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 . . . . . . . . . . . . . . . . . . . . 4
ITEM 1- DESCRIPTION OF BUSINESS . . . . . 4
The Patent Sale. . . . . . . . . . . . . . . . 4
Stock Acquisition Agreement, 12/18/97. . . . . 4
Purchase Agreement, 12/18/97 . . . . . . . . . 4
Waiver Agreement, 12/18/97 . . . . . . . . . . 5
Change of Directors. . . . . . . . . . . . . . 5
Trust Agreement, 12/18/97. . . . . . . . . . . 5
Acquisition or Disposition of Assets, March 09,1998.6
Teuber Employment Agreement Termination. . . . 6
Set Off of Promissory Note, 9/4/98 . . . . . . 6
Gaylord Employment Agreement Termination . . . 6
California Facilities, 9/30/98 . . . . . . . . 6
Demand for Indemnification, 12/9/98. . . . . . 6
Purchase Agreement of 1/29/99. . . . . . . . . 7
Employees. . . . . . . . . . . . . . . . . . . 7
ITEM 2. DESCRIPTION OF PROPERTY . . . . . . 7
ITEM 3. LEGAL PROCEEDINGS . . . . . . . . 7
Pending Matters. . . . . . . . . . . . . . . . 7
Settled Matters: . . . . . . . . . . . . . . . 8
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS . . . . . . . . . . . . . . . 8
PART II. . . . . . . . . . . . . . . . . . . . 8
ITEM 5. MARKET OF REGISTRANT'S COMMON
EQUITYAND RELATED STOCKHOLDER MATTERS . . 8
ITEM 6. PLAN OF OPERATION. . . . . . . . 9
Business Plan. . . . . . . . . . . . . . . . . 9
Client and Industry Representation . . . . . . 9
Y2K (Year 2000 Problem). . . . . . . . . . . .10
Forward Looking Statements . . . . . . . . . .10
ITEM 7. FINANCIAL STATEMENTS. . . . . . . . .11
Advanced Oxygen Technologies, Inc. Financial Statements;11
Statement of Operations. . . . . . . . . . . .12
Statement of Cash Flow . . . . . . . . . . . .14
Statement of Shareholder's Equity. . . . . . .15
PART III . . . . . . . . . . . . . . . . . . .16
ITEM 9.Directors and Officers of the Registrant 16
ITEM 10. Executive Compensation . . . . . . .16
ITEM 11. Security Ownership of Certain Beneficial Owners and
Management . . . . . . . . . . . . . . . . . .19
ITEM 12. Certain Relationships and Related Transactions20
ITEM 13. Exhibits and Reports on Forms 8-K. .21
SIGNATURES . . . . . . . . . . . . . . . . . .22
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%.
<TABLE>
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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%
</TABLE>
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:
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 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.
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:
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 judgement on July 06, 1998 from a case filed May 29,1998,
to be amended to the Company. The Motion was denied and the
judgement 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 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.
<TABLE>
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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
</TABLE>
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>
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Advanced Oxygen Technologies Inc.
Balance Sheet for the year ending
June 30, 1999
Assets
1999 1998
Current Assets
Cash 54,057 (56,835)
Receivables 61,203 161,064
Allowance for Doubtful Accounts (1,295) 0
Database Management Receivables 15,315 0
A/R Reserve 0 (45,554)
Inventory 6,759 3,525
Total Current Assets $136,039 $62,200
Property and Equipment
Furniture and Fixtures 31,869 31,869
Office Equipment 17,882 17,882
Equipment 98,858 98,858
Capitalized Equipment 125,352 25,406
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 4,093 0
Total Other Assets $4,093 $0
Total Assets $1,137,597 $1,063,168
Liabilities and Capital
Current Liabilities
Accounts Payable 179,930 66,490
Accrued Expenses 0 41,305
Sales Tax Payable 2,577 1,649
Health Care Contributions 5,894 1,351
Due to Employees 6,375 0
Federal payroll Taxes Payable 46,546 27,161
State Payroll Taxes payable 5,436 1,641
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 $245,276 $209,276
Long Term Liabilities
Note Payable Olsen 0 1,741
Capital Leases Obligation 123,583 23,637
NOTE Payable Crossfield 20,199 17,925
Note payable IMA 0 528,466
Other Long Term Liabilities 11,886 0
401k T Account 58,226 15,001
Total Long Term Liabilities 213,895 586,770
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 20,398,631 20,398,631 19,898,631
Retained Earnings (20,444,662)(20,187,362)
Net Income 410,963 (257,300)
Total Capital $678,085 $267,122
Total Liabilities & Capital 1,137,597 1,063,168
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
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Advanced Oxygen Technologies Inc.
