ADVANCED OXYGEN TECHNOLOGIES, INC.

INDEX
PART 1: FINANCIAL INFORMATION 3

Item I: Financial Statements                  
                 
3 
Balance Sheet                                        
 
              
    3 
Income Statement                                
                    
4 
Statement of Cash Flow                      
                    
5 
Statement of Changes                          
                   
6

Item 2: Management's Discussion and Analysis

of Financial Condition and Results of Operations.  
6

PART II 8
Item 1: Legal Proceedings                                     
   
8

SIGNATURE 8

PART 1: FINANCIAL INFORMATION

Item I: Financial Statements for the three
months ending March 31, 2001. (Un-audited)

|Balance Sheet, March 31, 2001                                                                     | 3 Months       
|------------------------------------------------------------------------------------------------- | ---------------
|Current Assets                                                                                    |                
|Cash                                                                                              | 0.00           
|Receivables                                                                                       | 20,635.82      
|Inventory                                                                                         | 13,122.15      
|Total Current Assets                                                                              | 33,757.97      
|                                                                                                  |                
|                                                                                                  |                
|Property and equipment                                                                            |                
|Fixed Assets                                                                                      | 1,085,404      
|Accumulated Depreciation                                                                          | (1,013,258.94) 
|Total Property - Equipment                                                                        | 72,147.06      
|                                                                                                  |                
|                                                                                                  |                
|Other Assets, Deposits                                                                            | 4,092.50       
|                                                                                                  |                
|===============================                                                                   | ===========    
|Total Assets                                                                                      | 109,997.53     
|                                                                                                  |                
|Liabilities and Capital                                                                           |                
|Current Liabilities                                                                               |                
|Accounts Payable                                                                                  | 214,720.02     
|Other Current Liabilities                                                                         | 56,146.52      
|Total Current Liabilities                                                                         | 270,866.54     
|                                                                                                  |                
|                                                                                                  |                
|Long Term Liabilities                                                                             |                
|Note Payable, Crossfield                                                                          | 97,487.57      
|Total  Long Term Liabilities                                                                      | 97,487.57      
|================================                                                                  | ===========    
|Total Liabilities                                                                                 | 368,354.11     
|                                                                                                  |                
|Capital                                                                                           |                
|Beginning Balance Equity                                                                          | 16,700.00      
|Preferred Stock                                                                                   | 50.00          
|Common Stock                                                                                      | 326,403.00     
|Paid in Capital                                                                                   | 20,493,631.00  
|Retained Earnings                                                                                 | (20,798,431.51)
|Treasury Stock                                                                                    | (7,284.00)     
|Net Income                                                                                        | (289,425.07)   
|Total Capital                                                                                     | (258,356.58)   
|                                                                                                  |                
|================================                                                                  | ===========    
|Total Liabilities and Capital                                                                     | 109,997.53     
|                                                                                                  |                
|                                                                                                  |                
|Income Statement for the three month period ending March
      31, 2001                           | 3 Months       
|Revenues                                                                                          |                
|Database Management                                                                               | 4,374.41       
|Total Revenues                                                                                    | 4,374.41       
|                                                                                                  |                
|Cost of Sales                                                                                     | 0.00           
|                                                                                                  |                
|Gross Profit                                                                                      | 4,374.71       
|                                                                                                  |                
|Expenses                                                                                          |                
|Airline Expense                                                                                   | 1,472.10       
|Auto                                                                                              | 648.38         
|Depreciation                                                                                      | 65,451         
|Freight                                                                                           | 320.76         
|Hotels                                                                                            | 1,754.86       
|Interest                                                                                          | 2,777.77       
|Travel- Meals and entertainment                                                                   | 894.96         
|Office Expense                                                                                    | 1,768.40       
|Postage                                                                                           | 87.53          
|rent                                                                                              | 14,915.00      
|taxes                                                                                             | 280.00         
|Telephone                                                                                         | 617.12         
|Travel                                                                                            | 3,496.63       
|Other Expenses                                                                                    | 299.79         
|Total Expenses                                                                                    | 94,784.30      
|================================                                                                  | ===========    
|Net Income                                                                                        | (90,409.89)    
|                                                                                                  |                
|                                                                                                  |                
|Statement of Cash Flow for the three month period ending March 31, 2001                           | 3 Months       
|                                                                                                  |                
|Cash flow from operating activities                                                               |                
|Net Income                                                                                        | (90,409.89)    
|                                                                                                  |                
|Adjustments to reconcile net income to cash provided by operations                                |                
|Accumulated Depreciation                                                                          | 65,451         
|Accounts Receivable                                                                               | 6,987.57       
|Accounts Payable                                                                                  | (8,360)        
|Walter Karl Advance                                                                               | 13,547.10      
|Total Adjustments                                                                                 | 77,625.67      
|                                                                                                  |                
|================================                                                                  | ===========    
|Net Cash provided by operations                                                                   | (12,784.22)    
|                                                                                                  |                
|Cash Flows from financing                                                                         |                
|Proceeds from :                                                                                   |                
|Note Payable Crossfield                                                                           | 53,196.90      
|Other Long Term Liabilities                                                                       | 1.00           
|                                                                                                  |                
|Used For:                                                                                         |                
|Note Payable Crossfield                                                                           | (28,526.68)    
|Other Long term Liabilities                                                                       | (11,887)       
|Net Cash used in Financing                                                                        | 12,784.22      
|                                                                                                  |                
|================================                                                                  | ===========    
|Net Increase (decrease) in cash                                                                   | 0.00           
|                                                                                                  |                
|                                                                                                  |                
|Statement of Changes in Financial Position for the three month period ending March
      31, 2001 | 3 Months       
|                                                                                                  |                
|Source of Working Capital                                                                         |                
|Net Income                                                                                        | (90,409.89)    
|Add Backs not requiring working capital                                                           |                
|Depreciation                                                                                      | 65,451         
|                                                                                                  |                
|Working capital from operations                                                                   | (24,958.89)    
|                                                                                                  |                
|Other Sources                                                                                     |                
|Note Payable Crossfield                                                                           | 53,196.90      
|Other Long Term Liabilities                                                                       | 1.00           
|Total Sources                                                                                     | 28,239.01      
|                                                                                                  |                
|Uses of Working Capital                                                                           |                
|Note Payable Crossfield                                                                           | (28,526.68)    
|Other Long term Liabilites                                                                        | (11,887.00)    
|Total Uses                                                                                        | (40,413.68)    
|================================                                                                  | ===========    
|Net change                                                                                        | (12,174.67)    
|                                                                                                  |                
|                                                                                                  |                
|Analysis of components of change                                                                  |                
|Increase (decrease) in Current Assets                                                             |                
|Accounts Receivable                                                                               | (6,987.57)     
|(Increase) decrease in Current Liabilities                                                        |                
|Accounts payable                                                                                  | 8,360          
|Walter Karl Advance                                                                               | (13,547.10)    
|Net Change                                                                                        | (12,174.67)    

