U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(x)QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended September
30, 2000
( )TRANSITION REPORT PURSUANT TO SECTION 13
OR 15 (d) OF THE
SECURITIES EXCHANGE ACT COMMISSION OF 1934
for the Transition period September 30, 2000
Commission file number 0-9951
ADVANCED OXYGEN TECHNOLOGIES, INC.
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(Exact name of small business issuer as
specified in its charter)
Delaware91-1143622
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(State of Incorporation)(IRS Employer
Identification No.)
26883 Ruether Avenue, Santa Clarita, CA 91351
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(Address of principal executive offices)
(661)-298-3333
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(Issuer's telephone number)
Check whether the issuer (1) has filed all
reports required to be filled by Section 13
or 15(d) of the Exchange Act during the
past 12 months (or for such shorter period
that the Registrant was required to file
such reports), and (2) has been subject to
such filing requirements for the past 90
days. Yes (X) No
The number of shares of common stock
outstanding as of September 30, 2000 was
29,640,252.
Transitional Small Business Disclosure
Format (check one):Yes( ) No( X )
ADVANCED OXYGEN TECHNOLOGIES, INC.
INDEX
PART 1: FINANCIAL INFORMATION. . . . . . . .3
Item I: Financial Statements . . . . .3
Balance Sheet . . . . . . . . . .3
Income Statement . . . . . . . .4
Statement of Cash Flow . . . . .5
Statement of Changes . . . . . .6
Item 2: Management's Discussion and
Analysis of Financial Condition
and Results of Operations. . . . . . . . . . . . . .6
PART II. . . . . . . . . . . . . . . . . . .8
Item 1: Legal Proceedings . . . . . . .8
SIGNATURE . . . . . . . . . . . . . . .8
PART 1: FINANCIAL
INFORMATION
Item I: Financial Statements for the three
months ending September 30, 2000. (Un-audited)
Balance Sheet, September 30, 2000
Current Assets
Cash ...................... 43.96
Accounts Receivable ....... 31,097.69
Inventory ................. 13,122.15
==============
Total Current Assets ...... 44,263.80
Property and Equipment
Furniture and Fixtures .... 31,869.00
Office Equipment .......... 17,882.00
Equipment ................. 98,858.00
Capitalized Equipment ..... 25,406.00
Other Depreciable Property 911,391.00
Accum. Depreciation ....... (853,875.93)
==============
Total Property & Equipment 231,530.07
Other Assets
Deposits .................. 4,092.50
==============
Total Other Assets ........ 4,092.50
==============
Total Assets .............. 279,886.37
Liabilities and Capital
Current Liabilities
Accounts Payable .......... 200,243.35
Sales Tax Payable ......... 2,669.94
Health Care Contributions . 5,894.06
Due to Employees .......... 6,374.59
Federal Payroll Taxes ..... 27,636.85
State payroll Taxes ....... 6,037.90
SUTA Tax .................. (119.86)
State Tax Payable ......... 3,960.00
==============
Total Current Liabilities . 246,802.77
Long Term Liabilities
Note Payable, Crossfield .. 202,524.38
Other Long Term Liabilities 11,886.00
==============
Total Long Term Liabilities 214,410.38
Total Liabilities ......... 461,213.15
Capital
Beginning Balance Equity .. 16,700.00
Preferred Stock ........... 50.00
Common Stock .............. 296,403.00
Paid-In Capital ........... 20,398,631.00
Retained Earnings ......... (20,798,431.51)
Treasury Stock .......... (7,284.00)
Net Income ................ (87,395.27)
Total Capital ........ (181,326.78)
==============
Total Liabilities & Capital 79,886.37
Income Statement, Three Months Ending
September 30, 2000
Revenues
Database Management . 27,282.73
=========
Total Revenues ...... 27,282.73
Cost of Sales ....... 0.00
=========
Gross Profit ........ 27,282.73
Expenses
Auto Expenses ....... 1,788.51
Depreciation Expense 93,932.01
Hotel Expenses....... 1,202.56
Meals & Entertainment 1,717.24
Payroll Tax Expenses 4,321.89
Postage ............. 233.74
Rent ................ 12,825.00
Office Expense....... 860.03
Telephone ........... 1,384.86
Travel .............. 309.95
Software ........... 133.55
Other ............... 290.55
==========
Total Expenses ...... 114,678.00
Net Income .......... (87,395.27)
Statement of Cash Flow
For the Three Months Ended September 30, 2000
Cash Flows from Operations
Net Income ................ (87,395.27)
Adjustments to reconcile income to net cash
Accum. Depreciation .........93,932.01
Accounts Receivable ...........
