U.S. SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-QSB


(Mark One)
[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

     For the quarterly period ended March 31, 2005

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

     For the transition period from _______ to _______

                         Commission file number 0-25455

                              LEXINGTON RESOURCES, INC.
        (Exact name of small business issuer as specified in its charter)

            NEVADA                                                88-0365453
(State or other jurisdiction of                               (I.R.S. Employer
incorporation of organization)                               Identification No.)

                                      7473 West Lake Mead Road
                                       Las Vegas, Nevada 89128
                    (Address of Principal Executive Offices)

                                 (702) 382-5139 (Issuer's telephone number)

                                       n/a
              (Former name, former address and former fiscal year,
                          if changed since last report)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 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
                                    -------     -------

                    Applicable   only  to   issuers   involved   in   bankruptcy
proceedings during the preceding five years.

                                       N/A

         Check whether the Registrant  filed all documents  required to be filed
by  Section  12, 13 and 15(d) of the  Exchange  Act  after the  distribution  of
securities under a plan confirmed by a court.

<PAGE>


                                        Yes                No
                                              -------      -------

                      Applicable only to corporate issuers

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:

Class                                  Outstanding as of May 12, 2005
                                              17,303,405

Common Stock, $.00025 par value

Transitional Small Business Disclosure Format (check one)

     Yes      No  X



PART I.  FINANCIAL INFORMATION

ITEM 1.  INTERIM CONSOLIDATED FINANCIAL STATEMENTS

         CONSOLIDATED BALANCE SHEETS                                          2

         INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS                        3

            INTERMIN CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

         INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS                        4

         NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS                   5

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
            CONDITION OR PLAN OF OPERATION

ITEM 3. CONTROLS AND PROCEDURES

PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS                                                   16

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS                           21

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES                                     22

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                 22

ITEM 5.  OTHER INFORMATION                                                   22

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K                                    22

SIGNATURES                                                                   23


<PAGE>

PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
-----------------------------




                            LEXINGTON RESOURCES, INC.

                    INTERIM CONSOLIDATED FINANCIAL STATEMENTS

                                 MARCH 31, 2005
                                  (Unaudited)












CONSOLIDATED BALANCE SHEETS

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS


                                      F-1

<PAGE>
<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------------------------------------
                            LEXINGTON RESOURCES, INC.

                           CONSOLIDATED BALANCE SHEETS



                                                                                                  March 31,     December 31,
                                                                                                     2005           2004
--------------------------------------------------------------------------------------------- ---------------- ----------------
                                                                                                (unaudited)

                                                            ASSETS

<S>                                                                                              <C>              <C>
CURRENT ASSETS
   Cash                                                                                          $    63,007      $   326,293
   Accounts receivable                                                                                97,648          136,573
   Prepaid expenses                                                                                        -                -
--------------------------------------------------------------------------------------------- ---------------- ----------------
                                                                                                     160,655          462,866
--------------------------------------------------------------------------------------------- ---------------- ----------------

PROPERTY AND EQUIPMENT  (Note 4)
     Oil and gas properties, full cost method of accounting
           Proved, net of accumulated depletion of $216,236                                        1,447,212        1,209,938
           Unproved                                                                                2,056,010        1,419,447
--------------------------------------------------------------------------------------------- ---------------- ----------------
                                                                                                   3,503,222        2,629,385
      Other property and equipment, net of accumulated depreciation                                    2,831            2,997
--------------------------------------------------------------------------------------------- ---------------- ----------------
                                                                                                   3,506,053        2,632,382
--------------------------------------------------------------------------------------------- ---------------- ----------------

                                                                                                 $ 3,666,708      $ 3,095,248
============================================================================================= ================ ================


                                      LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)

CURRENT LIABILITIES

   Accounts payable and accrued liabilities                                                      $ 1,314,336      $   228,819
   Current portion of drilling advances (Note 5)                                                     708,000          617,000
   Due to related parties (Note 8)                                                                         -                -
--------------------------------------------------------------------------------------------- ---------------- ----------------
                                                                                                   2,022,336          845,819
DRILLING ADVANCES (Note 5)                                                                           378,609          563,915
--------------------------------------------------------------------------------------------- ---------------- ----------------
                                                                                                   2,400,945        1,409,734
--------------------------------------------------------------------------------------------- ---------------- ----------------

CONTINGENCIES AND COMMITMENTS (Notes 1, 5 & 11)

STOCKHOLDERS' EQUITY (DEFICIENCY) (Note 6)
   Common stock $0.00025 par value: 200,000,000 shares authorized
   Preferred stock, $0.001 par value: 75,000,000 shares authorized
     Issued and outstanding:
        17,277,052 common shares (2004 -16,999,038)                                                    4,319            4,250
          Additional paid-in capital                                                              10,177,918        8,947,604
        Common stock purchase warrants                                                               301,815          301,815
         Accumulated Deficit                                                                      (9,218,289)      (7,568,155)
--------------------------------------------------------------------------------------------- ---------------- ----------------
                                                                                                   1,265,763        1,685,514
--------------------------------------------------------------------------------------------- ---------------- ----------------

                                                                                                 $ 3,666,708      $ 3,095,428
============================================================================================= ================ ================
</TABLE>

          The accompanying notes are an integral part of these interim
                       consolidated financial statements.

                                      F-2

<PAGE>
<TABLE>
<CAPTION>


                            LEXINGTON RESOURCES, INC.

                  INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

                                   (unaudited)


                                                                         Three months             Three months
                                                                      Ended March 31,           Ended March 31,
                                                                            2005                      2004
----------------------------------------------------------------- ------------------------- -------------------------


<S>                                                                           <C>                     <C>
OIL AND GAS REVENUE                                                           $   130,060             $     40,690
----------------------------------------------------------------- ------------------------- -------------------------

EXPENSES
     Depletion                                                                     54,907                    2,679
     Operating costs and taxes                                                     58,065                        -
----------------------------------------------------------------- ------------------------- -------------------------
                                                                                  112,972                   38,011
----------------------------------------------------------------- ------------------------- -------------------------

OPERATING INCOME                                                                   17,088                   38,011
----------------------------------------------------------------- ------------------------- -------------------------

OTHER EXPENSES
   Consulting - stock based (Note 7)                                              775,753                2,989,221
   General and administrative                                                     891,469                  138,126
   Interest expense                                                                     -                   14,393
----------------------------------------------------------------- ------------------------- -------------------------

                                                                                1,667,222                3,141,740
----------------------------------------------------------------- ------------------------- -------------------------

NET LOSS FOR THE PERIOD                                                       $(1,650,134)            $ (3,103,729)
================================================================= ========================= =========================




BASIC NET LOSS PER SHARE                                                      $     (0.09)            $      (0.23)
================================================================= ========================= =========================

WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING                                                             17,049,854               13,766,629
================================================================= ========================= =========================

</TABLE>


          The accompanying notes are an integral part of these interim
                       consolidated financial statements.

                                      F-3

<PAGE>
<TABLE>
<CAPTION>


                            LEXINGTON RESOURCES, INC.

                  INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (unaudited)



                                                                                        For the Three        For the Three
                                                                                        Months Ended         Months Ended
                                                                                          March 31,            March 31,
                                                                                            2005                 2004
------------------------------------------------------------------------------------ -------------------- --------------------
                                                                                                               (Note 1)
<S>                                                                                      <C>                   <C>
Net loss for the period                                                                  $   (1,650,134)       $  (3,103,729)
Adjustments to reconcile net loss to net cash from operating activities:
       Stock-based consulting fees                                                              775,753            2,989,221
           Non-cash compensation                                                                 81,354                    -
           Finance fees                                                                         (12,434)                   -
       Oil and gas depletion                                                                     54,907                2,679
           Accrued interest                                                                           -               14,393
           Depreciation                                                                             166                    -
  Changes in working capital assets and liabilities
       Prepaid expenses                                                                               -                  450
       Accounts receivable                                                                       38,925              (58,190)
       Accounts payable                                                                          90,729               55,592
------------------------------------------------------------------------------------ -------------------- --------------------

NET CASH FLOWS USED IN OPERATING ACTIVITIES                                                    (620,734)             (99,584)
------------------------------------------------------------------------------------ -------------------- --------------------

CASH FLOWS FROM INVESTING ACTIVITIES


  Oil and gas properties                                                                        (15,310)            (385,300)
------------------------------------------------------------------------------------ -------------------- --------------------

NET CASH FLOWS USED IN INVESTING ACTIVITIES                                                     (15,310)            (385,300)
------------------------------------------------------------------------------------ -------------------- --------------------

CASH FLOWS FROM FINANCING ACTIVITIES
    Drilling advances                                                                           (94,306)                   -
  Advances payable                                                                                    -              279,500

  Net proceeds on sale of common stock                                                          467,064                    -
------------------------------------------------------------------------------------ -------------------- --------------------

NET CASH FLOWS FROM FINANCING ACTIVITIES                                                        372,758              279,500
------------------------------------------------------------------------------------ -------------------- --------------------

INCREASE (DECREASE) IN CASH                                                                    (263,286)            (205,384)

CASH, BEGINNING OF PERIOD                                                                       326,293              351,420
------------------------------------------------------------------------------------ -------------------- --------------------

CASH, END OF PERIOD                                                                      $       63,007        $     146,036
==================================================================================== ==================== ====================
</TABLE>

SUPPLEMENTAL CASH FLOW INFORMATION (Refer to Note 10)


          The accompanying notes are an integral part of these interim
                       consolidated financial statements.

                                      F-4

<PAGE>

LEXINGTON RESOURCES INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
--------------------------------------------------------------------------------
(UNAUDITED)

NOTE 1:  NATURE OF CONTINUED OPERATIONS AND BASIS OF PRESENTATION
--------------------------------------------------------------------------------

By Share Exchange Agreement dated November 19, 2003, Lexington  Resources,  Inc.
(formerly Intergold Corporation) ("LRI" or "the Company"), a Nevada corporation,
acquired 100% of the issued and  outstanding  shares of Lexington Oil & Gas Ltd.
Co. LLC, (an exploration stage company) ("Lexington"), in exchange for 9,000,000
(3,000,000 pre January 26, 2004 3:1 forward split)  restricted  shares of common
stock of the Company representing 85% of the total issued and outstanding shares
of the  Company at the time.  In  connection  with this  transaction,  Intergold
Corporation changed its name to Lexington Resources, Inc. (Refer to Note 3.)

This acquisition has been accounted for as a reverse  acquisition with Lexington
being treated as the accounting parent and LRI, the legal parent,  being treated
as  the  accounting  subsidiary.   Accordingly,   the  consolidated  results  of
operations  of the Company  include  those of Lexington  for the period from its
inception on  September  29, 2003 and those of LRI since the date of the reverse
acquisition.

