit and denies some or all of the allegations, and
believes that the jurisdiction of the case should be in New
York. A judgment was entered on October 5, 1999
against the Company for $57,167.28.
2. A previous employee, Tim Rafalovich has filed suit against
Advanced Oxygen Technologies, Inc. in the Small Claims
court of New Hall, CA alleging that AOXY has not paid
approximately $5,000 in wages, case number 99S00761.
A judgment was entered against the Company for
$5,000.00
3. On June 14, 1999 Airborne Express, Inc. filed suit against
Advanced Oxygen Technologies, Inc., case # 99-C00738
in small claims court of Los Angeles CA Municipal
district, Newhall Judicial District for $5,093.95, including
court costs and attorney's fees alleging monies owed. A
judgment was entered on October 5, 1999 against the
Company for $5,093.95
4. On September 09, 1998 the Company appeared before the
Santa Clarita County small claims court to represent itself
in a motion ("Motion") filed by a plaintiff, Alpha Graphics,
against John Teuber for a judgment on July 06, 1998
from a case filed May 29,1998, to be amended to the
Company. The Motion was denied and the judgment was
not amended to reflect the Company as a defendant.
5. On February 10, 1999 in the Municipal Court of California,
county of Los Angeles, Newhall Judicial District,
America-United Enterprises, Inc. filed suit against
Advanced Oxygen Technologies, Inc, case no. 99U00109,
alleging that the February, 1999 rent due on February 01,
1999 had not been paid by Advanced Oxygen
Technologies, Inc. The suit has been settled out of court
and Advanced Oxygen Technologies, Inc. has tendered the
monies owed in full.
6. On February 19, 1999, Written Communications, Inc. filed
suit against Advanced Oxygen Technologies, Inc. in the
small claims court in Van Nuys CA Municipal Court, Case
no. 99V12825 for unpaid service rendered in the amount
of $4,875.00. The company paid the amount in full.
7. On January 16, 1999, A Better Type filed suit against
Advanced Oxygen Technologies, Inc. in the small claims
court of the Municipal Court of California, San Diego
Judicial District, Case no.691493 alleging non payment for
services rendered of $5,000. The Company paid the
amount in full.
8. On March 23, 1999 Corestaff Services filed suit against
Advanced Oxygen Technologies, Inc. in the small claims
court Newhall CA Judicial district case no 99S00349 for
lack of payment in the amount of $4,106. The case was
settled out of court and the company has agreed to pay
Corestaff $500.00 on the 15th day of each month
beginning on June 15, 1999 until any debts owed are paid
in full.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the prior
fiscal year.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year ended June 30, 1999, the Board of Directors held 2
meetings. During the current fiscal year, the Board of Directors held no
meeting..
On the meeting held January 12, 1999 the Board of Directors unanimously
passed the following resolutions: Resolved that the Board has approved and
authorized the purchase of assets from Integrated marketing Agency, Inc. of
1,670,000 shares of convertible preferred stock of Advanced Oxygen
Technologies, Inc. And a $550,000 promissory note issued by Advanced
Oxygen Technologies, Inc.
On the meeting held August 14, 1999 the Board of Directors of Advanced
Oxygen Technologies, Inc., unanimously passed the following resolutions:
Resolved, that:
Paragraph 4 (a) of the Certificate Of Incorporation of the Corporation
shall be amended to reflect the increase in authorized common shares
from 30,000,000 to 90,000,000 shares,
Paragraph one (10 of the Certificate of Incorporation of the Company
be amended to reflect the change of name of the company from
Advanced Oxygen Technologies, Inc. to AOXY, Inc.,
Bernstein, Pinchuk and Kaminsky, Llp act as the Company's
independent public accounts,
The Company effect a 2 for 1 reverse split of the outstanding common
shares of the Company, and to effect the reverse at such time that Mr.
Robert E. Wolfe deem appropriate, and
Company may obtain funding for two hundred and fifty thousand
dollars ($250,000) by issuing capital stock, where Mr. Robert E.
Wolfe will have the complete authority to negotiate, transact, obligate
the Company and enter into agreement with complete autonomy.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
No Officer or director received any compensation from the Company during
the last fiscal year.
STOCK OPTIONS.
The Company had a stock option plan under which it was authorized to grant
stock options and stock appreciation rights and to sell shares under restricted
stock purchase agreements to salaried directors, employees and consultants
of the Company. The options were to become exercisable over four years
beginning from the grant date and expire ten years thereafter, unless
employment terminates, in which case the option expires 90 days after
termination.
Options Number of Exercise
shares price range
Outstanding, June 30,1991 273,600 $1.33- 11.95
Granted 102,400 5.30- 8.15
Exercised (110,400) 1.33- 8.50
Canceled ( 4,600) 3.19- 11.95
Outstanding, June 30, 1992 260,600 1.59- 11.95
Granted 33,800 2.13- 5.60
Exercised (55,400) 1.59- 4.90
Canceled (40,800) 2.92-11.95
Outstanding, June 30, 1993 198,200 2.92-11.95
Granted 276,000 1.22- 2.50
Exercised
Canceled (87,900) 1.22-11.95
Outstanding, June 30, 1994 386,300 1.22-11.95
Granted 125,000 1.22- 2.50
Exercised
Canceled (366,300)
Outstanding, June 30, 1995 145,000
Exercisable, June 30, 1994 79,600 2.13-
11.95
Exercisable, June 30, 1993 103,400 2.13-11.95
Due to employee termination all options became void in August 1995.
The Company also has a non-employee director stock option plan for director
compensation in lieu of cash. Of the 200,000 shares reserved for issuance
under the plan, a total of 115,000 had been granted as of June 30, 1994 at
exercise prices ranging from $1.85 to $10.90 per share. Options granted
under the plan vest one year from the date of grant and generally expire 10
years from the date of issuance. No options were granted during 1995.
401(k) Plan. The Company does not have a 401(k) Plan.
Employment Agreements and Miscellaneous Personal Benefits. As of
December 18, 1997, Robert E. Wolfe and Joseph N. Noll have been appointed
Directors of Advanced Oxygen Technologies.
PERFORMANCE GRAPH
The Company's Common Stock is traded in the over-the-counter market.
The following table sets forth the range of high and low bid quotations on the
Common Stock for the quarterly periods indicated, as reported by the
National Quotation Bureau, Inc. The quotations are interdealer prices
without retail mark-ups, markdowns or commissions and may not represent
actual transactions.
Fiscal Year Ended June 30, 1998 High Low
First Quarter 0.07 0.010
Second quarter 0.02 0.005
Third Quarter 0.09 0.015
Fourth Quarter 0.23 0.055
Fiscal Year Ended June 30, 1999 High Low
First Quarter 0.220 0.055
Second quarter 0.047 0.015
Third Quarter 0.031 0.015
Fourth Quarter 0.200 0.015
At April 18, 2000, the closing bid price of the Company's Common Stock
as reported by the National Quotation Bureau, Inc, was $0.08
At February 16, 2000, the approximate number of holders of record of the
Company's Common Stock was 1,602.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange
Commission (the "SEC"). Officers, directors and greater than ten-percent
shareholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) reports they file. Based solely on review of the
copies of such reports furnished to the Company during or with respect to
fiscal 1999, or written representations that no Forms 5 were required, the
Company believes that during the fiscal year ended June 30, 1999 all Section
16(a) filing requirements applicable to its officers, directors and greater than
ten-percent beneficial owners were complied with. Crossland, Ltd.(Belize)
has 21.30% of Common Shares of the Company. Crossland, Ltd., has
20.03% of Common Shares of the Company. Eastern Star, Ltd. has 20.03%
of Common Shares of the Company. Coastal Oil, Ltd., has 20.03% of
Common Shares of the Company. Robert E. Wolfe has 0.017% of Common
Shares of the Company.
PROPOSAL I APPROVAL OF AMENDMENT TO ARTICLES OF
INCORPORATIONTO INCREASE AUTHORIZED COMMON
SHARES
GENERAL
Article (4)(a) of the Company's Articles of Incorporation presently provides
for an authorized capitalization of the Company of 30,000,000 Common
Shares, par value $0.01 per share, and 10,000,000 Preferred Shares, par value
$0.01 per share. As of February 16, 1998, one million six hundred and seventy
five thousand and three Preferred Shares were issued of which one million six
hundred and seventy thousand are treasury shares and 29,640,252 Common
Shares were issued and outstanding. The Company's Board of Directors has
determined that it would be advisable to amend and restate the Company's
Restated Articles of Incorporation to increase the Company's authorized
Common Shares from 30,000,000 to 90,000,000 shares.