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

On March 9, 1998, pursuant to an Agreement for Purchase and Sale of
Specified Business Assets ("Purchase Agreement"), a Promissory Note ("Note"),and
a Security Agreement ("Security Agreement") all dated March 9, 1998, Advanced
Oxygen Technologies, Inc. (the "Company") purchased certain tangible and
intangible assets (the "Assets") including goodwill and rights under certain
contracts, from Integrated Marketing Agency, Inc., a California Corporation
("IMA").

Pursuant to an employment agreement dated March 09, 1998 between the
Company and John Teuber ("Employment Agreement"), on September 04, 1998
the Company terminated John Teuber for cause without relinquishing any
of its rights or remedies.

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

The Company entered into a two year employment agreement ("NAG Agreement"
as contained in Exhibit I of the registrants SEC Form 10-K for the period
ending June 30, 1998) with Nancy Gaylord on March 13, 1998. On September
18, 1998, Nancy Gaylord terminated her employment with the Company. The
NAG Agreement had no provision for this termination. The Company entered
into a lease agreement as contained in Exhibit I of the registrants SEC
Form 10-QSB for the period ending September 30, 1998 with America-United
Enterprises Inc. on October 01, 1998 and took possession of 4,700 sf. of
premises on November 06,1998 in Santa Clarita for its CA location. Currently,
this is the only California location of the Company.

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

On January 29, 1999, pursuant to the Purchase Agreement of 1/28/99,
Advanced Oxygen Technologies, Inc. ("AOXY") purchased 1,670,000 shares
of convertible preferred stock of Advanced Oxygen Technologies, Inc. ("STOCK")
and a $550,000 promissory note issued by Advanced Oxygen Technologies,
Inc. ("Note") from Integrated Marketing Agency, Inc. ("IMA"). The terms
of the Purchase Agreement were: AOXY paid $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.

On December 31, 2000, AOXY entered into an
agreeement with Eastern Star, ltd, and Baldwin
Construction Co (the "Purchasers")
whereby  the Purchasers will buy three
million shares of capital stock of AOXY for
one hundred and twenty five thousand dollars
pursuant to a purchase agreement (the "Purchase
Agreement") contained herein as Exhibit
A. The Company has concluded the issuance
and delivery of the shares pursuant to the
Purchase Agreement. In addition, the Company
received a request from Ann Sejeroe for a
conversion of her 1 Preferred Share number
P 0002 issued April 16, 1998, and in accordance
with the restrictions, terms and conditions,
as evidenced on the reverse side of the share
certificate, the Company issued 333,333 shares
bearing a restrictive legend.

The location in Santa Clarita, CA is the
location for operations. Currently these
facilities are only being used for administrative
purposes and the Company's sales staff has
been eliminated. Current sales are out-sourced
through Walter Karl Inc. and Dunn & Bradstreet
(see below). The Company derives its revenues
mainly from database management. The Company
is currently in discussion with the landlord
of the location in Santa Clarita, CA to terminate
it lease early.

Database management includes managing client databases, assisting clients
in effective marketing with databases, providing database information to
clients, list rentals, and utilizing and structuring databases for fax
broadcasting.

The Company has a database management contract with Dunn and Bradstreet,
and Walter Karl, Inc., a division of InfoUSA, Inc. whereby, Walter Karl,
Inc. will broker the company's database . These contracts are currently
the majority of the revenue for the Company in California.

The Company also sells educational CD-ROMS. The content of the CD-ROMS
is derived from conferences, held by clients of the Company. All CD's are
in HTML format and are directly linked to the Internet sites of AOXY and
the Client.