(26,377.16)
Accounts Payable .............. 290.55
=========
Total Adjustments ............ 67,845.40
Net Cash Provided by Operations
(19,549.87)
Cash Flows from Financing
Proceeds from:
Note Payable Crossfield ....... 20,455.44
Used For:
Note Payable Crossfield, Inc. .(905.57)
Net Cash used in financing .....19,549.87
=========
Net increase (decrease) in cash. 0.00
Cash Balance at End of period ..43.96
Beginning Cash Balance ..... 43.96
Net Increase (decrease) ....... 0.00
in Cash
Statement of Changes in Financial Position
For the three months ended September 30, 2000
Sources of Working Capital
Net Income ............... ( 87,395.27)
Add Backs not requiring working capital
Accum. Depreciation ........... 93,932.01
Working Capital from Operations . 6,536.74
Other Sources:
Note Payable Crossfield ....... 20,455.44
Total Sources .............. 26,992.18
Use of Working Capital
Note Payable Crossfield ..... (905.57)
=========
Net Changes ................. 26,086.61
Analysis of components
Increase (decrease) in Current Assets
Receivables ............... . 26,377.16
(Increase) decrease in Current Liabilities
Accounts Payable .............. (290.55)
Net Change .................. 26,086.61
ITEM 2: MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
On March 9, 1998, pursuant to an Agreement
for Purchase and Sale of Specified Business
Assets ("Purchase Agreement"), a Promissory
Note ("Note"),and a Security Agreement
("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").
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.
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.
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. 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 sf.
of premises on November 06,1998 in Santa
Clarita for its CA location. Currently,
this is the only California location of the
Company.
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 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.
The location in Santa Clarita, CA is the
location for operations. Currently these
facilities are only being used for
administrative purposes and the Company's
sales staff has been eliminated. Current
sales are out-sourced through Walter Karl
Inc. and Dunn & Bradstreet (see below). The
Company derives its revenues mainly from
database management.
Database management 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.
The Company has a database management
contract with Dunn and Bradstreet, and
Walter Karl, Inc., a division of InfoUSA,
Inc. whereby, Walter Karl, Inc. will broker
the company's database . These contracts
are currently the majority of the revenue
for the Company in California.
The Company also sells educational CD-ROMS.
The content of the CD-ROMS is derived from
conferences, held by clients of the
Company. All CD's are in HTML format and
are directly linked to the Internet sites
of AOXY and the Client.
Acquisition Efforts:
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. The Company has been in
discussion with Companies looking to be
acquired. AOXY has not negotiated any terms
nor proposed any acquisition of any of
these companies. In addition, the Company
is in discussion with potential lending
institutions to assist in financing any
proposed acquisition. The Company expects
difficulty in financing the growth of the
increased business or acquisition and has
been concentrating on raising capital
and/or obtaining a line of credit.
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.
PART II
Item 1: Legal Proceedings
There were no legal proceedings brought
against the Company during this period.
Item 6. Exhibits and Reports on Form 8-K
No Reports on Form 8-K were filed in this
period.
SIGNATURE
In accordance with the requirements of the
Exchange Act, the Registrant has caused
this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Date: October 10, 2000
/s/ Robert E. Wolfe /s/
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Robert E. Wolfe, Chairman of the Board and
Chief Executive Officer and Principal
Financial Officer