Subject to shareholder approval, the Board of Directors has approved an
amendment and restatement of the Company's Restated Articles of
Incorporation which would revise Article (4)(a) of the Company's Articles of
Incorporation to increase from 30,000,000 to 90,000,000, the number of
authorized Common Shares.
PURPOSES OF THE AMENDMENT
The Amendment is being proposed to increase the number of the Company's
authorized but unissued Common Shares. As of February 16, 2000, the
Company had 30,000,000 Common Shares authorized and 29,640,252
Common Shares issued and outstanding.
There are no arrangements, understandings or plans for the issuance of any
such additional shares, other than (i) shares reserved for issuance upon the
exercise of stock options and warrants outstanding or authorized for issuance
under existing plans (ii) the Company's plans to raise additional capital in
fiscal
2000 to support its business, and (iii) the Company's plans to purchase,
acquire, merge or otherwise obtain or start an operating business. The
Company does not expect that it would seek authorization from shareholders
for issuance of such additional shares unless required by applicable law or
regulation or the rules of the market in which the Company's Common Shares
are traded. There are no preemptive rights available to shareholders in
connection with the issuance of any such shares.
VOTE REQUIRED
Approval of the Amendment required the affirmative vote of the holders of a
majority of the outstanding Common Shares.
THE COMPANY HAS RECEIVED VOTES EQUALING 64.7% OR
19,180,500 SHARES THAT HAVE BEEN VOTED FOR THE APPROVAL
OF THE AMENDMENT AND RESTATEMENT OF THE COMPANY'S
ARTICLES OF INCORPORATION AND SUCH AMENDMENT SHALL
BECOME EFFECTIVE APRIL 18, 2000.
PROPOSAL II APPROVAL TO CHANGE AUDITORS.
INDEPENDENT ACCOUNTANTS
The Board of Directors has selected Bernstein, Pinchuk and Kaminsky. LLP
as the Company's independent public accountant for the fiscal year ended
June 30, 1999 and has further directed that management submit the selection
of independent public accountants for ratification by the stockholders by
written consents.
Stockholder ratification of the selection of Bernstein, Pinchuk and Kaminsky.
LLP as the Company's independent public accountants is not required by the
Company's by-laws or otherwise and the Company has begun using some of
their services. The Board of Directors is submitting the selection of
Bernstein, Pinchuk and Kaminsky. LLP to the stockholders for ratification as
a matter of good corporate practice. In the event the stockholders fail to
ratify the selection, the Board of Directors will reconsider whether to retain
that firm. Even if the selection is ratified, the Board of Directors in its
discretion may direct the appointment of a different independent accounting
firm any time during the year if the Board of Directors decides that such a
change could be in the best interests of the Company and its stockholders.
The affirmative vote of the holders of a majority of the outstanding shares will
be required to ratify the selection of Bernstein, Pinchuk and Kaminsky. LLP.
THE COMPANY HAS RECEIVED VOTES EQUALING 64.7% OR
19,180,500 SHARES THAT HAVE BEEN VOTED FOR THE APPROVAL
OF THE CHANGE OF THE COMPANY?S AUDITORS TO Bernstein,
Pinchuk and Kaminsky. LLP., AND SUCH AMENDMENT SHALL
BECOME EFFECTIVE APRIL 18, 2000
PROPOSAL III NAME CHANGE
The Board of Directors has approved an amendment to the Company's
Certificate of Incorporation to change the name of the Company to AOXY,
Inc. Currently, the Company has no business operations. The Company's
current name was adopted in 1985 when the Company was focused on
applications of its technology which it has since disposed of or otherwise
abandoned. The Board of Directors believes it would be more appropriate for
the Company to utilize a corporate name which more accurately describes the
current focus of the Company. The current strategic focus of the Company
is to seek out new operations through merger, acquisition, sale or purchase.
The Company believes that it will incur certain out of pocket expenses in
connection with the name change, although such expenses are not expected
to exceed $5,000.
The Name Change will be affected by amending and restating Article 1 of the
Company's Certificate of Incorporation to read as follows:
?The Name of the expiration is AOXY, Inc.?
The above amendment to the Certificate of Incorporation will be filed with the
Secretary of State of the State of Delaware, and the Name Change will
become effective as of 5:00 p.m. Eastern Time, on the date of such filing (the
?Effective Date?). It is expected that such filing will take place on the date
of March 8, 1998, or shortly thereafter.
PURPOSES OF THE AMENDMENT
The Board of Directors feel that the name Advanced Oxygen
Technologies, Inc. no longer validly represents the Companies business and
feels that going forward the Name AOXY, Inc. will allow the Company to
pursue business activities without prejudice r other association to industry.
THE COMPANY HAS RECEIVED VOTES EQUALING 64.7% OR
19,180,500 SHARES THAT HAVE BEEN VOTED FOR THE APPROVAL
OF THE AMENDMENT AND RESTATEMENT OF THE COMPANY'S
ARTICLES OF INCORPORATION AND SUCH AMENDMENT SHALL
BECOME EFFECTIVE APRIL 18, 2000.
By order of the Board of Directors
/s/Robert E. Wolfe/s/
President and Chief Executive Officer
/s/Joseph N. Noll/s/
Secretary
ADVANCED OXYGEN TECHNOLOGIES, INC.
BOARD OF DIRECTORS PROXY FOR ANNUAL MEETING
APRIL 18, 2000
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS OF
ADVANCED OXYGEN TECHNOLOGIES, INC.
The undersigned hereby appoints Robert E. Wolfe and Joseph N. Noll, and
each of them, attorneys and proxies with full power of substitution in each
of them, in the name, place and stead of the undersigned to vote as proxy all
the Common Shares, par value $.01 per share, of the undersigned in
Advanced Oxygen Technologies, Inc. (the "Company") which the
undersigned is entitled to vote at the Annual Meeting of Shareholders of the
Company to be held on April 18, 2000, and at any and all adjournments
thereof.
(To be Signed on Reverse Side)
See Reverse
Side
THE VOTING PAGE FOR ADVANCED OXYGEN
TECHNOLOGIES, INC
[ X ] PLEASE MARK VOTES AS IN THIS EXAMPLE.
1. APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE COMPANY'S
RESTATED ARTICLES OF INCORPORATION TO INCREASE THE COMPANY'S
AUTHORIZED COMMON SHARES FROM 30,000,000 TO 90,000,000 SHARES.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. PROPOSAL TO RATIFY THE COMPANY?S AUDITORS AS BERNSTEIN, PINCHUK
AND KAMINSKY, LLP AS INDEPENDENT PUBLIC ACCOUNTANTS..
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE COMPANY'S
RESTATED ARTICLES OF INCORPORATION TO CHANGE THE NAME TO AOXY,
INCORPORATED.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED
IN ACCORDANCE WITH THE SPECIFICATIONS MADE HEREIN.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED
FOR PROPOSALS 1, 2, AND 3. IF NO INSTRUCTIONS TO THE
CONTRARY ARE INDICATED OR IF NO INSTRUCTION IS
GIVEN.
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY IN
THE ENCLOSED ENVELOPE.
NAME (COMPANY)
NUMBER OF SHARES OWNED
CERTIFICATE NUMBERS (IF APPLICABLE)
SIGNATURE(S) DATE:
, 2000
SIGNATURE(S) DATE:
, 2000
(NOTE: PLEASE SIGN EXACTLY AS NAME APPEARS HEREON, EXECUTORS,
ADMINISTRATORS, ATTORNEYS, GUARDIANS, TRUSTEES, ETC. SHOULD SO INDICATE WHEN
SIGNING, GIVING FULL TITLE AS SUCH. IF SIGNER IS A CORPORATION, EXECUTE IN FULL
CORPORATE NAME BY AUTHORIZED OFFICER IF SHARES ARE HELD IN THE NAME OF TWO
OR MORE PERSONS, ALL SHOULD SIGN.)