Lexington is an Oklahoma Limited Liability Corporation incorporated on September
29, 2003 formed for the purposes of the  acquisition  and development of oil and
natural gas properties in the United States,  concentrating  on coal bed methane
gas  acquisition and production  initiatives.  As planned  principal  operations
commenced in 2004 the Company is no longer considered to be an exploration stage
company.

GOING CONCERN
The consolidated financial statements have been prepared on the basis of a going
concern which  contemplates  the  realization of assets and the  satisfaction of
liabilities in the normal course of business.  The Company has a working capital
deficit of $1,861,681  has incurred  losses since  inception of  $9,218,289  and
further losses are  anticipated in the development of its oil and gas properties
raising  substantial  doubt as to the  Company's  ability to continue as a going
concern.  The ability of the Company to continue as a going concern is dependent
on raising  additional  capital to fund  ongoing  research and  development  and
ultimately on generating future profitable operations. The Company will continue
to fund operations with advances,  other debt sources, further equity placements
and the expected exercise of outstanding warrants.

UNAUDITED INTERIM FINANCIAL STATEMENTS
The accompanying  unaudited interim consolidated  financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information  and with the  instructions  to Form 10-QSB of Regulation
S-B. They do not include all  information  and  footnotes  required by generally
accepted  accounting  principles  for complete  financial  statements.  However,
except  as  disclosed  herein,  there  have  been  no  material  changes  in the
information  disclosed  in the notes to the  financial  statements  for the year
ended  December 31, 2004 included in the Company's  Annual Report on Form 10-KSB
filed  with the  Securities  and  Exchange  Commission.  The  interim  unaudited
consolidated  financial  statements  should be read in  conjunction  with  those
financial  statements included in the Form 10-KSB. In the opinion of Management,
all adjustments considered necessary for a fair presentation,  consisting solely
of normal recurring adjustments, have been made. Operating results for the three
months ended March 31, 2005 are not  necessarily  indicative of the results that
may be expected for the year ending December 31, 2005.

NOTE 2:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------------------------------------

(A)      PRINCIPLES OF CONSOLIDATION
The consolidated  financial  statements  include the accounts of the Company and
its  wholly-owned  subsidiary,  Lexington.  Lexington  was  acquired  by reverse
acquisition on November 19, 2003. All significant inter-company transactions and
account balances have been eliminated.

(B)      OIL AND GAS PROPERTIES
The  Company  follows  the full cost  method of  accounting  for its oil and gas
operations  whereby all costs related to the acquisition of methane,  petroleum,
and natural gas interests are capitalized. Under this method, all productive and
nonproductive  costs  incurred  in  connection  with  the  exploration  for  and
development of oil and gas reserves are capitalized. Such costs include land and
lease acquisition  costs,  annual carrying charges of non-producing  properties,
geological and geophysical costs, costs of drilling and equipping productive and
non-productive  wells,  and direct  exploration  salaries and related  benefits.
Proceeds from the disposal of oil and gas properties are recorded as a reduction
of the related  capitalized  costs without  recognition of a gain or loss unless
the  disposal  would  result in a change of 20 percent or more in the  depletion
rate. The Company currently operates solely in the U.S.A.

                                      F-5

<PAGE>

LEXINGTON RESOURCES INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
--------------------------------------------------------------------------------
(UNAUDITED)

NOTE 2:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
--------------------------------------------------------------------------------

Depletion   of   proved   oil   and   gas   properties   is   computed   on  the
units-of-production   method  based  upon  estimates  of  proved  reserves,   as
determined by  independent  consultants,  with oil and gas being  converted to a
common unit of measure based on their relative energy content.

The costs of acquisition  and  exploration  of unproved oil and gas  properties,
including  any  related  capitalized   interest  expense,  are  not  subject  to
depletion,  but  are  assessed  for  impairment  either  individually  or  on an
aggregated  basis. The costs of certain  unevaluated  leasehold acreage are also
not  subject to  depletion.  Costs not  subject to  depletion  are  periodically
assessed for possible impairment or reductions in value. If a reduction in value
has  occurred,  costs  subject to  depletion  are  increased or a charge is made
against  earnings  for  those  operations  where  a  reserve  base  is  not  yet
established.

Estimated future removal and site  restoration  costs are provided over the life
of  proven  reserves  on  a  units-of-production  basis.  Costs,  which  include
production equipment removal and environmental  remediation,  are estimated each
period by management based on current regulations, actual expenses incurred, and
technology and industry  standards.  The charge is included in the provision for
depletion and depreciation and the actual  restoration  expenditures are charged
to the accumulated provision amounts as incurred.

The Company applies a ceiling test to capitalized  costs which limits such costs
to the aggregate of the estimated  present value,  using a ten percent  discount
rate of the estimated  future net revenues from production of proven reserves at
year end at market  prices less future  production,  administrative,  financing,
site  restoration,  and  income  tax costs  plus the lower of cost or  estimated
market value of unproved  properties.  If  capitalized  costs are  determined to
exceed estimated future net revenues,  a write-down of carrying value is charged
to depletion in the period.

(C)      ASSET RETIREMENT OBLIGATIONS
The Company has adopted the  provisions of SFAS No. 143,  "Accounting  for Asset
Retirement Obligations." SFAS No. 143 requires the fair value of a liability for
an asset  retirement  obligation  to be  recognized in the period in which it is
incurred  if a  reasonable  estimate of fair value can be made.  The  associated
asset  retirement  costs are  capitalized as part of the carrying  amount of the
related oil and gas  properties.  As of March 31, 2005 management has determined
that there are no material asset retirement obligations.

(D)      EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share is computed by dividing  earnings (loss) for the
period by the  weighted  average  number of common  shares  outstanding  for the
period.  Diluted  earnings  (loss) per share reflects the potential  dilution of
securities by including  other  potential  common stock,  including  convertible
preferred  shares,  in the weighted average number of common shares  outstanding
for a period  and is not  presented  where  the  effect  is  anti-dilutive.  The
presentation  is only of  basic  earnings  (loss)  per  share as the  effect  of
potential  dilution of securities  has no impact on the current  period's  basic
earnings (loss) per share.  Loss per share,  as presented,  has been restated to
reflect the forward stock split described in Note 6. The weighted average number
of  shares  outstanding  prior to the  reverse  acquisition  is deemed to be the
number of  shares  issued  in  connection  with the  reverse  acquisition  being
9,000,000 shares (3,000,000 pre January 26, 2004 3:1 forward split).

(E)      REVENUE RECOGNITION
Oil and natural gas revenues are recorded  using the sales  method,  whereby the
Company  recognizes  oil and natural gas revenue  based on the amount of oil and
gas sold to  purchasers,  when  title  passes,  the amount is  determinable  and
collection is reasonably assured.

(F)      FINANCIAL INSTRUMENTS
The  fair  values  of  cash,  accounts  receivable,  accounts  payable,  accrued
liabilities,  drilling  advances  and  advances  due  to  related  parties  were
estimated  to  approximate  their  carrying  values  due  to  the  immediate  or
short-term maturity of these financial instruments. The Company's operations are
currently in the State of Oklahoma,  in the United  States,  and as a result the
Company is not subject to  significant  exposure to market risks from changes in
foreign currency rates.

The Company's financial instruments that are exposed to concentrations of credit
risk consist  primarily of cash and accounts  receivable.  The Company's cash is
held at a major financial  institution.  The Company manages and controls market
and credit risk through  established formal internal control  procedures,  which
are reviewed on an ongoing basis.

                                      F-6

<PAGE>


LEXINGTON RESOURCES INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
--------------------------------------------------------------------------------
(UNAUDITED)

NOTE 2:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
--------------------------------------------------------------------------------

The  Company  sells  its  gas  to  only  one  customer  as  there  is  currently
insufficient  production  for  multiple  purchasers.  The  Company  manages  and
controls this situation by ensuring it only deals with gas  purchasers  that are
reputable and are well established.

(G)      CONCENTRATION OF CREDIT RISK
Substantially  all of the  Company's  sales are to one party.  Consequently  the
Company is exposed to a concentration of credit risk.

(H)      USE OF ESTIMATES
The preparation of these consolidated  financial  statements requires the use of
certain   estimates  by  management  in   determining   the  Company's   assets,
liabilities,  revenues  and  expenses.  Actual  results  could  differ from such
estimates.  Depreciation,  depletion and  amortization of oil and gas properties
and the impairment of oil and gas properties are determined  using  estimates of
oil and gas  reserves.  There  are  numerous  uncertainties  in  estimating  the
quantity of reserves and in projecting the future rates of production and timing
of development expenditures, including future costs to dismantle, dispose, plug,
and restore the Company's  properties.  Oil and gas reserve  engineering must be
recognized as a subjective  process of estimating  underground  accumulations of
oil and gas that cannot be measured in an exact way.  Proved reserves of oil and
natural gas are  estimated  quantities  that  geological  and  engineering  data
demonstrate with reasonable certainty to be recoverable in the future from known
reservoirs under existing conditions.

(I)      STOCK-BASED COMPENSATION
In December  2002, the Financial  Accounting  Standards  Board  ("FASB")  issued
Financial Accounting Standard No. 148, "Accounting for Stock-Based  Compensation
-  Transition  and  Disclosure"  ("SFAS No.  148"),  an  amendment  of Financial
Accounting Standard No. 123 "Accounting for Stock-Based Compensation" ("SFAS No.
123").  The  purpose of SFAS No. 148 is to: (1) provide  alternative  methods of
transition for an entity that voluntarily changes to the fair value based method
of accounting for stock-based  employee  compensation,  (2) amend the disclosure
provisions  to require  prominent  disclosure  about the effects on reported net
income of an entity's  accounting  policy  decisions with respect to stock-based
employee compensation, and (3) to require disclosure of those effects in interim
financial information.  The disclosure provisions of SFAS No. 148 were effective
for the Company for the period ended December 31, 2003.

The  Company  has  elected to  continue  to  account  for  stock-based  employee
compensation  arrangements  in  accordance  with the  provisions  of  Accounting
Principles  Board Opinion No. 25,  "ACCOUNTING  FOR STOCK ISSUED TO  EMPLOYEES",
("APB No.  25") and comply  with the  disclosure  provisions  of SFAS No. 123 as
amended by SFAS No. 148 as described above. In addition, in accordance with SFAS
No. 123 the  Company  applies  the fair  value  method  using the  Black-Scholes
option-pricing model in accounting for options granted to consultants. Under APB
No. 25, compensation  expense is recognized based on the difference,  if any, on
the date of grant  between the estimated  fair value of the Company's  stock and
the amount an employee  must pay to acquire the stock.  Compensation  expense is
recognized  immediately  for past services and pro-rata for future services over
the option-vesting period.

