UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
———————
FORM 10-Q
———————
(Mark One)
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended: September 30, 2018 | |
Or | |
|
|
| |
| |
| |
|
|
For the transition period from: _____________ to _____________ |
———————
(Exact name of registrant as specified in its charter)
———————
ADVANCED OXYGEN TECHNOLOGIES, INC. | ||
(Exact name of registrant as specified in its charter) |
Delaware |
| 0-9951 | 91-1143622 | |
(State or Other Jurisdiction | (Commission | (I.R.S. Employer | ||
of Incorporation) | File Number) | Identification No.) |
C/O Crossfield, Inc., 653 VT Route 12A, PO Box 189, Randolph, VT 05060
(Address(Address of Principal Executive Offices) (Zip Code)
(212) 727-7085
(Registrant’s(Registrant’s telephone number, including area code)
Securities registered under Section 12(g) of the Exchange Act: Common Stock, par value $.01per$.01 per 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.
|
|
|
| |||
|
|
| x | |||
|
|
|
| |||
Emerging Growth Company | ¨ |
|
|
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
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the last practicable date: As of October 16, 2018, there were 2,292,945 issued and outstanding shares of the registrant’s Common Stock, $.01 par value.
Documents incorporated by reference: None.
Table of Contents
INDEX |
| ||||||
3 | |||||||
4 | |||||||
5 | |||||||
6-10 | |||||||
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 11 | ||||||
12 | |||||||
12 | |||||||
13 | |||||||
13 | |||||||
13 | |||||||
13 | |||||||
13 | |||||||
13 | |||||||
14 | |||||||
EXHIBIT 31.1, 31.2 Certifications of Officers | EX 31 | ||||||
EXHIBIT 32.1, 32.2 Certifications of Officers | EX 32 | ||||||
EXHIBIT 101.INS XBRL Instance | EX 101.INS | ||||||
EXHIBIT 101.SCH XBRL Taxonomy Extension Schema Document | EX 101.SCH | ||||||
EXHIBIT 101.CAL XBRL Taxonomy Extension Calculation Document | EX 101.CAL | ||||||
EXHIBIT 101.DEF XBRL Taxonomy Extension Definition Document | EX 101.DEF | ||||||
EXHIBIT 101.LAB XBRL Taxonomy Extension Labels Document | EX 101.LAB | ||||||
EXHIBIT 101.PRE XBRL Taxonomy Extension Presentation Document | EX 101.PRE |
2 |
Table of Contents |
| ||||||||
| ||||||||
|
|
| ||||||
| December 31, 2017 |
|
| June 30, 2017 |
| |||
ASSETS |
| (unaudited) |
|
|
|
| ||
|
|
|
|
|
|
| ||
CURRENT ASSETS |
|
|
|
|
|
| ||
Cash |
| $ | 50,443 |
|
| $ | 50,331 |
|
Property tax receivable |
|
| 1,285 |
|
|
| 1,221 |
|
Total current assets |
|
| 51,728 |
|
|
| 51,552 |
|
|
|
|
|
|
|
| ||
FIXED ASSETS |
|
|
|
|
|
|
|
|
Land |
|
| 651,816 |
|
|
| 619,592 |
|
TOTAL ASSETS |
| $ | 703,544 |
|
| $ | 671,144 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
Accounts payable |
| $ | 1,775 |
|
| $ | 1,405 |
|
Taxes payable |
|
| 35,665 |
|
|
| 30,389 |
|
Note payable, current portion |
|
| 149,248 |
|
|
| 153,638 |
|
Advances from a related party |
|
| 104,943 |
|
|
| 96,725 |
|
Total current liabilities |
|
| 291,631 |
|
|
| 282,157 |
|
|
|
|
|
|
|
|
|
|
Notes Payable |
|
| 94,975 |
|
|
| 98,760 |
|
|
|
|
|
|
|
|
|
|
Total Long Term Liabilities |
|
| 94,975 |
|
|
| 98,760 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
| 386,606 |
|
|
| 380,917 |
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY- |
|
|
|
|
|
|
|
|
Convertible preferred stock, Series 2, par value $0.01; authorized 10,000,000 shares; issued and outstanding 5,000 At December 31, 2017 and June 30, 2017 |
|
| 50 |
|
|
| 50 |
|
|
|
|
|
|
|
|
|
|
Convertible preferred stock, Series 3, par value $0.01; authorized, 1,670,000 shares issued and outstanding |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
Convertible preferred stock, Series 5; no par value, 1 share authorized, 0 shares issued and outstanding, respectively. |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
Common stock, par value $0.01; At December 31, 2017 and June 30, 2017, authorized 60,000,000 shares; issued and outstanding 2,292,945 shares. |
|
| 22,929 |
|
|
| 22,929 |
|
|
|
|
|
|
|
|
|
|
Additional paid-in capital |
|
| 20,953,991 |
|
|
| 20,953,991 |
|
|
|
|
|
|
|
|
|
|
Other Comprehensive Income |
|
| 79,436 |
|
|
| 53,065 |
|
|
|
|
|
|
|
|
|
|
Accumulated deficit |
|
| (20,739,468 | ) |
|
| (20,739,808 | ) |
|
|
|
|
|
|
|
|
|
TOTAL STOCKHOLDERS EQUITY |
|
| 316,938 |
|
|
| 290,227 |
|
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |
| $ | 703,544 |
|
| $ | 671,144 |
|
ADVANCED OXYGEN TECHNOLOGIES, INC.
AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2018 June 30, 2018 ASSETS (unaudited) CURRENT ASSETS Cash Property tax receivable Total current assets FIXED ASSETS Land and Buildings TOTAL ASSETS LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES Accounts payable Taxes payable Note payable, current portion Advances from a related party Total current liabilities Notes Payable Total Long Term Liabilities TOTAL LIABILITIES STOCKHOLDERS’ EQUITY- Convertible preferred stock, Series 2, par value $0.01; authorized 10,000,000 shares; issued and outstanding 5,000 at September 30, 2018 and June 30, 2018 Convertible preferred stock, Series 3, par value $0.01; authorized 1,670,000 shares; zero shares issued and outstanding Convertible preferred stock, Series 5; no par value, 1 share authorized, zero shares issued and outstanding, respectively. Common stock, par value $0.01; At September 30, 2018 and June 30, 2018, authorized 60,000,000 shares; issued and outstanding 2,292,945 shares. Additional paid-in capital Other Comprehensive Income Accumulated deficit TOTAL STOCKHOLDERS EQUITY TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 38,663 $ 53,415 1,766 1,772 40,429 55,187 629,240 632,712 $ 669,669 $ 687,899 $ 1,776 $ 750 24,120 40,269 143,332 143,422 114,150 112,255 283,378 296,696 78,606 83,446 78,606 83,446 361,984 380,142 50 50 - - - - 22,929 22,929 20,953,991 20,953,991 60,378 63,139 (20,729,663 ) (20,732,352 ) 307,685 307,757 $ 669,669 $ 687,899
See accompanying notes to condensed consolidated financial statements.
ADVANCED OXYGEN TECHNOLOGIES, INC. (Unaudited) | ||||||||||||||||
| ||||||||||||||||
| For the three months ended December 31, |
| For the six months ended December 31, |
| ||||||||||||
| 2017 | 2016 |
| 2017 |
|
| 2016 |
| ||||||||
Revenues |
|
|
|
|
|
| ||||||||||
|
|
|
|
|
|
| ||||||||||
Real Estate Rentals | $ | 9,930 | $ | 8,837 |
| $ | 19,634 |
|
| $ | 17,986 |
| ||||
|
|
|
|
|
|
| ||||||||||
Total Revenues | 9,930 | 8,837 |
| 19,634 |
|
| 17,986 |
| ||||||||
|
|
|
|
|
|
|
|
| ||||||||
Costs and Expenses |
|
|
|
|
|
|
|
| ||||||||
General & Administrative | 701 | 1,390 |
|
| 1,935 |
|
|
| 3,627 |
| ||||||
Professional expenses | 2,000 | 8,023 |
|
| 9,500 |
|
|
| 12,023 |
| ||||||
Transfer Agent Expense | 525 | - |
|
| 1,275 |
|
|
| - |
| ||||||
Total Operating Expenses | 3,226 | 9,413 |
|
| 12,710 |
|
|
| 15,650 |
| ||||||
|
|
|
|
|
|
|
|
| ||||||||