EXHIBIT A
--------------------------------------
RESTATED ARTICLES OF INCORPORATION
FOR USE BY DOMESTIC PROFIT CORPORATIONS
(PLEASE READ INFORMATION AND INSTRUCTIONS ON THE LAST PAGE)
RESTATED CERTIFICATE OF INCORPORATION
OF
ADVANCED OXYGEN TECHNOLOGIES, INC.
1. The name of the corporation is AOXY, Inc.; the corporation
was originally incorporated under the name Imperial Manufacturing
Corporation. The original certificate of incorporation was filed with the
Secretary of State of the State of Delaware on the 26th day of February 1981.
This restated certificate has been duly adopted pursuant to Section 245 of the
General Corporation Law of the State of Delaware and only restates and
integrates and does not further amend and provisions of the corporation's
certificate of incorporation as heretofore amended, and there is no discrepancy
between those provisions and the provisions of this restated certificate.
2. The address of its registered office in the State of Delaware is
1209 Orange Street, in the city of Wilmington, County of New Castle. The
name of its registered agent at such address is The Corporation Trust
Company.
3. The nature of the business or purposes to be conducted or
promoted is: To engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of Delaware.
4. (a) The total number of shares of stock which the corporation
shall have authority to issue is one hundred million (100,000,000) shares, of
which ninety million (90,000,000) shares, of the par value of one cent ($.01),
shall be common shares, amounting in the aggregate to nine hundred
thousand dollars ($900,000.00), and ten million (10,0000,000) shares, of the
par value of one cent ($.01) shall be preferred shares, amounting in the
aggregate to one hundred thousand dollars ($100,000.00).
(b) The corporation may issue any class of preferred shares in series.
The Board of Directors shall have authority to establish and designate series
and to fix the number of shares included in the relative rights, preferences and
limitations as between series, provided that when the stated dividends and
amounts payable on liquidation are not paid in full, and in any distribution of
assets other than by way of dividends in accordance with the sums payable
were discharged in full. Shares of each such series from shares of all other
series.
5. The corporation is to have perpetual existence.
6. In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized to make, alter or repeal
the by-laws of the corporation.
7. Meetings of stockholders may be held within or without the
State Of Delaware, as the by-laws may provide. The books of the corporation
may be kept (subject to any provisions contained in the statues) outside the
State of Delaware at such place or places as may be designated from time to
time by the board of directors or in the by-laws of the corporation. Elections
of directors need not be by written ballot unless the by-laws of the corporation
shall so provide.
8. Whenever a compromise or arrangement is proposed between
this corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditors or stockholders thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or
of the stockholders or class of stockholders of this corporation, as the case
may be, to be summoned in such manner as the said court directs. If a
majority in number representing three-fourths in value of the creditors or class
of creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and
to any reorganization of this corporation as a consequence of such
compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders, of this corporation, as the case
may be, and also on this corporation.
9. The corporation reserves the right to amend, alter, change or
repeal any provisions contained in this certificate of incorporation, in the
manner now or hereafter prescribed by statue, and all rights conferred upon
stockholders herein are granted subject to this reservation.
IN WITNESS WHEREOF, ADVANCED OXYGEN
TECHNOLOGIES, INC.> has caused its corporate seal to be hereunto
affixed sand this certificate shall be signed by Robert E. Wolfe, its President,
and shall be attested by Joseph N. Noll, its Secretary, this 18th day of April,
2000.
Advanced Oxygen Technologies, Inc.
BY:
/s/ Robert E. Wolfe /s/
President
Attest:
/s/ Joseph N. Noll /s/
Secretary
EXHIBIT B
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-KSB
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15
(d)OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1999
Commission file number 0-9951
ADVANCED OXYGEN TECHNOLOGIES, INC.
(Name of small business Issuer in its charter)
Delaware 91-1143622
(State of incorporation) (I.R.S. Employer Identification No.)
26883 Ruether Avenue Santa Clarita, CA 91351
(Address of principal executive offices) (Zip Code)
661-298-3333
(Issuer's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered under Section 12(g) of the Exchange Act: Common
Stock, par value $.01 per share
Check whether the Issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the preceding 12
months (or for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes [ X ] No[ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this form 10-KSB. [ X ]
For the year ended June 30, 1999, Issuer's revenues were $741,153.96
The aggregate market value of Common Stock at June 30, 1999 held by
non-affiliates approximated $1,534,375 based upon the average bid and asked
prices for a share of Common Stock on that date. For purposes of this
calculation, persons owning 10% or more of the shares of Common Stock are
assumed to be affiliates, although such persons are not necessarily affiliates
for
any other purpose. As of June 30, 1999, there were 29,640,252 issued and
outstanding shares of the registrant's Common Stock, $.01 par value.
Transitional Small Business Disclosure Format (check one): Yes[ ] No [
X ]
PART I
ITEM 1- DESCRIPTION OF BUSINESS
Advanced Oxygen Technologies, Inc. ("Advanced Oxygen
Technologies", "AOXY", "AOT" or the "Company"), incorporated in
Delaware in 1981 under the name Aquanautics Corporation, was, from 1985
until May 1995, a development stage specialty materials company producing
new oxygen control technologies. From May of 1995 through December of
1997 AOXY had minimal operations and was seeking funding for operations
and companies to which it could merge or acquire. In March of 1998 AOXY
began operations in California. The business consists of producing and
selling CD-ROMS for conference events, advertisement sales on the CD's,
database management and event marketing all associated with conference
events.
THE PATENT SALE
On May 1, 1995, the Company sold its patents, and all related technology
and intellectual property rights (collectively the "Patents Rights") to W. R.
Grace & Co. Conn., a Connecticut corporation ("Grace"). The price for the
Patents Rights was $335,000, in cash, and a royalty until April 30, 2007 of
two percent (2%) of the net sales price of (a) all products sold by Grace that
include as a component, material that absorbs, bars, climinates, extracts and/or
concentrates oxygen that, but for the purchase of the Patents Rights, would
fringe the Patents Rights, and (b) any mixture or compound (other than a
finished product) which includes as a component material that absorbs, bars,
climinates, extracts and/or concentrates oxygen that, but for the purchase of
the Patent Rights, would infringe the Patent Rights. Subsequently these
royalties and associated liabilities were transferred to a trust (see Trust
Agreement 12/18/97 below).
STOCK ACQUISITION AGREEMENT, 12/18/97
Pursuant to a Stock Acquisition Agreement dated as of December 18,
1997, Advanced Oxygen Technologies, Inc. ("AOXY") has issued 23,750,00
shares of its common stock, par value $.01 per share for $60,000 cash plus
consulting services rendered valued at $177,500, to Crossland, Ltd.,
("Crossland"), Eastern Star, Ltd., ("Eastern Star"), Coastal Oil, Ltd.
("Coastal") and Crossland, Ltd. (Belize) ("CLB"). Crossland and Eastern
Star, Ltd. are Bahamas corporations. Coastal Oil and CLB are Belize
corporations.
PURCHASE AGREEMENT, 12/18/97
Pursuant to a Purchase Agreement dated as of December 18, 1997,
CLB, Triton-International, Ltd., ("Triton"), a Bahamas corporation, and
Robert E. Wolfe purchased an aggregate of 800,000 shares of AOXY's
common stock from Edelson Technology Partners II, L.P. ("ETPII") for
$10,000 cash. AOXY issued 450,000 shares of its capital stock to ETPII in
exchange for consulting services to be rendered. The general partner of
ETPII is Harry Edelson, Chairman of the Board and Chief Executive Officer
of AOXY prior to the transactions resulting in the change of control (the
"Transactions"). Prior to the Transactions Mr. Edelson directly or indirectly
owned approximately 25% of the issued and outstanding common stock of
AOXY, and following the completion of Mr. Edelson's consultancy he will
own approximately 1.5%.
