U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
x ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended June 30, 2020
Or
¨
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to
__________
Commission File Number: 0-9951
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ADVANCED OXYGEN TECHNOLOGIES, INC.
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(Exact name of Registrant as specified in its charter)
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Delaware
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91-1143622
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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C/O Crossfield, Inc., 653 VT Route 12A,
PO Box 189, Randolph, VT 05060
(Address of Principal Executive Offices) (Zip
Code)
(212) 727-7085
(Registrant’s telephone number, including
area code)
Securities registered pursuant to Section 12(b)
of the Act: ¨
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Title of Class
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Trading Symbol
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Name of each exchange on
which registered
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Common Stock, $0.01 Par Value
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AOXY
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OTC:PINK
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Securities registered under Section 12(g) of
the Exchange Act: Common Stock, par value $.01per share
Indicate by check mark if the registrant is
a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨
No x
Indicate by check mark if the registrant is
not required to file reports pursuant to section 13 or Section 15(d) of the Act. Yes ¨
No x
Indicate by check whether the registrant: (1)
has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant
has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files). Yes x
No ¨
Indicate by check mark if disclosure of delinquent
filers in response to Item 405 of Regulation S-K(§ 229.405 of this chapter) is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. Yes ¨ No x
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions
of "large accelerated filer", "an accelerated filer" and "smaller reporting company" in Rule 12b-2
of the Exchange Act.
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Large Accelerated Filer
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Accelerated Filer
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Non Accelerated Filer
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x
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Smaller Reporting Company
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x
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If an emerging growth company, indicate by
check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act.
Check one: Yes ¨
No x
The aggregate market value of Common Stock
at December 31, 2019 held by non-affiliates approximated $76,283, based upon the average bid and asked prices for a share of Common
Stock on that date. For purposes of this calculation, persons owning 10% or more of the shares of Common Stock are assumed to be
affiliates, although such persons are not necessarily affiliates for any other purpose. As of August 20, 2020, there were 3,292,945
issued shares and outstanding shares of the registrant's Common Stock, $0.01 par value.
Documents incorporated by reference: None.
TABLE OF CONTENTS
Cautionary Language Regarding Forward-Looking
Statements and Industry Data
This Annual Report on Form 10-K contains "forward-looking
statements". Forward-looking statements are based upon our current assumptions, expectations and beliefs concerning future
developments and their potential effect on our business. In some cases, you can identify forward-looking statements by the following
words: "may," "could," "would," "should," "expect," "intend," "plan,"
"anticipate," "believe," "approximately," "estimate," "predict," "project,"
"potential" or the negative of these terms or other comparable terminology, although the absence of these words does
not necessarily mean that a statement is not forward-looking. This information may involve known and unknown risks, uncertainties
and other factors which may cause our actual results, performance or achievements to be materially different from the future results,
performance or achievements expressed or implied by any forward-looking statements.
Factors that may cause or contribute actual
results to differ from these forward-looking statements include, but are not limited to, the following:
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all the risks inherent in the owning, buying, leasing, selling, or developing real estate or the real estate business;
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the Company's absence of significant sales or sales revenues, which make it difficult to predict future performance;
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the need to make multiple assumptions in preparing forecasts and projections of any kind, and significant difficulties in predicting and forecasting accurately the expenses likely to be incurred and the revenues likely to be generated in the Company's future operations;
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significant competition in the real estate leasing and development business;
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the risk that the Company will have difficulties executing its intended business plan;
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the risk that the Company's sole source of revenues may discontinue leasing, become insolvent, or not renew its relationship with the Company;
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potential barriers, risks, uncertainties and obstacles to the Company's business plans;
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risks associated with the tightening or other adverse changes in the overall capital and credit markets and decreased availability of investment capital and/or credit, bank financing or other debt financing as and when needed or at favorable terms including fixed and/or low interest rates; and
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other risks over which we have no control.
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All forward-looking statements speak only as
of the date of this report. We undertake no obligation to update any forward-looking statements or other information contained
herein. Stockholders and potential investors should not place undue reliance on these forward-looking statements. Although we believe
that our plans, intentions and expectations reflected in or suggested by the forward-looking statements in this report are reasonable,
we cannot assure stockholders and potential investors that these plans, intentions or expectations will be achieved. These cautionary
statements qualify all forward-looking statements attributable to us or persons acting on our behalf.
Information regarding market and industry statistics
contained in this report is included based on information available to us that we believe is accurate. It is generally based on
academic and other publications that are not produced for purposes of securities offerings or economic analysis. Forecasts and
other forward-looking information obtained from these sources are subject to the same qualifications and the additional uncertainties
accompanying any estimates of future market size, revenue and market acceptance of products and services. Except as required by
U.S. federal securities laws, we have no obligation to update forward-looking information to reflect actual results or changes
in assumptions or other factors that could affect those statements.
PART I
ITEM 1- DESCRIPTION OF BUSINESS
GENERAL:
Advanced Oxygen Technologies, Inc. ("Advanced
Oxygen Technologies", "AOXY", or the "Company") operations are derived from its wholly owned subsidiaries
Anton Nielsen Vojens, ApS ("ANV"), Sharx Inc. and its wholly owned subsidiary Sharx DK ApS (collectively “Sharx”).
AOXY, incorporated in Delaware in 1981 under
the name Aquanautics Corporation, was, from 1985 until May 1995, a startup specialty materials company producing new oxygen control
technologies. From May of 1995 through December of 1997 AOXY had minimal operations and was seeking funding for operations and
companies to which it could merge or acquire. In March of 1998 AOXY began operations in California. From 1998 through 2000, the
business consisted of producing and selling CD- ROMS for conference events, advertisement sales on the CD's, database management
and event marketing all associated with conference events. From 2000 through March of 2003, the business consisted solely of database
management. From 2003 through April 2005, the business operations were derived totally from the Company's wholly owned business,
IP Service, ApS, a Danish IP security vulnerability company ("IP Service"). Business operations have been solely derived
from ANV and Sharx.
ANV is a Danish company that owns commercial
real estate in Vojens, Denmark. ANV's revenues are derived solely from the lease revenue from its real estate. Circle K Denmark
A/S, formerly StatOil A/S, leases the facility from ANV. The lease expires in 2026.
Sharx Inc. is a Wyoming corporation incorporated
in April 2020 and operations are derived from its wholly owned subsidiary Sharx Dk ApS.
Sharx DK ApS is a Danish company, incorporated
in April 2020. On June 30, 2020, Sharx DK ApS, entered into a Distribution Agreement (the “Distribution Agreement”
Exhibit 10.1) with Cleaver ApS, a Danish corporation (“Cleaver ”), whereby Cleaver has appointed the Company as Cleaver’s
nonexclusive distributor of its products in Europe, South America and North America. Cleaver is a manufacturer of a line of products
for the logistics and cargo industry.
AOXY, incorporated in Delaware in 1981 under
the name Aquanautics Corporation, was, from 1985 until May 1995, a startup specialty materials company producing new oxygen control
technologies. From May of 1995 through December of 1997 AOXY had minimal operations and was seeking funding for operations and
companies to which it could merge or acquire. In March of 1998 AOXY began operations in California. From 1998 through 2000, the
business consisted of producing and selling CD- ROMS for conference events, advertisement sales on the CD's, database management
and event marketing all associated with conference events. From 2000 through March of 2003, the business consisted solely of database
management. From 2003 through April 2005, the business operations were derived totally from the Company's wholly owned business,
IP Service, ApS, a Danish IP security vulnerability company ("IP Service"). Business operations have been solely derived
from ANV and Sharx.
HISTORY OF THE COMPANY:
THE PATENT SALE
On May 1, 1995, the Company sold its patents,
and all related technology and intellectual property rights (collectively the "Patents Rights") to W. R. Grace &
Co. Conn., a Connecticut corporation ("Grace"). The price for the Patents Rights was $335,000, in cash, and a royalty
until April 30, 2007.
STOCK ACQUISITION AGREEMENT, 12/18/97
Pursuant to a Stock Acquisition Agreement dated
as of December 18, 1997, Advanced Oxygen Technologies, Inc. ("AOXY") has issued 23,750,00 shares of its common stock,
par value $.01 per share for $60,000 cash plus consulting services rendered valued at $177,500, to Crossland, Ltd., ("Crossland"),
Eastern Star, Ltd., ("Eastern Star"), Coastal Oil, Ltd. ("Coastal") and Crossland, Ltd. (Belize) ("CLB").
Crossland and Eastern Star, Ltd. are Bahamas corporations. Coastal Oil and CLB are Belize corporations.
PURCHASE AGREEMENT, 12/18/97
Pursuant to a Purchase Agreement dated as of
December 18, 1997, CLB, Triton-International, Ltd., ("Triton"), a Bahamas corporation, and Robert E. Wolfe purchased
an aggregate of 800,000 shares of AOXY's common stock from Edelson Technology Partners II, L.P. ("ETPII") for $10,000
cash. AOXY issued 450,000 shares of its capital stock to ETPII in exchange for consulting services to be rendered. The general
partner of ETPII is Harry Edelson, Chairman of the Board and Chief Executive Officer of AOXY prior to the transactions resulting
in the change of control (the "Transactions"). Prior to the Transactions Mr. Edelson directly or indirectly owned approximately
25% of the issued and outstanding common stock of AOXY, and following the completion of Mr. Edelson's consultancy he will own approximately
1.5%.
ACQUISITION OR DISPOSITION OF ASSETS, 03/09/98.
On March 9, 1998, pursuant to an Agreement
for Purchase and Sale of Specified Business Assets, a Promissory Note, and a Security Agreement all dated March 9, 1998, Advanced
Oxygen Technologies, Inc. (the "Company") purchased certain tangible and intangible assets (the "Assets") including
goodwill and rights under certain contracts, from Integrated Marketing Agency, Inc., a California Corporation ("IMA").
The assets purchased from IMA consisted primarily of furniture, fixtures, equipment, computers, servers, software and databases
previously used by IMA in its full service telemarketing business. The purchase price was $2,000,000.
PURCHASE AGREEMENT OF 1/29/99
On January 29, 1999, pursuant to the Purchase
Agreement of 1/28/99, Advanced Oxygen Technologies, Inc. ("AOXY") purchased 1,670,000 shares of convertible preferred
stock of Advanced Oxygen Technologies, Inc. ("STOCK") and a $550,000 promissory note issued by Advanced Oxygen Technologies,
Inc. ("Note") from Integrated Marketing Agency, Inc. ("IMA"). The terms of the Purchase Agreement were: AOXY
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.
ACQUISITION OR DISPOSITION OF ASSETS OF
03/05/2003
Pursuant to a stock acquisition agreement,
on March 05, 2003 Advanced Oxygen Technologies, Inc. (AOXY or the Buyer) purchased 100% of the issued and outstanding stock of
IP Services, ApS (IP or the Company) from all of its owners (the Shareholders) for value of five hundred thousand dollars (Purchase
Price). AOXY issued fourteen million shares of common stock and one share of preferred convertible stock to the Shareholders for
payment and consideration of the Purchase Price.
MOBILIGROUP ApS MERGER AGREEMENT OF 04/
23/2005
Pursuant to a merger agreement attached hereto
as exhibit I, ("Merger Agreement"), on April 23, 2005 Mobile Group Inc., ("Mobile "a formerly wholly owned
subsidiary of Advanced Oxygen Technologies, Inc. acquired 100% of the issued and outstanding stock of Mobiligroup, ApS in exchange
for 800 shares of Mobile representing 80% of the issued and outstanding shares of Mobile.
SALE OF IP SERVICE: STOCK ACQUISITION AGREEMENT
OF 04/27/2005
Pursuant to a stock acquisition agreement,
on April 27, 2005 Advanced Oxygen Technologies, Inc. sold 100.00% of the stock of IP Service ApS to Securas, Ltd. 7 Stewards Court,
Carlisle Close, Kingston Upon Thames, Surrey KT2 7AU, United Kingdom ("SecurAs").
PURCHASE OF ANTON NIELSEN VOJENS, ApS: STOCK
ACQUISITION AGREEMENT OF FEBRUARY 3, 2006
Pursuant to a stock acquisition agreement on
February 3, 2006 Advanced Oxygen Technologies, Inc. ("AOXY") purchased 100.00% of the stock of Anton Nielsen Vojens ApS,
a Danish company from Borkwood Development Ltd. (a current shareholder of AOXY) for Six Hundred and Fifty Thousand US Dollars.
