**U.S. SECURITIES AND EXCHANGE COMMISSION**Washington, D.C. 20549FORM 10-QSB

(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR15 (d)OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2005

( )TRANSITION REPORT PURSUANT TO SECTION 13 OR15 (d)OF THE SECURITIES EXCHANGE ACT COMMISSION OF 1934

for the Transition period March 31, 2005

Commission file number 0-9951

**ADVANCED OXYGEN TECHNOLOGIES, INC.**-------------------------------------------------------------(Exact name of small business issuer as specified in its charter)

Delaware                                             91-1143622-----------------------                             ----------------------(State ofIncorporation)              (IRS Employer Identification No.)

C/O Crossfield, Inc., 133 W 13th Street, NewYork, NY 10011-------------------------------------------------------(Address of principal executive offices)

C/O Crossfield, Inc. (212)-727-7085---------------------------------------------------(Issuer's telephone number)

Check whether the issuer (1) has filed allreports required to be filled by Section 13 or 15(d)of the Exchange Act during the past 12 months (or for suchshorter period that the Registrantwas required to file such reports), and (2) has been subject tosuch filing requirements forthe past 90 days. Yes (X) No

The number of shares of common stockoutstanding as of March 31, 2005 was 46,973,585.

Transitional Small Business Disclosure Format(check one): Yes( ) No( X )

 

 

 

ADVANCED OXYGEN TECHNOLOGIES, INC.

 

 

 

| **INDEX**                                                                                                   |
|-------------------------------------------------------------------------------------------------------------|
| PART I: Financial        Information                                                                        | **2** |
| Item I: Financial Statements                                                                                | **2** |
| Balance Sheet                                                                                               | **2** |
| Consolidated Statement of        Operations and Changes in Accumulated Deficit                              | **3** |
| Consolidated Statement of        Cash Flow                                                                  | **4** |
| Item 2: Management's        Discussion and Analysis of Financial Condition and        Results of Operations | **6** |
| PART II                                                                                                     | **8** |
| Item 1: Legal Proceedings                                                                                   | **8** |
| - Item 6. Exhibits and Reports on Form 8-K                                                                  | **8** |
| Signature                                                                                                   | **8** |
| EXHIBIT 99.1 (A), 99.1(B) Certifications of Officers                                                        | **8** |
| EXHIBIT 99.1 (C), 99.1(D) Certifications of Officers                                                        | **9** |
|                                                                                                        |   |

 

 

PART 1: FINANCIAL INFORMATION 

Item I: Consolidated Financial Statements for the three monthsending March 31, 2005. (unaudited)

 

| **Balance        Sheet for March 31, 2005 and June 30, 2004**                                                                                                                | **March 31, 2005** | **June 30, 2004** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|-------------------|
|                                                                                                                                                                         | Unaudited          | Audited           |
| Cash                                                                                                                                                                         | 3,189              | 3,458             |
| Accounts        Receivable IP Service (Net of Doubtful A-R)                                                                                                                  | 2,731              | -                 |
| Prepaid        Leasing Fee                                                                                                                                                   | 762                | 762               |
| Value Added        Tax Receivable                                                                                                                                            | 9,456              | 8,735             |
| Total Current        Assets                                                                                                                                                  | 16,138             | 12,955            |
|                                                                                                                                                                         |               |              |
| PROPERTY AND        EQUIPMENT-AT COST,                                                                                                                                       |               |              |
| net of        accumulated depreciation and amortization                                                                                                                      | 7,283              | 14,869            |
|                                                                                                                                                                         |               |              |
| OTHER ASSETS                                                                                                                                                                 | 0                  |              |
| Nonamortizable        software                                                                                                                                               | 280,000            | 280,000           |
| **Total        Assets**                                                                                                                                                      | **303,421**        | **307,824**       |
|                                                                                                                                                                         |               |              |
| LIABILITIES AND        STOCKHOLDERS' DEFICIENCY                                                                                                                              |               |              |
| Accounts        Payable                                                                                                                                                      | 101,804            | 291,150           |
| Bank loan        -due within on year                                                                                                                                         | 544                | 544               |
| Payroll and        sales tax payable                                                                                                                                         | 56,834             | 56,834            |
| Due to        officer of subsidiary company                                                                                                                                  | 14,044             | 14,044            |
| Corporation        taxes payable                                                                                                                                             | 7,536              | 7,536             |
| Accrued        salaries and expenses                                                                                                                                         | 5,806              | -                 |
| Total Current        Liabilities                                                                                                                                             | 186,568            | 370,108           |
|                                                                                                                                                                         |               |              |
| Long Term        Liabilities:                                                                                                                                                | -                  | -                 |
| Due to        affiliate                                                                                                                                                      | 17,545             | 7,920             |
| Total        Liabilities                                                                                                                                                     | 204,113            | 378,028           |
|                                                                                                                                                                         |               |              |
| Stockholders'        Deficiency                                                                                                                                              |               |              |
| Convertible        Preferred Stock Series 2, par value $0.01; authorized        10,000,000 shares; issues and outstanding 5,000 shares        liquidating preference $25,000 | 50                 | 50                |
| Convertible        Preferred Stock Series 3, par value $0.01; authorized and        issued, 1,670,000 shares                                                                 | 16,700             | 16,700            |
| Convertible        Preferred Stock Series 4, issued and outstanding, 2        shares                                                                                         | -                  | -                 |
| Convertible        Preferred Stock Series 5, issued 1 share                                                                                                                  | -                  | -                 |
| Common Stock,        par value $0.01; authorized, 90,000,000 shares; issued        and outstanding, 46,973,585                                                               | 469,736            | 469,736           |
| Paid in        Capital                                                                                                                                                       | 20,628,396         | 20,628,396        |
| Accumulated        Deficit                                                                                                                                                   | (21,008,292)       | (21,177,802)      |
| Treasury        Stock                                                                                                                                                        | (7,284)            | (7,284)           |
|                                                                                                                                                                         |               |              |
|                                                                                                                                                                         | 99,308             | (70,204)          |
| **Total        Liabilities and****Stockholders' Deficiency**                                                                                                                 | **303,421**        | **307,824**       |