Company/Individual # of Shares %
Robert E. Wolfe 50,000 shares 0.17%
Triton-International 375,000 shares 1.26%
Crossland, Ltd. (Belize) 6,312,500 shares 21.30%
Crossland, Ltd. 5,937,500 shares 20.03%
Coastal Oil, Ltd. 5,937,500 shares 20.03%
Eastern Star, Ltd. 5,937,500 shares 20.03%
The 23,750,000 shares of AOXY common stock sold by AOXY as of
December 18, 1997 to Crossland, Eastern, Coastal and CLB pursuant to the
Stock Acquisition Agreement (the "Regulation S Shares") were not registered
under the Securities Act of 1933, as amended, in reliance on the exemption
from registration provided by Rule 903(c)(2) of Regulation S. Consideration
for the Regulation S Shares consisted of $60,000 cash and consulting services
rendered valued at $177,500. Each of the purchasers of the Regulation S
Shares (a "Buyer") has represented to AOXY that (i) it is not a "U.S. Person"
as that term is defined in Rule 902 (o) of Regulation S; (ii) the sale of the
Regulation S Shares was taking place outside of the United States; (iii) no
offer was made in the United States; (iv) it was purchasing the Regulation S
Shares for its own account and not as a nominee or for the account of any
other person or entity; (v) it had no intention to sell or distribute the shares
except in accordance with Regulation S; (vi) it agreed that it would not
transfer Regulation S Shares to a U.S. Person before the 41st day from the
date the Buyer purchased the Regulation S Shares.
AOXY represented to the Buyers that it had not conducted any
"directed selling effort" as defined in Regulation S, and that it had filed all
reports required to be filed under the Securities Exchange Act of 1934 during
the preceding twelve months.
WAIVER AGREEMENT, 12/18/97
Pursuant to a Waiver Agreement dated as of December 18, 1997,
Emile Battat, Richard Jacobsen, each directors of AOXY prior to the
Transactions, Sharon Castle, a former officer of AOXY, and ETPII released
AOXY from any liability for repayment of an aggregate of $275,000 of loans
plus all interest due thereon previously made by them to AOXY in
consideration of an aggregate amount of $60,000 cash paid to them pro rata
in proportion to their individual loans outstanding by CLB, Triton and Robert
E. Wolfe. The source of funds for the Transactions was working capital and
personal funds. To the knowledge of the registrant, no arrangements exist
which might subsequently result in a change in control of the registrant.
CHANGE OF DIRECTORS
All of the directors and officers of AOXY resigned in connection with
the Transactions on December 18, 1997. Robert E. Wolfe and Joseph N. Noll
were elected as directors and Mr. Wolfe was appointed President.
TRUST AGREEMENT, 12/18/97
On December 18, 1997, pursuant to a Trust Agreement dated as of
November 7, 1997 and an Assignment and Assumption Agreement dated as
of November 8, 1997, certain royalty rights associated with Grace and
liabilities related to technology AOXY sold to a third party in 1995 were
transferred to a trust for the benefit of the AOXY shareholders of record at
that date. No royalties had been paid or become due with respect to the rights
transferred to the Trust, and no value was assigned to such rights on the
books of AOXY.
ACQUISITION OR DISPOSITION OF ASSETS, MARCH 09,1998.
On March 9, 1998, pursuant to an Agreement for Purchase and Sale of
Specified Business Assets, a Promissory Note, and a Security Agreement all
dated March 9, 1998, Advanced Oxygen Technologies, Inc.(the "Company")
purchased certain tangible and intangible assets (the "Assets") including
goodwill and rights under certain contracts, from Integrated Marketing
Agency, Inc., a California Corporation ("IMA"). The assets purchased from
IMA consisted primarily of furniture, fixtures, equipment, computers, servers,
software and databases previously used by IMA in its full service
telemarketing business. The purchase price of $2,000,000 consisted of
delivery at closing by the Company of a $10,000 down payment, a Promissory
Note in the amount of $550,000 payable to IMA periodically, with final
payment due on April 10, 2000 and accruing compounded interest at a rate
of nine percent (9%) per annum, and 1,670,000 shares of convertible,
preferred stock, par value $.01 per share, of the Company (the "Preferred
Stock"). The Preferred Stock is automatically convertible into shares of the
Company's common stock, par value $.01 per shares (the "Common Stock"),
on March 2, 2000, at a conversion rate which will depend on the average
closing price of the Common Stock for a specified period prior thereto. The
purchase price was determined based on the fair market value of the
purchased assets. The down payment portion of the purchase price was drawn
from cash reserves of the Company, and the cash required for payments due
under the Promissory Note will be generated by future revenues from the
Company's business.
TEUBER EMPLOYMENT AGREEMENT TERMINATION
Pursuant to an employment agreement dated March 09, 1998 between
the Company and John Teuber ("Employment Agreement"), on September 04,
1998 the Company terminated John Teuber for cause without relinquishing
any of its rights or remedies.
SET OFF OF PROMISSORY NOTE, 9/4/98
Pursuant to the Note, the Purchase Agreement, and the Security
Agreement between the Company and ("IMA"), the Company on September
04, 1998 exercised its right of "Set Off" of the Note, as defined therein due
to IMA's breach of numerous representations, warranties and covenants
contained in the Note and certain ancillary documents. The Company further
reserved any and all rights and remedies available to it under the Note,
Purchase Agreement and Security Agreement.
GAYLORD EMPLOYMENT AGREEMENT TERMINATION
The Company entered into a two year employment agreement ("NAG
Agreement" as contained in Exhibit I of the registrants SEC Form 10-K for
the period ending June 30, 1998) with Nancy Gaylord on March 13, 1998.
On September 18, 1998, Nancy Gaylord terminated her employment with the
Company. The NAG Agreement had no provision for this termination.
CALIFORNIA FACILITIES, 9/30/98
The Company entered into a lease agreement as contained in Exhibit
I of the registrants SEC Form 10-QSB for the period ending September 30,
1998 with America-United Enterprises Inc. on October 01, 1998 and took
possession of 4,700 s.f. of premises on November 06,1998 in Santa Clarita for
its CA location. Currently, this is the only California location of the
Company.
DEMAND FOR INDEMNIFICATION, 12/9/98
On December 9, 1998 the company delivered to IMA, "Notification to
Indemnifying Party and Demand for Indemnification for $2,251,266."
Pursuant to the Note, the Purchase Agreement, the Security Agreement, and
the Employment Agreement (collectively the "Agreements"), the Company
demanded that IMA pay $2,251,266 or defend the Company against the
Liabilities (as defined therein) due to, among other things, IMA's breach,
representations, warranties, and violation of the Agreements.
PURCHASE AGREEMENT OF 1/29/99
On January 29, 1999, pursuant to the Purchase Agreement of 1/28/99,
Advanced Oxygen Technologies, Inc. ("AOXY") purchased 1,670,000 shares
of convertible preferred stock of Advanced Oxygen Technologies, Inc.
("STOCK") and a $550,000 promissory note issued by Advanced Oxygen
Technologies, Inc ("Note") from Integrated Marketing Agency, Inc.("IMA").
The terms of the Purchase Agreement were: AOXY payed $15,000 to IMA,
assumed a Citicorp Computer Equipment Lease, #010-0031648-001 from
IMA, delivered to IMA certain tangible business property (as listed in Exhibit
A of the Purchase Agreement), executed a one year $5,000 promissory note
with IMA, and delivered to IMA a Request For Dismissal of case #PS003684
(restraining order) filed in Los Angeles county superior court. IMA sold,
transferred, and delivered to AOXY the Stock and the Note. IMA sold,
transferred, assigned and delivered the Note and the Stock to AOXY,
executed documents with Citicorp Leasing, Inc. to effectuate an express
assumption by AOXY of the obligation under lease #010-0031648-001 in the
amount of $44,811.26, executed a UCC2 filing releasing UCC-1 filing
#9807560696 filed by IMA on March 13, 1998, and delivered such
documents as required. In addition, both IMA and AOXY provided mutual
liability releases for the other.
EMPLOYEES
As of June 30, 1999 the Company had a total of 7 employees.
ITEM 2. DESCRIPTION OF PROPERTY
The assets of the Company consist primarily of furniture, fixtures,
equipment, computers, servers, software and databases.
ITEM 3. LEGAL PROCEEDINGS
PENDING MATTERS
The Company is a party to the following legal proceedings:
1. On April 30, 1999 NEC America Filed suit against Advanced
Oxygen Technologies, Inc. In the Los Angeles Superior
Court, North Valley Branch, Case Number PC 023087X
alleging default of the Lease Agreement of November,
1998 in the amount of $57,167.28. AOXY has answered
the suit and denies some or all of the allegations, and
believes that the jurisdiction of the case should be in New
York.
2. A previous employee, Tim Rafalovich has filed suit against
Advanced Oxygen Technologies, Inc. in the Small Claims
court of New Hall, CA alleging that AOXY has not paid
approximately $5,000 in wages, case number 99S00761.