Acquisition Efforts:

The Company continues it efforts to raise capital to support operations
and growth, and is actively searching acquisition or merger with another
company that would compliment AOXY or increase its earnings potential.
The Company has been in discussion with Companies looking to be acquired.
AOXY has not negotiated any terms nor proposed any acquisition of any of
these companies. In addition, the Company is in discussion with potential
lending institutions to assist in financing any proposed acquisition. The
Company expects difficulty in financing the growth of the increased business
or acquisition and has been concentrating on raising capital and/or obtaining
a line of credit.

Forward Looking Statements

Certain statements contained in this report, including statements concerning
the Company's future and financing requirements, the Company's ability
to obtain market acceptance of its products and the competitive market
for sales of small production business' and other statements contained
herein regarding matters that are not historical facts, are forward looking
statements; actual results may differ materially from those set forth in
the forward looking statements, which statements involve risks and uncertainties,
including without limitation to those risks and uncertainties set forth
in any of the Company's Registration Statement's under the heading "Risk
Factors" or any other such heading. In addition, historical performance
of the Company should not be considered as an indicator for future performance,
and as such, the future performance of the Company may differ significantly
from historical performance.

PART II

Item 1: Legal Proceedings

There were no legal proceedings brought against the Company during this
period.

Item 6. Exhibits and Reports on Form 8-K

Exhibit A: Purchase Agreement dated December 31, 2000 for the purchase
and sale of three million shares of capital stock of Advanced Oxygen Technologies,
Inc.

No Reports on Form 8-K were filed in this
period, however, a report on Form 8-K was
filed on May 14, 2001, subsequent to this
period end and prior to the date of this
report, whereby the Company has completed
the sale to Purchasers (the "Purchasers"
as defined in the Purchase Agreement) an
amount of three million (3,000,000) shares
(the "Regulation S Shares") of
the capital stock of AOXY, Inc., ("AOXY")
pursuant to the Purchase Agreement ("Purchase
Agreement" Exhibit A) in an amount to
each Purchaser as set forth on Schedule 1
of the Purchase Agreement attached thereto.
This report is contained herein as Exhibit
B.

SIGNATURE

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

Date: May 15, 2001

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

EXHIBIT A

PURCHASE AGREEMENT

THIS AGREEMENT made as of the 31st day of December, 2000, (herein,
together with the Schedules attached hereto, referred to as "Agreement")
by and among the persons listed on Schedule 1 hereto  (herein referred
to collectively as "Purchasers" and each a "Purchaser") and AOXY Inc.,
formerly named Advanced Oxygen Technologies, Inc. (herein referred to as
"Seller").

In reliance upon the representations and warranties made herein
and in consideration of the mutual agreements herein contained the parties
hereby agree as follows:

1. SALE AND PURCHASE OF STOCK.

a. Sale of Stock  to Purchasers.    Seller
shall at the closing of the transactions hereinafter provided:

i. Sell, transfer, assign and deliver to Purchasers an amount
of three million (3,000,000) shares (the " Initial Shares") of the capital
stock of AOXY, Inc., a Delaware Corporation, ("AOXY") in an amount to each
Purchaser as set forth on Schedule 1 hereto.

b. Consideration for Stock.   In consideration of the
sale of the Initial Shares and Option Shares,

i. Purchasers shall pay at the Closing (herein defined) to Seller
for the Initial Shares, the aggregate amount of US$125,000 (the "Initial
Purchase Price") in the form of an official bank check or a certified check
of the Purchasers payable to the Seller in the amount specified on Schedule
1 and Purchasers shall forgive any debt owed by AOXY to them, if any.

c. Transactions on the Closing Date

i. Delivery of Initial Shares.  At the Closing, Seller will
deliver to Purchasers stock certificates, representing the shares duly
endorsed for transfer with their respective signatures guaranteed in form
acceptable to the transfer agent of AOXY; and

ii. Delivery of Consideration.  At the Closing, Purchasers
will deliver to the Seller an official bank check or a certified check
of the Purchasers payable to the Seller in the amount of the Purchase Price
payable to such Seller as set forth on Schedule 1., and

iii. Documents.   Each of the documents contemplated
by this Agreement.
 
 d. CLOSING.     The Closing will take place
at the offices of Tartaglia Law Offices White Plains, New York,  at
10:00 A.M. on the date of execution and delivery hereof by all of the parties.

2. REPRESENTATIONS AND WARRANTIES OF SELLER.   The Seller,
as and for himself or itself, severally and not jointly,  represents
and warrants the following to the best of his or its knowledge without
independent investigation:

a. Organization and Standing.

i. AOXY is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Delaware, the State of
its incorporation, and is authorized to conduct business in and is in good
standing in each jurisdiction in which the character of the properties
owned by it or the nature of the business transacted by it makes such license
or qualification necessary.

ii. The certified copies heretofore delivered to AOXY, of the
certificate of incorporation, of all licenses to transact business and
of the by-laws of AOXY with all amendments to the date hereof are true,
complete and correct.

iii. AOXY has no subsidiaries.

b.  Capital Stock.

i. The capital stock of AOXY consists of (A) ninety million (90,000,000)
shares of common stock, par value one cent (US $0.01) per share of which
twenty nine million, six hundred forty thousand, two hundred and fifty
two (29,640,252) shares have been validly issued and are fully paid and
are non-assessable and are fully transferable, and (b) ten thousand non
issued shares to be issued upon conversion of five thousand shares of Preferred
Stock.

ii. None of the issued and outstanding shares is subject to any
voting trust agreement or other agreement relating to the voting thereof.