The transaction was financed as follows:
1) AOXY executed a promissory note ("Note")
for $650,000, payable to the sellers of ANV ("Sellers") payable and amortized monthly and carrying an interest at 5%
per year. AOXY has the right to prepay the note at any time with a notice of 14 days. To secure the payment of principal and interest
the Sellers will receive a perfect lien and security interest in the Shares in the company ANV until the note with accrued interest
is paid in full and,
2) In the case that the Note has not been repaid
within 12 months from the day of closing the Sellers have the right to convert the debt to common stock of Advanced Oxygen Technologies,
Inc. in an amount of non diluted shares calculated on the conversion Date, equal to the lesser of : a) Six hundred and Fifty thousand
(650,000) or the Purchase Price minus the principal payments made by the buyer, whichever is greater, divided by the previous ten
day closing price of AOXY as quoted on the national exchange, or b) Fifteen million shares, whichever is lesser. The Sellers must
demand such conversion with a notice of 1 month.
SUBDIVISION AND SALE OF REAL ESTATE OF MARCH
3, 2006
Pursuant to an acquisition agreement attached
hereto as exhibit I (Danish original) and Exhibit II (English Translation) ("Acquisition Agreement"), on March 3, 2006
Anton Nielsen Vojens ApS , a wholly owned subsidiary of Advanced Oxygen Technologies, Inc. ("AOXY") entered into an agreement
to sub divide and sell a 3,300 M2 portion of its Vojens City property ('Property") for Two Million Three hundred Thousand
Danish Krone (2.300.000 DKK) to Ejendomsselskabet Ostergade 67 ApS, a Danish company ("EO"). Under the terms of the Acquisition
Agreement: EO purchased the Property in an as is condition, and was responsible for all costs of the transaction including but
not limited to: sub division costs, legal, financial, 1/2 the filing costs, deed transfer costs (ANV was responsible for the survey
costs and 1/2 the filing costs).
INCORPORATION OF SHARX INC AND SHARX DK
ApS OF APRIL 2020
In April 2020, the Company formed and incorporated
Sharx Inc. in Wyoming. In April 2020, Sharx Inc. incorporated Sharx DK Aps in Denmark. Operations of Sharx DK Aps began in June
2020. On June 30, 2020, Advanced Oxygen Technologies, Inc. (collectively with its subsidiaries, the “Company”), through
its indirect wholly owned subsidiary, Sharx DK ApS, a Danish corporation, entered into a Distribution Agreement (the “Distribution
Agreement”) with Cleaver ApS, a Danish corporation (“Cleaver ”), whereby Cleaver has appointed the Company as
Cleaver’s nonexclusive distributor of its products in Europe, South America and North America. Cleaver is a manufacturer
of a line of products for the logistics and cargo industry.
COMPANY OBJECTIVE AND MISSION:
The Company currently shares its location with
a related company of the President of the Company. The Company owns 100% of subsidiaries, Anton Nielsen Vojens, ApS, Sharx Inc.
and Sharx DK ApS.
Anton Nielsen Vojens owns and leases commercial
real estate to Circle K Denmark A/S, formerly StatOil A/S a Danish company. The lease expires in 2026. Through this lease, the
Company believes that the operations of ANV will continue to produce revenues.
Sharx Inc. and Sharx DK ApS distribute and
sell cargo security straps and tie downs pursuant to a distribution agreement with the manufacturer Cleaver ApS.
The Company continues its efforts to raise
capital to support operations and growth, and is actively searching acquisitions or mergers with another company that would complement
the Company and increase its earnings potential.
COMPETITION:
The Company's subsidiary ANV revenues are currently
derived from its lease revenues of its commercial real estate holding. With the global changes in the economies during the year
ended June 30, 2020, the Company's direct competition would be other vacant commercial real estate entities. The Company believes
that there are no identifiable direct competitors.
The Company's subsidiary Sharx revenues are
currently derived from its sales of cargo security straps and tie downs. The load restraint equipment market in the United States
and Europe is dominated by large companies such as Dottie Down, USA Ratchet, LLC, Ratchet Straps, USA, Kinedyne, LLC, The Rachet
Depot, Inc., The Forankra Group, and GTF Factors, Ltd, each of which have far greater capital and operational resources than us.
Our products will directly compete in the load restraint markets dominated by these major competitors. In this market, competitive
factors include price, product offerings, value-added service programs, service and delivery, credit terms, and customer support.
CUSTOMERS:
The Company's subsidiary ANV currently has
one customer, Circle K Denmark A/S, formerly StatOil AS., Copenhagen Denmark.
The Company's subsidiary Sharx currently has
one retail customer.
EMPLOYEES:
As of June 30, 2020 the Company had a total
of 2 employees.
ITEM 1A. RISK FACTORS
Risks Specific to Our Company
THE POTENTIAL PROFITABILITY OF COMMERCIAL REAL
ESTATE VENTURES DEPENDS UPON FACTORS BEYOND THE CONTROL OF OUR COMPANY.
The potential profitability of commercial real
estate properties is dependent upon many factors beyond our control. For instance, world prices and markets for rents and leases
of commercial properties are unpredictable, and respond to changes in domestic, international, political, social, and economic
environments. Additionally, due to worldwide economic uncertainty, the availability and cost of funds for maintenance, repair,
expansion and other expenses have become increasingly difficult, if not impossible, to project. These changes and events may materially
affect our financial performance. These factors cannot be accurately predicted and the combination of these factors may result
in our Company not receiving an adequate return on invested capital.
WE ARE SUBJECT TO RISKS ASSOCIATED WITH
FOREIGN CURRENCY
ANV and Sharx DK ApS are Danish companies with
operations only in Denmark. During the year ended June 30, 2020 and 2019, foreign revenues accounted for 100% of our total revenue.
As a result, we are subject to risks associated with generating revenue in multiple countries, including:
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increased time, effort and attention of our management to manage our foreign operations;
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balance sheet fluctuations.
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currency devaluations and fluctuations in currency exchange rates, including impacts of transactions in various currencies and translation of various currencies into dollars for U.S. reporting and financial covenant compliance purposes;
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language barriers and other difficulties in staffing and managing foreign operations;
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longer customer payment cycles and greater difficulties in collecting accounts receivable;
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uncertainties of laws and enforcement relating to the protection of property;
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imposition of or increases in currency exchange controls, including imposition of or increases in limitations on conversion of various currencies into U.S. dollars;
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imposition of or increases in revenue, income or earnings taxes and withholding and other taxes;
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imposition of or increases in investment or trade restrictions and other restrictions or requirements by non-U.S. Governments;
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inability to definitively determine or satisfy legal requirements, inability to effectively enforce contract or legal rights and inability to obtain complete financial or other information under local legal, judicial, regulatory, disclosure and other systems; and
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nationalization and other risks, which could result from a change in government or other political, social or economic instability.
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WE ARE SUBJECT TO RISKS ASSOCIATED WITH
OPERATIONS THAT HAVE A CONCENTRATION OF CUSTOMERS
ANV has only one customer. There is no guarantee
that this customer will remain solvent, and or continue with the Company in the same manner as it is now. As such, if ANV were
to lose this customer, 100% of ANV’s revenues would be lost representing a 86 percent decrease in the Company’s revenues.
Sharx DK ApS (“Sharx”) has only
one customer. There is no guarantee that this customer will remain solvent, and or continue with the Company in the same manner
as it is now. As such, if the Sharx were to lose this customer, 100% of its revenues would be lost representing a 14 percent decrease
in the Company’s revenues.
IN THE FUTURE, WE MAY NEED TO OBTAIN ADDITIONAL
FINANCING TO FUND OUR OPERATIONS AND TO ACQUIRE ADDITIONAL BUSINESSES
In the future, we may need to obtain additional
financing to fund our operations and to acquire additional businesses. There is no guarantee that we will be able to raise additional
capital.
PROVISIONS OF OUR CORPORATE DOCUMENTS AND
DELAWARE CORPORATE LAW MAY DETER A THIRD PARTY FROM ACQUIRING OUR COMPANY
Provisions of our articles of incorporation
and our bylaws, authorize our Board of Directors to, among other things, issue preferred stock and fix the rights, preferences,
privileges and restrictions of such shares without any further vote, approval or action by our stockholders. Our Board could take
actions that could discourage a third party from attempting to acquire control of us and that could make it more difficult for
a third party to acquire us. Our Board could take such actions even if our stockholders consider a change in control to be in their
best interests.
WE PLAN TO GROW OUR BUSINESS THROUGH ACQUISITIONS
AND JOINT VENTURES, WHICH WILL RESULT IN OUR INCURRING SIGNIFICANT COSTS
The acquisition of new businesses is costly,
such new businesses may not enhance our financial condition, and we may face difficulties and be unsuccessful in integrating new
businesses. The resources expended in identifying, negotiating and structuring acquisitions and joint ventures may be significant
and may not result in any transactions. Any future acquisitions will be subject to a number of challenges in integrating new operations
into our existing operations, including but not limited to:
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diversion of management time and resources;
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difficulty of assimilating the operations and personnel of the acquired companies;
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potential disruption of our ongoing business;
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difficulties in maintaining uniform standards, controls, procedures and policies;
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impairment of relationships with employees and customers as a result of any integration of new management personnel; and
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potential unknown liabilities associated with acquired businesses
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Risks Specific to Our Industry
WE ARE SUBJECT TO RISKS ASSOCIATED WITH
GLOBAL DECLINE IN REAL ESTATE
ANV, has only one commercial real estate property.
There is no guarantee that the demand for rental of this property will continue and potentially this would affect the Company's
performance.
WE ARE SUBJECT TO RISKS ASSOCIATED WITH
COMPETITION IN THE LOGISTICS AND TRANSPORTATION INDUSTRY
SharX is only selling one type of product and
only to the logistics and transportation industry. There are larger competitors with less expensive products. Technologies in the
logistics and transportation industry are advancing, and possibly eliminating the need for the SharX products. There is no assurance
that the demand for this product will continue in these industries.
WE ARE SUBJECT TO RISKS ASSOCIATED SUPPLY
OF PRODUCT
SharX’S supply of products is derived
from only one vendor and there can be no assurance that the vendor would continue to, or have the ability to, continue supply of
product. Should the vendor discontinue supplying product, Sharx would lose 100% of its supply of product.
WE ARE SUBJECT TO RISKS DELIVERY OF PRODUCT
SharX’S delivery of its products to its
customers is via drop shipping from the manufacturer to the customer. There can be no assurance that the manufacturer would continue
to, or have the ability to, continue drop shipping SharX’s products. Should the manufacturer discontinue drop shipping, there
is no assurance that Sharx could obtain alternate delivery solutions and that alternate shipping solutions would be cost effective
for the sales of SharX’s products.
Risks Related to Our Securities
OUR COMMON STOCK IS SUBJECT TO THE "PENNY
STOCK" RULES OF THE SEC AND THE TRADING MARKET IN OUR SECURITIES IS LIMITED, WHICH MAKES TRANSACTIONS IN OUR STOCK CUMBERSOME
AND MAY REDUCE THE VALUE OF AN INVESTMENT IN OUR STOCK.
The Securities and Exchange Commission has
adopted Rule 15g-9 which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity
security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to
certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: that a broker or dealer approve
a person's account for transactions in penny stocks; and the broker or dealer receive from the investor a written agreement to
the transaction, setting forth the identity and quantity of the penny stock to be purchased.
In order to approve a person's account for
transactions in penny stocks, the broker or dealer must: obtain financial information and investment experience objectives of the
person; and make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has
sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior
to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which,
in highlight form: sets forth the basis on which the broker or dealer made the suitability determination; and that the broker or
dealer received a signed, written agreement from the investor prior to the transaction.
Generally, brokers may be less willing to execute
transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to dispose
of our common stock and cause a decline in the market value of our stock.
Disclosure also has to be made about the risks
of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer
and the registered representative, current quotations for the securities and the rights and remedies available to an investor in
cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for
the penny stock held in the account and information on the limited market in penny stocks.
ITEM 1B. UNRESOLVED STAFF COMMENTS
There are none.
ITEM 2. DESCRIPTION OF PROPERTY
The assets of the Company consist of its wholly
owned subsidiary, Anton Nielsen Vojens, ApS whose sole asset is commercial real estate in Vojens, Denmark. The commercial real
estate is leased to Circle K Denmark, A/S, formerly StatOil, A/S until 2026. The property is land only and is a 750 square meter
parcel currently used as a fuel station and is located at Ostergade 67, 6500 Vojens Denmark.