The appeal is pending and AOXY denies all allegations,
and will defend the case.
3. On June 14, 1999 Airborne Express, Inc. filed suit against
Advanced Oxygen Technologies, Inc., case # 99-C00738
in small claims court of Los Angeles CA Municipal
district, Newhall Judicial District for $5,093.95, including
court costs and attorney's fees alleging monies owed.
AOXY denies the allegations and plans to defend the
claim and believes that some or all of the shipping charges
cited were from a previously shared location in Santa
Clarita.
SETTLED MATTERS:
1. On September 09, 1998 the Company appeared before the
Santa Clarita County small claims court to represent itself
in a motion ("Motion") filed by a plaintiff, Alpha Graphics,
against John Teuber for a judgment on July 06, 1998
from a case filed May 29,1998, to be amended to the
Company. The Motion was denied and the judgment was
not amended to reflect the Company as a defendant.
2. On February 10, 1999 in the Municipal Court of California,
county of Los Angeles, Newhall Judicial District,
America-United Enterprises, Inc. filed suit against
Advanced Oxygen Technologies, Inc, case no. 99U00109,
alleging that the February, 1999 rent due on February 01,
1999 had not been paid by Advanced Oxygen
Technologies, Inc. The suit has been settled out of court
and Advanced Oxygen Technologies, Inc. has tendered the
monies owed in full.
3. On February 19, 1999, Written Communications, Inc. filed
suit against Advanced Oxygen Technologies, Inc. in the
small claims court in Van Nuys CA Municipal Court, Case
no. 99V12825 for unpaid service rendered in the amount
of $4,875.00. The company paid the amount in full.
4. On January 16, 1999, A Better Type filed suit against
Advanced Oxygen Technologies, Inc. in the small claims
court of the Municipal Court of California, San Diego
Judicial District, Case no.691493 alleging non payment for
services rendered of $5,000. The Company paid the
amount in full.
5. On March 23, 1999 Corestaff Services filed suit against
Advanced Oxygen Technologies, Inc. in the small claims
court Newhall CA Judicial district case no 99S00349 for
lack of payment in the amount of $4,106. The case was
settled out of court and the company has agreed to pay
Corestaff $500.00 on the 15 Th day of each month
beginning on June 15, 1999 until any debts owed are paid
in full.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
There were no submissions of matters for a vote to the security holders.
PART II
ITEM 5. MARKET OF REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
The Company's Common Stock is traded on the Over-The-Counter
Bulletin Board. The following table sets forth the range of high and low bid
quotations on the Common Stock for the quarterly periods indicated, as
reported by the National Quotation Bureau, Inc. The quotations are
inter-dealer prices without retail mark-ups, mark downs or commissions and
may not represent actual transactions.
Fiscal Year Ended June 30, 1998 High Low
First Quarter 0.07 0.010
Second quarter 0.02 0.005
Third Quarter 0.09 0.015
Fourth Quarter 0.23 0.055
Fiscal Year Ended June 30, 1999 High Low
First Quarter 0.220 0.055
Second quarter 0.047 0.015
Third Quarter 0.031 0.015
Fourth Quarter 0.200 0.015
At September 30, 1999, the closing bid price of the Company's Common
Stock as reported by the National Quotation Bureau, Inc, was $0.0625
ITEM 6. PLAN OF OPERATION.
BUSINESS PLAN
The Company currently has two locations. The location in New York
is the location for some of the administrative operations and through June 30,
1999 was offered to the Company on a month to month basis at no cost from
Crossfield, Inc. Robert E. Wolfe is president of Crossfield, Inc. The location
in Santa Clarita, CA is the location for operations. The Company currently has
four areas of concentration: CD-ROM production/sales, event sales, database
management and marketing.
The Company began producing and selling educational CD-ROMS in
March of 1998. The content of the CD-ROMS is derived from conferences,
held by clients of the Company. AOXY produces a CD-ROM of the
conferences including the audio, video, graphics and/or verbatim transcripts
of the conference. AOXY sells CD's direct to the client and public, and/or
sells advertisement space on the CD's and produces the CD at no cost to the
conference organizer. All CD's are in HTML format and are directly linked
to the Internet sites of AOXY and the Client. The sales efforts are conducted
on the Internet and in the Santa Clarita CA location. In addition, the
Company began selling event registrations for conferences where AOXY is
producing CD-ROMS. The Company sells the events through fax
broadcasting, direct mail, and telemarketing from Santa Clarita CA.
In March 1998, AOXY began database management which includes
managing client databases, assisting clients in effective marketing with
databases, providing database information to clients, list rentals, and
utilizing
and structuring databases for fax broadcasting. Currently the Company has
the ability to fax broadcast or email broadcast to a large number of contacts.
The Company continues it efforts to raise capital to support operations
and growth, and is actively searching acquisition or merger with another
company that would compliment AOXY or increase its earnings potential.
CLIENT AND INDUSTRY REPRESENTATION
During this reporting period, 7 client contracts were concluded. There
were 4 active clients as of June 30, 1999. Because the company represents a
variety of clients in a variety of industries, the operation of each client
account
is unique. In addition to the CD Production Clients of AOXY, AOXY has 2
active contracts for Database Management. AOXY fulfils these contracts by
providing, selling, updating and/or renting database information.
Y2K (YEAR 2000 PROBLEM)
Y2K, or the Year 2000 Problem is a potential problem for computers
whereby the system would not recognize the date 2000 as year 2000 but
instead as 1900 due to the fact that the computer industry standard for dating
was a 2 digit system and not 4 digits. Each date represented was the last two
digits of the year, i.e.: 1998 was 98. This problem could render important
computer and communication systems inoperable which could have a
significant effect on the Company's operations. The Company's current
exposure to potential Y2K systems that could be affected include (but not
limited to): computers, telephones, all forms of electronic communications,
switches, routers, software, accounting software, banking, electricity, credit
card processors, electronic data exchange, security systems, fax broadcasting
software and hardware, database software, archives, data, records, and others.
In an effort to minimize the Company's exposure to the potential Y2K
problem, the Company has contacted each of our vendors to assess how Y2K
will affect our operations. Although some vendors make verbal assurances of
Y2K compliance, there can be no certainty that the systems that the Company
use will not be affected. AOXY continues to examine the risks associated
with its most reasonable worst case Year 2000 scenarios. Scenarios might
include a possible but presently unforeseen failure of key supplier or customer
business, processes, or systems. These situations could conceivably persist for
some months after the millennium transition and could lead to possible
revenue losses. The Company also may not have the applicable capital
resources to correct or replace certain systems to be compliant with Y2K.
The Company may be able to replace or correct the Y2K problem within the
organization, and still be affected by outside utilities and or vendors.
The Company may not directly experience any effect from the Y2K
problem, but the suppliers, vendors, clients or other associates of the
Company, may be affected and could cause the Company harm by loss of
clients, loss of contracts, inability to receive supplies, etc. The Y2K element
alone could significantly alter the Company's operations and profitability.
FORWARD LOOKING STATEMENTS
Certain statements contained in this report, including statements concerning
the Company's future and financing requirements, the Company's ability to
obtain market acceptance of its products and the competitive market for sales
of small production business? and other statements contained herein regarding
matters that are not historical facts, are forward looking statements; actual
results may differ materially from those set forth in the forward looking
statements, which statements involve risks and uncertainties, including
without limitation to those risks and uncertainties set forth in any of the
Company's Registration Statement's under the heading "Risk Factors" or any
other such heading. In addition, historical performance of the Company
should not be considered as an indicator for future performance, and as such,
the future performance of the Company may differ significantly from historical
performance.
ITEM 7. FINANCIAL STATEMENTS
ADVANCED OXYGEN TECHNOLOGIES, INC. FINANCIAL STATEMENTS;
<TABLE>
<S> <C> <C> <C>
Advanced Oxygen Technologies Inc.