iii. No transfer tax will be payable with respect to the issuance
of AOXY's stock contemplated hereby.

c. Stock Ownership.   The Seller shall issue to Purchasers
at Closing authorized common stock of AOXY which is free and clear of any
encumbrances, liens or restrictions on sale, other than those applicable
to restricted securities as defined under the rules and regulations promulgated
by the Securities and Exchange Commission.

d. Validity of Agreement; Authority.   This Agreement
has been duly executed and delivered by the Seller and (assuming valid
execution and delivery by Purchasers) is a valid and binding obligation,
enforceable in accordance with its terms.

e. Authority to take Action.

i. The execution and delivery of this Agreement and delivery
of the subject shares and the carrying out of the provisions hereof will
not contravene any provisions of law, any order, judgment and/or decree
of any court or other governmental agency or the Seller's certificate of
incorporation, by-laws, charter, partnership agreement, if any, or any
indenture, agreement or other instrument to which the Seller is a party
or by which the Seller may be bound, or by which any property owned by
the Seller may be bound.

ii. All legal actions required to be taken in connection with
this Agreement pursuant to the laws of any State or other governmental
authority have been so taken.

f. Accounts Receivable.   AOXY accounts receivable are
indicated in the recent filings of AOXY in the form of 10-QSB and 10-KSB
and contained in Exhibit B herein.

g. Liabilities of AOXY.  AOXY has no liabilities or obligations
of any nature other than as indicated in the recent filings of AOXY in
the form of 10-QSB and 10-KSB.

h. No Dividends or Distributions.     Since
June 30, 1999, AOXY has not declared, set aside or paid to its stockholder
any dividend or other distribution in respect of its capital stock or redeemed
or purchased or otherwise acquired any of its capital stock or agreed to
take any such action.

i. Absence of Material Changes or Events.   Except for
matters publicly disclosed on (1) AOXY's Proxy Statements in connection
with the sale of its oxygen control technology to W.R. Grace ("Grace")
in February 1995 and in connection with the change of Articles of the Company,
the change of Auditors, and the change of the name; (2) AOXY's Reports
on Form 10-KSB with respect to  AOXY's fiscal years ended June 30,
through 1999  and (3) AOXY's Reports on Form 10-QSB for the quarters
ending September 30, 1999 and December 31, 1999 and AOXY's 8-K's filed
prior hereto, copies of which have been heretofore delivered to Seller,
since June 30, 1999 there has been no event or condition of any character,
materially and adversely affecting AOXY's financial position, assets, liabilities
(contingent or otherwise), results of operation, business or business prospects,
and AOXY has not:

i. Incurred any obligation or liability (absolute, accrued, contingent,
or otherwise) except in the ordinary course of business or except in connection
with the performance of this Agreement;

ii. Mortgaged, pledged or subjected to lien, charge or other
encumbrance, any of its assets, tangible or intangible;

iii. Sold or transferred any of its assets or canceled any debts
or claims, or waived any right of substantial value;

iv. Made or committed to make any single capital expenditure
in excess of five thousand dollars ($5,000.00) or purchased or contracted
to purchase any land;

v. Increased the compensation payable or to become payable by
AOXY to any of its officers, employees or agents, or any bonus payment
or arrangement made to or with any of them;

vi. Agreed to modify in any material respect any contract or
other instrument to which AOXY is a party;

vii. Increased or changed the medical insurance provided for
the benefit of its employees and their families.

viii. Increased or changed the amount of disability insurance
provided for the benefit of its employees;

ix. Entered into any transaction other than in the ordinary course
of business; or

x. Made any material change in any method of accounting or any
accounting practice.

j. Title to Property.    AOXY has material assets
as indicated in the filings of AOXY in the form of 10-QSB and 10-KSB..

k. Buildings, Equipment and Motor Vehicles.   
AOXY is the owner of buildings, equipment or motor vehicles as indicated
in the filings of AOXY in the form of 10-QSB and 10-KSB.

l. Tax Status.

i. AOXY has heretofore furnished to Seller true and complete
copies of all federal, state, local and foreign income tax returns of AOXY
filed for the three (3) years ended June 30, 1995.  Said tax returns
of AOXY have not been audited by the applicable taxing authorities. 
No agreements made by AOXY for an extension of time for the assessment
of any tax are now in effect.  All taxes, including interest and penalties
thereon, shown on said tax returns to be due and payable by AOXY, or required
to be withheld by AOXY on or before the date hereof, have been paid or
fully reserved for and withheld and no formal written claim for any tax,
assessment or levy for which AOXY may become liable exists which has not
been settled.

ii. All other taxes, due and payable at the Closing Date, of
any kind whatsoever, including, but not limited to, estimated income tax,
franchise tax, excise tax, doing business tax, payroll tax, personal property
tax, use tax and sales tax are as indicated in the filings of AOXY in the
form of 10-QSB and 10-KSB..

m. Status of Contracts.   Except as reflected in the
filings of AOXY in the form of 10-QSB and 10-KSB and its normal course
of business, AOXY is not a party to any written or oral (i) contract for
the employment of any officer or individual employee, or any pension, profit
sharing, bonus, retirement, stock option or similar incentive or deferred
compensation plan or arrangement in effect with its officers, employees
or others; (ii) continuing contract for the acquisition of real estate
or fixed assets; (iii) financing arrangement involving the mortgaging,
pledging or other hypothecation of assets or involving borrowing which
may not be repaid in part or in full on not more than thirty (30) days'
notice with reference to unearned or amortized discount and without premium
or penalty; (iv) contract with any labor union; (v) continuing contract
for the future purchase of materials or supplies; (vi) contract with any
agent, representative or distributor.  True and complete copies of
the filings of AOXY in the form of 10-QSB and 10-KSB to Purchaser.

