-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VCIFMBoqJnz/tzR5+1J15ktHYvXoZMYpga5Wm5upsMe+tyxjj9FK9aZiQaYpyOFa CSIKDKhDgCNcROk92t/zNQ== /in/edgar/work/20000526/0000940180-00-000668/0000940180-00-000668.txt : 20000919 0000940180-00-000668.hdr.sgml : 20000919 ACCESSION NUMBER: 0000940180-00-000668 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000526 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ADVANCED OXYGEN TECHNOLOGIES INC CENTRAL INDEX KEY: 0000352991 STANDARD INDUSTRIAL CLASSIFICATION: [6794 ] IRS NUMBER: 911143622 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-09951 FILM NUMBER: 644409 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 10QSB 1 FORM 10-QSB 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 March 31, 2000 ( )TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT COMMISSION OF 1934 For the Transition period March 31, 2000 Commission file number 0-9951 ADVANCED OXYGEN TECHNOLOGIES, INC. ---------------------------------- (Exact name of small business issuer as specified in its charter) Delaware 91-1143622 -------- ---------- (State of Incorporation) (IRS Employer Identification No.) 26883 Ruether Avenue, Santa Clarita, CA 91351 --------------------------------------------- (Address of principal executive offices) (661)-298-3333 -------------- (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 March 31, 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 for the three months ending March 31, 2000. (Unaudited) 3 Balance Sheet, March 31, 2000 ....................................................... 3 Income Statement .................................................................... 5 Statement of Cash Flow .............................................................. 6 Statement of Changes ................................................................ 8 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations ............................. 9 PART II ............................................................................. 13 Item 1: Legal Proceedings ......................................................... 13 Item 6. Exhibits and Reports on Form 8-K .......................................... 13 SIGNATURE ........................................................................... 14
2 PART 1: FINANCIAL INFORMATION Item I: Financial Statements for the three months ending March 31, 2000. (Unaudited) Balance Sheet March 31, 2000 Current Assets Cash ...................... (3,434.80) Accounts Receivable ....... 138,338.96 Doubtful Accounts ......... (1,295.00) Inventory ................. 7,779.40 ============== Total Current Assets ...... 141,388.56 Property and Equipment Furniture and Fixtures .... 31,869.00 Office Equipment .......... 17,882.00 Equipment ................. 98,858.00 Capitalized Equipment ..... 125,352.40 Other Depreciable Property 911,391.00 Accum. Depreciation ....... (309,978.76) ============== Total Property & Equipment 875,373.64 Other Assets Deposits .................. 4,092.50 ============== Total Other Assets ........ 4,092.50 ============== Total Assets .............. 1,020,854.70 Liabilities and Capital Current Liabilities Accounts Payable .......... 225,169.36 Sales Tax Payable ......... 2,669.94 Health Care Contributions . 5,894.06 Due to Employees .......... 6,374.59 Federal Payroll Taxes ..... 57,282.64 State payroll Taxes ....... 6,060.98 SUTA Tax .................. (118.20) IMA Short Term Note ....... (4,500.00) State Tax Payable ......... 800.00 Walter Karl Advance ....... 5,120.00 ============== Total Current Liabilities . 304,753.66 Long Term Liabilities Capital Leases ............ 123,583.40 Note Payable, Crossfield .. 69,729.45 ICON Note Payable ......... 15,000.00 Other Long Term Liabilities 11,886.00 401K T Account ............ (94.26) ============== Total Long Term Liabilities 220,104.59 Total Liabilities ......... 524,858.25 Capital Beginning Balance Equity .. 16,700.00 Preferred Stock ........... 50.00 Common Stock .............. 296,403.00 Paid-In Capital ........... 19,898,631.00 Retained Earnings ......... (19,533,698.82) Net Income ................ (182,088.73) Total Capital ............. 495,996.45 ============== Total Liabilities & Capital 1,020,854.70
3 Income Statement For the Three Months Ending March 31, 2000 Revenues Consulting .......... (1,130.02) Database Management . 7,046.40 Finance Charge Income 9,335.84 ========= Total Revenues ...... 15,252.22 Cost of Sales ....... 0.00 Gross Profit ........ 15,252.22 Expenses Accounting Fees ..... 6.00 Auto Expenses ....... 549.74 Bank Charges ........ 90.00 Credit Card Fees .... 0.00 Depreciation Expense 40,697.22 Employee Benefit .... 340.00 Meals & Entertainment 1,049.88 Payroll Tax Expenses 4,321.89 Postage ............. 209.14 Rent ................ 12,825.00 Supplies ............ 305.09 Telephone ........... 3,603.01 Travel .............. 1,658.00 Utilities ........... 301.00 Wages ............... 2,829.00 Total Expenses ...... 64,885.07 Net Income .......... (49,632.85)