The following  table  illustrates  the pro forma effect on net income (loss) and
net income (loss) per share as if the Company had accounted for its  stock-based
employee  compensation using the fair value provisions of SFAS No. 123 using the
assumptions as described in Note 7:

<TABLE>
<CAPTION>


                                                        Three months ended March                   Year ended
                                                                        31, 2005            December 31, 2004
                                                    ----------------------------- ----------------------------
<S>                                  <C>                           <C>                         <C>
Net loss for the period              As reported                   $ (1,667,222)               $ (6,092,689)
SFAS 123 compensation expense        Pro-forma                               -                     (692,051)
                                                    ----------------------------- ----------------------------
Net loss for the period              Pro-forma                     $ (1,667,222)               $ (6,784,740)
                                                    ============================= ============================

Pro-forma basic net loss per share   Pro-forma                       $    (0.09)                 $    (0.43)
                                                    ============================= ============================
</TABLE>

                                      F-7

<PAGE>

LEXINGTON RESOURCES INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
--------------------------------------------------------------------------------
(UNAUDITED)

--------------------------------------------------------------------------------
NOTE 2:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)

The Company accounts for equity  instruments  issued in exchange for the receipt
of goods or services from other than  employees in accordance  with SFAS No. 123
and the  conclusions  reached  by the  Emerging  Issues  Task Force in Issue No.
96-18.   Costs  are  measured  at  the  estimated   fair  market  value  of  the
consideration  received or the  estimated  fair value of the equity  instruments
issued,  whichever is more reliably measurable.  The value of equity instruments
issued for  consideration  other than  employee  services is  determined  on the
earliest  of a  performance  commitment  or  completion  of  performance  by the
provider of goods or services as defined by EITF 96-18.

The Company has also adopted the  provisions of the FASB  Interpretation  No.44,
ACCOUNTING  FOR  CERTAIN   TRANSACTIONS   INVOLVING  STOCK   COMPENSATION  -  AN
INTERPRETATION  OF APB OPINION NO. 25 ("FIN 44"), which provides  guidance as to
certain applications of APB 25.

(J)      INCOME TAXES
The Company follows the liability  method of accounting for income taxes.  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
balances.  Deferred tax assets and  liabilities  are measured  using  enacted or
substantially  enacted tax rates  expected to apply to the taxable income in the
years in which those  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 date of  enactment  or
substantial enactment. A valuation allowance is provided for deferred tax assets
if it is more  likely  than not that the  Company  will not  realize  the future
benefit, or if future deductibility is uncertain.

(K)      CASH AND CASH EQUIVALENTS
The company considers all highly liquid instruments with an original maturity of
three months or less at the time of issuance to be cash equivalents.

NOTE 3 - ACQUISITION OF LEXINGTON OIL & GAS LTD. CO. LLC ("LEXINGTON")
--------------------------------------------------------------------------------

By Share Exchange  Agreement dated November 19, 2003, the Company  acquired 100%
of the  issued  and  outstanding  shares  of  Lexington  (an  exploration  stage
company),  in exchange for 9,000,000 (3,000,000 pre January 26, 2004 3:1 forward
split)  restricted  shares of common stock of the  Company.  As a result of this
transaction the former  stockholders of Lexington acquired  approximately 85% of
the total issued and outstanding  shares of the Company as at November 19, 2003,
resulting in a change in control of the Company.

During  January,  2004,  the  parties to the Share  Exchange  Agreement,  Orient
Exploration  Ltd.  ("Orient"),  Douglas  Humphreys  ("Humphreys"),  the Company,
Lexington,  and Paluca Petroleum Inc.  ("Paluca")  re-evaluated the terms of the
original  Share  Exchange  Agreement  and upon further  negotiations  desired to
modify the terms of the original  agreement in the best  interest of all parties
such that: (i) 2,250,000 post forward split shares of restricted Common Stock of
the  Company  held  of  record  by  Humphreys  were  transferred  to  Orient  in
consideration  therefore;  (ii) the Company  assigned to  Humphreys a 5% carried
working  interest in every well  drilled by the Company on the Wagnon  Property;
(iii) the Company  agreed to allow  Humphreys to participate up to an additional
5% working interest in every well drilled by the Company on the Wagnon Property;
(iv) the Company agreed to transfer to Paluca certain assets previously acquired
by the Company (which included  working  interests and net revenue  interests in
certain oil and gas leases  located on the Doc Cole  Property,  the Atwood Booch
Sand Property, the Jeneva Property and the Sasakwa Gilcrease Sand Property).

Management  of the  Company  decided  not to  proceed  with the  acquisition  or
development  of  the  described  properties  as  set  out in  item  (iv)  due to
management's  analysis that the properties did not contain the  appropriate  oil
and gas development  elements that form part of the Company's  current focus and
criteria for corporate oil and gas development initiatives.

This acquisition has been accounted for as a  recapitalization  using accounting
principles  applicable to reverse  acquisitions  with Lexington being treated as
the  accounting  parent  (acquirer)  and LRI  being  treated  as the  accounting
subsidiary  (acquiree).  The value assigned to the capital stock of consolidated
LRI on  acquisition of Lexington is equal to the book value of the capital stock
of Lexington  plus the book value of the net assets  (liabilities)  of LRI as at
the date of the acquisition.

                                      F-8

<PAGE>

LEXINGTON RESOURCES INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
--------------------------------------------------------------------------------
(UNAUDITED)

NOTE 3 - ACQUISITION OF LEXINGTON OIL & GAS LTD. CO. LLC ("LEXINGTON") -(CONT'D)
--------------------------------------------------------------------------------

The  book  value  of  Lexington's   capital  stock  subsequent  to  the  reverse
acquisition is calculated and allocated as follows:

         Lexington capital stock                              $     300
         LRI net assets (liabilities)                        (1,430,969)
                                                        -----------------
                                                        -----------------
                                                             (1,430,669)
         Charge to deficit on reverse acquisition             1,433,317
                                                        -----------------
                                                        -----------------
         Consolidated stock accounts post reverse
         acquisition                                         $    2,648
                                                        =================

These  consolidated  financial  statements  include the results of operations of
Lexington since September 29, 2003  (inception) and the results of operations of
LRI since the date of the reverse acquisition effective November 19, 2003. LRI's
results of operations  for the period from January 1, 2003 to September 30, 2003
have been reported in the Company's September 30, 2003 filing on Form 10-QSB.

In  order  to  reflect  the  revised   operating   arrangement   resulting  from
modifications  to  the  original  terms  of the  Share  Exchange  Agreement  the
Humphreys   Purchase  and  Sale   Agreement  and  the  Paluca   Agreement   were
simultaneously executed.

HUMPHREYS PURCHASE AND SALE AGREEMENT
On January 21, 2004,  Orient and Humphreys,  a director of the Company,  entered
into  a  purchase  and  sale  agreement  (the   "Humphreys   Purchase  and  Sale
Agreement").  Pursuant to the terms and provisions of the Humphreys Purchase and
Sale  Agreement:  Humphreys  agreed to transfer  2,250,000  shares of restricted
Common Stock of the Company held of record by Humphreys to Orient.

PALUCA AGREEMENT
On January 21, 2004, the Company, Lexington,  Paluca, and Humphreys entered into
an agreement whereby: (i) the Company assigned to Humphreys a 5% carried working
interest in every well drilled by the Company on the Wagnon  Property;  (ii) the
Company agreed to allow  Humphreys to participate up to an additional 5% working
interest  in every well  drilled by the  Company on the Wagnon  Property;  (iii)
Humphreys agreed to waive any and all other claims, debts or obligations owed to
Humphreys  by the  Company  or by  Lexington,  and (iv) the  Company  agreed  to
transfer to Paluca  certain  assets  previously  acquired by the Company  (which
included  working  interests  and net revenue  interests  in certain oil and gas
leases  located on the Doc Cole Property,  the Atwood Booch Sand  Property,  the
Jeneva Property and the Sasakwa Gilcrease Sand Property).

MANAGEMENT COMPENSATION AGREEMENT
The Company and Lexington have  negotiated a new  compensation  agreement  ("New
Agreement")  with  Humphreys  for his  assistance  in  overseeing  the  drilling
operations and the completion,  management of wells, and for his increasing role
in  development  of the  Company on a  performance  basis.  Under the  covenants
provided under the New Agreement and within its effective  term,  Humphreys,  or
his  designate:  (1) will receive  compensation  of $7,500 per month,  effective
April 1, 2004;  (2) will be  assigned up to a 10%  carried  working  interest in
every  well  drilled  by the  Company  on all  properties  held by the  Company,
including  the Wagnon  property,  (3) will have the right to  purchase  up to an
additional  5%  working  interest  in all wells  drilled  by the  Company on its
properties  provided  that  funds for this  participation  are paid prior to the
commencement  of drilling of said wells;  and (4) will receive a further 200,000
options in the Company to be granted at $3.00 per share  exercisable  for a five
year term. These options were granted in July 2004. (Refer to Note 7.)

During  the  period  ended  March  31,  2005  the  Company  recorded  additional
compensation  expense to Humphreys of $81,354  (2004 - $NIL) being the estimated
value of his 10% carried interest in the Company's wells that were  successfully
developed in the period end March 31, 2005. (Refer to Note 4.)

Humphreys is a director of the Company and is the Drilling Operations Manager of
Lexington,  and also  consults to Oak Hills  Drilling and  Operating,  LLC ("Oak
Hills"),  an oil and gas drilling and operating  company  based in  Holdenville,
Oklahoma that acts as designated  "operator" to Lexington since January 1, 2005.
Humphreys is in charge of oil and gas operations in Oklahoma. (Refer to Note 8.)
The previous operator in charge of drilling and operating of wells for Lexington
was Oakhills Energy, Inc.

                                      F-9

<PAGE>

LEXINGTON RESOURCES INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
(UNAUDITED)
--------------------------------------------------------------------------------

NOTE 4 - PROPERTY AND EQUIPMENT
--------------------------------------------------------------------------------

Paluca  is a  private  Oklahoma  based  oil and gas  services  company  owned by
Humphreys and his immediate  family.  Some of the services provided by Humphreys
to the Company are provided through this business entity.  Mr. Humphreys is also
the President of Paluca Inc.

