Advanced Oxygen Technologies Inc – ‘10KSB/A’ for 6/30/99

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Amendment to Annual Report — Small Business   —   Form 10-KSB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10KSB/A     Main Doc                                              33±   136K 
 2: EX-11       Statement re: Computation of Earnings Per Share --     1      6K 
                          fds                                                    

10KSB/A   —   Main Doc
Document Table of Contents

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 . . . . . . . . . . . . . . . . . . . . . 5                              
ITEM 1-  DESCRIPTION OF BUSINESS     . 5                    
The Patent Sale . . . . . . . . . 5               
Stock Acquisition Agreement, 12/18/975            
Purchase Agreement, 12/18/97. . . 5               
Waiver Agreement, 12/18/97. . . . 6               
Change of Directors . . . . . . . 6               
Trust Agreement, 12/18/97 . . . . 6               
Acquisition or Disposition of Assets, March       
09,1998. . . . . . . . . . . 7          
Teuber Employment Agreement Termination           
. . . . . . . . . . . . . . 7         
Set Off of Promissory Note, 9/4/987               
Gaylord Employment Agreement Termination          
. . . . . . . . . . . . . . 7         
California Facilities, 9/30/98. . 7               
Demand for Indemnification, 12/9/988              
Purchase Agreement of 1/29/99 . . 8               
Employees . . . . . . . . . . . . 8               
ITEM 2. DESCRIPTION OF PROPERTY    . . 8                    
ITEM 3.  LEGAL PROCEEDINGS     . . . . 8                    
Pending Matters . . . . . . . . . 8               
Settled Matters:. . . . . . . . . 9               
ITEM 4. SUBMISSION OF MATTERS TO A VOTE                     
OF SECURITY HOLDERS . . . . . . . 9               

PART II. . . . . . . . . . . . . . . . . . . . .10                              
ITEM 5.  MARKET OF REGISTRANT'S                             
COMMON EQUITY AND RELATED                         
STOCKHOLDER MATTERS     . . . . .10               
ITEM 6.  PLAN OF OPERATION.      . . .10                    
Business Plan . . . . . . . . . .10               
Client and Industry Representation11              
Y2K (Year 2000 Problem) . . . . .11               
Forward Looking Statements. . . .11               
ITEM 7.  FINANCIAL STATEMENTS. . . . .13                    
Advanced Oxygen Technologies, Inc.                
Financial Statements;. . . .13          
Statement of Operations . . . . .14               
Statement of Cash Flow. . . . . .15               
Statement of Shareholder's Equity16               
Year ended June 30, 1999. . . . .16               
PART III . . . . . . . . . . . . . . . . . . . .23                              
ITEM 9.Directors and Officers of the Registrant 23          
ITEM 10.  Executive Compensation . . .24                    
ITEM 11.  Security Ownership of Certain Beneficial          
Owners and Management                             
. . . . . . . . . . . . . . . . . . . . . . . .27                             
ITEM 12.  Certain Relationships and Related                 
Transactions. . . . . . . . . . .28               
ITEM 13.  Exhibits and Reports on Forms 8-K29               
SIGNATURES . . . . . . . . . . . . . .30                    

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               
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.                                        
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.  AUDITED FINANCIAL STATEMENTS                                           

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, 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, 1999 and the results of its            
operations and its cash flows for the year 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 an operating loss before             
extraordinary item of $324,865 during the fiscal year ended June 30,            
1999, and as of that date, the Company's current liabilities exceeded           
its current assets by $198,612.  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 9, 1999                                                               

ADVANCED OXYGEN TECHNOLOGIES, INC. FINANCIAL                          
STATEMENTS;                                                           

                                                                [Download Table]
                                             
Advanced Oxygen Technologies Inc.            

Balance Sheet for the year ending            

June 30, 1999                                

Assets                                       

                                      1999   

Current Assets                               

Cash                                 54,788  

Database management receivable       15,315  

Receivables, net of allowance        59,908  
of $1,295 (note 3)                           

Inventory (note 3)                   6,759   

Total Current Assets                136,770  

Property and Equipment, At                   
Cost, net                                    

accumulated depreciation and        748,545  
amortization (Note3 &  4)                    

Other Assets                                 

Deposits                             4,093   

Total Other Assets                  $4,093   

Total Assets                        889,408  

Liabilities and Stockholder's Equity         

Current Liabilities                          

Accounts Payable                    180,690  

Payroll and sales taxes payable      55,299  

Corporation taxes payable             1,900  

Employee deferred saving payable     58,226  

Accrued salaries and expenses        10,868  

Due to Affiliate (note 7)            28,399  

Total Current Liabilities           335,382  

Long Term Liabilities                        

Capital lease obligation             85,273  

Other long term liabilities          11,886  

Total Long Term Liabilities          97,159  

   Commitments and Contingencies             
                         (Note 6)            