 

| **Consolidated Statement        of Operations**             | 3 Month Period Ending March        31, | 9 Month Period Ending March        31, |
|-------------------------------------------------------------|----------------------------------------|----------------------------------------|
| **and Changes in        Accumulated Deficit**               | (Unaudited)                            | (Unaudited)                            |
|                                                        | **2005**                               | **2004**                               | **2005** | **2004** |
| Revenues                                                    |                                   |                                   |   |   |
| Software Sales IP Service                                   | 7,981                                  | 22,160                                 | 41,420 | 56,514 |
| Total Revenues                                              | 7,981                                  | 22,160                                 | 41,420 | 56,514 |
|                                                        |                                   |                                   |   |   |
| Cost of Sales                                               |                                   |                                   |   |   |
| Cost of Sales IP Service                                    | 2,145                                  | 2,560                                  | 9,255 | 9,565 |
| Selling Expenses IP        Service                          | 3,158                                  | 480                                    | 15,414 | 1,185 |
|  Total Cost of Sales                                   | 5,304                                  | 3,040                                  | 24,669 | 10,751 |
|                                                        |                                   |                                   |   |   |
| Gross Profit                                                | 2,676                                  | 19,120                                 | 16,751 | 45,763 |
|                                                        |                                   |                                   |   |   |
| Expenses                                                    |                                   |                                   |   |   |
| Accounting Expense                                          | 1,250                                  | 625                                    | 10,688 | 625 |
| Depreciation Expense, IP        Service                     |                                   | -                                      | 7,586 | - |
| Interest Expense IP        Service                          | 5                                      | 152                                    | 10 | 399 |
| General &        Administrative Expenses for IP Service | 478                                    | 15,680                                 | 10,923 | 45,890 |
| Share/Transfer Agent        Expense                         |                                   | 2,100                                  | 2,125 | 2,100 |
| Total Expenses                                              | 1,733                                  | 18,557                                 | 31,332 | 49,014 |
| Income (loss) from Operations                               | 943                                    | 563                                    | 14,581 | (3,251) |
|                                                        |                                   |                                   |   |   |
| Vendor Forgiveness of Debt                                  |                                   |                                   | 184,091 |   |
|                                                        |                                   |                                   |   |   |
| **Net Income (Loss)**                                       | **943**                                | **563**                                | **169,510** | **(3,251)** |
|                                                        |                                   |                                   |   |   |
| Accumulated Deficit                                         |                                   |                                   |   |   |
| Beginning of Period                                         | (21,009,235)                           | (21,144,415)                           | (21,177,802) | (21,140,601) |
| End of Period                                               | (21,008,292)                           | (21,143,852)                           | (21,008,292) | (21,143,852) |
|                                                        |                                   |                                   |   |   |
| Earnings per Share                                          | 0.00                                   | 0.00                                   | 0.0036 | (0.0001) |