n.  Status of Leases.    AOXY is not a party
to any leases other than as indicated in the filings of AOXY in the form
of 10-QSB and 10-KSB.

o. Directors and Officers; Compensation;.    
Schedule 3(o) hereto  contains a true an complete list showing (i)
the names of all directors and officers of AOXY; (ii) the names of all
persons whose compensation from AOXY for the period beginning July 1, 1999
and ending March 31, 2000 will equal or exceed ten thousand dollars ($10,000.00)
together with a statement of the full amount paid or payable to each such
person for services rendered or to be rendered in such period and the basis
therefor; and (iii) the names of all persons holding powers of attorney
from AOXY, and a summary statement of the terms thereof;

p. Status of Insurance.  AOXY has no insurance.

q. Permits and Licenses.     AOXY is not required
to have permits, licenses, approvals, and authorization of all federal,
state, local and foreign authorities.

r. Litigation.  There is no action, suit, proceeding or investigation
pending, or to the knowledge of AOXY threatened, against or affecting AOXY
before any court, arbitrator or administrative or governmental body and
AOXY is not presently subject to or in default in respect of any order,
injunction or decree of any court or government instrumentality other than
as indicated in the filings of AOXY in the form of 10-QSB and 10-KSB.

s. Compliance with Laws.   Except as reflected on Schedule
3(s), AOXY is not in violation of any law, regulation or ordinance which
violation would materially and adversely affect it or its operations.

t. Employee Benefit Plans.  AOXY is not party to any bonus,
incentive compensation, profit-sharing, pension, retirement, stock purchase,
stock option, deferred compensation, hospitalization, group insurance,
death benefit, disability, collective bargaining and other fringe benefit
plans, trust agreements, arrangements or commitments other than as indicated
in the filings of AOXY in the form of 10-QSB and 10-KSB.

u. Offer to Buy.  No offer to buy the Shares was made to
AOXY by any person in the United States.
 
 v. Pre-Arranged Transaction.  The transactions contemplated
by this Agreement:

i. have not been pre-arranged with a purchaser who is in the
United States or is a US Person; and

ii. are not part of a plan or scheme to evade the registration
provisions of the Securities Act of 1933 (the "1933 Act").

w. Stop Transfer.  AOXY has not issued, and provided nothing
comes to AOXY's attention after the closing date that will cause it to
believe in good faith that the issuance of the Shares was in contravention
with any United States law, will not issue, any stop transfer order or
other order impeding the sale and delivery of the Shares, or any underlying
shares except for a stop order restricting the sale of the Shares into
the United States or to, or for the account or benefit of, US Persons during
the Restricted Period, as hereinafter defined.

3. REPRESENTATIONS AND WARRANTIES OF PURCHASERS.    
Each Purchaser, as and for itself or himself, severally and not jointly,
represents and warrants the following:

a. Organization and Standing.

i. Each corporate Purchaser is  a corporation duly organized,
validly existing, and in good standing under the laws of the place of its
incorporation.

ii. The copy heretofore delivered to Seller, of the certificate
of incorporation or charter of each corporate Purchaser with all amendments
to the date hereof are true, complete and correct.

iii. Each corporate Purchaser has no subsidiaries, except as
set forth on Schedule 4(a).

b. Validity of Agreement; Authority.   This Agreement
has been duly executed and delivered by the Purchasers and (assuming valid
execution and delivery by the Seller) is a valid and binding obligation
of each Purchaser, enforceable in accordance with its terms.

c. Authority to take Action.

i. The execution and delivery of this Agreement and delivery
of the subject shares and the carrying out of the provisions hereof will
not contravene any provisions of law, any order, judgment and/or decree
of any court or other governmental agency or any corporate Purchaser's
certificate of incorporation or charter, by-laws or any indenture, agreement
or other instrument to which any Purchaser is a party or by which it may
be bound, or by which any property owned by it may be bound.

ii. All corporate and legal actions required to be taken in connection
with this Agreement pursuant to the laws of any State or other governmental
authority have been so taken.

d. Compliance with Laws.    No Purchaser has received
notice of any violation of any law, regulation or ordinance which violation
would materially and adversely affect it or its operations.

e. Consents.  No Purchaser is required to obtain consent,
approval, registration, qualification or filing with any United States
federal, state or local government authority or any foreign government
authority in connection with such Purchaser's execution of this Agreement
or consummation of the transactions contemplated hereby, other than the
required filings with the United States Securities and Exchange Commission.

f. Site and Condition of Sale.  Each Purchaser is not a US
Person (as that term is defined in Exhibit A attached hereto).  Each
Purchaser acknowledges that AOXY has not solicited this offer to purchase
the Shares within the United States and that the sale of the Shares will
not take place within the United States (for this purpose, the "United
States" means the Unites States of America, its territories and possessions,
and any state of the United States and the District of Columbia). 
Each Purchaser also acknowledges that the Shares have not been registered
under the laws of any other country or jurisdiction and that AOXY takes
no responsibility for complying with any such laws.

g. Investment Purposes.  Each Purchaser is acquiring the
Shares for investment, for its own account,  and not with a view to,
or for resale in connection with, any distribution of any part thereof. 
Each Purchaser acknowledges that the Seller is selling the Shares hereunder
in reliance upon an exemption from the registration provisions of the Securities
Act of 1933, as amended (the "Act") which depends upon, among other things,
the bona fide nature of the investment intent and accuracy of such Purchaser's
representations as expressed herein.  Each Purchaser is able to fend
for itself, can bear the economic risk of this investment and has such
knowledge and experience in financial or business matters that it can evaluate
the merits and risks of the investment.  Each Purchaser is an "accredited
investor" within the meaning of Rule 501(a) of Regulation D promulgated
under the Securities Act.