Property and equipment include the following:

                                               MARCH 31,        DECEMBER 31,
                                                 2005               2004
                                           ------------------ -----------------
OIL AND GAS PROPERTIES:                            $                 $
Proved, subject to depletion                    1,663,448        1,371,266
Unproved, not subject to depletion              2,056,010        1,419,447
Accumulated depletion                            (216,236)        (161,328)
                                           ------------------ -----------------
Net oil and gas properties                      3,503,222        2,629,385
                                           ------------------ -----------------

Other equipment                                     3,495            3,495
Accumulated depreciation                             (664)            (498)
                                           ------------------ -----------------
Net other property and equipment                    2,831            2,997
                                           ------------------ -----------------
Property and equipment, net of
accumulated depreciation  and depletion         3,506,053        2,632,382
                                           ================== =================


The  Company's  oil and gas  activities  are  currently  conducted in the United
States.

During the current period the Company incurred  development  costs of $1,010,100
on its properties.

WAGNON LEASE
By agreement dated October 9, 2003,  Lexington acquired an interest in a section
of farm-out acreage with the intention to develop coal bed methane gas producing
wells in Pittsburg County, Oklahoma. Lexington holds an 80% working interest and
a 60.56% net revenue interest in approximately  590 gross acreage of a potential
gas  producing  property  located in  Pittsburg  County,  Oklahoma  (the "Wagnon
Property"). The Company's interest relating to the Wagnon Property is subject to
farm-out  agreements  equating to a total 20% working  interest  between Paluca,
Oakhills Energy, Inc. and the lessee of the Wagnon Property.

A director and an officer of LRI were minority owners in Oakhills  Energy,  Inc.
in 2003. Their interest in Oakhills  Energy,  Inc. was purchased by the majority
shareholder on January 26, 2004.

During the year ended  December  31,  2004  three gas wells (the  Kellster  1-5,
Kyndal 2-2 and Bryce 3-2) have been put into production.

On March  15,  2005 the  Company  began  drilling  a fourth  well on the  Wagnon
Property  (Caleigh 4-2). The well began  producing on April 2, 2005.  During the
period  ended  March 31,  2005 the  Company  has spent  $1,663,166  on  drilling
expenditures on the Wagnon lease. (Refer to Note 5.)

                                      F-10

<PAGE>

LEXINGTON RESOURCES INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
--------------------------------------------------------------------------------
(UNAUDITED)

NOTE 4 - PROPERTY AND EQUIPMENT - (CONT'D)
--------------------------------------------------------------------------------

COAL CREEK PROSPECT
In March 2004 the  Company  obtained  an option to  purchase  an  undivided  95%
interest in  approximately  2,500 net leasehold  acres in 5 sections of the Coal
Creek  Prospect  located  in  Hughes  and  Pittsburg  Counties,  in the State of
Oklahoma. During the year ended December 31, 2004 the Company acquired 1,932 net
leasehold  acres  under the option.  The Company  does not expect to acquire any
additional  acreage under this option.  Under the terms of the purchase of these
leases,  Lexington has an undivided  95% - 100% working  interest in the subject
lands and a minimum  79% net revenue  interest.  The terms of the leases are for
two years.

On March 31, 2005 the Company  began  drilling  the first well on the Coal Creek
Prospect  (Lex  1-34).  The  well  is  currently  in the  completion  stage  and
production  is  expected  to begin by the end of April  2005.  The  Company  has
approximately  a 50% working  interest in the well and has accrued $316,  987 in
costs associated with the well for the period.

On April 15, 2005 the Company  began  drilling the second well on its Coal Creek
Prospect  (Braumbaugh  1-10 ). The  Company  has a 22%  working  interest in the
Braumbaugh  1-10 well  (contingent  liability of $125,000  for a completed  well
based on Oak Hills Drilling & Operating Authority For Expenditure "AFE").

PANTHER CREEK PROSPECT
In March 2004 the Company  purchased a 3 year lease of  approximately  300 acres
located in five separate sections to develop the Panther Creek Project in Hughes
County,  Oklahoma.  Lexington has an undivided 100% working  interest in subject
lands and an approximate 81% net revenue  interest.  Part of the acreage in this
lease has been subject to three division pooling orders by Newfield  Exploration
Mid-Continent,  Inc. ("Newfield"), for three wells to be drilled and operated by
Newfield in which  Lexington  has elected to  participate.  Lexington's  working
interests in the three wells are  proportionate  to  Lexington's  Panther  Creek
lease ownership in areas pooled by Newfield.  Lexington working interests in the
three wells are  estimated  to be as follows;  25.78%  (contingent  liability of
$419,801  for a  completed  well based on  Newfield  Authority  For  Expenditure
"AFE"),  10.94% (contingent  liability of $159,655 for a completed well based on
Newfield  AFE if  drilled),  and 4.06%  (contingent  liability  of $58,521 for a
completed  well  based  on  Newfield  AFE  if  drilled).   Newfield  has  up  to
approximately  the end of 2005 to drill  such  wells and may or may not  proceed
with any individual well project at their election.  Contingent liability exists
to Lexington  for any well  drilled by Newfield  that  Lexington  has elected to
participate.  Newfield  has  proceeded  with the drilling of one of the wells in
which Lexington has leased acreage.

The first of the three wells,  the POE 1-29,  commenced  drilling on February 9,
2005 and began producing on March 21, 2005. The company has accrued  $333,205 on
the POE 1-29 as of March 31, 2005.

SOUTH LAMAR PROSPECT
By agreement dated April 21, 2004,  Lexington  acquired a 100% working interest,
78.5% net revenue interest, in three sections (960 acres) of farm-out acreage in
Hughes  County,  Oklahoma  (the "South Lamar  Prospect")  with the  intention to
develop  coal bed  methane  gas  producing  wells.  The term of the lease is two
years.  On July 26,  2004,  the Company  acquired a further  183.98 acres in the
South Lamar prospect and a 100% working  interest and a 79% net revenue interest
in the additional acreage. The term of the lease is two years.

H-9 PROSPECT
By agreement  dated June 29, 2004,  Lexington has obtained an option to purchase
an  undivided  100%  leasehold  interest,   79.25%  net  revenue  interest,   in
approximately  4,600 net leasehold acres in approximately 38 sections of the H-9
Prospect located in Hughes and McIntosh Counties, in the State of Oklahoma.  The
Company  concluded  the purchase of the property on July 29, 2004.  The terms of
leases acquired within the prospect are between three and four years.

On July 19, 2004 the  Company  acquired  an  additional  325 acres of gas target
drillable  acreage in the northeast  portion of Hughes  County,  Oklahoma in the
vicinity of the  approximate  4,600 acres of farm out leases  under  acquisition
(H-9)  Prospect.  Drilling  targets  that  are  included  in the  lease  include
Hartshorne and Booch Coal gas zones with a 100% Working Interest and a 78.3% Net
Revenue  Interest.  The acquired  lease is held by  production.  The term of the
lease is three years.

                                      F-11

<PAGE>

LEXINGTON RESOURCES INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
--------------------------------------------------------------------------------
(UNAUDITED)

NOTE 4 - PROPERTY AND EQUIPMENT - (CONT'D)
--------------------------------------------------------------------------------

MIDDLE CREEK PROSPECT
By agreement  dated October 28, 2004,  Lexington has purchased an undivided 100%
leasehold interest,  70% net revenue interest, in 320 net leasehold acres in two
sections of the Middle Creek Prospect located in Hughes County,  in the State of
Oklahoma.  Drilling  targets  are the Caney  Shale  and  Hartshorne  zones.  The
leasehold interest acquired is held by production.

NOTE 5:  DRILLING ADVANCES
--------------------------------------------------------------------------------

During the period ended December 31, 2003 Lexington,  the Company,  and Oakhills
Energy,  Inc.  entered into  drilling  agreements  with private  investors  (the
"Funding  Investors")  for the funding for the first three  wells,  the Kellster
1-5, the Kyndal 2-2 and the Bryce 3-2,  located on the Wagnon Lease. The Funding
Investors each provided  one-third of the Authorization For Expenditure  ("AFE")
capital  estimated at $360,000 for the  drilling and  completion  of each of the
first three  wells.  As of March 31,  2005,  the Company had  received the total
required  funding  of  $1,080,000  ( 2004  -  $720,000)  for  the  drilling  and
completion  of the first three Wagnon Lease wells and has  successfully  drilled
and completed the Kellster 1-5, the Kyndal 2-2 well and the Bryce 3-2 wells. The
terms of the drilling  agreements  of all wells on the Wagnon Lease are the same
for each well on the property.

Lexington,  the  Company,  and  Oakhills  Energy,  Inc.  entered  into  drilling
agreements  with the Funding  Investors  for the  drilling and  completion  of a
fourth  Wagnon  Lease well,  the Caleigh  4-2.  The Company  began  drilling the
Caleigh 4-2 on March 15, 2005. As of March 31, 2005,  $405,000 had been received
for the drilling of the Caleigh 4-2. The Caleigh 4-2 began  production  on April
2, 2005.

Wells to be  drilled  on the  Wagnon  Lease  property  carry  royalty  interests
totaling 25% to land owners and property  interest  holders and carried  working
interests of 5% to a land owner,  and 10% to a company  related to a director of
the Company (see Note 3 - Management Compensation Agreement). Paluca also owns a
non-carried  working  interest  of 5% as part of capital  participation  funding
provided by Paluca.

The Funding Investors are provided an 80% working  interest,  60.56% net revenue
interest,  in the wells  until their  invested  capital for each well is repaid,
after which time the Funding  Investors  revert to an  aggregate  20.1%  working
interest,  15.075%  net  revenue  interest,  in the wells  located on the Wagnon
Lease. Oakhills Energy, Inc., the previous operator responsible for drilling the
wells,  will  "back-in" to a reversionary  6.7% working  interest after invested
capital is repaid to the Funding  Investors  in the wells  located on the Wagnon
Lease and the Company will back-in to a reversionary 53.2% working interest. The
Company's  repayment  obligation  to the  Funding  Investors  is  limited to the
production   revenues   generated  from  wells  located  on  the  Wagnon  Lease.
Accordingly,  if any of the subject  wells on the Wagnon Lease are  unsuccessful
the  drilling  advances  will be written  off when such  determination  is made.
Management has estimated that the non-current  portion of the drilling  advances
as at March 31, 2005 is $563,915 (2004 - nil).

As of March 31, 2005, the Funding  Investors  have been repaid  $398,391 (2004 -
nil) of their  $1,080,000  investment in the Kellster 1-5,  Kyndal 2-2 and Bryce
3-2 wells. The amount paid in the period ended March 31, 2005 was $94,306. (2004
- nil)

NOTE 6:  STOCKHOLDERS' EQUITY
--------------------------------------------------------------------------------

The  authorized  capital of the Company  consists of  200,000,000  voting common
shares with $0.00025 par value, and 75,000,000  non-voting preferred shares with
$0.001 par value.