 

| **Consolidated        Statement of Cash Flow**                     | 3 Month Period (Unaudited) |      | 9 Month Period (Unaudited) |
|-------------------------------------------------------------------------|----------------------------|-----------|----------------------------|
|                                                                    | Ending March 31,           |      | Ending March 31,           |
|                                                                    | **2005**                   | **2004**  |                       | **2005** | **2004** |
| **Cash flow        from operating activities**                          |                       |      |                       |   |   |
| Net Income        (Loss)                                                | 943                        | 563       |                       | 169,510 | (3,251) |
|                                                                    |                       |      |                       |   |   |
| Adjustments        to reconcile net loss to cash provided by operations |                       |      |                       |   |   |
| Accum        Depreciation IP Service                                    |                       |      |                       | 7,586 |   |
| Accounts        Receivable & Value Added Tax Receivable             | (893)                      | (1,680)   |                       | (3,452) | (8,563) |
| Accounts        Payable and Accrued Expenses                            | 353                        | 2,725     |                       | (183,538) | 18,082 |
| Net Cash        provided (used) by operations                           | 403                        | 1,608     |                       | (9,894) | 6,269 |
|                                                                    |                       |      |                       |   |   |
| **Cash Flows        from financing activities:**                        |                       |      |                       |   |   |
| Proceeds        From:                                                   |                       |      |                       |   |   |
| Note Payable,        Crossfield                                         |                       |      |                       | 9,625 |   |
| **Net Cash        Flows used in Financing Activities:**                 |                       |      |                       | 9,625 | - |
|                                                                    |                       |      |                       |   |   |
| **Net        Increase (decrease) in Cash**                              | **403**                    | **1,608** |                       | **(269)** | **6,269** |
|                                                                    |                       |      |                       |   |   |
| **Cash        Balance at beginning of Period**                          | 2,786                      | 4,789     |                       | 3,458 | **128** |
| **Cash        Balance at End of Period**                                | 3,189                      | 6,397     |                       | 3,189 | **6,397** |

Item 2: Management's Discussion and Analysis of FinancialCondition and Results of Operations.

For the three month and nine month period ending March 31,2005, the Company had profits of $943 and $169,510 respectively.These profits were primarily the result of forgiveness of debtfrom vendors and the lack of profitable operations of IP Service.

Pursuant to a stock acquisition on March 05, 2003 AdvancedOxygen Technologies, Inc. (AOXY or the Buyer) purchased 100% ofthe issued and outstanding stock of IP Services, ApS (IP or theCompany) from all of its owners (the Shareholders) for value offive hundred thousand dollars (Purchase Price). AOXY issuedfourteen million shares of common stock and one share ofpreferred convertible stock to the Shareholders for payment andconsideration of the Purchase Price. Concurrently, pursuant to anEmployment Agreement on March 05, 2003 AOXY entered into anagreement with Kurd Sondergaard (Employee). The Employee will beemployed by AOXY for four years and will perform duties ofpresident of IP, and AOXY and the Shareholders entered into acovenant of non competition agreement whereby the Shareholdersagreed not to compete with IP for a period of five years.

At a special meeting of the Board of Directors, AOXY removedJoseph N. Noll as a director due to his inability to perform hisduties as a director. AOXY appointed Kurt Sondergaard andLawrence Donofrio to the board of directors to replace Joseph N.Noll . Kurt Sondergaard founder and major shareholder of thecompany, Mr. Sondergaard was educated in the Danish Navy as anelectronic engineer. He has worked for 10 years in the electronicsecurity industry, specifically in the IT sector. During thisperiod, Kurt has developed as a business entrepreneur, buildingand selling an IT business. Lawrence Donofrio graduated fromHamilton College with a BA in English studies. He then worked atCitibank for three years as a financial analyst, and five yearsas a private financial consultant. He then took a position withBankers Trust for two years and since 1982 has been a privateconsultant in the financial industry.