ITEM 3. LEGAL PROCEEDINGS
During the period ending June 30, 2020, the
pending or threatened legal actions as follows:
None
ITEM 4: MINE SAFETY DISCLOSURES.
Not applicable.
PART II
ITEM 5. MARKET OF COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES.
HOLDERS
At June 30, 2020 the company had 1,557 shareholders
of record. At June 30, 2020, the closing bid price of the Company's Common Stock as reported by the National Quotation Bureau,
Inc., was $0.10.
DIVIDENDS
We have not paid or declared any dividends
on our common stock since our inception. Our Board of Directors does not expect to declare cash dividends on our common stock in
the near future. We anticipate that we will retain our future earnings to finance the continuing development of our business.
RECENT SALES OF UNREGISTERED SECURITIES
On September 23, 2019 Advanced Oxygen Technologies,
Inc. (the “Company”) entered into a Stock Grant and Investment Agreement with Robert Wolfe, its CEO and a Director
(“Wolfe”) whereby the Company has granted 1,000,000 shares (the “Shares”) of common stock of the Company
to Wolfe for services rendered by Wolfe to the Company and which Shares are deemed irrevocably and fully earned and vested as of
the date thereof. The Shares have been issued in reliance upon the exemption from registration pursuant to Section 4(a)(2) of the
Securities Act of 1933, as amended.
ITEM 6. SELECTED FINANCIAL DATA
Not Applicable.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION.
The following discussion of our plan of operation,
financial condition and results of operations should be read in conjunction with the Company's condensed consolidated financial
statements, and notes thereto, included elsewhere herein. This discussion contains forward-looking statements that involve risks
and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result
of various factors including, but not limited to, those discussed in this Annual Report.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The SEC defines critical accounting policies
as those that are, in management's view, most important to the portrayal of our financial condition and results of operations and
those that require significant judgments and estimates.
The discussion and analysis of our financial
condition and results of operations is based upon our financial statements that have been prepared in accordance with accounting
principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates
and judgments that affect the reported amounts of assets and liabilities. On an on-going basis, we evaluate our estimates including
the allowance for doubtful accounts, the salability and recoverability of inventory, income taxes and contingencies. We base our
estimates on historical experience and on other assumptions that we believe to be reasonable under the circumstances, the results
of which form our basis for making judgments about the carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates under different assumptions or conditions.
We cannot predict what future laws and regulations
might be passed that could have a material effect on our results of operations. We assess the impact of significant changes in
laws and regulations on a regular basis and update the assumptions and estimates used to prepare our financial statements when
we deem it necessary.
Revenue recognition of contracts with customers:
In May 2014, the FASB issued ASU No. 2014-09,
Revenue from Contracts with Customers (Topic 606), to update the financial reporting requirements for revenue recognition.
Topic 606 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers.
It supersedes most current revenue recognition guidance, including industry-specific guidance. The guidance is based on the principle
that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the
consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires additional
disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including
significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. This guidance became
effective for the Company beginning on July 1, 2018, and entities have the option of using either a full retrospective or a modified
retrospective approach for the adoption of the new standard. We adopted this standard using the modified retrospective approach
on July 1, 2018.
In preparation for adoption of the standard,
we have implemented internal controls and completed our impact assessment of implementing this guidance. We have evaluated each
of the five steps in Topic 606, which are as follows: 1) identify the contract with the customer; 2) identify the performance obligations
in the contract; 3) determine the transaction price; 4) allocate the transaction price to the performance obligations; and 5) recognize
revenue when (or as) performance obligations are satisfied.
Revenue was not affected materially in any
period due to the adoption of ASC Topic 606 because: (1) we identified similar performance obligations under ASC Topic 606 as compared
with deliverables and separate units of account previously identified; our performance obligation is to provide the land; (2) we
determined the transaction price to be consistent; the lease agreement with the customer specifies the transaction price; and (3)
we recorded revenue at the same point in time, upon delivery under both ASC Topic 605 and ASC Topic 606, as applicable under the
terms of the contract with the customer. Additionally, the accounting for fulfillment costs or costs incurred to obtain a contract
were not affected materially in any period due to the adoption of Topic 606.
There are also certain considerations related
to accounting policies, business processes and internal control over financial reporting that are associated with implementing
Topic 606. We have evaluated our policies, processes, and control framework for revenue recognition, and identified and implemented
the changes needed in response to the new guidance.
Lastly, disclosure requirements under the new
guidance in Topic 606 have been significantly expanded in comparison to the disclosure requirements under the current guidance,
including disclosures related to disaggregation of revenue into appropriate categories, performance obligations, the judgments
made in revenue recognition determinations, adjustments to revenue which relate to activities from previous quarters or years,
any significant reversals of revenue, and costs to obtain or fulfill contracts. We have designed and implemented the appropriate
controls over gathering and reporting the information as required under Topic 606, in order to support the expanded disclosure
requirements.
Property Plant and Equipment:
Land and buildings are recognized at cost.
Land is carried at cost less accumulated impairment losses.
Foreign Currency Translation:
Foreign currency transactions are translated
applying the current rate method. Assets and liabilities are translated at current rates. Stockholders' equity accounts are translated
at the appropriate historical rates and revenue and expenses are translated at weighted average rates for the year. Exchange rate
differences that arise between the rate at the transaction date and the one in effect at the payment date, or at the balance sheet
date, are recognized in the income statement.
Income Taxes:
The Company accounts for income taxes under
the asset and liability method of accounting. Under this method, deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities
and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets
and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance
is required when it is less likely than not that the Company will be able to realize all or a portion of its deferred tax assets.
Because it is doubtful that the net operating losses of recent years will ever be used, a valuation allowance has been recognized
equal to the tax benefit of net operating losses generated.
Stock-Based Compensation:
The Company records stock-based
compensation in accordance with ASC 718, Compensation. All transactions in which goods or services are the consideration received
for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair
value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost
of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued
and are recognized over the employees required service period, which is generally the vesting period.
Net Earnings per Share:
Basic earnings per share is computed by dividing
income available to common shareholders by the weighted-average number of common shares available. Diluted earnings per share is
computed similar to basic earnings per share except that the denominator is increased to include the number of additional common
shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were
dilutive. As of June 30, 2020 and June 30, 2019 there were 10,000 and 10,000, potential dilutive shares that need to be considered
as common share equivalents and because of the net loss, the effect of these potential common shares is anti-dilutive for twelve-months
ended June 30, 2020 and dilutive for the twelve months ended June 30, 2019.
Cash and Cash Equivalents:
For purposes of the statement of cash flows,
the Company considers all highly-liquid investments purchased with original maturities of twelve-months or less to be cash equivalents.
The Company maintains its cash in bank deposit
accounts which, at June 30, 2020 did not exceed federally insured limits. The Company has not experienced any losses in such accounts
and believes that it is not exposed to any significant credit risk on such amounts.
Estimates:
The preparation of consolidated financial statements
in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated
financial statements, as well as the reported amounts of revenue and expenses during the reported period. Actual results could
differ from those estimates.
Concentrations of Credit Risk:
Financial instruments that potentially subject
the Company to major credit risk consist principally of a single subsidiary of Anton Nielsen Vojens ApS.
Recently Issued Accounting Standards:
In February 2016, the FASB issued ASU No. 2016-02
- Leases (Topic 842), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for
both parties to a contract (i.e. lessees and lessors). The new standard requires lessees to apply a dual approach, classifying
leases as either financing or operating leases based on the principle of whether or not the lease is effectively a financed purchase
by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or
on a straight-line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and
a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of
12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors
to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing
leases and operating leases. The standard is effective on January 1, 2019, however early adoption is permitted. effective January 1,
2019. On July 1, 2019 the Company adopted the requirements of Financial Accounting Standards Board (“FASB”) Accounting
Standards Update (“ASU”) No. 2016-02 (Topic 842), Leases (“ASU 2016-02”) using modified
retrospective approach. Amounts and disclosures set forth in this Form 10-K reflect this change.
In June 2018, the FASB issued ASU No. 2018-07. The ASU
expands the scope of ASU No. 2018-07 to include share-based payment transactions for acquiring goods and services from nonemployees.
An entity should apply ASU No. 2018-07 to nonemployee awards except with respect to option pricing models and the attribution of
cost (that is, the period of time over which share-based payment awards vest and the pattern of cost recognition over that period).
The amendments specify that ASU No. 2018-07 applies to all share-based payment transactions in which a grantor acquires goods or
services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. ASU No. 2018-07 is effective
for fiscal years beginning after December 15, 2018, or July 1, 2019 for the Company, and interim periods within those fiscal years
with early adoption permitted. The Company adopted the new standard as of July 1, 2019, and the new standard had no material impact
on its consolidated financial statements.
In January 2017, the FASB issued
ASU No. 2017-01, Business Combinations: Clarifying the Definition of a Business . ASU No. 2017-01 most significantly revises guidance
specific to the definition of a business related to accounting for acquisitions. Additionally, ASU No. 2017-01 also affects other
areas of US GAAP, such as the definition of a business related to the consolidation of variable interest entities, the consolidation
of a subsidiary or group of assets, components of an operating segment, and disposals of reporting units and the impact on goodwill.
This ASU became effective for public entities for annual and interim periods beginning after December 15, 2017. The Company adopted
this standard on January 1, 2018. The adoption of this standard did not have a material impact on the Company’s condensed
consolidated financial statements or related disclosures.
New Accounting Pronouncements Not Yet Adopted
In December 2019, the FASB issued
ASU No. 2019-12, Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes. ASU 2019-12 is intended
to simplify accounting for income taxes. It removes certain exceptions to the general principles in Topic 740 and amends existing
guidance to improve consistent application. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 and interim
periods within those fiscal years, which is fiscal 2022 for us, with early adoption permitted. We do not expect adoption of the
new guidance to have a significant impact on our financial statements.
In August 2018, the FASB issued ASU 2018-13, Fair
Value Measurement (Topic 820), Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurements. This
ASU includes additional disclosures requirements for recurring Level 3 fair value measurements including disclosure of changes
in unrealized gains and losses for the period included in other comprehensive income, disclosure of the range and weighted average
of significant unobservable inputs used to develop Level 3 fair value measurements and narrative description of measurement uncertainty
related to Level 3 measurements. Early adoption is permitted. This ASU will be effective for us on July 1, 2020. We are evaluating
the impact of the adoption of this ASU on our financial condition, results of operations and cash flows, and, as such, we are not
able to estimate the effect the adoption of the new standard will have on our financial statements.
Other recent accounting pronouncements issued
by the FASB did not or are not believed by management to have a material impact on the Company's present or future financial statements.
RESULTS OF OPERATIONS 2020 COMPARED TO 2019
REVENUES. Revenues from operations were $43,154
in 2020 compared to $38,408 in 2019. The increase was attributable to the commissions from the sales of cargo security products
from the Company’s subsidiary Sharx. The following table summarizes the Company’s revenue allocations:
|
Year ending June 30,
|
|
2020
|
|
|
2019
|
|
|
Subsidiary ANV Lease Revenues
|
|
$
|
37,280
|
|
|
$
|
38,408
|
|
|
Subsidiary Sharx commissions from the sales of cargo security products
|
|
|
5,874
|
|
|
|
-
|
|
|
Total
|
|
$
|
43,154
|
|
|
$
|
38,408
|
|
SALARY AND WAGES EXPENSES. Salary and wages
expenses were $113,000 in 2020 compared to $0 in 2019. The increase was due to a one-time stock grant to an officer of the Company.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.
G&A expenses were $6,562 in 2020 compared to $3,634 in 2019. The expenses are attributable to ANV's deferred revenues expense,
the Company's SEC compliance, the disbursement of stock-based compensation, and accounting costs.
PROFESSIONAL EXPENSES. The professional expenses
were $15,600 in 2020 compared to $15,600 in 2019. The expenses were attributable to the ordinary audit of $13,500 and $2,100 attributable
to transfer agent fees for 2020, and 2019.
NET LOSS. Net loss attributed to common stockholders
was $(103,101) or $(0.034) per share for 2020 as compared to $8,111 or $0.003 per share for 2019 and the 2020 result
was less and mainly attributable to the disbursement of stock-based compensation.