Income (Loss) from operations before other income (expenses) | 6,704 | (576 | ) |
| 6,924 |
|
| 2,336 |
| |||||||
Other income (expenses) |
|
|
|
|
|
|
|
| ||||||||
Interest Expense | (1,406 | ) | (1,663 | ) |
| (3,096 | ) |
|
| (3,476 | ) | |||||
Income before Income Taxes | 5,298 | (2,239 | ) |
| 3,828 |
|
| (1,140 | ) | |||||||
|
|
|
|
|
|
|
|
| ||||||||
Income Taxes Expense (Benefit) | 1,836 | 3,239 |
|
| 3,488 |
|
| 3,239 | ||||||||
|
|
|
|
|
|
|
|
| ||||||||
NET INCOME | $ | 3,462 | $ | (5,478 | ) | $ | 340 |
| $ | (4,379 | ) | |||||
| ) |
|
|
|
|
|
|
| ||||||||
Weighted average number of common shares outstanding | 2,292,945 | 2,292,945 |
| 2,292,945 |
|
|
| 2,292,945 |
| |||||||
Dilutive average weighted number of common shares | 2,302,945 | 2,292,945 |
|
| 2,302,945 |
|
|
| 2,292,945 |
| ||||||
Basic Net Income per Share | $ | 0.0015 | $ | (0.0024 | ) | $ | 0.0001 |
| $ | (0.0019 | ) | |||||
Dilutive Net Income per Share | $ | 0.0015 | $ | (0.0024 | ) | $ | 0.0001 |
| $ | (0.0019 | ) | |||||
|
|
|
|
|
|
|
|
| ||||||||
COMPREHENSIVE INCOME |
|
|
|
|
|
|
|
| ||||||||
Other Income (Loss) |
|
|
|
|
|
|
|
| ||||||||
Translation Adjustments | $ | 9,105 | $ | (28,853 | ) | $ | 26,371 |
| $ | (11,639 | ) | |||||
Total Comprehensive Income | $ | 12,567 | $ | (34,331 | ) | $ | 26,711 |
|
| $ | (16,018 | ) |
ADVANCED OXYGEN TECHNOLOGIES, INC.
AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS)
(Unaudited)
For the three months ended September 30, 2018 2017 Revenues Real Estate Rentals Total Revenues Costs and Expenses General & Administrative Professional expenses Total Operating Expenses Income (Loss) from operations Other income (expenses) Interest Expense Income before Income Taxes Income Taxes Benefit (expense) NET INCOME (LOSS) Weighted average number of common shares outstanding Basic Dilutive Basic Earnings per Share, 2,292,945 shares outstanding Dilutive Earnings per Share, 2,302,945 shares fully diluted COMPREHENSIVE INCOME Other Income (Loss) Foreign Currency Translation Adjustments Total Comprehensive (Loss) $ 9,673 $ 9,704 9,673 9,704 1,861 1,984 6,000 7,500 7,861 9,484 1,812 220 (1,143 ) (1,690 ) 669 (1,470 ) 2,020 (1,652 ) $ 2,689 $ (3,122 ) 2,292,945 2,292,945 2,302,945 2,292,945 $ 0.0011 $ (0.0014 ) $ 0.0011 $ (0.0014 ) $ (2,761 ) $ 17,266 $ (72 ) $ 14,144
See accompanying notes to condensed consolidated financial statements.
4 |
Table of Contents |
Return to Table of ContentsADVANCED OXYGEN TECHNOLOGIES, INC.
AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
ADVANCED OXYGEN TECHNOLOGIES, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | ||||||||
| ||||||||
|
| For the Six Months Ended December 31, |
| |||||
|
| 2017 |
|
| 2016 |
| ||
Cash flows from operating activities |
|
|
|
| ||||
Net income |
| $ | 340 |
| $ | (4,379 | ) | |
Adjustments to reconcile net income to net cash |
|
|
|
|
|
|
|
|
Expenses paid for on behalf of the Company |
|
| 11,655 |
|
|
| 14,648 |
|
Changes in operating assets and liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
|
| 370 |
|
| (1,304 | ) | |
Taxes payable |
|
| 3,620 |
|
| 4,798 | ||
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities |
|
| 15,985 |
|
| 13,763 | ||
|
|
|
|
|
|
|
|
|
Cash flow from financing activities: |
|
|
|
|
|
|
|
|
Proceeds from: |
|
|
|
|
|
|
|
|
Proceeds used for: |
|
|
|
|
|
|
|
|
Long Term Debt |
|
| (18,431 | ) |
|
| (12,413 | ) |
Net cash provided by financing activities |
|
| (18,431 | ) |
|
| (12,413 | ) |
Change due to FX Translation | 2,559 | (2,062 | ) | |||||
|
|
|
|
| ||||
Net Decrease in Cash | 112 | (712 | ) | |||||
|
|
|
| |||||
|
|
|
|
|
|
|
|
|
Cash at beginning of the period |
| $ | 50,331 |
|
| $ | 46,170 |
|
Cash at end of period |
| $ | 50,443 |
|
| $ | 45,458 |
|
| ||||||||
Non Cash Investing and Financing Activities |
|
|
|
|
|
|
|
|
Cash paid for Interest |
|
| 3,096 |
|
|
| 3,476 |
|
For the Three Months Ended September 30, 2018 2017 Cash flows from operating activities Net income (loss) Adjustments to reconcile net income (loss) to net cash Expenses paid on behalf of a related party Changes in operating assets and liabilities Accounts payable Taxes payable Net cash provided by (used in) operating activities Cash flow from financing activities: Repayment of long term and related party debt Net cash provided by (used in) financing activities Change due to FX Translation Net Decrease in Cash Cash at beginning of the period Cash at end of period Supplemental Disclosure of Cashflow Information Cash paid for Interest $ 2,689 $ (3,122 ) 6,000 9,155 1,025 (155 ) (15,939 ) (695 ) (6,225 ) 5,183 (8,440 ) (11,100 ) (8,440 ) (11,100 ) (284 ) 1,693 (14,752 ) (4,224 ) $ 53,415 $ 50,331 $ 38,663 $ 46,107 1,143 1,690
See accompanying notes to condensed consolidated financial statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1- ORGANIZATION AND LINE OF BUSINESS
Organization and Basis of Presentation:
The accompanying unaudited interim condensed consolidated financial statements of
Advanced Oxygen Technologies Inc.Inc, (“Group”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”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 prepared by managementsolely derived from real estate rentals in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all information and footnotes required by generally accepted accounting principles for annual audited financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included.
Denmark through its wholly owned subsidiary.
The results of operations for the sixthree months ended December 31, 2017September 30, 2018 are not necessarily indicative of the results to be expected for the year ending June 30, 2018.2019. The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes related thereto for the years ended June 30, 20172018 and 20162017 included in Form 10-K filed with the SEC.
Lines of Business:
The Company, through its wholly owned subsidiary Anton Nielsen Vojens ApS owns income producing commercial real estate leased until 2026. The real estate consists solely of the land with no buildings or improvements (“Land”)(Land). All improvements on the Land are those of the tenant.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Revenue recognition of rental income:
Revenues are recognized during
In May 2014, the periodFASB 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 rental payment is received.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 appliesbeginning on January 1, 2018, and entities have the provisionsoption of FASB Accounting Standards Codification ('ASC') 605-10. Revenue Recognitionusing 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 June 30, 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 Financial Statements ASC 605-10,Topic 606, which provides guidance on recognition, presentation, and disclosure of revenues in financial statements filedare as follows: 1) identify the contract with the SEC. 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.
The Company's source
We do not expect reported revenue to be affected materially in any period due to the adoption of ASC Topic 606 because: (1) we expect to identify similar performance obligations under ASC Topic 606 as compared with deliverables and separate units of account previously identified; (2) we have determined the transaction price to be consistent; and (3) we record 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, we do not expect the accounting for fulfillment costs or costs incurred to obtain a contract to be 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 isinto appropriate categories, performance obligations, the judgments made in revenue recognition determinations, adjustments to revenue which relate to activities from a commercial property leaseprevious 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 which quarterly payments are received pursuantorder to support the property lease which is in effect until 2026.
expanded disclosure requirements.
6 |
Table of Contents |
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'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.
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.
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 December 31,September 30, 2018 and September 30, 2017 and December 31, 2016 there were 10,000 and 10,000 potential dilutive shares that need to be considered as common share equivalents. As of December 31,2016,September 30, 2018, there were 10,000 potential dilutive shares and because of the net income, the effect of these potential common shares is dilutive for the period ended September 30, 2018. Because of the net loss at September 30, 2017, the effect of these potential common shares is anti-dilutive for December 31, 2016.the three month period ending September 30, 2017.
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 December 31, 2017September 30, 2018 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.
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reported period. Actual results could differ from those estimates.
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.
Reclassification:
7 |
Table of Contents |
Certain balances in previously issued financial statements have been reclassified to be consistent with the current period presentation.