Balance Sheet for the year ending
June 30, 1999
Assets
1999 1998
Current Assets
Cash (56,835)
54,057
Receivables 161,064
61,203
Allowance for Doubtful Accounts(1,295) 0
Database Management Receivables 0
15,315
A/R Reserve 0 (45,554)
Inventory 3,525
6,759
Total Current Assets $62,200
$136,039
Property and Equipment
Furniture and Fixtures 31,869
31,869
Office Equipment 17,882
17,882
Equipment 98,858
98,858
Capitalized Equipment 25,406
125,352
Other Depreciable Property 911,391
911,391
Accumulated Depreciation (187,887) (84,438)
Total Property and Equipment
$997,465 $1,000,968
Other Assets
Deposits 0
4,093
Total Other Assets $0
$4,093
Total Assets $1,137,59 7
$1,063,168
Liabilities and Capital
Current Liabilities
Accounts Payable 66,490
179,930
Accrued Expenses 0 41,305
Sales Tax Payable 1,649
2,577
Health Care Contributions 1,351
5,894
Due to Employees 0
6,375
Federal payroll Taxes Payable 27,161
46,546
State Payroll Taxes payable 1,641
5,436
SUTA Tax payable (140) (220)
IMA Short Term Note (1,800) 0
State Taxes Payable 800 800
Payable to Client 0 61,418
Deferred Commission Income 0 7,681
Total Current Liabilities
$245,617 $209,276
Long Term Liabilities
Note Payable Olsen 0 1,741
Capital Leases Obligation 23,637
123,583
NOTE Payable Crossfield 17,925
20,199
Note payable IMA 0 528,466
Other Long Term Liabilities 0
11,886
401k T Account 15,001
58,226
Total Long Term Liabilities 586,770
213,895
Total Liabilities
$459,512 $796,046
Capital
Beginning Balance Equity 16,700
16,700
Preferred Stock 50 50
Common Stock 296,403
296,403
Paid in Capital 20,398,63 1
20,398,631
Retained Earnings (20,444,6 62)(20,187,362)
Net Income (257,300)
410,963
Total Capital
$678,085 $267,122
Total Liabilities & Capital
1,137,597 1,063,168
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<S> <C> <C> <C>
Advanced Oxygen Technologies Inc.
Income Statement for the year ending
June 30, 1999
1999 1998
Revenues
Service Fees 0.00
1,395.00
Consulting
105,895.43 50,000.00
CA Registrations
346,234.17 9,799.01
CD Sales
142,617.46 150,726.70
Sponsor Sales
32,602.00 10,995.00
Client Contracts
12,190.19 58,434.05
Database Management 225.00
32,515.71
Commissions
69,099.00 31,254.00
Total Revenues
741,153.96 312,828.76
Cost of Sales
Cost of Product
10,681.24 12,709.00
Freight (5,387.90) 0.00
Other 0.00
2,113.78
Independent Contract commissions
42,864.77 105,647.00
Royalties 0.22
16,008.53
Show Fees 0.00
110,000.00
Amortization 0.00
75,949.00
Returns and Allowances 510.00 0.00
Total Cost of Sales
64,694.24 306,419.00
Gross Profit
676,459.72 6,409.76
Expenses
IC Reimbursable Expense 274.00 91.50
Advertising Expense (4,992.54)
2,382.59
Accounting/Professional Fee32,952.50 4,107.30
Auto Expense 248.10
1,049.52
Bad Debt Expense (45,554.00)
50,554.00
Bank Charges
17,024.48 2,487.35
Closing Costs
26,910.15 54,664.73
Commissions and Fees Expense
2,570.74 183,951.00
Consulting Expense 0.00
3,000.00
Credit Card Charges (1,076.05) 0.00
Depreciation Expense
103,449.18 8,488.92
Dues and Subscriptions (2,138.70)
1,756.19
Employee Benefits 48.50
3,001.23
Freight 282.08 726.00
Interest Expense
28,252.07 8,857.92
Cleaning Expense 977.99
2,024.13
Legal & Professional Expense(26,117.32)
57,930.12
Maintenance Expense 718.00 45.99
Management Expenses 0.00 433.92
Moving Expense 996.36 48.47
Meal & Entertainment Expense 973.43
1,557.27
Misc. Expense 0.00
16,875.00
Office Expense 951.64
2,905.93
Other Taxes 0.00 193.05
Payroll Tax Expense
16,949.81 4,017.82
Postage Expense
6,002.06 3,313.00
Printing and Reproduction
16,528.58 7,612.65
Professional Development 0.00 32.45
Professional Salaries Billable 40.00 0.00
Share/Transfer Agent expense
1,785.00 5,270.00
Professional 706.75 411.05
Salaries-Non Billable
Rent/Lease Expense
37,292.96 20,848.00
Computer & Equipment leases
40,962.23 12,236.85
Repairs Expense 550.00 0.00
Transcribing Expense
35,587.74 14,290.00
Salaries Expense
114,824.76 59,110.62
Employee Commission Expenses
9,372.00 1,491.02
Subcontract Fees
18,444.20 2,952.20
Temporary Employment 0.00 317.75
Supplies Expense
2,554.60 2,362.59
Computer Software Upgrades 726.36
3,651.61
Telephone Expense
53,505.99 18,193.64
Travel Expense
15,966.78 11,821.00
Utilities Expense
5,658.02 4,585.03
Wages Expense
72,231.74 9,989.90
Overtime Wage Expense 146.25 0.00
Other Expenses 464.54 360.00
State Tax Provision 0.00 800.00
Total Expenses
595,852.89 581,997.40
Extraordinary Income
Bad Receivables Income (201,629.62) 0.00
Commission Income 0.00
8,000.00
Interest Income 108.41 0.00
Other Income
5,914.26 17,187.50
12/97 Forgiveness off Debt 0.00
286,374.00
1/29/99 Forgiveness 0.00
of Debt 521,894.11
Shipping Charges Reimbursed
4069.35 6,726.00
Total Extraordinary Income
$830,357 $318,288
Net Income ($257,300)
$410,963
</TABLE>
STATEMENT OF CASH FLOW
<TABLE>
<S> <C> <C> <C>
Advanced Oxygen Technologies Inc.
Statement of Cash Flow
June 30, 1999
1999
CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME
410,963.32
Adjustments to reconcile
net income to Net
Cash by operating activities
Accum. Depreciation
103449.18
Accounts Receivable
99,860.77
Allowance for Doubtful accounts 1,295.00
Database Management Receivable(15,315.33)
A/R Reserve (45,554.00)
Inventory (3,234.03)
Accounts Payable
113,439.64
Accrued Expenses (41,305.00)
Sales Tax Payable 928.40
Health Care Contributions 4,543.12
Due to Employees 6,374.59
Federal Payroll Taxes Payable
19,384.72
State Payroll Taxes Payable 3,794.87
SUTA Tax Payable 79.75
IMA Short Term Note Payable (1,800.00)
Payable to Clients (61,418.00)
Deferred Commission Income (7,681.00)
Total Adjustments
176,842.68
Net Cash Provided By Operations
587,806.00
CASH FLOWS FROM INVESTING ACTIVITIES
Used For::
Capitalized Equipment (99,946.40)
Deposits (4,092.50)
Net Cash used in investing (104,038.90)
Cash Flows from Financing activities
Proceeds From:
Capital Leases Obligation
99,946.40
Notes Payable Jens Olsen 8,400.00
Note Payable Crossfield
23,273.75
Other Long Term Liabilities 1,259.45
401K T account
58,226.45
Preferred Stock
10,000.00
Used For:
Notes Payable Olsen (10,140.50)
Notes Payable Crossfield (21,000.00)
Note Payable IMA (528,466.48)
Other Long Term Liabilities (4,374.50)
Preferred Stock (10,000.00)
Net Cash used in Financing (372,875.43)
Net Increase (decrease) in cash
110,891.67
Summary:
Cash Balance at End of Period
54,057.09
Cash Balance at Beginning 6,098.94
of Period
Net Increase (decrease) in cash
60,156.03
</TABLE>
STATEMENT OF SHAREHOLDER?S EQUITY
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C><C>
Advanced Oxygen Technologies Inc.