LIQUIDITY AND CAPITAL RESOURCES. As of June
30, 2020 the Company had $43,603 of cash and cash equivalents and working capital deficit of $258,858 compared to June 30, 2019
the Company had $43,098 of cash and cash equivalents and working capital deficit of $251,829. The change in cash is primarily due
to the ANV'S payment of debt and normal operations. The increase in the working capital is primarily related to the operations
of the Subsidiary.
Net cash provided by operating activities for
2020 and 2019 was $36,333 and $17,411 respectively. The increase was primarily the revenues generated from the commission from
the sales of cargo security products from the Company’s subsidiary Sharx DK, ApS and the stock-based compensation to an officer,
which is a non-cash activity.
Net cash (used for) investing activities for
2020 and 2019 was $(125) and $0 respectively. Net cash provided from or used for investing activities is related to the Company's
incorporating Sharx Inc. and Sharx DK ApS.
Net cash (used for) financing activities
for 2020 and 2019 was $35,383 and $(26,282) respectively. Net cash provided from or used for financing activities for both periods
is related to the company's borrowings from banks, officers and directors, and the repayment of debt.
OFF BALANCE SHEET ARRANGEMENTS
We do not currently have any off-balance sheet
arrangements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE
MARKET DISCLOSURES ABOUT RISK
Not required.
ITEM 8. AUDITED CONSOLIDATED FINANCIAL
STATEMENTS
See the consolidated financial statements on
Exhibit F for the period ending June 30, 2020 and June 30, 2019.
ITEM 9. CHANGES IN AND DISAGREEMENTS
WITH AUDITORS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURE
Evaluation of Disclosure Controls and
Procedures
We conducted an evaluation under the supervision
and with the participation of our management, including our Chief Executive Officer who is also our Chief Financial Officer, of
the effectiveness of the design and operation of our disclosure controls and procedures. The term "disclosure controls and
procedures," as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended ("Exchange
Act"), means controls and other procedures of a company that are designed to ensure that information required to be disclosed
by the company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within
the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures also
include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company
in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management, including
its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely
decisions regarding required disclosure. Based on this evaluation, our Chief Executive Officer and Acting Chief Financial Officer
concluded as of June 30, 2020 that our disclosure controls and procedures were not effective at ensuring that the material information
required to be disclosed in the Exchange Act reports is recorded, processed, summarized and reported as required in applicable
SEC rules and forms.
Changes in Internal Control over Financial
Reporting
We adopted ASC 842, Leases, on July 1,
2019, which required management to make changes to our policies and processes and to implement new or modify existing internal
controls over financial reporting during the year ended June 30, 2020. This included modifications to our existing controls over
the review of customer contracts and other agreements, and new controls related to disclosure requirements.
During the twelve-month period ended June 30,
2020, there were no other changes in our internal control over financial reporting identified in connection with managements evaluation
of the effectiveness of our internal control over the financial reporting that have materially affected, or are reasonably likely
to materially affect, our internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange
Act.
Management's Report on Internal Control
Over Financial Reporting
Our management is responsible for establishing
and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities
Exchange Act of 1934). Our internal control over financial reporting is designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance
with generally accepted accounting principles.
Under the supervision and with the participation
of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the
effectiveness of our internal control over financial reporting based on the framework set forth in Internal Control - Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework
set forth in Internal Control - Integrated Framework, our management concluded that our internal control over financial reporting
was not effective as of June 30, 2020.
Inherent Limitations on Effectiveness
of Controls
Our management, including our Chief Executive
Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will
prevent all errors and all fraud. The term "disclosure controls and procedures," as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities and Exchange Act of 1934, as amended ("Exchange Act"), means controls and other procedures of a
company that are designed to ensure that information required to be disclosed by the company in the reports it files or submits
under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and
Exchange Commission's rules and forms. Disclosure controls and procedures also include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange
Act is accumulated and communicated to the company's management, including its principal executive and principal financial officers,
or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. A control system,
no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control
system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits
of controls must be considered relative to their costs. Our disclosure controls and procedures and our internal controls over financial
reporting have been designed to provide reasonable assurance of achieving their objectives. Because of the inherent limitations
in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud,
if any, have been detected.
ITEM 9B. OTHER INFORMATION.
Not applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE: COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Set forth below is information regarding the
Company's directors and executive officers, including information furnished by them as to their principal occupations for the last
five years, other directorships held by them and their ages as of June 30, 2020. All directors are elected for one-year terms,
which expire as of the date of the Company's annual meeting.
|
Name
|
|
Age
|
|
Position
|
|
Director Since:
|
|
Robert E. Wolfe
|
|
57
|
|
Chairman of the Board, CEO, and CFO
|
|
1997
|
|
Lawrence Donofrio
|
|
69
|
|
Director
|
|
2003
|
Robert Wolfe has been the Chairman and CEO
for Advanced Oxygen Technologies Inc. since 1997. Concurrently he has been the President and CEO of Crossfield, Inc. a corporate
consulting company. Enochian Biosciences, Inc. ("ENOB"), a company that engages in the research and development, manufacturing
and clinical trials of pharmaceutical and biological products for the human treatment of cancer using the dendritic cell technology
appointed Robert Wolfe as the CFO from July 11, 2017 to January 9, 2019 and as the CFO and Director from January 1, 2014 to April
28, 2015. From 1992-1993 he was Vice President and partner for CFI, NY Ltd. A Subsidiary of Corporate Financial Investments, PLC,
London. , effective immediately.
Lawrence Donofrio has been a director of the
Company and a member of the Compensation Committee since March 2003. He graduated from Hamilton College with a BA in English studies.
He then worked at Citibank for three years as a financial analyst, and five years as a private financial consultant. He then took
a position with Bankers Trust for two years and since 1982 has been a private consultant in the financial industry.
Compliance with Section 16(a) of the Exchange
Act
Section 16(a) of the Securities Exchange Act
of 1934, as amended, requires our directors, executive officers and persons who beneficially own more than 10% of a registered
class of our securities to file with the SEC reports of ownership and changes in ownership of the common stock and other equity
securities. Officers, directors and greater than 10% beneficial owners are required by SEC regulations to furnish us with copies
of all Section 16(a) forms they file. No officer, director or Section 16(a) officer has sold or acquired any of our stock during
the last calendar year, thus not requiring any reports under Section 16(a) to be filed.
Audit Committee Financial Expert
As of June 30, 2020, we do not have an audit
committee financial expert, as that term is defined in Item 407(d)(5) of Regulation S-B, because at this time our current level
of operations and the cost of retaining such a financial expert are prohibitive. The Board of Directors as a whole fulfilled the
duties normally assigned to an audit committee.
Code of Ethics
As of June 30, 2020, we have a code of ethics
that applies to our Principal Executive Officer and Principal Financial and Accounting Officer(s) and to all of our staff. While
we are a small company we believe that our code of ethics directs the Company to practice its business in an ethical way.
Procedure for Nominating Directors
We have not made any material changes to the
procedures by which security holders may recommend nominees to our Board of Directors. The Board does not have a written policy
or charter regarding how director candidates are evaluated or nominated for the Board. Our directors annually review all director
performance over the prior year and make recommendations to the Board of Directors for future nominations.
ITEM 11. EXECUTIVE COMPENSATION
Robert Wolfe, Chairman and CEO has waived his
$500,000 annual salary for the year ending June 30, 2020. Robert Wolfe, Chairman and CEO received compensation of $113,000 attributable
to the issuance of 1,000,000 shares of the Company’s Common Stock. No other officer or director received any compensation
from the Company during the last fiscal year. The Company paid no bonuses in the last three fiscal years ended June 30, 2020 to
officers or other employees.
The following table sets forth the total compensation
paid or accrued to its Chief Executive Officer and Chief Financial Officer, Robert E. Wolfe during the fiscal year ending June
30, 2020. There were no other corporate officers in any of the last three fiscal years.
EXECUTIVE COMPENSATION
|
Name
|
|
Yr.
|
|
Salary
|
|
|
Bonus
|
|
|
Other
Compensation
|
|
|
Restricted
Awards
|
|
|
LTIP
Awards
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert E. Wolfe(1)
|
|
2020
|
|
|
-
|
|
|
|
-
|
|
|
|
113,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
2019
|
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1)
|
On September 23, 2019 the Company entered into a Stock Grant and
Investment Agreement with Robert Wolfe, its CEO and a Director (“Wolfe”) whereby the Company has granted 1,000,000
shares (the “Shares”) of common stock of the Company to Wolfe for services rendered by Wolfe to the Company and which
Shares are deemed irrevocably and fully earned and vested as of the date thereof. The Shares have been issued in reliance
upon the exemption from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended.
|
EMPLOYMENT AGREEMENTS
We do not currently have any oral or written
employment contracts, severance or change-in-control agreements with any of our executive officers.
OPTION GRANTS DURING 1999; VALUE OF OPTIONS
AT YEAR-END
The following tables set forth certain information
covering the grant of options to the Company's Chief Executive Officer and Chief Financial Officer, Robert E. Wolfe during the
fiscal year ended June 30, 2020 and unexercised options held as of that date. Mr. Wolfe did not exercise any options during fiscal
2020.
|
Name
|
|
# of Securities
|
|
|
% Total Options
|
|
|
Option Price
|
|
|
Exercise
Price
|
|
|
Expiration
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert E. Wolfe
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Compensation Committee Report
The Compensation Committee of the Board of
Directors was responsible for reviewing and approving the Company's compensation policies and the compensation paid to executive
officers. Mr. Wolfe and Mr. Donofrio, who comprise the Compensation Committee are employee and non-employee directors respectively.
Compensation Philosophy
The general philosophy of the Company's compensation
program, which has been reviewed and endorsed by the Committee, was to provide overall competitive compensation based on each executive's
individual performance and the Company's overall performance.
There are two basic components in the Company's
executive compensation program: (i) base salary and (ii) stock option awards.
Base Salary
Executive Officers' salaries are targeted at
the median range for rates paid by competitors in comparably sized companies. The Company recognizes the need to attract and retain
highly skilled and motivated executives through a competitive base salary program, while at the same time considering the overall
performance of the Company and returns to stockholders.
Stock Option Awards
With respect to executive officers, stock options
are generally granted on an annual basis, usually at the commencement of the new fiscal year. Generally, stock options vest ratably
over a four-year period and the executive must be employed by the Company in order to vest the options. The Compensation Committee
believes that the stock option grants provide an incentive that focuses the executives' attention on managing the Company from
the perspective of an owner with an equity stake in the business. The option grants are issued at no less than 85% of the market
price of the stock at the date of grant, hence there is incentive on the executive's part to enhance the value of the stock through
the overall performance of the Company.
Compensation Pursuant to Plans
The Company has three plans (the "Plans")
under which its directors, executive officers and employees may receive compensation. The principal features of the 1981 Long-Term
Incentive Plan (the "1981 Plan"), the 1988 Stock Option Plan (the "1988 Plan"), and the Non-Employee Director
Plan (the "Director Plan") are described below. During the fiscal year ended June 30, 1994, the Company terminated its
tax qualified cash or deferred profit-sharing plan (the "401(k) Plan"). During fiscal 2020, no executive officer received
compensation pursuant to any of the Plans.
The 1981 and 1988 Plans
The purpose of the 1981 Plan and 1988 Plan
(the "Option Plans") is to provide an incentive to eligible directors, consultants and employees whose present and potential
contributions to the Company are or will be important to the success of the Company by affording them an opportunity to acquire
a proprietary interest in the Company and to enable the Company to enlist and retain in its employ the best available talent for
the successful conduct of its business.
The 1981 Plan
The 1981 Plan was adopted by the Board of Directors
in May 1981 and approved by the Company's stockholders in March 1982. A total of 500,000 shares have been authorized for issuance
under the 1981 Plan. With the adoption of the 1988 Plan, no additional awards may be made under the 1981 Plan. As a result, the
shares remaining under the 1981 Plan are now available solely under the 1988 Plan. Prior to its termination, the 1981 Plan provided
for the grant of the following five types of awards to employees (including officers and directors) of the Company and any subsidiaries:
(a) incentive stock rights, (b) incentive stock options, (c) non-statutory stock options, (d) stock appreciation rights, and (e)
restricted stock. The 1981 Plan is administered by the Compensation Committee of the Board of Directors.
The 1988 Plan
The 1988 Plan provides for the grant of options
to purchase Common Stock to employees (including officers) and consultants of the Company and any parent or subsidiary corporation.
The aggregate number of shares which remained available for issuance under the 1981 plan as of the effective date of the 1988 Plan
plus an additional 500,000 shares of Common Stock.