Except as set forth in this Agreement, no representations or
warranties, oral or otherwise, have been made to Purchasers, including
without limitation, any representations concerning the future prospects
of AOXY, by any Seller, by any agent of any Seller, any employees or affiliates
of any Seller or by any other person whether or not associated with this
transaction and in entering into this transaction Purchaser is not relying
upon any information.

Without in any way limiting the representations set forth above,
Purchaser further agrees not to make any disposition of all or any portion
of the Shares that constitutes "restricted securities" delivered pursuant
hereto unless (1) there is then in effect a Registration Statement under
the Act covering the proposed disposition and disposition is made according
to the Registration Statement; or (2) the transferee has agreed in writing
for the benefit of AOXY to be bound by the restrictions set forth in this
section, to the extent applicable; and each Purchaser has furnished AOXY
with an opinion of counsel, reasonably satisfactory to AOXY,  that
such disposition will not require registration of the shares under the
Act.

4. CONDITIONS PRECEDENT TO PURCHASERS' OBLIGATION TO COMPLETE THE TRANSACTION.   
The obligation of each Purchaser to consummate the transactions described
in Section 1 hereof is subject to the fulfillment of each of the following
conditions prior to or at the Closing:

a. Delivery of Initial Shares.  Each Purchaser shall have
received delivery of the Shares as contemplated herein.

b. Representations and Warranties of Seller.   The representations
and warranties made by the Seller herein shall be true and correct in all
material respects.

c. No actions or proceedings.     No action
or proceeding shall be pending or threatened on the Closing Date wherein
an unfavorable judgment, decree or order would prevent or make unlawful
the carrying out of this Agreement or would cause the transaction contemplated
by this Agreement to be rescinded or would require a Purchaser to divest
itself of the shares to be acquired.

It is understood that the certificates evidencing the Shares
sold pursuant hereto may bear legends in substantially the following form:

THE SECURITIES REPRESENTED BY THIS CERTIFICATION HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). 
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, THESE
SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF SAID ACT AND UPON OBTAINING AN OPINION OF COUNSEL (WHICH MAY BE COUNSEL
TO THE COMPANY) SATISFACTORY TO THE COMPANY THAT SUCH DISPOSITION MAY BE
MADE WITHOUT REGISTRATION UNDER SAID ACT, OR UNLESS SOLD PURSUANT TO RULE
144.

5. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO COMPLETE THE TRANSACTION. 
The obligation of the Seller to consummate the transactions described in
Section 1 hereof is subject to the fulfillment of each of the following
conditions prior to or at the Closing:

a. Purchase Price.  The Seller shall have received the purchase
price to which each such Seller is entitled hereunder.

b. Representations and Warranties of Purchasers.   
The representations and warranties made by the Purchasers herein shall
be true and correct in all material respects.

c. No actions or proceedings.     No action
or proceeding shall be pending or threatened on the Closing Date wherein
an unfavorable judgment, decree or order would prevent or make unlawful
the carrying out of this Agreement or would cause the transaction contemplated
by this Agreement to be rescinded.

6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.    
All representations and warranties contained herein or made in writing
by the parties in connection with the transactions contemplated hereby
shall survive the execution and delivery of this Agreement and the closing
of the transactions contemplated by this Agreement, regardless of any investigation
made by or on behalf of the parties or any payment for and acceptance of
stock hereunder.  All statements contained in any certificate, list,
letter or other instrument delivered by or on behalf of the parties pursuant
hereto or in connection with the transactions contemplated hereby (including
statements, letters or certificates of independent parties such as public
accountants or attorneys) shall constitute representations and warranties
by the parties hereunder.

7.  INDEMNIFICATION.

a. Of Seller.   Each Purchaser agrees to defend, indemnify
and hold harmless Seller against and in respect of (i) any and all losses,
liabilities, damages, deficiencies, costs or expenses (including, without
limitation reasonable attorneys fees and disbursements) resulting from
(A) the breach of any covenant, warranty or agreement hereunder by such
Purchaser or (B) any representations made by such Purchaser in this Agreement,
not being complete and correct or being false and misleading or containing
any material misstatement of fact or omitting any material fact required
to be stated to make the statements therein not misleading; and (ii) any
and all actions, suits, proceeding, claims, demands, assessments, judgments,
costs and expenses (including, without limitation, reasonable attorneys
fees and disbursements) incident to any of the foregoing; provided, however,
that if any such action, suit or proceeding shall be asserted against Seller
in respect of which Seller or AOXY propose to demand indemnification, such
Purchaser shall be promptly notified to that effect and shall have the
right to assume the control of the defense, compromise or settlement thereof,
including, at their own expense, employment of counsel reasonably acceptable
to Seller.