Income Statement for the year ending
June 30, 1999
1999 1998
Revenues
Service Fees 0 1,395
Consulting 105,895 50,000
CA Registrations 346,234 9,799
CD Sales 142,617 150,727
Sponsor Sales 32,602 10,995
Client Contracts 12,190 58,434
Database Management 32,516 225
Commissions 69,099 31,254
Total Revenues 741,154 312,829
Cost of Sales
Cost of Product 10,681 12,709
Freight (5,388) 0
Other 0 2,114
Independent Contract commissions 42,882 105,647
Royalties 16,009 0
Show Fees 0 110,000
Amortization 0 75,949
Returns and Allowances 510 0
Total Cost of Sales 64,694 306,419
Gross Profit 676,460 6,410
Expenses
IC Reimbursable Expense 274 92
Advertising Expense (4,993) 2,383
Accounting/Professional Fee 32,953 4,107
Auto Expense 248 1,050
Bad Debt Expense (45,554) 50,554
Bank Charges 17,024 2,487
Closing Costs 26,910 54,665
Commissions and Fees Expense 2,571 183,951
Consulting Expense 0 3,000
Credit Card Charges (1,076) 0
Depreciation Expense 103,449 8,489
Dues and Subscriptions 1,756 (2,139)
Employee Benefits 3,001 49
Freight 282 726
Interest Expense 28,252 8,858
Cleaning Expense 978 2,024
Legal & Professional Expense (26,117) 57,930
Maintenance Expense 718 46
Management Expenses 0 434
Moving Expense 996 48
Meal & Entertainment Expense 973 1,557
Misc. Expense 0 16,875
Office Expense 2,906 952
Other Taxes 0 193
Payroll Tax Expense 16,950 4,018
Postage Expense 6,002 3,313
Printing and Reproduction 16,529 7,613
Professional Development 0 32
Professional Salaries Billable 40 0
Share/Transfer Agent expense 1,785 5,270
Professional Salaries-Non Billable 707 411
Rent/Lease Expense 37,293 20,848
Computer & Equipment leases 40,962 12,237
Repairs Expense 550 0
Transcribing Expense 35,588 14,290
Salaries Expense 114,825 59,111
Employee Commission Expenses 9,372 1,491
Subcontract Fees 18,444 2,952
Temporary Employment 0 318
Supplies Expense 2,555 2,363
Computer Software Upgrades 726 3,652
Telephone Expense 53,506 18,194
Travel Expense 15,967 11,821
Utilities Expense 5,658 4,585
Wages Expense 72,232 9,990
Overtime Wage Expense 146 0
Other Expenses 465 360
State Tax Provision 0 800
Total Expenses 595,853 581,997
Extraordinary Income
Bad Receivables Income (201,630) 0
Commission Income 0 8,000
Interest Income 108 0
Other Income 5,914 17,188
12/97 Forgiveness off Debt 0 286,374
1/29/99 Forgiveness of Debt 521,894 0
Shipping Charges Reimbursed 4,069 6,726
Total Extraordinary Income $830,357 $318,288
NET INCOME $410,963 ($257,300)
</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
Adjustments to reconcile net income to Net
Cash by operating activities
Accum. Depreciation 103,449
Accounts Receivable 99,861
Allowance for Doubtful accounts 1,295
Database Management Receivable (15,315)
A/R Reserve (45,554)
Inventory (3,234)
Accounts Payable 113,440
Accrued Expenses (41,305)
Sales Tax Payable 928
Health Care Contributions 4,543
Due to Employees 6,375
Federal Payroll Taxes Payable 19,385
State Payroll Taxes Payable 3,795
SUTA Tax Payable 80
IMA Short Term Note Payable (1,800)
Payable to Clients (61,418)
Deferred Commission Income (7,681)
Total Adjustments 176,843
Net Cash Provided By Operations 1,087,806
CASH FLOWS FROM INVESTING ACTIVITIES
Used For::
Capitalized Equipment (99,946)
Deposits (4,093)
Net Cash used in investing (104,039)
Cash Flows from Financing activities
Proceeds From:
Capital Leases Obligation 99,946
Notes Payable Jens Olsen 8,400
Note Payable Crossfield 23,274