Options granted under the 1988 Plan may either
be immediately exercisable for the full number of shares purchasable thereunder or may become exercisable in cumulative increments
over a period of months or years as determined by the Compensation Committee. The exercise price of options granted under the 1988
Plan may not be less than 85% of the fair market value of the Common Stock on the date of the grant and the maximum period during
which any option may be paid in cash, in shares if the Company's Common Stock or through a broker-dealer same-day sale program
involving a cash-less exercise of the option. One or more optionees may also be allowed to finance their option exercises through
Company loans, subject to the approval of the Compensation Committee.
Issuable Shares
As of September 20, 1995, approximately 374,000
shares of Common Stock had been issued upon the exercise of options granted under the Option Plans, no shares of Common Stock were
subject to outstanding options under the Options Plans and 626,000 shares of Common Stock were available for issuance under future
option grants. From July 1, 1991 to September 20, 1995, options were granted at exercise prices ranging from $1.22 to $8.15 per
share. The exercise price of each option was equal to 85% of the closing bid price of Company's Common Stock as reported on the
NASDAQ Over the Counter Bulletin Board Exchange. Due to employee terminations, all options became void in August 1995. As of September
30, 2001, 1,000,000 shares of Common Stock were available for issuance under future option grants and were still available at June
30, 2020.
Board of Directors Compensation
As of June 30, 2020 the directors did not receive
any compensation for serving as members of the Board.
In addition to any cash compensation, non-employee
directors also are eligible to participate in the Non-Employee Director Stock Option Plan and to receive automatic option grants
thereunder. The Director Plan provides for periodic automatic option grants to non-employee members of the Board. An individual
who is first elected or appointed as a non-employee Board member receives an annual automatic grant of 25,000 shares plus the first
annual grant of 5,000 shares, and will be eligible for subsequent 5,000 share grants at the second Annual Meeting following the
date of his initial election or appointment as a non-employee Board member.
During the fiscal year ended June 30, 2020,
no options were granted to non-employee Board members.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information
regarding the beneficial ownership of the Company's Common Stock as of June 30, 2020, by (i) all those known by the Company to
be beneficial owners of more than 5% of its Common Stock; (ii) all directors; and (iii) all officers and directors of the Company
as a group.
|
Name and Address of Beneficial Owner
|
|
No. Shares
fully diluted
|
|
|
Percent ownership
|
|
|
Robert E. Wolfe, Randolph, VT, Chairman, CEO, CFO
|
|
|
1,004,500
|
|
|
|
30.41
|
%
|
|
Hennistone Projects Ltd.2 Eastglade Northwood Middlessex, HA6 3LD UK
|
|
|
588,000
|
|
|
|
17.80
|
%
|
|
Crossland Ltd. Belize, 60 Market Square, PO Box 364, Belize City, Belize, Central America
|
|
|
315,625
|
|
|
|
9.56
|
%
|
|
Crossland, ltd. 104B Saffrey Square, Nassau, Bahamas
|
|
|
296,876
|
|
|
|
8.99
|
|
|
Lawrence Donofrio, San Diego, CA, Director
|
|
|
-
|
|
|
|
0.00
|
|
|
5% Shareholders Total:
|
|
|
2,340,600
|
|
|
|
70.86
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Officers and Directors
|
|
|
|
|
|
|
|
%
|
|
Robert E. Wolfe, Randolph, VT, Chairman, CEO, CFO
|
|
|
1,004,500
|
|
|
|
30.41
|
%
|
|
Lawrence Donofrio, San Diego, CA, Director
|
|
|
-
|
|
|
|
0.00
|
%
|
|
Directors and Officers Total:
|
|
|
1,004,500
|
|
|
|
30.41
|
%
|
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS AND DIRECTOR INDEPENDENCE
The Company's transactions with its officers,
directors and affiliates have been and such future transactions will be, on terms no less favorable to the Company than could have
been realized by the Company in arms-length transactions with non-affiliated persons and will be approved by a majority of the
independent disinterested directors.
On February 3, 2006 the Company purchased 100.00%
of the stock of Anton Nielsen Vojens ApS, a Danish company from Borkwood Development Ltd. , a prior shareholder of AOXY. At the
time of the transaction, a director of Borkwood Development, Ltd., Aage Madsen was also a director of Anton Nielsen Vojens ApS.
As of May 25, 2007, Mr. Madsen is not a director, owner, beneficiary or affiliate of the Company or its wholly owned subsidiary
Anton Nielsen Vojens, ApS.
Director Independence
During the year ended June 30, 2020, Robert
Wolfe and Lawrence Donofrio served as our directors and only Mr. Donofrio is an independent director as he has no ownership, employment,
or business interaction with the Company. We are currently traded on the Over-the-Counter Bulletin Board system and specifically
the OTCQB. The OTCQB does not require that a majority of the Board be independent.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND
SERVICES
The Company's auditors for the periods ending
June 30, 2020 and June 30, 2019 were Sadler, Gibb & Associates, LLC, 22455 East Parleys Way, Suite 320, Salt Lake City, UT
84109, tel (801)783-2950. The Company's wholly owned subsidiary's local Danish accountant is IN-REVISION STATSAUTORISEREDE REVISORER
A/S, Gersonsvej 7, 2900 Hellerup. The local auditors, IN-REVISION have performed work for ANV that included tax work and Danish
Standards auditing work on ANV's yearly balance sheet and the profit/loss statement for the Danish Tax Authority and the Danish
Ministry of Commerce. We have paid or expect to pay the following fees to Sadler, Gibb & Associates, LLC and In-Revision Statautoriserede
Revisorer for work performed for the fiscal years ending June 30, 2020, and June 30, 2019, attributable to the audits of consolidated
financial statements:
|
Year ending June 30,
|
|
2020
|
|
|
2019
|
|
|
Audit-Related Fees
|
|
$
|
14,000
|
|
|
$
|
13,500
|
|
|
Tax and consulting Fees
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Other fees
|
|
$
|
-
|
|
|
$
|
-
|
|
The aggregate fees billed include amounts for
interim reviews and the audit of the consolidated financial statements for 2020.
In January 2003, the SEC released final rules
to implement Title II of the Sarbanes-Oxley Act of 2003. The rules address auditor independence and have modified the proxy fee
disclosure requirements. Audit fees include fees for services that normally would be provided by the accountant in connection with
statutory and regulatory filings or engagements and that generally only the independent accountant can provide. In addition to
fees for an audit or review in accordance with generally accepted auditing standards, this category contains fees for comfort letters,
statutory audits, consents, and assistance with and review of documents filed with the SEC. Audit-related fees are assurance-related
services that traditionally are performed by the independent accountant, such as employee benefit plan audits, due diligence related
to mergers and acquisitions, internal control reviews, attest services that are not required by statute or regulation, and consultation
concerning financial accounting and reporting standards.
The board has reviewed the fees paid to Sadler,
Gibb & Associates, LLC and In-Revision. The board has also adopted policies and procedures to approve audit and non-audit services
provided in the fiscal year 2020 by Sadler, Gibb & Associates, LLC and In-Revision. These policies and procedures involve annual
pre-approval by the board of the types of services to be provided by our independent auditor and fee limits for each type of service
on both a per-engagement and aggregate level. The board may additionally ratify certain de minimis services provided by the independent
auditor without prior board approval, as permitted by the Sarbanes-Oxley Act and rules of the SEC promulgated thereunder.
PART IV
ITEM 15: EXHIBITS AND REPORTS ON FORMS
8K,
Reports filed on Form 8-K for the year ending
June 30, 2020:
During the twelve- month period ending June
30, 2020, the Company filed two reports on Form 8-K.
On September 23, 2019 Advanced Oxygen Technologies,
Inc. (the “Company”) entered into a Stock Grant and Investment Agreement with Robert Wolfe, its CEO and a Director
(“Wolfe”) whereby the Company has granted 1,000,000 shares (the “Shares”) of common stock of the Company
to Wolfe for services rendered by Wolfe to the Company and which Shares are deemed irrevocably and fully earned and vested as of
the date thereof. The Shares have been issued in reliance upon the exemption from registration pursuant to Section 4(a)(2)
of the Securities Act of 1933, as amended.
On June 30, 2020, Advanced
Oxygen Technologies, Inc. (collectively with its subsidiaries, the “Company”), through its indirect wholly owned subsidiary,
Sharx DK ApS, a Danish corporation, entered into a Distribution Agreement (the “Distribution Agreement”) with Cleaver
ApS, a Danish corporation (“Cleaver ”), whereby Cleaver has appointed the Company as Cleaver’s nonexclusive
distributor of its products in Europe, South America and North America. Cleaver is a manufacturer of a line of products for the
logistics and cargo industry.
Exhibits
*Filed
herewith
|
(1)
|
Filed as an exhibit to the Company’s 8-K filed with the SEC on December 5, 2014 and incorporated herein by reference.
|
SIGNATURES
In accordance with Section 13 or 15(d) of the
Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.
|
(Registrant):
ADVANCED OXYGEN TECHNOLOGIES, INC.
|
|
|
|
|
Date: August 20, 2020
|
|
|
|
|
|
By (Signature and Title):
|
|
|
|
|
|
/s/ Robert E. Wolfe
|
|
|
Robert E. Wolfe, CEO & Chairman of the Board
|
|
Date: August 20, 2020
By (Signature and title):
/s/ Lawrence Donofrio
Lawrence Donofrio, Director
EXHIBIT F
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
To the Board of Directors and Shareholders of Advanced
Oxygen Technologies, Inc.:
Opinion on the Financial Statements
We have audited the accompanying consolidated
balance sheets of Advanced Oxygen Technologies, Inc. (“the Company”) as of June 30, 2020 and 2019, the related consolidated
statements of operations and comprehensive loss, stockholders’ equity and cash flows for each of the years in the two-year
period ended June 30, 2020 and the related notes (collectively referred to as the “financial statements”). In our opinion,
the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of
June 30, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the two-year period ended
June 30, 2020, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based
on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have,
nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required
to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to
assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining on a test basis, evidence regarding the amounts and disclosures
in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a
reasonable basis for our opinion.
/s/ Sadler, Gibb & Associates, LLC
We have served as the Company’s auditor since 2016.
Salt Lake City, UT
August 20, 2020
ADVANCED OXYGEN TECHNOLOGIES, INC.
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
As of June 30,
|
|
|
|
2020
|
|
2019
|
|
ASSETS
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
43,603
|
|
|
$
|
43,098
|
|
|
Property tax receivable
|
|
|
1,202
|
|
|
|
1,213
|
|
|
Total Current Assets
|
|
|
44,805
|
|
|
|
44,311
|
|
|
|
|
|
|
|
|
|
|
|
|
FIXED ASSETS
|
|
|
|
|
|
|
|
|
|
Land
|
|
|
609,250
|
|
|
|
615,220
|
|
|
TOTAL ASSETS
|
|
$
|
654,055
|
|
|
$
|
659,531
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
—
|
|
|
$
|
225
|
|
|
Deferred revenue
|
|
|
3,150
|
|
|
|
—
|
|
|
Taxes payable
|
|
|
36,030
|
|
|
|
30,782
|
|
|
Notes payable, current portion
|
|
|
144,211
|
|
|
|
144,380
|
|
|
Advances from a related party
|
|
|
120,271
|
|
|
|
120,753
|
|
|
Total Current Liabilities
|
|
|
303,662
|
|
|
|
296,140
|
|
|
|
|
|
|
|
|
|
|
|
|
Long Term Liabilities
|
|
|
|
|
|
|
|
|
|
Notes payable
|
|
|
44,416
|
|
|
|
62,464
|
|
|
Total Long Term Liabilities
|
|
|
44,416
|
|
|
|
62,464
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
348,078
|
|
|
|
358,604
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY-
|
|
|
|
|
|
|
|
|
|
Convertible preferred stock, Series 2, par value $0.01; authorized 10,000,000 shares; issued and outstanding 5,000 At June 30, 2020 and June 30, 2019
|
|
|
50
|
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible preferred stock, Series 3, par value $0.01; 1,670,0000 authorized, zero shares issued and outstanding
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible preferred stock, Series 5; no par value, 1 share authorized and zero shares issued and outstanding, respectively
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, par value $0.01; At June 30, 2020 and June 30, 2019, authorized 60,000,000 shares; issued and outstanding 3,292,945 and 2,292,945 shares, respectively
|
|
|
32,929
|
|
|
|
22,929
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional paid-in capital
|
|
|
21,057,116
|
|
|
|
20,953,991
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive income
|
|
|
43,226
|
|
|
|
48,198
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated deficit
|
|
|
(20,827,344
|
)
|
|
|
(20,724,241
|
)
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL STOCKHOLDERS’ EQUITY
|
|
|
305,977
|
|
|
|
300,927
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
|
|
$
|
654,055
|
|
|
$
|
659,531
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to the consolidated financial
statements.