REVERSE STOCK SPLIT
Effective  August  7,  2003 the  Company  completed  a  reverse  stock  split of
one-for-three hundred of the Company's outstanding common stock,  resulting in a
reduction  of the then  outstanding  common  stock  from  156,328,943  shares to
521,184  shares.  The par value and the number of authorized but unissued shares
of the  Company's  common stock was not changed as a result of the reverse stock
split.

                                      F-12

<PAGE>

LEXINGTON RESOURCES INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
--------------------------------------------------------------------------------
(UNAUDITED)

NOTE 6:  STOCKHOLDERS' EQUITY (CONT'D)
--------------------------------------------------------------------------------

FORWARD STOCK SPLIT
On January 26, 2004 the Company  forward split its common shares on the basis of
three new shares for each common share outstanding. The par value and the number
of authorized but unissued shares of the Company's  common stock was not changed
as a result of the forward stock split.

Unless  otherwise   noted,  all  references  to  common  stock,   common  shares
outstanding,  average numbers of common shares outstanding and per share amounts
in these  Financial  Statements and Notes to Financial  Statements  prior to the
effective  dates of the reverse and forward  stock splits have been  restated to
reflect the one-for-three  hundred reverse split and the  one-for-three  forward
split on a retroactive basis.

STOCK OPTION EXERCISE - 2004
On January 22, 2004 the Company issued 1,200,000 pre forward split shares of its
common stock,  upon the exercise of 1,200,000  stock options at $0.167 per share
for proceeds of $200,000, which was paid by way of offset of $200,000 originally
advanced  to the Company by ICI which was  assigned  by Investor  Communications
International,  Inc. ("ICI") to International Market Trend AG ("IMT") designated
option holders as described in Note 8.

On May 18, 2004 the Company issued 495,000 shares of its common stock,  upon the
exercise of 495,000  stock  options at $1.00 per share for proceeds of $495,000,
which was paid by way of offset of $495,000  originally  advanced to the Company
by ICI, which was assigned to an IMT designated  option holder,  as described in
Note 8.

On June 25, 2004 the Company issued 320,000 shares of its common stock, upon the
exercise of 320,000 stock options at $3.00 per share for proceeds of $960,000.

PRIVATE PLACEMENTS
On September 9, 2004 the Company  approved a financing of up to 4,150,000  units
of  restricted  common  shares at a price of $1.47 per share  plus a full  share
purchase  warrant  exercisable  at a price of $1.68  per  share  for each  share
purchased (the  "September  Unit(s)").  The warrants will expire six months from
the effective date of  registration of the stock and warrants to be issued under
the  offering.  The amount  approved  to be raised in this  financing  was up to
$6,100,500.  Brokers'  fees payable on the September  Units were:  cash of 8% of
gross  proceeds,  brokers'  warrants  equal to 4% of the gross  proceeds  (to be
issued under the same terms as the warrants  issued under the  offering),  and a
warrant exercise fee equal to 5% of proceeds  received as a result of the future
exercise of the warrants by the investors. On November 1, 2004 LRI completed the
sale of an  aggregate  of  1,700,686  Units.  The Company  filed a  registration
statement  (form SB-2) with the  Securities and Exchange  Commission  ("SEC") on
December  15,  2004,  covering  the resale of shares of common stock sold in the
private placement or issuable upon exercise of the warrants.  Under the terms of
the financing, the registration statement is to become effective within 120 days
after the filing date; the registration  statement went effective on January 24,
2005 and the warrants under this filing expire July 23, 2005.

As of December 31, 2004, 1,700,686 September Units had been sold for proceeds of
$2,319,264, net of an $180,746 agent fee which was charged to additional paid in
capital.  Of the 1,700,686  units sold 376,318 were  non-brokered  and 1,324,368
were  brokered.  The fair value of the warrants was  estimated to be $0.147 each
and $250,001 has been recorded as a separate component of stockholders'  equity.
The fair value of the 46,353 broker  warrants  issued to date has been estimated
to be $0.147 per warrant and as a result, $6,814 has been recorded as a separate
component  of  stockholders'  equity.  The  non-brokered  units in the amount of
376,318 were issued upon: (1) settlement of the $500,000 convertible  promissory
note  and  accrued  interest  of  approximately  $12,637  for  348,733  units as
described in Note 6; and (2) pursuant to a non-brokered placee that paid $40,550
for 27,585  units.  The Company  does not intend to sell any further  securities
under this offering.

                                      F-13

<PAGE>

LEXINGTON RESOURCES INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
(UNAUDITED)
--------------------------------------------------------------------------------

NOTE 6:  STOCKHOLDERS' EQUITY (CONT'D)
--------------------------------------------------------------------------------

SHARE PURCHASE WARRANTS
Share purchase warrants outstanding at March 31, 2005 are:

                                                             Weighted average
        Range of           Weighted         Number       (remaining contractual)
     exercise prices    average price      of shares         life (in years)
-------------------------------------------------------------------------------

      $1.68 - $5.00         $2.078          1,669,025           .37
===============================================================================

In the period  ended  March 31,  2005,  278,014  share  purchase  warrants  were
exercised at $1.68 per purchase  warrant  providing  $454,630 in proceeds to the
Company, net of brokers' fees of $12,434.

In April 2005,  26,353  share  purchase  warrants  were  exercised  at $1.68 per
purchase warrant providing $44,273 in proceeds to the Company.

NOTE 7:  STOCK OPTION PLAN
--------------------------------------------------------------------------------

By  Directors'  Resolution  dated July 2, 2004 the  Company  (1)  increased  the
authorized  number of options under its Stock Option Plan ("SOP") from 4,000,000
to 5,000,000;  and (2) made the new 1,000,000 stock options exercisable at $3.00
per share for a 5 year term.

As of March 31, 2005,  4,700,000  options under the  Company's  current SOP have
been granted and 3,665,000 have been exercised.

A summary of the  Company's  stock  options as of March 31,  2005,  and  changes
during the period ended is presented below:

<TABLE>
<CAPTION>

                                         --------------------- ----------------------- -----------------------
                                                                  Weighted average        Weighted average
                                                Number of          exercise price      remaining contractual
                                               options               per share            life (in years)
                                         --------------------- ----------------------- -----------------------
                                                                         $
<S>                                               <C>                   <C>                     <C>
Outstanding at December 31, 2003                   1,350,000            0.50                    3.64
Exercised January 22, 2004                        (1,200,000)
Granted February 2, 2004                           1,000,000
                                         --------------------- ----------------------- -----------------------
Exercisable at March 31, 2004                      1,150,000            1.76                    4.11
Exercised May 18, 2004                              (495,000)
Exercised June, 2004                                (320,000)
Granted July 26, 2004                                200,000
Cancellation, February 1, 2005                      (100,000)
Granted February 1, 2005                             600,000
                                         --------------------- ----------------------- -----------------------

Exercisable at March 31, 2005                      1,035,000            2.02                    3.44
                                         ===================== ======================= =======================
</TABLE>

In January 2004, 1,200,000 stock options (400,000 pre-forward split shares) were
exercised at $0.167 per share ($0.50 per  pre-forward  split share) for proceeds
of $200,000 which was paid by way of offset of $200,000  originally  advanced to
the Company by ICI which was assigned by ICI to IMT designated option holders.

On February 2, 2004,  an  additional  1,000,000  share  options  were granted to
consultants  500,000  exercisable at $1.00 and 500,000 exercisable at $3.00. The
term of these options is five years. The fair value of these options at the date
of grant of $2,989,221  was estimated  using the  Black-Scholes  option  pricing
model  with an  expected  life of 5 years,  a risk free  interest  rate of 3%, a
dividend  yield of 0%, and an expected  volatility of 251% and has been recorded
as a consulting expense in the period. Of these options, 100,000 were granted to
an officer of the Company.

                                      F-14

<PAGE>

LEXINGTON RESOURCES INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
--------------------------------------------------------------------------------
(UNAUDITED)

NOTE 7:  STOCK OPTION PLAN (CONT'D)
--------------------------------------------------------------------------------

In April 2004 the Company registered 500,000 common stock options exercisable at
$1.00 per share under an S-8 Registration Statement. On May 18, 2004, 495,000 of
these stock  options were  exercised at $1.00 per share for proceeds of $495,000
which was paid by way of offset of $495,000  originally  advanced to the Company
by ICI which was assigned to a designated option holder.

In June 2004 the Company registered 400,000 common stock options  exercisable at
$3.00 per share under an S-8 Registration Statement.  And, in June 2004, 320,000
of these  stock  options  were  exercised  at $3.00 per share  for  proceeds  of
$960,000.

On July 12,  2004,  200,000  stock  options  were  granted at $3.00 per share to
Humphreys.  The term of these  options  is five  years.  The fair value of these
options at the date of grant of $692,051 was estimated  using the  Black-Scholes
option pricing model with an expected life of 5 years, a risk free interest rate
of 3%,  a  dividend  yield  of 0%,  and an  expected  volatility  of 222% and in
accordance  with the  provisions of SFAS 148, has been  disclosed on a pro-forma
basis in Note 2.

On February 1, 2005, 500,000 options were granted at $1.00 per share to IMT. The
term of these options is five years. The fair value of these options at the date
of grant of $646,054 was estimated using the Black-Scholes  option pricing model
with an expected  life of 5 years,  a risk free  interest rate of 3%, a dividend
yield of 0%, and an expected volatility of 239.25%.

On February 1, 2005,  100,000  existing S-8 options were granted at $0.16667 per
share to IMT. The term of these  options is five years.  The fair value of these
options at the date of grant of $129,699 was estimated  using the  Black-Scholes
option pricing model with an expected life of 5 years, a risk free interest rate
of 3%, a dividend yield of 0% and an expected volatility of 239.25%.


NOTE 8:  RELATED PARTY TRANSACTIONS
--------------------------------------------------------------------------------

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2005
The Company previously  entered into a contract with International  Market Trend
AG ("IMT"),  a private  company to whom certain of the  Company's  directors and
officers provide consulting services relating to oil and gas industry and market
development services. The Company incurred $30,000 in fees to IMT for the period
ended March 31, 2005 (2004 - $NIL).

On February 1, 2005 IMT was granted 600,000 stock options (refer to Note 7).

On November 9, 2004, the Company  reached an agreement with Oak Hills to drill a
ten well  program.  Humphreys  is a director of the Company and is the  Drilling
Operations  Manager of Lexington,  and also consults to and is a 25% shareholder
of Oakhills Drilling and Operating, LLC., an oil and gas operating company based
in Holdenville,  Oklahoma that acts as "operator" to Lexington. Mr. Humphreys is
in charge of oil and gas operations in Oklahoma.