Other Long Term Liabilities 1,259
401K T account 58,226
Preferred Stock 10,000
Used For:
Notes Payable Olsen (10,141)
Notes Payable Crossfield (21,000)
Note Payable IMA (528,466)
Other Long Term Liabilities (4,375)
Preferred Stock (10,000)
Net Cash used in Financing (872,875)
Net Increase (decrease) in cash 110,892
Summary:
Cash Balance at End of Period 54,057
Cash Balance at Beginning of Period 6,099
Net Increase (decrease) in cash 60,156
</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
Jan 29, 1999
Balance Purchase of Note Net Balance
6/30/1998 & Preferred Shares Income 6/30/1999
============================================================================
Series2 Shares 5,000 5,000
Amount $50 $50
- -----------------------------------------------------------------------------
Series3 Shares 1,670,000 (1,670,000) 0
Amount $16,700 $16,700
- -----------------------------------------------------------------------------
Series4 Shares 2 2
Amount $0 $0
- -----------------------------------------------------------------------------
Series5 Shares 1 1
Amount $0 $0
- -----------------------------------------------------------------------------
Preferred Shares 0 1,670,000 1,670,000
Treasury Stock Amount $0 $0
- -----------------------------------------------------------------------------
Common Stock Shares 29,640,252 29,640,252
Amount $296,403 $296,403
- -----------------------------------------------------------------------------
Addtnl Paid in Capital $20,398,631 ($500,000) $20,398,631
- -----------------------------------------------------------------------------
Accumulated Deficit ($20,187,362) 410,963 ($19,276,399)
=============================================================================
TOTAL (257,300) $678,085
</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 Director Since Age Positions
Robert E. Wolfe 1997 36 Chairman of the Board Chief Executive Officer
Joseph N. Noll 1997 76 Director
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>
Other LTIP
Compen- Restricted Pay All
Name Yr Salary Bonus sation Awards outs Security Other
===============================================================================
Harry Edelson 99 0 0 0 0 0 0 0
Robert Wolfe 99 0 0 0 0 0 0 0
</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 Expiration Date
underlying Options to Price
Option Employer
============================================================================
Harry Edelson 0 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
<TABLE>
<S> <C> <C>
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%
</TABLE>
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
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
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> JUN-30-1999
<CASH> 54,057
<SECURITIES> 0
<RECEIVABLES> 76,518
<ALLOWANCES> (1,295)
<INVENTORY> 6,759
<CURRENT-ASSETS> 136,039
<PP&E> 1,185,352
<DEPRECIATION> (187,887)
<TOTAL-ASSETS> 1,137,597
<CURRENT-LIABILITIES> 245,617
<BONDS> 213,895
0
50
<COMMON> 296,403
<OTHER-SE> 16,700
<TOTAL-LIABILITY-AND-EQUITY> 1,137,597
<SALES> 741,154
<TOTAL-REVENUES> 741,154
<CGS> 64,694
<TOTAL-COSTS> 64,694
<OTHER-EXPENSES> 567,601
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 28,252
<INCOME-PRETAX> 80,606
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 330,357
<CHANGES> 0
<NET-INCOME> 410,963
<EPS-BASIC> 0.014
<EPS-DILUTED> 0.014
</TABLE>