Stockholders' deficiency (notes              
1 and 2)                                     

Convertible preferred stock,             50  
Series 2, par value $0.01;                   
authorized 10,000,000 shares;                
issued and outstanding                       
5,000 shares                                 

convertible preferred stock,         16,700  
Series 3 par value $0.01;                    
authorized and issued,                       
1,670,000 shares                             

Convertible preferred stock,              0  
Series 4; issued and                         
outstanding, 2 shares                        

Convertible preferred stock,              0  
Series 5; issued and                         
outstanding, 1 shares                        

Common Stock, par value $0.01;      296,403  
authorized, 30,000,000                       
shares; issued and outstanding, 29,640,252   

Additional paid-in capital                   
                                 20,398,631  

Additional Paid-in Capital       (20,247,633)

Less treasury stock, at cost-       (7,284)  
1,670,000 shares of                          
convertible preferred stock,                 
Series 3                                     

                                    456,867  

Total Liabilities & Capital         889,408  


See the accompanying accountants' report and notes to                           
financial statements.                                                           

STATEMENT OF INCOME AND ACCUMULATED DEFICIT                           

                                                                [Download Table]
                                              
Advanced Oxygen Technologies Inc.             

Income Statement for the year ending          

June 30, 1999                                 

                                      1999    

Revenues (Note 1)                             

California Registrations            277,305   

Compact Disk Sales                 142,617    

Consulting and other fees            27,542   

Commissions                          69,099   

Sponsor Sales                        32,602   

Database Management                  32,516   

Total Revenues                      581,681   

Cost and Expenses                             

Cost of Product                       2,830   

Commission                           57,483   

Sales Royalties                      16,009   

Salaries and wages                  191,696   

Advertising                           2,207   

Professional fees                    33,012   

Rent                                 37,293   

Computer and equipment leases         7,788   

Transcribing Total Cost of Sales      35,588  

Subcontracting                       16,940   

Telephone                            53,506   

                         Travel      15,967   

Utilities                             5,658   

Payroll and other taxes              16,950   

Depreciation                        347,748   

Postage, printing and repoduction      15,650 

Bank and Credit card charges         15,937   
and fees                                      

Other costs and expenses             13,090   

Total                               884,838   

   Loss from operations before    (303,157)   
                   other income               
         (expense), income tax                
     expense, and extraordinary               
                          gain.               

Other income (expenses)                       

Interest expense                   (22,148)   

Bad debt expense                    (4,742)   

Interest Income                          68   

Other Income                         5,914    

Total Other Income                 (20,908)   

LOSS BEFORE INCOME TAX            (324,065)   
EXPENSE AND EXTRAORDINARY                     
GAIN (NOTE 9)                                 

INCOME TAX EXPENSE (NOTE 9)             800   

LOSS BEFORE EXTRAORDINARY GAIN    (324,865)   

EXTRAORDINARY GAIN ON               521,894   
FORGIVENESS OF DEBT                           

NET INCOME                          197,029   

ACCUMULATED DEFICIT AT         (20,444,662)   
BEGINNING OF YEAR                             

ACCUMULATED DEFICIT AT END OF YEAR(20,247,633)

BASIC AND DILUTED EARNINGS                    
PER SHARE:                                    

LOSS BEFORE EXTRAORDINARY GAIN       (0.01)   

EXTRAORDINARY GAIN ON                  0.02   
FORGIVENESS OF DEBT                           

NET INCOME                             0.01   

See the accompanying accountants' report and notes to                           
financial statements.                                                           

STATEMENT OF CASH FLOW                                                

                                                                [Download Table]
                                                    
Advanced Oxygen Technologies Inc.                   

Statement of Cash Flow                              

June 30, 1999                                       

                                        1999        

CASH FLOWS FROM OPERATING ACTIVITIES                

Net Income                            197,029       

Adjustments to reconcile net                        
income to Net Cash by                               
operating activities                                

Depreciation and amortization         347,748       

Extraordinary gain on               (521,894)       
forgiveness of debt                                 

Changes in operating assetss and liabilities        

   Decrease in accounts receivable     40,287       

   Increase in inventories            (3,234)       

   Increase in other assets           (4,093)       

   Increase in accounts payable       114,200       

   Increase in payroll and sales       23,717       
taxes payable                                       

   Decrease in accrued liabilities   (99,536)       

   Increase in income taxes payable      1,100      

   Increase in due to affiliate         2,161       

Net cash provided by operating activities     96,971

Cash flow from investing activities:                