The Company maintains a database ("Database") ofbusiness contacts that have participated in conference events.The Database was obtained through acquisition and the Company'sactivities of marketing events and producing CD-ROMS for clients.The Company maintains and updates contact fields on a quarterlybasis.AOXY has a database management contract with Dun and Bradstreet,("DB") and Walter Karl, Inc., a division of InfoUSA,Inc. ("WK") whereby, Walter Karl, Inc. will broker theCompany's Database. Walter Karl's function is to market and rentthe data contained in the Database. This is available in one oftwo formats: on a one time basis, or a 'database' basis wherebythe customer will commit to a minimum number of contact names.The majority of the customers using the Database through WK aredirect business to business marketers. WK receives a fee for eachsale. During the year ending June 30, 2002 Walter Karl was theCompany s only source of revenue. During this period, Walter Karlis the Company s only customer.AOXY has an agreement with Dun and Bradstreet whereby DB willupdate, correct, append, and offer deletions to the Database. DBwill evaluate the Database each time, and has the option topurchase contacts on a case by case as they see fit, in whichcase AOXY would receive a fee. Correspondingly, should AOXY,rent, sell or otherwise profit from registered DB information,AOXY would pay a fee to DB. To date, AOXY has not sold anyregistered DB information.The Company had a location in Santa Clarita, CA for operations.The Company had abandoned this facility and equipment andmaintains no staff other than the sole officer of the Company.Currently, the sole officer of the Company allows the Company tomaintain its books, records and operations at its office.

The Company continues it efforts to raise capital to supportoperations and growth, and is actively searching acquisition ormerger with another company that would compliment AOXY orincrease its earnings potential. During this period, the Companyhas had discussions with candidates, and has had no success insecuring negotiations or a transaction. Further, the Company'sfinancial position makes it difficult for the Company to continueoperations. The foregoing raise substantial doubt about theCompany's ability to continue as a going concern. The Company'scontinuation as a going concern is dependent on the attainment ofprofitable operations and meeting its obligations on a timelybasis, which during this period, the Company has not been able todo.

Acquisition Efforts:

The Company continues it efforts to raise capital to supportoperations and growth, and is actively searching acquisition ormerger with another company that would compliment AOXY orincrease its earnings potential. During this period, the Companyhas been in discussion with five Companies looking to beacquired. AOXY has not negotiated any terms nor proposed anyacquisitions of any of these companies that have been accepted.In addition, the Company is in discussion with potential lendinginstitutions to assist in financing any proposed acquisition. TheCompany expects difficulty in financing the growth of theincreased business or acquisition and has been concentrating onraising capital and/or obtaining a line of credit.

Historical Operations:On March 9, 1998, pursuant to an Agreement for Purchase and Saleof Specified Business Assets ("Purchase Agreement"), aPromissory Note ("Note"),and a Security Agreement("Security Agreement") all dated March 9, 1998,Advanced Oxygen Technologies, Inc. (the "Company")purchased certain tangible and intangible assets (the"Assets") including goodwill and rights under certaincontracts, from Integrated Marketing Agency, Inc., a CaliforniaCorporation ("IMA").

Pursuant to an employment agreement dated March 09, 1998between the Company and John Teuber ("EmploymentAgreement"), on September 04, 1998 the Company terminatedJohn Teuber for cause without relinquishing any of its rights orremedies. 

Pursuant to the Note, the Purchase Agreement, and the SecurityAgreement between the Company and ("IMA"), the Companyon September 04, 1998 exercised its right of "Set Off"of the Note, as defined therein due to IMA's breach of numerousrepresentations, warranties and covenants contained in the Noteand certain ancillary documents. The Company further reserved anyand all rights and remedies available to it under the Note,Purchase Agreement and Security Agreement. 

The Company entered into a two year employment agreement("NAG Agreement" as contained in Exhibit I of theregistrants 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 NAGAgreement had no provision for this termination. The Companyentered into a lease agreement as contained in Exhibit I of theregistrants SEC Form 10-QSB for the period ending September 30,1998 with America-United Enterprises Inc. on October 01, 1998 andtook possession of 4,700 sf. of premises on November 06,1998 inSanta Clarita for its CA location. Currently, this is the onlyCalifornia location of the Company. 

On December 9, 1998 the company delivered to IMA,"Notification to Indemnifying Party and Demand forIndemnification for $2,251,266." Pursuant to the Note, thePurchase Agreement, the Security Agreement, and the EmploymentAgreement (collectively the "Agreements"), the Companydemanded that IMA pay $2,251,266 or defend the Company againstthe Liabilities (as defined therein) due to, among other things,IMA's breach, representations, warranties, and violation of theAgreements. 