ADVANCED OXYGEN TECHNOLOGIES, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS
|
|
|
|
|
|
For
the Years ended
June
30,
|
|
|
|
2020
|
|
2019
|
|
Revenues
|
|
|
|
|
|
Rent
revenue
|
|
|
37,280
|
|
|
|
38,408
|
|
|
Commission
Revenue
|
|
|
5,874
|
|
|
|
—
|
|
|
Net
Sales
|
|
$
|
43,154
|
|
|
$
|
38,408
|
|
|
Total
Revenues
|
|
$
|
43,154
|
|
|
$
|
38,408
|
|
|
Costs
and expenses
|
|
|
|
|
|
|
|
|
|
General
& administrative
|
|
|
6,562
|
|
|
|
3,634
|
|
|
Professional
expenses
|
|
|
15,600
|
|
|
|
15,600
|
|
|
Salary
and wages
|
|
|
113,000
|
|
|
|
—
|
|
|
Total
Operating Expenses
|
|
|
135,162
|
|
|
|
19,234
|
|
|
Income
from operations before other income (expenses)
|
|
|
(92,008
|
)
|
|
|
19,174
|
|
|
Other
income (expenses)
|
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
|
(3,290
|
)
|
|
|
(4,182
|
)
|
|
Income
before Income Taxes
|
|
|
(95,298
|
)
|
|
|
14,992
|
|
|
Income
Taxes Expense
|
|
|
7,805
|
|
|
|
6,881
|
|
|
NET
INCOME (Loss)
|
|
$
|
(103,103
|
)
|
|
$
|
8,111
|
|
|
Weighted Average number
of common shares outstanding
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
3,063,437
|
|
|
|
2,292,945
|
|
|
Diluted
|
|
|
3,063,437
|
|
|
|
2,302,945
|
|
|
Basic
earnings per Share
|
|
$
|
(0.034
|
)
|
|
$
|
0.003
|
|
|
Dilutive
earnings per Share
|
|
$
|
(0.034
|
)
|
|
$
|
0.003
|
|
|
OTHER
COMPREHENSIVE LOSS
|
|
|
|
|
|
|
|
|
|
Foreign
Currency Translation Adjustments
|
|
$
|
(4,722
|
)
|
|
|
(14,941
|
)
|
|
Total
Comprehensive Loss
|
|
$
|
(107,825
|
)
|
|
$
|
(6,830
|
)
|
See accompanying notes to the consolidated financial
statements.
|
ADVANCED OXYGEN TECHNOLOGIES, INC.
AND SUBSIDIARY
|
|
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
Stock Convertible Series 2
|
|
|
Common
Stock
|
|
|
Additional
Paid In
Capital
|
|
|
Accumulated
Deficit
|
|
|
Accumulated
Other Comprehensive Income
|
|
|
Total
Stockholders' Equity
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Amount
|
|
|
Amount
|
|
|
Amount
|
|
|
Amount
|
|
|
Balance at June 30, 2018
|
|
|
5,000
|
|
|
|
50
|
|
|
|
2,292,945
|
|
|
|
22,929
|
|
|
|
20,953,991
|
|
|
|
(20,732,352
|
)
|
|
|
63,139
|
|
|
|
307,757
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
Currency Translation Adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(14,941
|
)
|
|
|
(14,941
|
)
|
|
Net Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,111
|
|
|
|
|
|
|
|
8,111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June
30, 2019
|
|
|
5,000
|
|
|
|
50
|
|
|
|
2,292,945
|
|
|
|
22,929
|
|
|
|
20,953,991
|
|
|
|
(20,724,241
|
)
|
|
|
48,198
|
|
|
|
300,927
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-Based
Compensation
|
|
|
|
|
|
|
|
|
|
|
1,000,000
|
|
|
|
10,000
|
|
|
|
103,000
|
|
|
|
|
|
|
|
|
|
|
|
113,000
|
|
|
Foreign
Currency Translation Adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,972
|
)
|
|
|
(4,972
|
)
|
|
Capital
Investment in Subsidiary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
125
|
|
|
|
|
|
|
|
|
|
|
|
125
|
|
|
Net
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(103,103
|
)
|
|
|
|
|
|
|
(103,103
|
)
|
|
Balance
at June 30, 2020
|
|
|
5,000
|
|
|
|
50
|
|
|
|
3,292,945
|
|
|
|
32,929
|
|
|
|
21,057,116
|
|
|
|
(20,827,344
|
)
|
|
|
43,226
|
|
|
|
305,977
|
|
See accompanying notes to the consolidated
financial statements.
ADVANCED OXYGEN TECHNOLOGIES, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
For
the Years Ended
June 30,
|
|
|
|
2020
|
|
2019
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
$
|
(103,103
|
)
|
|
|
8,111
|
|
|
Adjustments
to reconcile net income to net cash
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
|
113,000
|
|
|
|
—
|
|
|
Expenses
paid on behalf of a related party
|
|
|
18,125
|
|
|
|
17,700
|
|
|
Accounts
payable
|
|
|
(225
|
)
|
|
|
(525
|
)
|
|
Deferred
revenue
|
|
|
3,092
|
|
|
|
|
|
|
Taxes
payable
|
|
|
5,445
|
|
|
|
(8,400
|
)
|
|
Prepaid
expenses
|
|
|
—
|
|
|
|
525
|
|
|
Net
cash provided by operating activities
|
|
|
36,334
|
|
|
|
17,411
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
|
Capital
investment in subsidiary
|
|
|
(125
|
)
|
|
|
—
|
|
|
Net
Cash provided by investing activities
|
|
|
(125
|
)
|
|
|
—
|
|
|
Cash
flow from financing activities:
|
|
|
|
|
|
|
|
|
|
Repayment
of related party debt
|
|
|
(18,262
|
)
|
|
|
(8,965
|
)
|
|
Repayment
of long term debt
|
|
|
(17,121
|
)
|
|
|
(17,317
|
)
|
|
Net
cash used in financing activities
|
|
|
(35,383
|
)
|
|
|
(26,282
|
)
|
|
Change
due to FX Translation
|
|
|
(321
|
)
|
|
|
(1,446
|
)
|
|
NET
CHANGE IN CASH
|
|
|
505
|
|
|
|
(10,317
|
)
|
|
Cash
at beginning of year
|
|
$
|
43,098
|
|
|
$
|
53,415
|
|
|
Cash
at end of year
|
|
$
|
43,603
|
|
|
$
|
43,098
|
|
|
Non
Cash Investing and Financing Activities
|
|
|
|
|
|
|
|
|
|
Cash
paid for Interest
|
|
|
3,290
|
|
|
|
4,182
|
|
See accompanying notes to the consolidated financial
statements.
NOTE 1 - ORGANIZATION AND
LINE OF BUSINESS:
Organization:
Advanced Oxygen Technologies Inc, ("Advanced
Oxygen Technologies", "AOXY", or the "Company"), was incorporated in Delaware in 1981 under the name Aquanautics
Corporation and was, from 1985 until May 1995, a startup stage specialty materials company producing new oxygen control technologies.
From May of 1995 through December of 1997 the Company had minimal operations and was seeking funding for operations and companies
to which it could merge or acquire. In March of 1998 the Company began operations again in California. From 1998 through 2000,
the business produced and sold CD- ROMS for conference events, advertisement sales on the CD's, database management and event marketing
all associated with conference events. From 2000 through March of 2003, the business consisted solely of database management. From
2003 through April 2005, the business operations were derived totally from the Company's wholly owned business, IP Service, ApS,
a Danish IP security vulnerability company ("IP Service"). Since then, business operations have been solely derived from
its wholly owned subsidiaries Anton Nielsen Vojens, ApS ("ANV"), Sharx Inc. and its wholly owned subsidiary Sharx DK
ApS (collectively “Sharx”).
Lines of Business:
Advanced Oxygen Technologies, Inc. operations
are derived from its wholly owned subsidiaries Anton Nielsen Vojens, ApS ("ANV"), Sharx Inc. and its wholly owned subsidiary
Sharx DK ApS (collectively “Sharx”).
ANV is a Danish company that owns commercial
real estate in Vojens, Denmark. ANV's revenues are derived solely from the lease revenue from its real estate. Circle K Denmark
A/S, formerly StatOil A/S, leases the facility from ANV. The lease expires in 2026.
Sharx Inc. is a Wyoming corporation incorporated
in 2020 and operations are derived from its wholly owned subsidiary Sharx Dk ApS.
Sharx DK ApS is a Danish company, incorporated
in 2020. On June 30, 2020, Sharx DK ApS, entered into a Distribution Agreement (the “Distribution Agreement” Exhibit
10.1) with Cleaver ApS, a Danish corporation (“Cleaver ”), whereby Cleaver has appointed the Company as Cleaver’s
nonexclusive distributor of its products in Europe, South America and North America. Cleaver is a manufacturer of a line of products
for the logistics and cargo industry.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES:
Principles of Consolidation:
The accompanying consolidated financial statements include the accounts
of the Company and its wholly-owned subsidiaries (ANV and Sharx), after elimination of all intercompany accounts, transactions,
and profits.
Basis of Presentation:
The consolidated financial statements of the Company
have been prepared in accordance with U.S. GAAP and are expressed in United States dollars. The Company’s fiscal year end
is June 30.
Revenue Recognition:
Revenue from Contracts with Customers
In May 2014, the FASB issued ASU No. 2014-09,
Revenue from Contracts with Customers (Topic 606), to update the financial reporting requirements for revenue recognition.
Topic 606 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers.
It supersedes most current revenue recognition guidance, including industry-specific guidance. The guidance is based on the principle
that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the
consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires additional
disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including
significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. This guidance became
effective for the Company beginning on January 1, 2018, and entities have the option of using either a full retrospective or a
modified retrospective approach for the adoption of the new standard. We adopted this standard using the modified retrospective
approach on July 1, 2018.
In preparation for adoption
of the standard, we implemented internal controls and completed our impact assessment of implementing this guidance. We have evaluated
each of the five steps in Topic 606, which are as follows: 1) identify the contract with the customer; 2) identify the performance
obligations in the contract; 3) determine the transaction price; 4) allocate the transaction price to the performance obligations;
and 5) recognize revenue when (or as) performance obligations are satisfied.
Rental Revenue
Revenue was not affected
materially in any period due to the adoption of ASC Topic 606 because: (1) we identified similar performance obligations under
ASC Topic 606 as compared with deliverables and separate units of account previously identified; our performance obligation is
to provide the land; (2) we determined the transaction price to be consistent; the lease agreement with the customer specifies
the transaction price; and (3) we recorded revenue at the same point in time, upon delivery under both ASC Topic 605 and ASC Topic
606, as applicable under the terms of the contract with the customer. Additionally, the accounting for fulfillment costs or costs
incurred to obtain a contract were not affected materially in any period due to the adoption of Topic 606.
Lastly, disclosure requirements under the new
guidance in Topic 606 have been significantly expanded in comparison to the disclosure requirements under the current guidance,
including disclosures related to disaggregation of revenue into appropriate categories, performance obligations, the judgments
made in revenue recognition determinations, adjustments to revenue which relate to activities from previous quarters or years,
any significant reversals of revenue, and costs to obtain or fulfill contracts.
The rental revenue is derived from the
Commercial Property lease in which quarterly payments are received pursuant to the property lease which is in effect until 2026.
(See Note 3 for further details) and from the sale of product pursuant to a non-exclusive distribution agreement. We recognize
revenue when we have satisfied a performance obligation by transferring control over a product or delivering a service to a client.
We measure revenue based upon the consideration set forth in an arrangement or contract with a client. We recognize revenue from
these services when the services are completed. If we are paid in advance for these services, we record such payment as deferred
revenue until we complete the services. As of June 30, 2020, the Company recorded $3,150 of deferred revenue in connection to rental
revenues.