Recently Issued Accounting Standards:
In May 2014, the Financial
On January 5, 2017 FASB issued Accounting Standards Board (FASB)Update (“ASU”) 2017-01, Clarifying the Definition of a Business. This update amended the definition of a business, which is fundamental to the determination of whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. That distinction impacts how the acquisition is treated in the financial statements, for instance, whether deal costs are capitalized or expensed. The primary goal of ASU 2017-01 was to narrow that definition, which is generally expected to result in fewer transactions qualifying as business combinations. The Company is in the process of evaluating the impact of this new guidance.
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 new standard to achieve a consistent application of revenue recognition within the U.S., resulting in a single revenue model to be applied by reporting companies under U.S. generally accepted accounting principles. Under the new model, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, thecontract (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 reporting companies discloseis 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. The Company is in the nature, amount, timing, and uncertaintyprocess of revenue and cash flows arising from contracts with customers. On July 9,evaluating the impact of this new guidance.
In February 2015, the FASB agreedissued Accounting Standards Update No. 2015-02 (ASU 2015-02) “Consolidation (Topic 810): Amendments to delay the effective date by one year; accordingly,Consolidation Analysis.” ASU 2015-02 changes the new standardanalysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. It is effective for usannual reporting periods, and interim periods within those years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. We do not anticipate that the first quarteradoption of 2018 and we expect to adopt it at that time. The new standard is required to be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application. WeASU 2015-02 will have not yet selected a transition method, nor have we determined theany impact of the new standard on our condensed consolidated 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'sCompany’s present or future financial statements.
NOTE
NOTE 3 - MAJOR CUSTOMER:
The Company'sCompany’s subsidiary, Anton Nielsen Vojens, ApS has sales to major customersone customer who wereis a non related parties.party. For the period ending December 31,September 30, 2018 and September 30, 2017 and December 31, 2016 the major customer concentrations were as follows:
|
|
| Percent of Sales |
| |||||
Customer |
|
| 2017 |
|
| 2016 |
| ||
Circle K Denmark A/S, Formerly Statoil A/S |
|
|
| 100 | % |
|
| 100 | % |
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
Total Sales from Major Customers |
|
|
| 100 | % |
|
| 100 | % |
|
| Percent of Sales for the Period ending September 30, |
| |||||
Customer |
| 2018 |
|
| 2017 |
| ||
Circle K Denmark A/S, Formerly Statoil A/S |
|
| 100 | % |
|
| 100 | % |
|
|
|
|
|
|
|
|
|
Total Sales from Major Customers |
|
| 100 | % |
|
| 100 | % |
NOTE 4 - LAND AND BUILDINGS :BUILDINGS:
The Land owned by the Company'sCompany’s wholly owned subsidiary constitutes the largest asset of the Company. During the sixthree month period ending December 31, 2017September 30, 2018 the Company recorded an increasea decrease in the carrying value of the Land of $32,224$(3,472) due to the currency translation difference. The carrying value of the Land of the Company was as follows:
|
| Carrying Value of Land at |
| |||||
|
| December 31, 2017 |
|
| June 30, 2017 |
| ||
|
|
|
|
|
|
|
|
|
US Dollars |
| $ | 651,816 |
|
| $ | 619,592 |
|
|
| Carrying Value of Land at September 30, |
| |||||
|
| 2018 |
|
| 2017 |
| ||
|
|
|
|
|
|
| ||
US Dollars |
| $ | 629,240 |
|
| $ | 640,868 |
|
NOTE 5 - RELATED PARTY TRANSACTIONS:Advances payable to Crossfields,
and had a balance of $92,430 and was advanced $14,168$6,000 respectively, to meet expenses.expenses and repaid $4,055.
Advances payable to Crossfields, Inc., a company that the CEO, Robert Wolfe is an officer and director, which are not collateralized, non-interest bearing, and payable upon demand, however, the Company did not expect to make payment within one year. During the 3 months ended September 30, 2016 and September 30, 2015 the Company had a balance of $80,563 and was advanced $2,301 and $63,423 and was advanced $2,425 respectively, from affiliates and officers to meet expenses. The balances were not collateralized, were non-interest bearing and were payable on demand.
NOTE 6 - NOTES PAYABLE:
The
During 2006, the Company issued a promissory note ("Note"(“Note”) for $650,000, payable to the Borkwood Development Ltd, a previous shareholder of the Company ("Seller"(“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.,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 dilutednon-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, 20182019, prior to period end and interest waived through the period ending July 1,June 30, 2019. Due to the extension, the note is not in default and therefore not convertible as of June 30, 2018. The balance on the note as of December 31, 2017September 30, 2018 and June 30, 20172018 was $127,029.