Statement of Shareholder's Equity
For the Year ended June 30, 1999
BalancePurchase of Balance
IMA Note
June And Preferred SharesNet IncomeJune 30, 1999
30, 1998
Shares 5,000 5,000
Preferred StockSeries 2
Amount $50 $50
Shares (1,670,000) 0
Series 3 1,670,000
Amount $16,700 $16,700
Shares 2 2
Series 4
Amount $0 $0
Shares 1 1
Series 5
Amount $0 $0
Treasury StockPreferredShares 0 1,670,000
1,670,000
Amount $0 $0
Common Stock Shares
29,640,252 29,640,252
Amount $296,403
$296,403
Paid InCapital
Additional $20,398,631 $20,398,631
Deficit ($20,187,362) ($19,276,399)
Accumulated 410,963
(257,300) $678,085
Total
</TABLE>
ITEM 8. Changes in and Disagreements with Accounts on Accounting and
Financial Disclosure
The Company has no disagreements with accountants on accounting and
financial disclosure. During this time AOXY has engaged Singer, Lewak
Greenbaum & Goldstein, LLP, 10960 Wilshire Blvd, Los Angeles, CA 90024
and Bernstein Pinchuk & Kaminsky, LLP, Seven Penn Plaza, New York, NY,
10001
PART III
ITEM 9.Directors and Officers of the Registrant
Set forth below is information regarding the Company's directors and
executive officers, including information furnished by them as to their
principal occupations for the last five years, other directorships held by them
and their ages as of June 30, 1999. All directors are elected for one-year
terms, which expire as of the date of the Company's annual meeting.
Name Age Positions Director Since
Robert E. Wolfe 36 Chairman of the
Board and 1997
Chief Executive Officer
Joseph N. Noll 76 Director 1997
Robert Wolfe has been the Chairman and CEO for AOXY, Inc. since 1997.
Concurrently he has been the President and CEO of Crossfield, Inc. and
Crossfield Investments, llc , both corporate consulting companies. From
1992-1993 he was Vice President and partner for CFI, NY Ltd. A Subsidiary
of Corporate Financial Investments, PLC, London.
Joseph N. Noll has been a director of the Company since 1997.Mr. Noll was
president and CEO of Franco Machine Corp (a manufacturer of machine
tools) for 25 years. Mr. Noll was the Secretary of the State of Wisconsin
department of Labor, Industry and Human Relations, from 1983 to 1985. Mr.
Noll was also President and CEO of Columbia Car Company, a manufacturer
of golf carts.
ITEM 10. Executive Compensation
Robert Wolfe, Chairman and CEO has waived his $250,000 annual for the
year ending June 30, 1999. No officer or director received any compensation
from the Company during the last fiscal year. The Company paid no bonuses
in the last three fiscal years ended June 30, 1999 to officers or other
employees. Prior to the Stock Acquisition of December 12, 1998, the
Company's Chief executive officer and Chairman of the Board was Harry
Edelson. Mr. Edelson received no compensation during the fiscal year ending
June 30, 1999.
The following table sets forth the total compensation paid or accrued to its
Chief Executive Officer, Robert E. Wolfe and former Chief Executive officer
Harry Edelson during the fiscal year ending June 30, 1999. There were no
other corporate officers in any of the last three fiscal years.
Executive Compensation
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Name Yr Salary Bonus Other RestrictedAwardsLTIPAll Other
Compen- Pay Security
sation outs
Harry ?99 0 0 0 0 0 0 0
Edelson
Robert ?99 0 0 0 0 0 0 0
Wolfe
</TABLE>
OPTION GRANTS DURING 1999; VALUE OF OPTIONS AT YEAR-END
The following tables set forth certain information covering the grant of
options to the Company's Chief Executive Officer, Mr. Robert E. Wolfe and
the former Chief Executive Officer, Mr. Harry Edelson during the fiscal year
ended June 30, 1999 and unexercised options held as of that date. Neither
Mr. Wolfe or Mr. Edelson exercised any options during fiscal 1998.
<TABLE>
<S> <C> <C> <C> <C>
Name # Securities % of Total Exercise PriceExpiration Date
underlying Options to
Option Employer
Harry Edelson0 0 n/a n/a
Robert Wolfe 0 0 n/a n/a
</TABLE>
Compensation Committee Report
The Compensation Committee of the Board of Directors was responsible for
reviewing and approving the Company's compensation policies and the
compensation paid to executive officers. Mr. Wolfe and Mr. Noll, who
comprise the Compensation Committee are employee and non-employee
directors respectively.
Compensation Philosophy
The general philosophy of the Company's compensation program, which has
been reviewed and endorsed by the Committee, was to provide overall
competitive compensation based on each executive's individual performance
and the Company's overall performance.
There are two basic components in the Company's executive compensation
program: (i) base salary and (ii) stock option awards.
Base Salary
Executive Officers' salaries are targeted at the median range for rates paid by
competitors in comparably sized companies. The Company recognizes the
need to attract and retain highly skilled and motivated executives through a
competitive base salary program, while at the same time considering the
overall performance of the Company and returns to stockholders.
Stock Option Awards
With respect to executive officers, stock options are generally granted on an
annual basis, usually at the commencement of the new fiscal year. Generally,
stock options vest ratably over a four-year period and the executive must be
employed by the Company in order to vest the options. The Compensation
Committee believes that the stock option grants provide an incentive that
focuses the executives' attention on managing the Company from the
perspective of an owner with an equity stake in the business. The option
grants are issued at no less than 85% of the market price of the stock at the
date of grant, hence there is incentive on the executive's part to enhance the
value of the stock through the overall performance of the Company.
Compensation Pursuant to Plans
The Company has three plans (the "Plans") under which its directors,
executive officers and employees may receive compensation. The principal
features of the 1981 Long-Term Incentive Plan (the "1981 Plan"), the 1988
Stock Option Plan (the "1988 Plan"), and the Non-Employee Director Plan
(the "Director Plan") are described below. During the fiscal year ended June
30, 1994, the Company terminated its tax qualified cash or deferred
profit-sharing plan (the "401(k) Plan"). During fiscal 1998, no executive
officer received compensation pursuant to any of the Plans except as
described below.
The 1981 and 1988 Plans
The purpose of the 1981 Plan and 1988 Plan (the "Option Plans") is to
provide an incentive to eligible directors, consultants and employees whose
present and potential contributions to the Company are or will be important
to the success of the Company by affording them an opportunity to acquire
a proprietary interest in the Company and to enable the Company to enlist and
retain in its employ the best available talent for the successful conduct of its
business.
The 1981 Plan
The 1981 Plan was adopted by the Board of Directors in May 1981 and
approved by the Company's stockholders in March 1982. A total of 500,000
shares have been authorized for issuance under the 1981 Plan. With the
adoption of the 1988 Plan, no additional awards may be made under the 1981
Plan. As a result, the shares remaining under the 1981 Plan are now available
solely under the 1988 Plan. Prior to its termination, the 1981 Plan provided
for the grant of the following five types of awards to employees (including
officers and directors) of the Company and any subsidiaries: (a) incentive
stock rights, (b) incentive stock options, (c) non-statutory stock options, (d)
stock appreciation rights, and (e) restricted stock. The 1981 Plan is
administered by the Compensation Committee of the Board of Directors.
The 1988 Plan
The 1988 Plan provides for the grant of options to purchase Common Stock
to employees (including officers) and consultants of the Company and any
parent or subsidiary corporation. The aggregate number of shares which
remained available for issuance under the 1981 plan as of the effective date of
the 1988 Plan plus an additional 500,000 shares of Common Stock.
Options granted under the 1988 Plan may either be immediately exercisable
for the full number of shares purchasable thereunder or may become
exercisable in cumulative increments over a period of months or years as
determined by the Compensation Committee. The exercise price of options
granted under the 1988 Plan may not be less than 85% of the fair market value
of the Common Stock on the date of the grant and the maximum period
during which any option may be paid in cash, in shares if the Company's
Common Stock or through a broker-dealer same-day sale program involving
a cash-less exercise of the option. One or more optionees may also be allowed
to finance their option exercises through Company loans, subject to the
approval of the Compensation Committee.
Issuable Shares
As of September 20, 1995, approximately 374,000 shares of Common Stock
had been issued upon the exercise of options granted under the Option Plans,
no shares of Common Stock were subject to outstanding options under the
Options Plans and 626,000 shares of Common Stock were available for
issuance under future option grants. From July 1, 1991 to September 20,
1995, options were granted at exercise prices ranging from $1.22 to $8.15 per
share. The exercise price of each option was equal to 85% of the closing bid
price of Company's Common Stock as reported on the NASDAQ Over the
Counter Bulletin Board Exchange. Due to employee terminations, all options
became void in August 1995. As of September 30, 1999 1,000,000 shares of
Common Stock were available for issuance under future option grants.
Board of Directors Compensation
As of June 30, 1999 the directors did not receive any compensation for
serving as members of the Board.