On January 29, 1999, pursuant to the Purchase Agreement of1/28/99, Advanced Oxygen Technologies, Inc. ("AOXY")purchased 1,670,000 shares of convertible preferred stock ofAdvanced 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: AOXYpaid $15,000 to IMA, assumed a Citicorp Computer Equipment Lease,#010-0031648-001 from IMA, delivered to IMA certain tangiblebusiness property (as listed in Exhibit A of the PurchaseAgreement), 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 theNote. IMA sold, transferred, assigned and delivered the Note andthe Stock to AOXY, executed documents with Citicorp Leasing, Inc.to effectuate an express assumption by AOXY of the obligationunder lease #010-0031648-001 in the amount of $44,811.26,executed a UCC2 filing releasing UCC-1 filing #9807560696 filedby IMA on March 13, 1998, and delivered such documents asrequired. In addition, both IMA and AOXY provided mutualliability releases for the other. 

On April 18, 2000, notice was given that the Board ofDirectors and persons owning 64.7%, or 19,180,500 shares ofcommon stock of Advanced Oxygen Technologies, Inc. have electedto adopt the following proposals: 1. To amend and restate theCompany's Restated Articles of Incorporation to increase theCompany's authorized Common Shares from 30,000,000 to 90,000,000shares, 2. The Board of Directors has approved an amendment tothe Company s Certificate of Incorporation to change the name ofthe Company to AOXY, Inc. The Company s current name was adoptedin 1985 when the Company was focused on applications of itstechnology which it has since disposed of or otherwise abandoned.The Board of Directors believes it would be more appropriate forthe Company to utilize a corporate name which more accuratelydescribes the current focus of the Company or is not misleadingas to the Company s operations. The above amendments to theCertificate of Incorporation will be filed with the Secretary ofState of the State of Delaware, and the Name Change will becomeeffective as of 5:00 p.m. Eastern Time, on the date of suchfiling.

On December 31, 2000, AOXY entered into an agreement withEastern Star, ltd, and Baldwin Construction Co (the"Purchasers") whereby  the Purchasers will buythree million shares of capital stock of AOXY for one hundred andtwenty five thousand dollars pursuant to a purchase agreement("Purchase Agreement"). The Company has concluded theissuance and delivery of the shares pursuant to the PurchaseAgreement. In addition, the Company received a request from AnnSejeroe for a conversion of her 1 Preferred Share number P 0002issued April 16, 1998, and in accordance with the restrictions,terms and conditions, as evidenced on the reverse side of theshare certificate, the Company issued 333,333 shares bearing arestrictive legend.

On February 14, 2002 the Company gave notice of the change ofthe Company's location, and location of books and records fromAdvanced Oxygen Technologies, Inc. 26883 Ruether Avenue, SantaClarita, CA, 91351 ("CA Location") to Advanced OxygenTechnologies, Inc. c/o Crossfield, Inc. 133 W 13th Street, Suite#5, New York, NY 10011, Telephone (212)-727-7085, Fax(208)-439-5488. This location is co-located with a relatedbusiness of the president, Robert E. Wolfe.

Forward Looking Statements 

Certain statements contained in this report, includingstatements concerning the Company's future and financingrequirements, the Company's ability to obtain market acceptanceof its products and the competitive market for sales of smallproduction business' and other statements contained hereinregarding matters that are not historical facts, are forwardlooking statements; actual results may differ materially fromthose set forth in the forward looking statements, whichstatements involve risks and uncertainties, including withoutlimitation to those risks and uncertainties set forth in any ofthe 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 asan indicator for future performance, and as such, the futureperformance of the Company may differ significantly fromhistorical performance. 

PART II 

Item 1: Legal Proceedings 

There were no legal proceedings brought against the Companyduring this period. 

Item 6. Exhibits and Reports on Form 8-K 

There were no reports filed on Form 8-K during this period.

**EXHIBIT 99.906CERT (A)CERTIFICATION OF CHIEF EXECUTIVE OFFICERPURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

**EXHIBIT 99.906CERT (B)CERTIFICATION OF TREASURERPURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

**EXHIBIT 99.CERT (C)CERTIFICATION PURSUANT TOSECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

**EXHIBIT 99.CERT (D)CERTIFICATION PURSUANT TOSECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

SIGNATURE 

In accordance with the requirements of the Exchange Act, theRegistrant has caused this report to be signed on its behalf bythe undersigned, thereunto duly authorized. 

Date: May 10, 2005

 

/s/ Robert E. Wolfe /s/ ------------------------------------------ Robert E. Wolfe, Chairman of the Board and Chief Executive Officer and Principal Financial Officer