Humphreys  has  been  assigned  a 10%  carried  Working  Interest  in each  well
successfully  drilled  on the Wagnon  lease,  as  partial  compensation  for his
involvement  in  obtaining  and  facilitating  the  execution  of  the  Farm-Out
Agreement  and  to  compensate  for  his  services  relating  to  operation  and
completion  of wells to be located on the Wagnon Lease.  The estimated  value of
the 10% carried  Working  Interest of $81,354 (2004 - $NIL) has been recorded as
additional  compensation  expense during the period ended March 31, 2005.  Total
additional  compensation  expense to Humphreys since inception of the Company to
March  31,  2005 is  $198,384.  Humphreys  also  has the  right to  purchase  an
additional  5% working  interest in each well to be located on the Wagnon  Lease
and has  elected to do so for the first four wells  drilled on this  lease.  The
original 5% cost to  participate  in the wells by Humphreys  was $60,000.  As of
March 31,  2005 the  Company  was still owed  $22,500  (2004 - $17,500)  and has
recorded  the amount as a  receivable  from  Humphreys  as full  payment  for an
additional 5% working  interest in each of the Kellster 1-5, the Kyndal 2-2, and
the Bryce 3-2. Refer to Notes 3, 5, and 7.

During the period  ended  March 31,  2005 the  Company  incurred  $58,500 to its
officers for management fees (2004 - $17,500).

                                      F-15

<PAGE>

LEXINGTON RESOURCES INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
--------------------------------------------------------------------------------
(UNAUDITED)

NOTE 8:  RELATED PARTY TRANSACTIONS (CONT'D)
--------------------------------------------------------------------------------

On January 1, 2005, the Company appointed Oak Hills Drilling and Operating,  LLC
of Oklahoma  as its  elected  operator  for wells on its Wagnon  Lease,  and for
further drilling to be conducted by Lexington. Oak Hills Drilling and Operating,
LLC replaces Oakhills Energy, Inc. as its designated operator.

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2004
An officer and director of the Company has been contracted by ICI as part of the
management team provided to the Company and its  subsidiary.  During the quarter
ended  March 31,  2004 a total of $30,000  was  incurred  to ICI, a  significant
shareholder,  for managerial,  administrative  and investor  relations  services
provided  to the Company  and its  subsidiary.  As of March 31, 2004 the Company
owed ICI a total of $483,370 in  management  fees payable  which have accrued as
described  above,  loans of $65,998,  and interest of $95,778 accrued at 10% per
annum on outstanding  loans and unpaid  management fees payable,  for a total of
$645,146.

During the period  ended  March 31,  2004 the  Company  settled  $200,000 of the
amounts  due to ICI in exchange  for the  issuance  of  1,200,000  shares of the
Company's common stock by way of exercising options at $0.167 per share.

Of the 1,000,000 stock options granted on February 2, 2004, 100,000 were granted
to an officer and director and 895,000 stock options were granted to IMT. IMT is
a services consultant to the Company engaged since November, 2003 for an initial
12 month  period to  provide  corporate  planning,  strategy  and  negotiations,
internet based consulting,  and general business consulting services as required
by the Company. (Refer to Note 7.)

NOTE 9:  INCOME TAXES
--------------------------------------------------------------------------------

The Company has adopted FASB No. 109 for reporting purposes.  As of December 31,
2004,  the  Company  had net  operating  loss carry  forwards  of  approximately
$3,000,000 that may be available to reduce future years' taxable income and will
expire between the years 2006 - 2025.  Availability  of loss usage is subject to
change of ownership  limitations  under  Internal  Revenue Code 382.  Future tax
benefits which may arise as a result of these losses have not been recognized in
these  financial  statements,  as their  realization is determined not likely to
occur and  accordingly,  the Company has recorded a valuation  allowance for the
deferred tax asset relating to these tax loss carry forwards.

The Company  evaluates its valuation  allowance  requirements on an annual basis
based on projected future operations.  When circumstances change and this causes
a change in management's judgment about the recoverability of future tax assets,
the impact of the change on the  valuation  allowance is generally  reflected in
current income.

NOTE 10: SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS
--------------------------------------------------------------------------------

                                      Period ended     Period ended
                                     March 31, 2005   March 31, 2004
  --------------------------------- ---------------- -----------------
  Cash paid during the year for:
           Interest                 $         -        $        -
           Income taxes             $         -        $        -
  --------------------------------- ---------------- -----------------


                                      F-16

<PAGE>

         Statements  made in this Form 10-QSB that are not historical or current
facts  are  "forward-looking  statements"  made  pursuant  to  the  safe  harbor
provisions of Section 27A of the  Securities Act of 1933 (the "Act") and Section
21E of the  Securities  Exchange  Act of 1934.  These  statements  often  can be
identified  by the use of terms  such as  "may,"  "will,"  "expect,"  "believe,"
"anticipate,"  "estimate," "approximate" or "continue," or the negative thereof.
We intend that such  forward-looking  statements  be subject to the safe harbors
for such  statements.  We wish to caution readers not to place undue reliance on
any such forward-looking  statements,  which speak only as of the date made. Any
forward-looking  statements represent  management's best judgment as to what may
occur in the future. However,  forward-looking  statements are subject to risks,
uncertainties  and important  factors beyond our control that could cause actual
results and events to differ  materially from  historical  results of operations
and events  and those  presently  anticipated  or  projected.  We  disclaim  any
obligation  subsequently  to revise any  forward-looking  statements  to reflect
events or  circumstances  after the date of such  statement  or to  reflect  the
occurrence of anticipated or unanticipated events.

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION OR PLAN OF
OPERATION

GENERAL

         Lexington Resources,  Inc. is a corporation organized under the laws of
the State of Nevada (herein known as "we" or the "Company").  We currently trade
on the OTC  Bulletin  Board  under the symbol  "LXRS" and on the  Frankfurt  and
Berlin Stock Exchanges under the symbol "LXR"; WKN: A0BKLP.

CURRENT BUSINESS OPERATIONS

         We are a natural resource  exploration and production company currently
engaged in the  acquisition  and  development  of oil and gas  properties in the
United States. We expect to weight our future  development  initiatives  towards
gas production. We are committed to developing into a profitable independent oil
and gas  producer  through the  systematical  expansion  of  operations  and the
acquisition  of new drilling  targets while  organizing  drilling and production
initiatives on leased properties.

<PAGE>

         Our wholly owned subsidiary,  Lexington Oil & Gas Ltd. Co., an Oklahoma
limited liability company  ("Lexington"),  previously  acquired a 590 gross acre
section of farm-out  acreage in Pittsburg  County,  Oklahoma for the development
and production of coal bed methane gas (the "Wagnon  Property").  We hold an 80%
working interest and a 60.56% net revenue  interest in the Wagnon  Property.  We
have  drilled,  completed  and are  producing gas from four wells drilled on the
Wagnon Property.

         We have also successfully  drilled,  completed,  and are producing from
two further CBM gas wells  located on our Coal Creek  Project.  In addition,  we
have a 25%  working  interest  in a  third  gas  well  drilled,  completed,  and
producing  by  Newfield  Exploration  Mid-Continent,  Inc.  In  total,  we  have
interests  in 6 CBM gas wells and 1 non-CBM  gas  well,  and  estimated  acreage
suitable for the drilling of a further  70-100 CBM gas wells.  All wells drilled
to date  have  reached  the  completion  stage  and have  been  productive  with
immediate gas sales to market.

         We have also consummated the acquisition of certain additional coal bed
methane gas  prospects in the Arkoma  Basin in the State of Oklahoma,  including
1,932 gross leasehold  acres in the Coal Creek Prospect,  292 gross acres in the
Panther Creek Prospect, 320 gross acres in the Middlecreek Prospect, 1,144 gross
acres in the South Lamar Prospect, and 4,925 gross acres in the H-9 Prospect. We
currently have an aggregate of approximately 590 gross developed and 8,613 gross
undeveloped acres pursuant to leases and/or  concessions as more fully described
below. It is anticipated that our ongoing  efforts,  subject to adequate funding
being  available,  will  continue  to  be  focused  on  successfully  concluding
negotiations for additional  tracts of prime acreage in the coal bed methane and
other gas and oil producing  domains,  and to implement  additional  development
initiatives by drilling new wells to developed reserves and to provide revenues.
We plan to continue  building and increasing a strategic base of proven reserves
and production  opportunities first targeted within Oklahoma's Arkoma Basin, and
diversifying alternative development initiatives in the State of Texas.

OIL AND GAS PROPERTIES

         As of the date of this Quarterly Report, we have not reported nor filed
any reserve estimates with any Federal agencies,  but have commenced  production
from  certain   properties  as  more  fully  described  below.  We  obtained  an
independent reserve and economic evaluation report regarding the Wagnon Property
that was  conducted  by  Fletcher  Lewis  Engineering,  Inc.  of  Oklahoma.  The
following is a description of our oil and gas properties.

         WAGNON PROPERTY

         We hold an 80% working  interest  and a 60.56% net revenue  interest in
approximately  590.2 gross  acres of a gas lease  located in  Pittsburg  County,
Oklahoma  (the "Wagnon  Property").  The gas lease was  acquired  from Oak Hills
Energy,  Inc.  ("Oak Hills  Energy"),  which  acquired  the lease  pursuant to a
farm-out  agreement  with Quinton  Rental & Repair  Services,  Inc. (the "Wagnon
Farm-Out Agreement"). Our interest relating to the Wagnon Property is subject to
farm-out  agreements  equating to a total 20% working  interest  between  Paluca
Petroleum  Inc.  ("Paluca"),  an  affiliate  of one of  our  directors,  Douglas
Humphreys, Oak Hills Energy, and the lessee of the Wagnon Property.

         As of March 31, 2005,  we have  drilled,  completed  and put four wells
into production on this prospect,  the Kellster #1-5, the Kyndal #2-2, the Bryce
#3-2,  and the Caleigh #4-2. On April 2, 2005, the Caleigh #4-2 coal bed methane
gas well commenced production. It is estimated that up to a total of 5 wells may
drilled on this the Wagnon Property.

         We previously  entered into funding  agreements  for the Kellster #1-5,
Kyndal  #2-2,  Bryce #3-2,  and Caleigh #4-2 wells  (collectively,  the "Funding
Agreements").  Pursuant  to  the  Funding  Agreements,  private  investors  were

<PAGE>

provided with an 80% working  interest and a 60.56% net revenue  interest in the
wells  until their  respective  invested  capital in each well is repaid,  after
which time the private  investors  will  revert to an  aggregate  20.1%  working
interest  and a 15.075% net revenue  interest.  Oak Hills  Energy,  the original
driller and operator of the wells, will "back-in" to a reversionary 6.7% working
interest after invested  capital is repaid to the private  investors and we will
"back-in" to a  reversionary  53.2%  working  interest.  Pursuant to the further
terms and provisions of the Funding  Agreements,  all wells to be drilled on the
Wagnon property carry royalty interests  totaling 25% to landowners and property
interest holders and carried working interests of 5% to a landowner,  as well as
a 10% carried working interest to Paluca. Paluca also owns a non-carried working
interest of 5% as part of capital  participation  funding provided by Paluca. As
of March 31,  2005,  the  private  investors  have been repaid an  aggregate  of
$398,391 of their $1,080,000  investment under the Funding Agreements,  of which
$94,306 was paid during the three-month period ended March 31, 2005.