Cash payments for the purchase       (94,811)       
of property                                         

Net cash used in investing activities   (94,811)    

Cash from financing activities:                     

Proceeds from issuance of              58,521       
long-term debt                                      

Cash payment for purchase of         (7,284)        
treasury stock                                      

Proceeds from employee deferred savings     58,226  

Net cash provided by financing activities    109,463

NET INCREASE IN CASH                  111,623       

Cash and equivalents, beginning      (56,835)       
of year                                             

Cash and equivalents, end of year      54,788       

Supplemental Disclosures                            

Income taxes paid                           0       

Interest expense paid                  20,968       

STATEMENT OF SHAREHOLDER'S EQUITY                                     
YEAR ENDED JUNE 30, 1999                                              

                                                                [Download Table]
                                                                           
             Balances                                Balances              
                             Purchase of                                   

             June 30,   1998 Preferred StockNet IncomeJune                 
                                                     30, 1999              

Preferred Stock SharesAmount Shares  Amount            SharesAmount        

              5,000      $50                           5,000       $50     
      Series 2                                                             

                     $16,700                                   $16,700     
      Series 31,670,000                              1,670,000             

                  2                                        2               
      Series 4                                                             

                  1                                        1               
      Series 5                                                             

Common Stock                                                  $296,403     
             29,640,252 $296,403                     29,640,252            

AdditionalPaid inCapital                                                   
                    $20,398,631                              $20,398,631   

Accum.Deficit       ($20,444,662        )                    ($20,2247,633)
                                            $197,029                       

                                                              $464,151     
                    $267,122                $197,029                       

Less cost    of                                                ($7,284)    
preferredstock,              16,700,000 $7,284       1,670,000             
Series 3                                                                   

                                                               $464,151    
                    $267,122         $7,284 $197,029                       


NOTES TO FINANCIAL STATEMENTS                                                   
JUNE 30, 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.                               

NOTE 1 -  (Continued)                                                           

ORGANIZATION: (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.                               

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.                                           

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, 1999.   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.                      

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                                                           

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, 1999 consisted of the following:            
Furniture and fixtures                  $   31,869                    
Office equipment                   17,882                             
Computers and computer equipment         98,858                       
Capitalized equipment              120,217                            
Capitalized database cost               911,391                       
Sub Total                     1,180,217                               

Less accumulated depreciation and                                     
amortization                  431,672                       
Total                              $ 748,545                          

Depreciation and amortization expense for the year ended June 30,               
1999 was $347,234.                                                              

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,                                        

2000                                              
$  50,352                                                             
2001                                              
53,204                                                        
2002                                              
56,052                                                        
2003                                              
58,904                                                        
2004                                              
19,952                                                        

$238,464                                                              

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, 1999 consisted of advances               
payable to Crossfields, Inc., a    related party, which are                     
uncollateralized, non-interest bearing, and payable upon    demand.             

NOTE 8 - CAPITAL LEASE OBLIGATIONS:                                             

The obligation includes three separate leases payable to the          
lessors, collateralized by    equipment, and requires a combined                
total of principal and interest payments of $2,704     per month with           
interest rates ranging from 10.47% to17.6% interest per annum                   
through   2003.                                                                 

Total minimum future principal payments on the leases are as          
follows:                                                                        

Year Ending June 30,                                                  

2000                                                        
$23,071                                                               
2001                                                        
26,094                                                            
2002                                                        
26,357                                                            
2003                                                        
9,751                                                         

$85,273                                                               

NOTE 9 - INCOME TAXES                                                           

The current provision for income taxes is the minimum tax due to the          
State of California.                                                            

As of June 30, 1999, the Company had federal and state net operating            
loss      carryforwards of approximately $7,600,000.  These                     
carryforwards, if unused, begin to  expire from 2010 to 2013.  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.                                                                   

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 theten               
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 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                                                          

                                                                [Download Table]
                                                            
Name  Yr   SalaryBonus  Other   RestrictedAwardsLTIPAllOther
                        Compen-          Pay   Security     
                        sation           outs               

Harry      0     0      0       0        0     0       0    
Edelson                                                     

RobertWolfe0     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, 1999 and unexercised options              
held as of that date.  Neither Mr. Wolfe or Mr. Edelson exercised any           
options during fiscal 1998.                                                     

                                                                [Download Table]
                                                                    
Name     #        % of TotalOptions toEmployerExerciseExpirationDate
         SecuritiesunderlyingOptionPrice                            

Harry    0        0        n/a      n/a                             
Edelson                                                             

Robert   0        0        n/a      n/a                             
Wolfe                                                               

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 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

Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘10KSB/A’ Filing		Date		Other Filings
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