The Company has a note payable with a bank. The original amount of the note was kr 800,000 Danish Krone (kr) ("Note A"). The note is secured by the revenues of the lease with Circle K Denmark A/S, formerly Statoil, with a 7.00% interest rate and 0.50 years left on the term. The balance on the note as of December 31, 2017 was $5,329. The Company made principal payments of $5,774 and interest payments of $431. The value of the note reflect the currency adjustments. The table below summarizes the company's commitments going forward.
The Company has a note payable with a bank ("(“Note B"B”). The original amount of Note B was kr 1,132,000 Danish Krone (kr). Note B is secured by the subsidiary'ssubsidiary’s real estate, with a 2.00% interest rate and 64.75 years left on the term. The balance on the note as of December 31, 2017September 30, 2018 was $111,865.$94,911. During the period ended December 31, 2017,September 30, 2018, the Company paid $8,921$4,382 in principal payments and $2,757$1,143 in interest.The table below summarizes the company's commitments going forward.
The Company'sCompany’s commitments and contingencies are $153,154 for$243,655for 2018 and $91,069$62,302 for the years 2019 through 2025 with a total of $244,223.$322,261. The amounts stated reflect the Company'sCompany’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. The Company’s commitment for bank payments would be $16,573 for the next quarter year, and $22,097 thereafter for another 5 years.
The amounts stated in this note 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.
The amounts stated in this note 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 - SHAREHOLDERS'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).
9 |
Table of Contents |
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.
Series 2 Convertible Preferred Stock:
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'sCompany’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'sCompany’s common stock. As of December 31, 2017,June 30, 2018, there wereare 5,000 shares issued, which are convertible into 2 common shares. There are no warrants outstanding that have been issued in connection with thethese 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'sCompany’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, 2018.
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)a.) 290,000 shares divided by the ten day closing price, prior to the date of acquisition of IPS, of the Company'sCompany’s common stock as quoted on the national exchange and not to exceed twenty million shares, or b)b.) six million shares.
There are zero shares issued and outstanding at June 30, 2018.
NOTE 8 - SUBSEQUENT EVENTS:
In accordance with ASC 855-10, Company management reviewed all material events through the date of this report. There are no material subsequent events to report.
10 |
Table of Contents |
ITEM 2: MANAGEMENT'SMANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The following should be read in conjunction with our Consolidated Financial Statements and the notes thereto included in the Financial Statements.
FORWARD LOOKING STATEMENTS:
Certain statements contained in this report, including statements concerning the Company'sCompany’s future and financing requirements, the Company'sCompany’s ability to obtain market acceptance of its products and the competitive market for sales of small production business'business’ and other statements contained herein regarding matters that are not historical facts, are forward looking statements; actual results may differ materially from those set forth in the forward looking statements, which statements involve risks and uncertainties, including without limitation to those risks and uncertainties set forth in any of the Company'sCompany’s Registration Statements under the heading "Risk Factors"“Risk Factors” or any other such heading. In addition, historical performance of the Company should not be considered as an indicator for future performance, and as such, the future performance of the Company may differ significantly from historical performance.
RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTH PERIODSPERIOD ENDING DECEMBER 31, 2017SEPTEMBER 30, 2018 COMPARED TO 2016:2017:
Revenues: Revenues from operations for the three month period ending December 31,September 30, 2018 and September 30, 2017 were $9,673 and December 31, 2016 were $9,930 and $8,837 respectively, and the revenues from operations for the six month period ending December 31, 2017 and December 31, 2016 were $19,634 and $17,986$9,704 respectively. They were attributable to operations of the Company'sCompany’s wholly owned subsidiary Anton Nielsen Vojens. The fluctuation was due to currency fluctuations.
Selling, general and administrative expenses: G&A expenses for the three month period ending December 31,September 30, 2018 and September 30, 2017 were $1,861 and December 31, 2016 were $701 and $1,390 respectively and the G&A expenses for the six month period ending December 31, 2017 and December 31, 2016 were $1,935 and $3,627$1,984 respectively. Professional fees for the three month period ending December 31 2017 and December 31, 2016 were $2,000 and $8,023 and the expenses for the six month period ending December 31, 2017 and December 31, 2016 were $9,500 and $12,023. The 20162018 expenses are mainly attributable to ANV’s normal operations and the engagement of new auditors.Company’s SEC compliance and the fluctuations are attributable to currency fluctuations and accounting costs.