4 Statement of Cash Flow For the Three Months Ended March 31, 2000 Cash Flows from Operations Net Income ............................... (49,632.85) Adjustments to reconcile income to net cash Accum. Depreciation ...................... 40,697.22 Accounts Receivable ...................... (11,993.00) Inventory ................................ 0.00 Accounts Payable ......................... (2,165.31) Federal Payroll Taxes .................... 610.05 State Payroll Taxes ...................... 25.02 SUTA ..................................... 1.82.83 Walter Karl Advance ...................... 5,120.29 ========= Total Adjustments ........................ 32,296.96 Net Cash Provided by Operations .......... (17,335.89) Cash Flows from Financing Note Payable Crossfield .................. 18,110.70 Net Cash used in financing ............... 18,110.70 Net increase (decrease) .................. 774.81 in cash Cash Balance at End of period ............ (3,434.80) Beginning Cash Balance ................... (4,209.61) Net Increase (decrease) .................. 774.81 in Cash
5 Statement of Changes in Financial Position For the three months ended March 31, 2000 Sources of Working Capital Net Income ............................... (49,632.85) Add Backs not requiring working capital Accum. Depreciation ...................... 40,697.22 Working Capital from Operations (8,935.63) Other Sources: Note Payable Crossfield .................. 18,110.70 Total Sources ............................ 9,175.07 Net Changes .............................. 9,175.07 Analysis of components Increase (decrease) in Current Assets Cash ..................................... 774.81 Receivables .............................. 11,993.14 Inventory ................................ 0.00 (Increase) decrease in CurrentLiabilities Accounts Payable ......................... 2,165.31 Federal Payroll Taxes .................... (610.05) State Payroll ............................ (25.02) SUTA ..................................... (2.83) Walter Karl Inc. Advance ................. (5,120.29) Net Change ............................... 9,175.07
6 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. 7 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 currently has two areas of concentration: CD-ROM production/sales, and database management. The Company produces and sells educational CD-ROMS. 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. Currently the Company has 3 production schedules for the remainder of the calendar year for a maximum of 500,000 CD's. The revenues associated with the production of the these CD's would be derived from advertisement revenue on the CD's and not through direct sales. 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. 8 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 three Companies looking to be acquired. AOXY has not negotiated any terms nor proposed any acquisition of any of these companies. 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. Y2K (Year 2000 Problem) Through March 31, 2000, the Company experienced no adverse effect from the Y2K problem (see below). The Company is unaware of any of its vendors or clients experiencing difficulty associated with Y2K that has or would affect the Company. However, this does not mean that future problems associated with Y2K could not occur as discussed below. 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. 9 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 A report on Form 8-K was filed on February 16, 1999 and reported under Item 2 the Purchase of Specified Assets from Integrated Marketing Agency, Inc. The assets purchased consisted a promissory note of $550,000 payable to IMA and issued by Advanced Oxygen Technologies date March 09, 1998 and 1,670,000 Preferred Shares of Advanced Oxygen Technologies. IMA, and Advanced Oxygen Technologies, Inc. provided each other a mutual release of liability. Exhibit 1, contained therein defined the terms and conditions of the transaction. 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: May 02, 2000 /s/ Robert E. Wolfe ------------------------------------------ Robert E. Wolfe, Chairman of the Board and Chief Executive Officer and Principal Financial Officer 10 EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS JUN-30-2000 MAR-31-2000 (3,434) 0 138,338 (1,295) 7,779 141,388 1,346,270 (309,978) 1,020,854 304,753 220,104 16,7000 50 296,403 0 1,020,854 15,252 15,252 0 0 64,885 0 0 (496,632) 0 0 0 0 0 (49,632) (0.002) (0.002)
-----END PRIVACY-ENHANCED MESSAGE-----