Commission revenue
The Company recognizes commission
revenue based on the five criteria for revenue recognition established under Topic 606: 1) identify the contract, 2) identify separate
performance obligations, 3) determine the transaction price, 4) allocate the transaction price among the performance obligations,
and 5) recognize revenue as the performance obligations are satisfied as set forth below.
The Company's source of commission revenue
is from the Company’s subsidiary Sharx in which quarterly payments are received when the customer pre-pays or pays upon the
date products are drop shipped from the manufacturer pursuant to a non-exclusive distribution agreement. At such time the products
are drop shipped, the Company’s performance obligation has been satisfied and revenue is recorded The Company has determined
that it is an agent of the manufacturer and collects commission revenue at or before the delivery of product (See Note 3 for further
details).
Property Plant and Equipment:
Land is recognized at cost. Land is carried
at cost less accumulated impairment losses.
Foreign currency translation:
Foreign currency transactions are translated
applying the current rate method. Assets and liabilities are translated at current rates. Stockholders' equity accounts are translated
at the appropriate historical rates and revenue and expenses are translated at weighted average rates for the year. Exchange rate
differences that arise between the rate at the transaction date and the one in effect at the payment date, or at the balance sheet
date, are recognized in the income statement.
Income Taxes:
The Company accounts for income taxes under
the asset and liability method of accounting. Under this method, deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities
and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets
and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance
is required when it is less likely than not that the Company will be able to realize all or a portion of its deferred tax assets.
Because it is doubtful that the net operating losses of recent years will ever be used, a valuation allowance has been recognized
equal to the tax benefit of net operating losses generated.
Earnings per Share:
Basic earnings per share is computed by dividing
income available to common shareholders by the weighted-average number of common shares available. Diluted earnings per share is
computed similar to basic earnings per share except that the denominator is increased to include the number of additional common
shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were
dilutive. As of June 30, 2020 and June 30, 2019 there were 10,000 and 10,000, potential dilutive shares that need to be considered
as common share equivalents and because of the net loss, the effect of these potential common shares is anti-dilutive for twelve-months
ended June 30, 2020 and dilutive for the twelve-months ended June 30, 2019.
Cash and Cash Equivalents:
For purposes of the statement of cash flows,
the Company considers all highly-liquid investments purchased with original maturities of three months or less to be cash equivalents.
The Company maintains its cash in bank deposit
accounts which, at June 30, 2020 did not exceed federally insured limits. The Company has not experienced any losses in such accounts
and believes that it is not exposed to any significant credit risk on such amounts.
Stock-Based Compensation:
The Company records stock-based
compensation in accordance with ASC 718, Compensation. All transactions in which goods or services are the consideration received
for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair
value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost
of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued
and are recognized over the employees required service period, which is generally the vesting period.
Estimates:
The preparation of the condensed consolidated
financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of
the condensed consolidated financial statements, as well as the reported amounts of revenue and expenses during the reported period.
Actual results could differ from those estimates.
Concentrations of Credit Risk:
Financial instruments that potentially subject
the Company to major credit risk consist principally of a single subsidiary of Anton Nielsen Vojens ApS. ANV’s rent revenues
are derived from one customer. The Company’s commission revenues are subject to concentration risk as the commission revenues
are derived from one product, and one customer, but that should not be the case going forward.
Leases:
The company adopted ASU No. 2016-02, Leases
(Topic 842), as of July 1, 2019, using the modified retrospective approach, which allows comparative periods not to be restated.
In addition, the company elected the package of practical expedients permitted under the transition guidance within the new standard,
which among other things, allowed the company to carry forward the historical lease classification, not reassess whether any expired
or existing contracts are or contain leases and not to reassess initial direct costs for any existing leases. The company also
elected the hindsight expedient to determine the lease terms for existing leases. The election of the hindsight expedient did not
have a significant impact on the calculation of the expected lease term.
The Company leases land to a customer. The
Company determines if an arrangement contains a lease at contract inception. An arrangement is or contains a lease if the agreement
identifies an asset, implicitly or explicitly, that the Customer has the right to use over a period of time. If an arrangement
contains a lease, the Company classifies the lease as either an operating lease or as a finance lease based on the five criteria
defined in ASC 842.
Lease liabilities are recognized at commencement
date based on the present value of the remaining lease payments over the lease term. The corresponding right-of-use asset is recognized
for the same amount as the lease liability adjusted for any payments made at or before the commencement date, any lease incentives
received, and any initial direct costs. The Company’s lease agreements may include options to renew, extend or terminate
the lease. These clauses are included in the initial measurement of the lease liability when at lease commencement the Company
is reasonably certain that it will exercise such options. The discount rate used is the interest rate implicit in the lease or,
if that cannot be readily determined, the Company's incremental borrowing rate.
Operating lease expense is recognized on a
straight-line basis over the lease term and presented within cost of sales on the Company’s consolidated statements of operations.
Finance lease right-of-use assets are amortized on a straight-line basis over the shorter of the useful life of the asset or the
lease term. Interest expense on the finance lease liability is recognized using the effective interest rate method and is presented
within interest expense on the Company’s consolidated statements of operations and comprehensive income. Variable rent payments
related to both operating and finance leases are expensed as incurred. The Company’s variable lease payments primarily consists
of real estate taxes, maintenance and usage charges. The Company made an accounting policy election to combine lease and non-lease
components.
The Company has elected to exclude short-term
leases from the recognition requirements of ASC 842. A lease is short-term if, at the commencement date, it has a term of less
than or equal to one year. Lease expense related to short-term leases is recognized on a straight-line basis over the lease term.
The adoption of the new standard did not materially
impact consolidated net income and had no impact on cash flows.
Recently Issued Accounting Standards
In February 2016, the FASB issued ASU No.
2016-02 - Leases (Topic 842), which sets out the principles for the recognition, measurement, presentation and disclosure of
leases for both parties to a contract (i.e. lessees and lessors). The new standard requires lessees to apply a dual approach,
classifying leases as either financing or operating leases based on the principle of whether or not the lease is effectively
a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an
effective interest method or on a straight-line basis over the term of the lease, respectively. A lessee is also required to
record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their
classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating
leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to
existing guidance for sales-type leases, direct financing leases and operating leases. The standard is effective on January
1, 2019, however early adoption is permitted. effective January 1, 2019. On July 1, 2019 the Company adopted the
requirements of Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”)
No. 2016-02 (Topic 842), Leases (“ASU 2016-02”) using modified retrospective approach.
Amounts and disclosures set forth in this Form 10-K reflect this change.
In January 2017, the FASB issued
ASU No. 2017-01, Business Combinations: Clarifying the Definition of a Business. ASU No. 2017-01 most significantly revises guidance
specific to the definition of a business related to accounting for acquisitions. Additionally, ASU No. 2017-01 also affects other
areas of US GAAP, such as the definition of a business related to the consolidation of variable interest entities, the consolidation
of a subsidiary or group of assets, components of an operating segment, and disposals of reporting units and the impact on goodwill.
This ASU became effective for public entities for annual and interim periods beginning after December 15, 2017. The Company adopted
this standard on January 1, 2018. The adoption of this standard did not have a material impact on the Company’s condensed
consolidated financial statements or related disclosures.
In June 2018, the FASB issued ASU No. 2018-07. The ASU
expands the scope of ASU No. 2018-07 to include share-based payment transactions for acquiring goods and services from nonemployees.
An entity should apply ASU No. 2018-07 to nonemployee awards except with respect to option pricing models and the attribution of
cost (that is, the period of time over which share-based payment awards vest and the pattern of cost recognition over that period).
The amendments specify that ASU No. 2018-07 applies to all share-based payment transactions in which a grantor acquires goods or
services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. ASU No. 2018-07 is effective
for fiscal years beginning after December 15, 2018, or July 1, 2019 for the Company, and interim periods within those fiscal years
with early adoption permitted. The Company adopted the new standard as of July 1, 2019, and the new standard had no material impact
on its consolidated financial statements.
In June 2018, the FASB issued ASU
2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which
simplifies the accounting for nonemployee share-based payment transactions by expanding the scope of ASC Topic 718, Compensation
- Stock Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. Under
the new standard, most of the guidance on stock compensation payments to nonemployees would be aligned with the requirements for
share-based payments granted to employees. This standard became effective for us on July 1, 2019. The adoption of this standard
did not have a material impact on our consolidated financial statements.
In August 2018, the FASB issued ASU
2018-13, “Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.” ASU 2018-13 modifies
the fair value measurements disclosures with the primary focus to improve effectiveness of disclosures in the notes to the financial
statements that is most important to the users. The new guidance modifies the required disclosures related to the valuation techniques
and inputs used, uncertainty in measurement, and changes in measurements applied. ASU 2018-13 will be effective for the Company
for its fiscal year beginning after December 15, 2019 and each quarterly period thereafter. Early adoption is permitted. The Company
is currently assessing the impact this new guidance may have on the Company’s consolidated financial statements and footnote
disclosures.
New Accounting Pronouncements Not Yet Adopted
In December 2019, the FASB issued
ASU No. 2019-12, Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes. ASU 2019-12 is intended
to simplify accounting for income taxes. It removes certain exceptions to the general principles in Topic 740 and amends existing
guidance to improve consistent application. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 and interim
periods within those fiscal years, which is fiscal 2022 for us, with early adoption permitted. We do not expect adoption of the
new guidance to have a significant impact on our financial statements.
In August 2018, the FASB issued ASU 2018-13, Fair
Value Measurement (Topic 820), Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurements. This
ASU includes additional disclosures requirements for recurring Level 3 fair value measurements including disclosure of changes
in unrealized gains and losses for the period included in other comprehensive income, disclosure of the range and weighted average
of significant unobservable inputs used to develop Level 3 fair value measurements and narrative description of measurement uncertainty
related to Level 3 measurements. Early adoption is permitted. This ASU will be effective for us on July 1, 2020. We are evaluating
the impact of the adoption of this ASU on our financial condition, results of operations and cash flows, and, as such, we are not
able to estimate the effect the adoption of the new standard will have on our financial statements.
Other recent accounting pronouncements issued
by the FASB did not or are not believed by management to have a material impact on the Company's present or future financial statements.
NOTE 3 - REVENUE:
The Company's subsidiary, Anton Nielsen Vojens,
ApS has one customer who is a non-related party and leases property from the Company. Rent revenues related to the operating lease
are recognized as incurred. The Company’s subsidiary Sharx DK ApS derived its commission revenues from the sales of cargo
security product from one customer. The Company has determined that is an agent of the manufacturer and collects commission revenue
at or before the delivery of product.
The Company disaggregates revenues by revenue
type and geographic location. See the below tables:
|
|
|
Year Ended June 30,
|
|
Revenue Type
|
|
2020
|
|
2019
|
|
Real Estate Renal
|
|
$
|
37,280
|
|
|
$
|
38,408
|
|
|
Commission Revenues
|
|
|
5,874
|
|
|
|
—
|
|
|
Total Sales by Revenue Type
|
|
$
|
43,154
|
|
|
$
|
38,408
|
|
The Company’s derives revenues from 100%
of foreign revenues. For the period ending June 30, 2020 and June 30, 2019 the major geographic concentrations were as follows:
|
|
|
U.S.A.
Sales
|
|
Foreign
Sales
|
|
|
|
for
the Year Ended June 30,
|
|
for
the Year Ended June 30,
|
|
Revenue
Type
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Real
Estate Rental Revenues
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
37,280
|
|
|
$
|
38,408
|
|
|
Commission
Revenues
|
|
|
—
|
|
|
|
—
|
|
|
|
5,874
|
|
|
|
—
|
|
|
Total
Sales by Geographic Location
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
43,154
|
|
|
$
|
38,408
|
|
NOTE
4 - LAND:
The
Land owned by the Company's wholly owned subsidiary constitutes the largest asset of the Company. During the period ending June
30, 2020 the Company recorded a decrease in the carrying value of the Land of $5,970, due to the currency translation difference.
The carrying value of the Land of the Company was as follows:
|
|
|
Carrying
Value of Land at June 30,
|
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
US
Dollars
|
|
$
|
609,250
|
|
|
$
|
615,220
|
|
NOTE
5 - RELATED PARTY TRANSACTIONS:
Crossfield, Inc., a company of which the CEO,
Robert Wolfe is an officer and director, has made advances to the Company which are not collateralized, non-interest bearing, and
payable upon demand; however, the Company did not expect to make payment within one year. At June 30, 2020 and 2019, the Company
had a balance of $120,271 and $120,753 respectively. During the twelve-month period ended June 30, 2020 and 2019 expenses paid
on behalf of the Company were $18,125 and $17,700 respectively. The Company repaid $18,262 of the advancement during the twelve
months ending June 30, 2020.