Interest expense: Interest expense for the three month period ending December 31,September 30, 2018 and September 30, 2017 was $(1,143) and December 30, 2016 was $1,406 and $1,663 respectively. Interest expense for the six month period ending December 31, 2017 and December 30, 2016 was $3,096 and $3,476$(1,690) respectively. Interest expenses for 20172018 are lower primarily due to the currency fluctuations and the reduction of debt.
Net income (loss) attributed to common stockholders: Net income (loss) attributed to common stockholders was $3,462$2,681 or $0.0015$0.0011 per share for the three monththree-month period ending December 31, 2017September 30, 2018 as compared to $(5,478)$(3,122) or $(0.0024)$(0.0014) per share for December 31, 2016. Net income (loss) attributed to common stockholders was $340 or $0.0001 per share for the six month period ending December 31, 2017 as compared to $(4,379) or $(0.0019) per share for December 31, 2016.September 30, 2017. The fluctuations are mainly attributable to professional fees and currency fluctuations.
Liquidity and capital resources: At December 31, 2017September 30, 2018 and June 30, 2017,2018, the Company had cash and cash equivalents of $50,443$38,663 and $50,331$53,415 respectively. At December 31, 2017September 30, 2018 and June 30, 2017,2018, the Company had a working capital deficit of $239,903$242,949 and $230,605$241,509 respectively. The change in cash is primarily associated with currency fluctuations, and the decrease in the working capital deficit is primarily due to payment of debt and normal operations.
Net cash provided fromby (used for)in) operating activities for sixthree month period ending December 31,September 30, 2018 and September 30, 2017 was $(6,225) and December 31, 2016 was $15,985 and $13,763,$5,183, respectively. The net cash used by operating activities was primarily due to the operations of ANV and the payment of ANV taxes.
Net cash provided from (used for)in) financing activities for sixthree months period ending December 31,September 30, 2018 and September 30, 2017 was $(8,440) and December 31, 2016 was $(18,431) and $(12,413)$(11,100) respectively. Net cash provided from or used for financing activities for both periods is related to the company'scompany’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.
11 |
Table of Contents |
ACQUISITION EFFORTS:
The Company continues its efforts to raise capital to support operations and growth, and is actively searching acquisition or merger with another company that would complement AOXY or increase its earnings potential. During this period, the Company has been in discussion with Companies looking to be acquired. AOXY has not negotiated any terms nor proposed any acquisitions of any of these companies that have been accepted. In addition, the Company is in discussion with potential lending institutions to assist in financing any proposed acquisition. The Company expects difficulty in financing the growth of the increased business or acquisition and has been concentrating on raising capital and/or obtaining a line of credit.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk:
Smaller reporting companies are not required to provide the information required by this Item.
ITEM 4. CONTROLS AND PROCEDURES
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,”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 December 31, 2017September 30, 2018 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.
During the sixthree month period ended December 31, 2017,September 30, 2018, there were no changes in our internal control over financial reporting identified in connection with management’smanagements 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.
12 |
Table of Contents |
During the period ending December 31, 2017,September 30, 2018, there were pending or threatened legal actions as follows:
None
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None
None
None
ITEM 4. MINE SAFETY DISCLOSURES
None
None
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
During the 63 month period ending December 31, 2017,September 30, 2018, the Company filed no reports on Form 8-K.
Exhibit | Description of the Document | |
|
| Bylaws.(1) |
| ||
| ||
| ||
101.INS |
| XBRL Instance |
101.SCH |
| XBRL Taxonomy Extension Schema Document |
101.CAL |
| XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF |
| XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB |
| XBRL Taxonomy Extension Labels Linkbase Document |
101.PRE |
| XBRL Taxonomy Extension Presentation Linkbase Document |
________________
(1) | Filed as an exhibit to the |
13 |
Table of Contents |
In accordance with the requirements of the Exchange Act, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: February 5, 2018
/s/ Robert E. Wolfe /s/------------------------------------------Robert E. Wolfe, Chairman of the Board andChief Executive Officer and Principal
Date: October 16, 2018 | By: | /s/ Robert E. Wolfe | |
Robert E. Wolfe | |||
Chairman of the Board and Chief Executive Officer and Principal Financial Officer |
14 |