b. Of Purchasers.    The Seller, severally and
not jointly, agrees to defend, indemnify and hold harmless Purchasers against
and in respect of (i) any and all losses, liabilities, damages, deficiencies,
costs or expenses (including, without limitation reasonable attorneys fees
and disbursements) resulting from (A) the breach of any covenant, warranty
or agreement hereunder by such Seller or (B) any representations made by
such Seller in this Agreement, not being complete and correct or being
false and misleading or containing any material misstatement of fact or
omitting any material fact required to be stated to make the statements
therein not misleading; and (ii) any and all actions, suits, proceeding,
claims, demands, assessments, judgments, costs and expenses (including,
without limitation, reasonable attorneys fees and disbursements) incident
to any of the foregoing; provided, however, that if any such action, suit
or proceeding shall be asserted against a Purchaser  in respect of
which such Purchaser proposes to demand indemnification, all Seller shall
be promptly notified to that effect and the Seller or Seller against whom
indemnification is sought shall have the right to assume the control of
the defense, compromise or settlement thereof, including, at their own
expense, employment of counsel reasonably acceptable to such Purchaser.

c. Payment.    Any indemnification payments required
pursuant to Section 7(a) and 7(b) hereof shall be paid in full within ten
(10) days after receipt of notice specifying (i) the amount required to
be paid and (ii) the nature of the event or events giving rise to indemnification
hereunder.

d. Liability.    The liability of the parties under
this Section 7 shall be without limitation, and the failure of either of
them to withhold amounts from any payments shall not act as a waiver of
or diminish the obligations of parties under this Section 7.

e. Interest.    Any and all amounts which may become
due and payable pursuant to this Section 7 shall bear interest from the
date when due to the date of payment at a percentage rate of twelve (12%)
percent per annum.

8. COMMISSIONS, FEES AND EXPENSES.     Purchasers
and Seller each represent and warrant to the other that the negotiations
relative to this Agreement and the transactions contemplated hereby have
been carried on by Purchaser and Seller directly and in such manner as
not to give rise to any valid claim against either for a  brokerage
commission, finder's fee or other like payment.

9. APPLICABLE LAW.     This Agreement shall be governed
by, and construed in accordance with, the law of the State of Delaware
(other than its law with respect to conflicts of laws), including all matters
of construction, validity and performance.

10. NOTICES.    All notices, requests, permissions, waivers,
and other communications hereunder shall be in writing and shall be deemed
to have been duly given if signed by the respective persons giving them
(in the case of any corporation the signature shall be by an officer thereof)
and delivered by hand, sent via facsimile transmission, nationally-recognized
overnight courier service or deposited in the United States mail (registered,
return receipt requested), properly addressed and postage prepaid to the
intended recipient thereof to the address for such person on the signature
page(s) hereof.  All such notices, requests, consents and other communications
shall be deemed to have been delivered (a) in the case of personal delivery
or delivery by telecopy, on the date of such delivery, (b) in the case
of dispatch by nationally-recognized overnight courier, on the next business
day following such dispatch and (c) in the case of mailing, on the third
business day after the posting thereof.  Such names and addresses
may be changed by such notice.

11. ENTIRE AGREEMENT; AMENDMENT; HEADINGS; COUNTERPARTS.  This
Agreement, including the Schedules hereto, all of which are a part hereof,
contains the entire understanding of the parties hereto with respect to
the subject matter contained herein and therein, supersedes and cancels
all prior agreements with respect hereto or thereto and may be amended
only by a written instrument executed by the parties or their respective
successors or assigns.  There are no restrictions, promises, representations,
warranties, agreements or undertakings of any party hereto with respect
to the transactions under this Agreement other than those set forth herein
or made hereunder in the documents delivered at each Closing.  The
section and paragraph headings contained in this Agreement and the description
of exhibits attached hereto are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement. 
This 
Agreement may be executed in one or more counterparts and each counterpart
shall be deemed to be an original.

12. PARTIES IN INTEREST.   Except with the express written
consent of the other parties hereto, this Agreement shall not be assignable
or otherwise transferred in whole or in part.  This Agreement shall
inure to the benefit of and be binding upon the parties and their respective
successors.  Nothing in this Agreement, express or implied, is intended
to confer upon any other person any rights or remedies under or by reason
of this Agreement.13. SEVERABILITY.  The invalidity of any portion hereof shall not
affect the validity, force or effect of the remaining portions hereof.14. FURTHER ASSURANCES.    Seller and Purchasers shall
execute and deliver or cause to be executed and delivered such additional
instruments, and take such other actions as the other party may reasonably
request in writing in order to effectuate the purposes of this Agreement.IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.PURCHASERS:Eastern Star, Bay Street, Nassau Bahamas
     /s/A. Howarth /s/Baldwin Construction, Ltd
     Gml Sandbjerg 79, DK 6000, Kolding, Denmark
     /s/ Bent Jul /s/Seller:___________________________________
     Advanced Oxygen Technologies, Inc.
     Robert E. Wolfe, CEO, ChairmanSchedule 1
 