NOTE 6 - NOTES PAYABLE:
During 2006, the Company issued a promissory
note (“Note”) for $650,000, payable to the Borkwood Development Ltd, a previous shareholder of the Company (“Seller”),
payable and amortized monthly and carrying an interest at 5% per year. The Company has the right to prepay the note at any time
with a notice of 14 days. To secure the payment of principal and interest the Sellers will receive a perfect lien and security
interest in the Shares in the company ANV until the note with accrued interest is paid in full, and, 2) In the case that the Note
has not been repaid within 12 months from the day of closing the Sellers have the right to convert the debt to common stock of
Advanced Oxygen Technologies, Inc. in an amount of non-diluted shares calculated on the conversion Date, equal to the lesser of
: a) Six hundred and Fifty thousand (650,000) or the Purchase Price minus the principal payments made by the buyer, whichever is
greater, divided by the previous ten day closing price of AOXY as quoted on the national exchange, or b) Fifteen million shares,
whichever is lesser. The Note has been extended until July 1, 2021, prior to period end and interest waived through the period
ending June 30, 2020. Due to the extension, the note is not in default and therefore not convertible as of June 30, 2020. As of
June 30, 2020, the unpaid balance was $127,029.
The Company has a note payable with a bank
("Note B"). The original amount of Note B was kr 1,132,000 Danish Krone (kr). Note B is secured by the subsidiary's real
estate, with a 2.00% interest rate and 3.5 years left on the term. The balance on the note as of June 30, 2020 was $61,599. During
the period ended June 30, 2020, the Company paid $17,121, in principal payments and $3,275 in interest.
The Company’s commitments and contingencies are $144,211 for 2020. See below table for the years 2020 through 2024 with a
total of $188,627. The amounts stated reflect the Company’s commitments in the currencies that those commitments were made
and the amounts are an estimate of what the US dollar amount would be if the currency rates did not change.
|
Year
|
|
Amount
|
|
|
2021
|
|
$
|
144,
211
|
|
|
2022
|
|
|
18,762
|
|
|
2023
|
|
|
18,518
|
|
|
2024
|
|
|
7,136
|
|
|
Total
|
|
$
|
188,627
|
|
|
Less:
Long-term portion of notes payable
|
|
|
(44,416)
|
|
|
Notes
payable, current portion
|
|
$
|
188,627
|
|
The amounts stated reflect the Company's commitments
in the currencies that those commitments were made and the amounts are an estimate of what the US dollar amount would be if the
currency rates did not change going forward.
NOTE 7 - INCOME TAXES:
As of June 30, 2020, the Company had federal
and state net operating loss carryforwards of approximately $20,724,241 of which approximately $380,000 may be utilized to offset
future taxable income. Section 382 of the Internal Revenue Code imposes substantial restrictions on the utilization of net operating
loss and tax credit carryforwards when a change in ownership occurs. No deferred tax debits have been recorded because it is considered
unlikely that they will be realized. The loss carryforwards will expire during the fiscal years ended June 30 as follows:
|
Year
|
|
Amount
|
|
|
2020
|
|
$
|
351,000
|
|
|
2021
|
|
|
29,000
|
|
|
Total
|
|
$
|
380,000
|
|
The overall effective tax rate differs from
the federal statutory tax rate of 21% due to operating losses and other deferred assets not providing benefit for income tax purposes.
A reconciliation of income tax expense at the
federal statutory rate to income tax expense at the Company's effective rate is as follows at June 30, 2020 and 2019:
|
|
|
2020
|
|
2019
|
|
United States Statutory Income tax Rate
|
|
|
21
|
%
|
|
|
21
|
%
|
|
Increase (Decrease) in rate on income subject to Danish income tax rates
|
|
|
1
|
%
|
|
|
1
|
%
|
|
Decrease in rate resulting from Non-Deductible expenses
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Tax Expense
|
|
|
22
|
%
|
|
|
22
|
%
|
The components of income tax expense
(benefit) from continuing operations for the years ended June 30, 2020 and 2019 consisted of the following:
|
Current
Tax Expense
|
|
2020
|
|
2019
|
|
Danish
Income Tax Expense (Benefit)
|
|
$
|
7,805
|
|
|
$
|
6,881
|
|
|
Federal
US Income Tax Expense (Benefit)
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
—
|
|
|
|
—
|
|
|
Deferred
|
|
|
—
|
|
|
|
—
|
|
|
Total
Income Tax Expense
|
|
$
|
7,805
|
|
|
$
|
6,881
|
|
Deferred
income tax expense/(benefit) results primarily from the reversal of temporary timing differences between tax and financial statement
income.
The
Company had deferred tax income tax assets as of June 30, 2020 and 2019 as follows:
|
|
|
2020
|
|
2019
|
|
Net
operating loss carryforwards
|
|
$
|
4,349,913
|
|
|
$
|
4,352,091
|
|
|
|
|
|
|
|
|
|
|
|
|
Valuation
allowance
|
|
|
(4,349,913
|
)
|
|
|
(4,352,091
|
)
|
|
Total
net deferred tax assets
|
|
$
|
—
|
|
|
$
|
—
|
|
The Company has maintained a full valuation
allowance against the total deferred tax assets for all period due to the uncertainty of future utilization.
NOTE 8 - SHAREHOLDERS' EQUITY:
Common Stock:
Pursuant to a Certificate of Amendment to our
Certificate of Incorporation filed with the State of Delaware and effective as of December 8, 2014, the Company (effected a reverse
stock split of all the outstanding shares of our common stock at an exchange ratio of one for twenty (1:20) and changed the number
our authorized shares of common stock, par value $0.01 per share, from 90,000,000 to 60,000,000 while maintaining the number of
authorized shares of preferred stock, par value $0.01 per share, at 10,000,000. As a result, the 45,853,585 shares of common stock
outstanding at December 7, 2014 had been reduced to 2,292,945 shares of common stock (taking into account the rounding up of fractional
share interests).
On September 23, 2019 the Company entered into
a Stock Grant and Investment Agreement with Robert Wolfe, its CEO and a Director (“Wolfe”) whereby the Company has
granted 1,000,000 shares (the “Shares”) of common stock of the Company, with a fair value of $113,000 based on a stock
price of $0.11. The shares were issued for services rendered by Wolfe to the Company and which Shares are deemed irrevocably and
fully earned and vested as of the date thereof. The Shares have been issued in reliance upon the exemption from registration pursuant
to Section 4(a)(2) of the Securities Act of 1933, as amended.
Preferred Stock:
The Company is authorized to issue 10,000,000
shares of $0.01 par value of series 2 convertible preferred stock. The Company may issue any class of preferred shares in series.
The board of directors has the authority to establish and designate series and to fix the number of shares included in each such
series. Each Series 2 preferred share is convertible into two shares of common stock at the option of the holder.
Series 2 Convertible Preferred Stock:
Each Series 2 preferred share also includes
one warrant to purchase two common shares for $5.00. The warrants are exercisable over a three-year period. In the event of the
liquidation of the Company, holders of Series 2 preferred stock would be entitled to receive $5.00 per share, plus any unpaid dividends
declared on the Series 2 preferred stock from the funds remaining after the Company's creditors, including directors, have been
paid. There have been no dividends declared. There are 177,000 Series 2 Convertible Preferred shares designated. During November
1997, 172,000 shares of Series 2 preferred stock were converted into 344,000 shares of the Company's common stock. As of June 30,
2020 and 2019, there are 5,000 shares issued, which are convertible into 2 common shares. There are no warrants outstanding that
have been issued in connection with these preferred shares.
Series 3 Convertible Preferred Stock:
The Company has designated 1,670,000 shares
of series 3 convertible preferred stock with a par value $0.01. Each share automatically converts on March 2, 2000 into either
(a) one (1) share of the Company's common stock if the average closing price of the common stock during the ten trading days immediately
prior to March 1, 2000 is equal to or greater than sixty-six cents ($0.66) per share, or (b) one and one-half (1 1/2) shares of
common stock if the average closing price of the common stock during the ten trading days immediately prior March 1, 2000 is less
than sixty-six cents ($0.66) per share. There are zero shares issued and outstanding at June 30, 2020 and 2019.
Series 5 Convertible Preferred Stock:
The Company has designated 1 share of series
5 convertible preferred stock, no par value. There is 1 Series 5 Convertible Preferred shares designated. The shares are collectively
convertible to common stock of the Company on March 5, 2004, in an amount equal to the greater of a.)290,000 shares divided by
the ten day closing price, prior to the date of acquisition of IPS, of the Company's common stock as quoted on the national exchange
and not to exceed twenty million shares, or b.) six million shares. There are zero shares issued and outstanding at June 30, 2020
and 2019.
NOTE 9 - Segment and Geographic Information
Segment Performance
We have three reporting segments:
|
|
·
|
The ANV lease segment which leases land in Denmark by long term
leases.
|
|
|
·
|
The Sharx’s segment which generate commissions for the sale
cargo security products.
|
|
|
·
|
The Corporate segment, Advanced Oxygen Technologies, Inc. which
does not generate revenues, but has administrative expenses.
|
The
following table summarizes financial information regarding each reportable segment’s results of operations for the periods
presented:
|
|
|
Year
Ended June 30,
|
|
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
by segment
|
|
|
|
|
|
|
|
|
|
ANV
lease revenues
|
|
$
|
37,280
|
|
|
$
|
38,408
|
|
|
Sharx
commission revenues from security product sales
|
|
|
5,874
|
|
|
|
—
|
|
|
Corporate
segment revenues
|
|
|
—
|
|
|
|
—
|
|
|
Total
revenue
|
|
$
|
43,154
|
|
|
$
|
38,408
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
profitability
|
|
|
|
|
|
|
|
|
|
ANV
lease revenues
|
|
$
|
23,089
|
|
|
$
|
25,499
|
|
|
Sharx
commission revenues from security product sales
|
|
|
4,457
|
|
|
|
—
|
|
|
Corporate
segment
|
|
|
(130,649
|
)
|
|
|
(17,388
|
)
|
|
Total
segment profitability
|
|
$
|
(103,103
|
)
|
|
$
|
8,111
|
|
The
following table presents net sales, based on the location in which the sale originated, and long-lived assets, representing property,
plant and equipment, net of related depreciation, by geographic region. All of the assets are land that are held by the Company’s
subsidiary, ANV.
|
Year
Ending June 30:
|
|
2020
|
|
2019
|
|
Net
Sales
|
|
|
|
|
|
|
|
|
|
United
States
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Denmark
|
|
|
43,154
|
|
|
|
38,408
|
|
|
Total
|
|
$
|
43,154
|
|
|
$
|
38,408
|
|
|
Long-Lived
Assets
|
|
|
|
|
|
|
|
|
|
United
States
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Denmark
|
|
|
609,250
|
|
|
|
615,220
|
|
|
Total
|
|
$
|
609,250
|
|
|
$
|
615,220
|
|
|
Year
Ended June 30, 2020
|
|
|
|
ANV
|
|
Sharx
|
|
Corporate
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
$
|
37,280
|
|
|
$
|
5,874
|
|
|
$
|
—
|
|
|
$
|
43,154
|
|
|
Operating
income (loss)
|
|
|
32,894
|
|
|
|
5,747
|
|
|
|
(130,649
|
)
|
|
|
(92,008
|
)
|
|
Interest
expense
|
|
|
743
|
|
|
|
—
|
|
|
|
—
|
|
|
|
743
|
|
|
Depreciation
and amortization
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Total
assets
|
|
$
|
646,425
|
|
|
$
|
7,480
|
|
|
$
|
150
|
|
|
$
|
654,055
|
|
|
Year
Ended June 30, 2019
|
|
|
|
ANV
|
|
Sharx
|
|
Corporate
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
$
|
38,408
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
38,408
|
|
|
Operating
(loss) income
|
|
|
36,874
|
|
|
|
—
|
|
|
|
(17,700
|
)
|
|
|
19,174
|
|
|
Interest
expense
|
|
|
4,182
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,182
|
|
|
Depreciation
and amortization
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Total
assets
|
|
$
|
659,381
|
|
|
$
|
—
|
|
|
$
|
150
|
|
|
$
|
659,531
|
|
NOTE 10 -SUBSEQUENT
EVENTS:
In accordance
with ASC 855-10, Company management reviewed all material events through the date of this report.
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