         COAL CREEK PROSPECT

         During fiscal year 2004, we obtained an option to purchase an undivided
95% interest in approximately 2,500 net leasehold acres in five sections located
in Hughes and Pittsburg Counties, State of Oklahoma (the "Coal Creek Prospect").
On March 12, 2004,  we entered  into a two-year  lease for  approximately  1,536
gross acres in the Coal Creek  Prospect  pursuant to which we have an  undivided
95% working interest and a minimum 79% net revenue interest. On May 20, 2004, we
entered into a two-year  lease  pursuant to which we acquired an additional  372
acres of the Coal Creek  Prospect  with a minimum 95 working  interest and a 78%
net revenue interest. On August 20, 2004, we entered into an additional two-year
lease  pursuant to which we acquired  an  additional  23 acres of the Coal Creek
Prospect with a minimum 95% working interest and a 79% net revenue interest.

         As of the date of this Quarterly Report,  the total acreage acquired in
the Coal Creek Gas Prospect is  approximately  1,932 gross  leasehold  acres. On
March 31, 2005, we began drilling the first well on the Coal Creek Prospect, the
Lex #1-34, of which we have a 50% working interest.  The Lex #1-34 well has been
completed and is currently in  production.  On April 15, 2005, we began drilling
the second well on the Coal Creek Project, the Brumbaugh #1-10 well, of which we
have a 22% working interest.  The Brumbaugh #1-10 well has been completed and is
currently in  production.  It is estimated  that interests in 12-16 wells may be
drilled on lease  acreage  owned by the  Company  that form part of the its Coal
Creek Prospect.

         PANTHER CREEK PROSPECT

         During March 2004, we entered into a three-year lease for approximately
292 acres  located  in five  separate  sections  in the  Panther  Creek coal bed
methane gas prospect  located in Hughes County,  State of Oklahoma (the "Panther
Creek  Prospect").  We have a 100% working  interest and an approximate  81% net
revenue interest in the Panther Creek Prospect.

         A portion of the  acreage in the Panther  Creek  Prospect is subject to
three division  pooling  orders by Newfield  Exploration  Mid-Continent  Inc., a
subsidiary of Newfield Exploration Company  ("Newfield"),  for three wells to be
drilled and  operated by Newfield in which we have  elected to  participate.  On
January 25, 2005, we entered into the joint operating agreement with Newfield to
participate  in  the  proposed  wells  to  be  drilled  (the  "Joint   Operating
Agreement").  Pursuant  to the  terms  and  provisions  of the  Joint  Operating
Agreement: (i) Newfield shall drill and operate the first well and explore other

<PAGE>

zones up to 8500 feet in depth; (ii) we have an approximate 25% working interest
in the  first  completed  well;  (iii)  we have an  approximate  10.94%  working
interest in the second completed well; (iv) we have an approximate 4.06% working
interest in the third completed  well; and (v) Newfield has up to  approximately
the end of fiscal year 2005 to drill such wells and may or may not proceed  with
any individual well project at their discretion.

         On February 9, 2005, Newfield commenced drilling on the first well, the
POE #1-29 and, as of March 21, 2005, the POE #1-29 well commenced production.

         SOUTH LAMAR PROSPECT

         On April 21,  2004,  we entered  into a  two-year  lease  agreement  to
acquire a 100% working  interest  and a 78.5% net revenue  interest in 960 gross
undeveloped acres to develop coal bed methane gas wells in Hughes County,  State
of Oklahoma  (the  "South  Lamar  Prospect").  On July 26,  2004,  we acquired a
further 183.98 gross acres in the South Lamar Prospect pursuant to which we hold
a 100% working interest and a 79% net revenue interest. The Company is preparing
the drill site for the  drilling of a first well on this site on this  prospect,
the  Goodson  #1-24 well.  The  planned  "Goodson  #1-23" CBM  Hartschorne  Coal
targeted gas well is  undergoing  drilling  site  preparations,  road work,  and
pipeline planning.

         MIDDLECREEK PROSPECT

         On May 24,  2004,  we entered into an agreement to acquire an undivided
100% leasehold  interest and a 70% net revenue  interest in 320 gross  leasehold
acres  located in two  sections in the  Middlecreek  Prospect  located in Hughes
County,  State of Oklahoma  (the  "Middlecreek  Prospect").  Rights to drill all
geological  zones are included  and primary gas targets  include the Caney shale
and Hartshorne coal zones with further  possibilities  in the Booch,  Stuart and
Savannah zones.

         H-9 PROSPECT

         On June 29,  2004,  we entered  into an option  agreement to purchase a
leasehold  interest  and a net  revenue  interest  in  approximately  4,600  net
leasehold  acres  located in  approximately  38 sections of the H-9  Prospect in
Hughes and McIntosh  counties,  State of Oklahoma (the "H-9 Prospect").  On July
29,  2004,  we entered  into three to four year lease  agreements  to acquire an
undivided 100% leasehold interest and a 79.25% net revenue interest in the 4,600
gross  leasehold  acres on the H-9  Prospect.  On July 19, 2004, we entered into
another  three-year  lease to acquire a 100% leasehold  interest and a 78.3% net
revenue  interest  in an  additional  325 gross  acres of gas  target  drillable
acreage on the H-9 Prospect.

         WELLS DEVELOPED ON OIL AND GAS PROPERTIES

         As of the date of this Quarterly Report, the following table summarizes
wells and working interests in wells under current development initiatives:

<TABLE>
<CAPTION>

-------------------------------- ----------------------------- ---------------------------- -----------------------------
COMPANY LEASE/PROSPECT           WELL NAME                     INTEREST                     STATUS
-------------------------------- ----------------------------- ---------------------------- -----------------------------
<S>                              <C>                           <C>                          <C>
Wagnon                           Kellster #1-5                 53.2% Back WI APO            Producing
-------------------------------- ----------------------------- ---------------------------- -----------------------------
Wagnon                           Kyndal #2-2                   53.2% Back WI APO            Producing
-------------------------------- ----------------------------- ---------------------------- -----------------------------
Wagnon                           Bryce #3-2                    53.2% Back WI APO            Producing
-------------------------------- ----------------------------- ---------------------------- -----------------------------
Wagnon                           Calleigh #4-2                 53.2% Back WI APO            Producing
-------------------------------- ----------------------------- ---------------------------- -----------------------------
Panther Creek                    POE #1-29                     25.7% WI                     Producing
-------------------------------- ----------------------------- ---------------------------- -----------------------------
Coal Creek                       LEX #1                        50.1% WI                     Producing
-------------------------------- ----------------------------- ---------------------------- -----------------------------
Coal Creek                       Brumbaugh #1-10               22.2% WI                     Producing
-------------------------------- ----------------------------- ---------------------------- -----------------------------
South Lamar                      Goodson #1-23                 87.5% WI                     Drilling site prepared
-------------------------------- ----------------------------- ---------------------------- -----------------------------
</TABLE>

<PAGE>

         To date,  we have  committed  to  interests  in 8 gas wells.  All wells
drilled to date have reached the completion  stage and have been productive with
immediate  gas sales to market.  We estimate that we have  additional  available
acreage  suitable  for the  drilling of a further 70 to 100 coal bed methane gas
wells.

RESULTS OF OPERATION

THREE-MONTH  PERIOD ENDED MARCH 31, 2005  COMPARED TO  THREE-MONTH  PERIOD ENDED
MARCH 31, 2004

         Our net  loss for the  three-month  period  ended  March  31,  2005 was
approximately  ($1,650,134)  compared  to  ($3,103,729)  during the  three-month
period ended March 31, 2004 (a decrease of  $1,453,595).  During the three-month
period ended March 31, 2005, we generated  $130,060 in gross revenue compared to
$40,690 in gross  revenue  generated  during the same period in 2004,  resulting
primarily  from the sale of gas produced  from coal bed methane gas wells on the
Wagnon Property that started  production in mid February 2004. The gross revenue
of $130,060  generated  during the  three-month  period ended March 31, 2005 was
reduced by an aggregate of $112,972 ($54,907 in estimated  depletion and $58,065
in operating costs and taxes, which resulted in operating income of $17,088. The
gross revenue of $40,690 generated during the three-month period ended March 31,
2004 was  reduced  by an  aggregate  of $2,679  in  estimated  depletion,  which
resulted in operating  income of $38,011.  The  increase in  operating  expenses
during the three-month  period ended March 31, 2005 from the three-month  period
ended March 31, 2004 was primarily the result of the increase in operating costs
and estimated depletion resulting from the increased number of operating wells.

         During the  three-month  period ended March 31, 2005, we incurred other
expenses in the aggregate amount of $1,667,222  compared to $3,141,740  incurred
during the same period in 2004 (a decrease of  $1,474,518),  which consisted of:
(i) general and  administrative  expenses of  $891,469  (2004:  $138,126);  (ii)
consulting fees - stock based  compensation  relating to the fair value of stock
options  granted  to  consultants  of  $775,753  (2004:  $2,989,221);  and (iii)
interest  expense  of $-0-  (2004:  $14,393).  The  decrease  in other  expenses
incurred during the three-month period ended March 31, 2005 compared to the same
period during 2004 resulted  primarily  from the decrease in fair value of stock
options granted to consultants.  General and  administrative  expenses increased
during the  three-month  period ended March 31, 2005 compared to the same period
during 2004 as a result of the increased  drilling activity and overall business
operations.  General and  administrative  expenses  generally  include corporate
overhead,  financial and  administrative  contracted  services,  marketing,  and
consulting costs.

         Of the  $1,667,222  incurred as other expenses  during the  three-month
period  ended March 31, 2005,  an  aggregate of $30,000 was incurred  payable to
International Market Trend AG ("IMT") for amounts due and owing for operational,
administrative  and financial services rendered for the three-month period ended
March 31, 2005.  On November 10,  2003,  we entered into a consulting  agreement
with IMT (the  "Consulting  Agreement"),  whereby  IMT  performs a wide range of
management, administrative, financial, and business development services for us.

<PAGE>

On February 1, 2005,  we granted to IMT an  aggregate of 500,000  stock  options
exercisable at $1.00 per share for a period of five years.  On February 1, 2005,
we also granted to IMT an aggregate of 100,000 stock options registered under an
S-8  Registration  Statement  exercisable  at $0.16667 per share for a period of
five years.