In addition to any cash compensation, non-employee directors also are eligible
to participate in the Non-Employee Director Stock Option Plan and to receive
automatic option grants thereunder. The Director Plan provides for periodic
automatic option grants to non-employee members of the Board. An
individual who is first elected or appointed as a non-employee Board member
receives an annual automatic grant of 25,000 shares plus the first annual grant
of 5,000 shares, and will be eligible for subsequent 5,000 share grants at the
second Annual Meeting following the date of his initial election or
appointment as a non-employee Board member.
During the fiscal year ended June 30, 1999, no options were granted to
non-employee Board members.
ITEM 11. Security Ownership of Certain Beneficial Owners and
Management
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of June 30, 1999, by ( i ) all
those known by the Company to be beneficial owners of more than 5% of its
Common Stock; ( ii ) all directors; and ( iii )
all officers and directors of the Company as a group.
Beneficial Ownership
Name and Address of Shares Fully Diluted Percent
Beneficial Owner
Crossland, Ltd. (Belize) 6,312,500 21.30%
60 Market Square
PO Box 364
Belize City, Belize, Central America
Eastern Star, Ltd. 5,937,500 20.03%
104B Saffrey Square
Bank Lane and Bay Street
Box N-1612
Nassau, Bahamas
Coastal Oil, Ltd. 5,937,500 20.03%
40 Santa Rita Road
Corazal, Belize, Central America
Crossland, Ltd. 5,937,500 20.03%
104B Saffrey Square
Nassau, Bahamas
Robert E. Wolfe 50,000 0.17%
Joseph Noll 0 0.00%
Note:
AOXY Purchase 1,670,000 Preferred Shares of Advanced Oxygen
Technologies, Inc from IMA (see Purchase Agreement, 1/29/99) and includes
shares of convertible, preferred stock, par value $.01, having the aggregate
value of $1,440,000.00 w/fixed annual dividends of $0.001 per share payable
on January 1 of each year; with an automatic conversion on 3/2/2000 of each
share of preferred stock into either a) 1 share of common stock, par value
$.01 per share if the average closing price of the common stock during the
10 trading days immediately prior to March 1, 2000 is equal to or greater than
$0.66 per share or (b) 1 ? shares of common stock if the average closing
price of the common stock during the 10 trading days immediately prior to
March 1, 2000 is less than $0.66 per share. If on the conversion date the
aggregate value of the common stock into which the preferred shares are
converted is less than $500,000, then the Company could be caused to redeem
the converted shares for the aggregate sum of $500,000 upon receiving notice
of intention to redeem the converted shares within 10 business day. This
stock is now treasury stock.
ITEM 12. Certain Relationships and Related Transactions
The Company's transactions with its officers, directors and affiliates have been
and such future transactions will be, on terms no less favorable to the
company than could have been realized by the Company in arms-length
transactions with non-affiliated persons and will be approved by a majority of
the independent disinterested directors.
ITEM 13. Exhibits and Reports on Forms 8-K
Exhibits
Material Contracts
1981 Long-Term Incentive Plan, as amended in September 1988,
incorporated herein by reference to Appendix A to the Registrant's 1986
definitive Proxy Statement.
a) 1988 Stock Option Plan, incorporated by reference to the Registrant's
1988 definitive Proxy Statement filed pursuant to Regulation 14A
b) Non-Employee Director Stock Option Plan incorporated by reference
to the Registrant's report on Form 10-K for the fiscal year ended June 30,
1993
c) Patent Purchase Agreement between Advanced Oxygen Technologic
Inc., and Grace-Conn, dated February 10, 1995 incorporated by reference to
the Registrant's 1995 definitive Proxy Statement filed pursuant to Regulation
14A.
d) Contingent Plan of Liquidation dated February 10, 1995, incorporated
by reference to the Registrant's 1995 definitive Proxy Statement filed pursuant
to Regulation 14 A
e) Stock Acquisition Agreement dated December 18, 1997 incorporated
by reference to the Registrant's report on form 8-K as Exhibit A
f) Purchase Agreement of December 18, 1997 incorporated by reference
to the Registrant's report on form 8-K as Exhibit B
g) Waiver Agreement incorporated by reference to the Registrant's report
on form 8-K as Exhibit C
h) Trust Agreement incorporated by reference to the Registrant's report
on form 8-K dated, December 18, 1997 as Exhibit D
i) Assignment and Assumption Agreement incorporated by reference to
the Registrant's report on form 8-K dated, December 18, 1997 as Exhibit D
j) Agreement For Purchase & Sale Of Specified Business Assets
incorporated by reference to the Registrant's report on form 8-K dated March
09, 1998 as Exhibit 1
k) Covenant of Non-Competition incorporated by reference to the
Registrant's report on form 8-K dated March 09, 1998 as Exhibit B
l) Promissory Note of March 09, 1998 incorporated by reference to the
Registrant's report on form 8-K dated March 09, 1998 as Exhibit C
m) Security Agreement of March 09, 1998 incorporated by reference to
the Registrant's report on form 8-K dated March 09, 1998 as Exhibit D
n) Employment Agreement, John Teuber, incorporated by reference to the
Registrant's report on form 8-K dated March 09, 1998 as Exhibit F
o) Employment Agreement, Nancy Gaylord, dated March 13, 1998
attached hereto as Exhibit 1
p) America United Lease, dated September 23, 1998 incorporated by
reference to the Registrant?s report form 10-QSB dated November 16, 1998
q) NEC Lease, date November 10, 1998, incorporated by reference to the
Registrant?s report form 10-QSB dated January 28, 1999 as Exhibit I.
r) Purchase Agreement of 1/29/99, dated January 29, 1999, incorporated
by reference to the Registrant?s report form 8-K dated February 17, 1999 as
Exhibit I
REPORTS ON FORM 8-K
A report on Form 8-K was filed on January 16, 1998 and reported under
Item 1 that all directors and officers of AOXY resigned on December 18,
1997 and Robert E. Wolfe and Joseph N. Noll were elected as directors and
Mr. Wolfe was appointed president in association with the transaction of
December 18, 1997 of the Stock Acquisition Agreement, the Purchase
Agreement, the Waiver Agreement and the Trust Agreement (all exhibited
thereto). Under Item 2 that certain royalty rights and liabilities related to
technology AOXY sold to a third party was transferred to a trust for the
benefit of the AOXY shareholders of record of date. Further reported under
Item 7 was the sale of 23,750,000 shares of AOXY common stock as of
December 18, 1997 that were not registered under the Securities Act of 1933,
as amended, in reliance on the exemption from registration provided by Rule
903 ( c ) (2) of Regulation S. for consideration of $60,000 cash and $177,500
in consulting services.
A report on Form 8-K was filed on February 17, 1999 and reported under
Item 2 the Purchase of Specified Assets from Integrated Marketing Agency,
Inc. The assets purchased consisted of 1,670,000 shares of convertible
preferred stock of Advanced Oxygen Technologies, Inc. ("STOCK") and a
$550,000 promissory note issued by Advanced Oxygen Technologies, Inc
("Note") from Integrated Marketing Agency, Inc.("IMA"). The terms of the
Purchase Agreement were: AOXY payed $15,000 to IMA, assumed a
Citicorp Computer Equipment Lease, #010-0031648-001 from IMA,
delivered to IMA certain tangible business property (as listed in Exhibit A of
the Purchase Agreement), executed a one year $5,000 promissory note with
IMA, and delivered to IMA a Request For Dismissal of case #PS003684
(restraining order) filed in Los Angeles county superior court. IMA sold,
transferred, and delivered to AOXY the Stock and the Note. IMA sold,
transferred, assigned and delivered the Note and the Stock to AOXY,
executed documents with Citicorp Leasing, Inc. to effectuate an express
assumption by AOXY of the obligation under lease #010-0031648-001 in the
amount of $44,811.26, executed a UCC2 filing releasing UCC-1 filing
#9807560696 filed by IMA on March 13, 1998, and delivered such
documents as required. In addition, both IMA and AOXY provided mutual
liability releases for the other.
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.
(Registrant): ADVANCED OXYGEN TECHNOLOGIES,
INC.
Date: October 13, 1999 By (Signature and Title):
/s/ Robert E. Wolfe /s/
-----------------
Robert E. Wolfe
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Date: October 13, 1999 By (Signature and title):
/s/Joseph Noll /s/
-------------------------
Joseph N. Noll
Director
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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