ADVANCED OXYGEN TECHNOLOGIES INC (AOXY) stock intrinsic value fair value estimate & owner earnings analysis

Advanced Oxygen Technologies is a one-asset company. Its only income is rent on a 750 square meter parcel of land in Vojens, Denmark, on which Circle K Denmark A/S (formerly Statoil) operates a fuel station. The company bought the property's owner, Anton Nielsen Vojens ApS, in 2006 for $650,000, financed by a note to the seller, Borkwood Development Ltd, which is itself a shareholder. A small second subsidiary, Sharx, which was set up to sell cargo security products, has had no revenue. What the business earns. Rent has run between about $38,000 and $47,000 a year since fiscal 2019 and was $47,444 in fiscal 2026 (year ended June 30, 2026). Audit and SEC compliance costs take about $31,000 of that ($6,147 of administrative cost and $24,960 of professional fees), leaving operating income of $16,337 and, after about $10,212 of tax charges, owner earnings of $6,140, or $0.0019 per share. Over the last five years the business has produced between about $3,000 and $6,100 a year, and the level we use is $5,030 a year (about $0.0015 per share), the middle year of fiscal 2022 to fiscal 2026. We left out two distorting years: fiscal 2020, which carried a one-time $113,000 stock grant, and the $53,902 tax gain in fiscal 2022. Reported fiscal 2026 net income of $102,970 is mostly a one-time, non-cash $96,830 gain from writing off old tax liabilities, and we excluded it. The filing does not explain why those liabilities disappeared, and we could not reconcile that from the filings. Owner earnings rose 48% in fiscal 2026 ($4,138 to $6,140); our first-year assumption is flat at $5,030, because we cannot point to anything locked in that makes the increase repeat. We also remove roughly $24,000 a year of expenses that the chief executive's private company, Crossfield, Inc., pays on the company's behalf and is later repaid for, since that is borrowing rather than earnings. What changed since our last analysis. The lease's initial term ended in February 2026. Instead of expiring, it now rolls forward in six-month periods and the filing says it runs to 2027, but Circle K can end it on six months' notice and remove its improvements. Total liabilities fell from $277,463 to $163,618, mainly because of the tax write-off and $60,858 of repayments to Crossfield. The seller's note is $127,029, carries a stated 5% interest rate that was waived through June 30, 2026, and has been extended to July 1, 2027; if the 5% interest resumed it would cost about $6,350 a year, about as much as the company's entire owner earnings. Our earlier figures were built on a different basis and are not comparable. What the shares are worth. Rent alone, as a perpetual stream, is worth roughly $84,000, which is less than the roughly $107,000 the company owes after its cash. So the value to shareholders rests on the land itself, which is carried at $616,768 (the 2006 purchase price at today's exchange rate); the current rent is a 7.7% annual return on that figure. What the company owes: the seller's note of $127,029 plus $19,276 of advances from Crossfield, less $39,259 of cash, gives net debt of $107,046. Per-share figures use 3,302,945 diluted shares. Base case, $0.043 per share. Circle K stays on its current terms for another 20 years, matching the time the company has owned the site, and rent produces $5,030 a year with no growth. We credit no rent increases, since the rise in reported revenue may partly reflect currency. At the end of that period the land is sold or re-let at its carrying value of $616,768. The business is worth about $250,000 ($57,700 from rent and $192,300 from the land), the company owes $107,046, and the difference is $142,958. Bull case, $0.074 per share. Circle K stays for 25 years and the tax charges keep going unpaid (taxes owed rose in nine of the last ten years), so the business produces its full $16,337 of operating income each year, and the land is then realised at carrying value. The business is worth about $352,500, the company owes $107,046, and the difference is $245,500. Bear case, $0.015 per share. Circle K uses its six-month termination right within the next two years, so rent ends after two more years of payments. The company then carries about $31,100 a year of audit and compliance costs, paid by Crossfield, for three years while it sells the land, at 30% below carrying value, about $431,700; our judgement is that a seller with no tenant would not recover a price set in 2006, near the peak of the Danish property market, in full. The business is worth about $257,800 after those costs. After repaying Crossfield from cash, about $277,800 would remain. The seller's note is secured by the shares of the Danish subsidiary and can be converted into as many as 15,000,000 new shares if it is not repaid, against 3.3 million shares today. In this case the seller would rationally convert (about 82% of $277,800 is worth more than the $127,029 owed), leaving existing shareholders about 18%. The note holder has not used this right in the roughly 19 years since it arose, so we keep it out of the base and bull cases. How we reach the margin-of-safety price: $0.015. We are fairly sure of the earnings level, which is a fixed rent against known costs, but that level is tiny and a single decision by Circle K or by the note holder changes the outcome. The worst plausible outcome is the bear case: the tenant leaves, the land sits empty and is sold into a weak market, and the note holder takes most of the equity. That would leave about $0.015 a share. Outcomes we do not model are worse: the seller enforcing its security over the subsidiary, Crossfield ceasing to fund costs, or the land selling for less than 70% of cost. The business pays no dividend and its cash grows by only about $5,000 a year, so the price assumes a holding period of at least five years for the price to reflect the land, with the company's cash and a stable rent as the only support in the meantime. At $0.015 the price equals the bear value even if we are wrong about the tenant staying and about the land's value; if instead the base case plays out, the base value is nearly three times that price. If the seller's note were converted, the shares would be worth about $0.015 even without a tenant departure, which is why the margin-of-safety price is not higher. What would make this wrong: a rent increase or sale of the land to a buyer at a price above carrying value would raise value; Circle K's departure with no buyer, or foreclosure on the subsidiary's shares, would lower it.