Purchasers
Name & Address Amount in US Dollars ($) Debt Reduction Amount in
US Dollars Number of Shares
Eastern Star, Ltd.
Bay Street, Nassau, Bahamas $113,000.00 Any Claim prior to 12/31/2000
2,712,000
Baldwin Construction Co
Gml. Sandbjerg 79
DK 6000, Kolding Denmark $12,000.00 $0.00 288,000
Total $125,000.00  3,000,000Schedule 4(a)Subsidiaries of Purchasers/SellersNONESchedule 3(s)Compliance with Laws (Seller)Purchaser has not held an annual meeting since October, 1993.Schedule 3(o)Directors:Robert E. Wolfe
Joseph N. NollOfficers:Robert E. Wolfe    Chairman of the Board and
      Chief Executive Officer, President,
Chief Financial Officer and DirectorSchedule 3(m)Contracts of AOXYAOXY contracts are indicated in its filings on Form 10-KSB, 10-QSB,
8-K and other public filings with the SEC.
EXHIBIT A

US PERSON1. "US Person" means:(i)  Any natural person resident in the United States;(ii)  Any partnership or corporation organized or incorporated
under the laws of the United States;(iii)      Any estate of which any executor
or administrator is a US person;(iv)  Any trust of which any trustee is a US person;(v)  Any agency or branch of a foreign entity located in
the United States;(vi)  Any non-discretionary account or similar account (other
than an estate or trust) held by a dealer or other fiduciary for the benefit
or account of a US person;(vii)  Any discretionary account or similar account (other
than an estate or trust) held by a dealer or other fiduciary organized,
incorporated, or (if an individual) resident in the United States; and(viii)  Any partnership or corporation if: (A) organized
or incorporated under the laws of any foreign jurisdiction; and (B) formed
by a US person principally for the purpose of investing in securities not
registered under the Act, unless it is organized or incorporated, and owned,
by accredited investors (as defined in Rule 501(a)) who are not natural
persons, estates or trusts.2. Notwithstanding paragraph 1 of this rule, any discretionary account
or similar account (other than an estate or trust) held for the benefit
or account of a non-US person by a dealer or other professional fiduciary
organized, incorporated, or (if an individual) resident in the United States
shall not be deemed a "US person."3. Notwithstanding paragraph 1, any estate of which any professional
fiduciary acting as executor or administrator is a US person shall not
be deemed a US person if:(i)  An executor or administrator of the estate who is not
a US person has sole or shared investment discretion with respect to the
assets of the estate; and(ii)  The estate is governed by a foreign law.4. Notwithstanding paragraph 1, any trust of which any professional
fiduciary acting as trustee is a US person shall not be deemed a US person
if a trustee who is not a US person has sole or shared investment discretion
with respect to the trust assets, and no beneficiary of the trust (and
no settlement or if the trust is revocable) is a US person.5. Notwithstanding paragraph 1, an employee benefit plan established
and administered in accordance with the law of a country other than the
United States and customary practices and documentation of such country
shall not be deemed a US person.6. Notwithstanding paragraph 1, any agency or branch of a US person
located outside the United States shall not be deemed a "US person" if:(i)  The agency or branch operates for valid business reasons;
and(ii)  The agency or branch is engaged in the business of
insurance or banking and is subject to substantive insurance or banking
regulation, respectively, in the jurisdiction where located.7. The International Monetary Fund, the International Bank for Reconstruction
and Development, the Inter-American Development Bank, the Asian Development
Bank, the African Development Bank, the United Nations, and their agencies,
affiliates and pension plans, and any other similar international organizations,
their agencies, affiliates and pension plans shall not be deemed "US persons."
EXHIBIT B
RECENT FILINGS
 

Exhibit B, Report on Form 8-K
=====================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------------------------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
January 12, 2001
(Date of Earliest Event Reported)
ADVANCED OXYGEN TECHNOLOGIES, Inc.
(Exact Name of Registrant as Specified in
its Charter)
Delaware 000-09951 91-1143622
(State of Incorporation) (Commission File
No.) (I.R.S. Employer Identification No.)
26883 Ruether Avenue
Santa Clarita, CA 91351
(Address of Principal Executive Offices)
Registrant's Telephone Number: (661) 298-3333
230 Park Avenue, Suite 1000
New York, NY, 10169
(Former Address)
=====================================================================
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION & EXHIBITS. 
(c) Exhibits 
Exhibit A Stock Acquisition Agreement 
ITEM 9. SALES OF EQUITY SECURITIES PURSUANT
TO REGULATION S. 
The Company has completed the sale to Purchasers
(the "Purchasers" as defined in
the Purchase Agreement) an amount of three
million (3,000,000) shares (the "Regulation
S Shares") of the capital stock of AOXY,
Inc., ("AOXY") pursuant to the
Purchase Agreement ("Purchase Agreement"
Exhibit A) in an amount to each Purchaser
as set forth on Schedule 1 of the Purchase
Agreement attached thereto. The Regulation
S Shares have not been 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 Regulations S Shares consisted of
$125,000 cash and forgiveness of debt.
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 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; and (vi) it agreed that
it would not transfer Regulation S Shares
to a U.S. Person before the 360th day from
the date the Buyer purchased the Regulation
S Shares. 
AOXY represented to the Buyers that it had
not conducted any "directed selling
efforts" 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.

SIGNATURES 
Pursuant to the requirements of the Securities
and Exchange Act of 1934, as amended, the
registrant has duly caused this report to
be signed on its behalf by the undersigned
hereunto duly authorized. 
Dated: January 12, 2001 
ADVANCED OXYGEN TECHNOLOGIES, INC. 
BY:/s/ Robert E. Wolfe /s/ 
------------------------------- 
Robert E. Wolfe 
President 
Exhibit A (see above)