         Of the  $1,667,222  incurred as other expenses  during the  three-month
period  ended  March 31,  2005,  an  aggregate  of $58,500 to Douglas  Humphreys
pursuant  to  managerial  services  performed,   and  $81,354  was  recorded  as
additional  compensation  expense to Mr.  Humphreys  relating  to the  estimated
valuation of his 10% carried working interest in our wells developed as at March
31,  2005.  On July 12,  2004,  we entered into a  consultation  agreement  (the
"Humphreys Consultation  Agreement") with Lexington Oil & Gas and Mr. Humphreys.
Pursuant to the  Humphreys  Consultation  Agreement,  Mr.  Humphreys  assists in
overseeing  the drilling  operations  and the  completion  and management of our
wells.  Mr. Humphreys  compensation  pursuant to the terms and provisions of the
Humphreys  Consultation  Agreement is: (i) $7,500 per month; (ii) the assignment
of up to 10% carried  working  interest in every well drilled on all  properties
held by us,  including  the Wagnon  Lease;  (iii) the right to purchase up to an
additional  5% working  interest  in all wells  drilled by us on our  properties
provided that funds for this participation are paid prior to the commencement of
drilling  of said  wells;  and (iv) grant of 200,000  Stock  Options to purchase
shares of our common  stock at an exercise  price of $3.00 per share (which were
granted July 2004).  The Humphreys  Consultation  Agreement can be terminated at
any time with ninety days written notice by either party.

         As discussed  above,  the  decrease in net loss during the  three-month
period ended March 31, 2005 compared to the  three-month  period ended March 31,
2004 is attributable  primarily to the increase in oil and gas gross revenue and
the decrease in consulting fees - stock based compensation.  Our net loss during
the three-month  period ended March 31, 2005 was  approximately  ($1,650,134) or
($0.09) per share compared to a net loss of  ($3,103,729)  or ($0.23) during the
three-month  period ended March 31, 2004. The weighted  average number of shares
outstanding  was  17,049,854  for the  three-month  period  ended March 31, 2005
compared to 13,766,629  for the  three-month  period ended March 31, 2004 (which
had been  restated in accordance  with the forward stock split of  three-for-one
shares of common stock effected January 26, 2004).

LIQUIDITY AND CAPITAL RESOURCES

         Our  financial  statements  have been  prepared  assuming  that we will
continue  as a  going  concern  and,  accordingly,  do not  include  adjustments
relating to the  recoverability  and realization of assets and classification of
liabilities  that  might  be  necessary  should  we be  unable  to  continue  in
operation.

THREE-MONTH PERIOD ENDED MARCH 31, 2005

         As of the  three-month  period ended March 31, 2005, our current assets
were $160,655 and our current  liabilities were $2,022,336,  which resulted in a
working capital deficit of $1,861,681.  As of the three-month period ended March
31, 2005, our total assets were  $3,666,708  consisting of: (i) $63,007 in cash;
(ii) $97,648 in accounts  receivable;  (iii) $1,447,212 carrying value of proved
oil and gas properties (net of depreciation);  (iv) $2,056,010 in carrying value
of  unproved  oil and gas  properties;  and (v)  $2,831  in other  property  and
equipment (net of accumulated depreciation).  As of the three-month period ended
March 31,  2005,  our total  liabilities  were  $2,400,945  consisting  of:  (i)
$1,086,609 in current and non-current drilling obligations;  and (ii) $1,314,336
in accounts payable and accrued liabilities.

<PAGE>

         Stockholders'  equity  decreased from  $1,685,514 for fiscal year ended
December 31, 2004 to $1,265,763 for the three-month period ended March 31, 2005.

         We have not generated  positive cash flows from  operating  activities.
For the  three-month  period  ended  March  31,  2005,  net cash  flows  used in
operating activities was ($620,734) compared to net cash flows used in operating
activities  for the  three-month  period ended March 31, 2004 of ($99,584).  Net
cash flows used in operating  activities for the three-month  period ended March
31, 2005 consisted primarily of a net loss of ($1,650,134).  Net cash flows used
in operating  activities  was adjusted by $899,746 to reconcile  net loss to net
cash from operating activities primarily relating to the non-cash expense of the
grant of stock options and non-cash compensation and oil and gas depletion.

         Net  cash  flows  from  investing  activities  was  ($15,310)  for  the
three-month  period  ended  March 31,  2005  compared  to net cash flows used in
investing  activities  for  the  three-month  period  ended  March  31,  2004 of
($385,300),  which  primarily  pertained to the  acquisition  of the oil and gas
properties.

         Net  cash  flows  from  financing   activities  was  $372,758  for  the
three-month  period  ended  March  31,  2005  compared  to net cash  flows  from
financing  activities  for  the  three-month  period  ended  March  31,  2004 of
$279,500.  Net cash flows from financing  activities for the three-month  period
ended March 31, 2005 consisted of $467,064 (2004:  $-0-) in net proceeds on sale
of stock,  which was  adjusted by ($94,306)  in drilling  advances,  and $-0- in
advances (2004: $279,500).

PLAN OF OPERATION

         During  fiscal year 2004,  we  completed  the sale of an  aggregate  of
1,351,953  Units at a  purchase  price of $1.47 per Unit for gross  proceeds  of
approximately  $1,987,371.  Further,  the  holder  of  two  of  our  outstanding
promissory  notes in the  aggregate  principal  amount of $500,000  plus accrued
interest of $12,637  exchanged  the  promissory  notes and accrued  interest for
Units,  resulting  in the issuance of an  additional  348,733  Units.  Each Unit
consists of one share of our common stock and one warrant to purchase a share of
our common stock at an exercise price of $1.68. The 1,351,953  warrants from the
offering (the "November  Warrants") are exercisable for a term of 180 days after
the  Registration  Statement  filed by us for the resale of the common stock and
the  shares of common  stock  underlying  the  November  Warrants  (Registration
Statement declared effective on January 21, 2005 creating an expiry term of July
23,  2005).  As of the date of this  Quarterly  Report,  an aggregate of 304,367
November  Warrants were exercised this year for aggregate  proceeds of $498,903,
net of $12,434 in brokers' fees.

         Existing   working   capital,   further   advances  and  possible  debt
instruments,  anticipated  warrant exercises,  further private  placements,  and
anticipated  cash flow are expected to be adequate to fund our  operations  over
the  next  six  months.  We have no lines of  credit  or  other  bank  financing
arrangements.  Generally,  we  have  financed  operations  to date  through  the
proceeds of the private  placement of equity and debt securities.  In connection
with our business plan, management anticipates additional increases in operating
expenses  and  capital  expenditures  relating  to:  (i) oil  and gas  operating
properties;  (ii) drilling  initiatives;  and (iii)  property  acquisitions.  We
intend to finance these expenses with further issuances of securities,  debt and
or advances, and revenues from operations. Thereafter, we expect we will need to
raise additional  capital and increase its revenues to meet long-term  operating
requirements.

<PAGE>

         Additional  issuances of equity or  convertible  debt  securities  will
result in dilution to our current  shareholders.  Further, such securities might
have rights,  preferences or privileges  senior to our common stock.  Additional
financing may not be available  upon  acceptable  terms,  or at all. If adequate
funds are not available or are not available on acceptable  terms, we may not be
able to take advantage of prospective new business  endeavors or  opportunities,
which could significantly and materially restrict our business operations.

         The independent auditors' report accompanying our December 31, 2004 and
December 31, 2003  consolidated  financial  statements  contains an  explanatory
paragraph expressing  substantial doubt about our ability to continue as a going
concern. The consolidated financial statements have been prepared "assuming that
we will continue as a going  concern," which  contemplates  that we will realize
our assets and satisfy our liabilities and commitments in the ordinary course of
business.

MATERIAL COMMITMENTS

DRILLING OBLIGATIONS

         As of the date of this Quarterly  Report, we have committed to drilling
and operating four wells on the Wagnon  Property and have elected to participate
in the drilling of a well on the Panther Creek Prospect with  Newfield.  We have
also drilled and are  operating  two further  wells on our Coal Creek  Prospect.
Pertaining to the private drilling capital obtained for the drilling of the four
wells on our Wagnon  Property,  as at March 31, 2005,  we have received from the
funding  investors the total funding  requirement of $1,080,000 for the drilling
and  completion of the Kellster #1-5, the Kyndal #2-2, and the Bryce #3-2 wells.
As at March 31, 2005, we have received from the funding  investors an additional
$405,000 for the drilling and  completion  of the Caleigh #4-2 well. As at March
31, 2005, we have paid the funding investors  approximately  $398,391,  of which
$94,306 was paid during the three-month period ended March 31, 2005.

OFF-BALANCE SHEET ARRANGEMENTS

         As of the date of this Quarterly Report, we do not have any off-balance
sheet  arrangements  that have or are  reasonably  likely  to have a current  or
future  effect on our  financial  condition,  changes  in  financial  condition,
revenues or expenses, results of operations,  liquidity, capital expenditures or
capital resources that are material to investors.  The term  "off-balance  sheet
arrangement"  generally means any  transaction,  agreement or other  contractual
arrangement to which an entity unconsolidated with us is a party, under which we
have:  (i) any  obligation  arising  under  a  guaranteed  contract,  derivative
instrument or variable  interest;  or (ii) a retained or contingent  interest in
assets transferred to such entity or similar  arrangement that serves as credit,
liquidity or market risk support for such assets.

ITEM III. CONTROLS AND PROCEDURES

         An  evaluation  was  conducted  under  the  supervision  and  with  the
participation of our management, including Grant Atkins, our President and Chief
Executive Officer, and Vaughn Barbon, our Treasurer and Chief Financial Officer,
of the effectiveness of the design and operation of our disclosure  controls and
procedures as at March 31, 2005.  Based on that evaluation,  Messrs.  Atkins and
Barbon  concluded that our disclosure  controls and procedures were effective as

<PAGE>

of such date to ensure that information  required to be disclosed in the reports
that we file or submit under the  Securities  Exchange  Act of 1934,  as amended
(the "Exchange Act"), is recorded, processed, summarized and reported within the
time periods specified in Commission rules and forms. Such officers also confirm
that there was no change in our internal control over financial reporting during
the three-month period ended March 31, 2005 that has materially affected,  or is
reasonably  likely to materially  affect,  our internal  control over  financial
reporting.

AUDIT COMMITTEE REPORT

         The Board of Directors has established an audit committee.  The members
of the audit committee are Mr. Steven Jewett, Mr. Doug Humphreys, and Mr. Norman
MacKinnon.  Two of the three members of the audit  committee  are  "independent"
within the meaning of Rule 10A-3 under the Exchange Act. The audit committee was
organized  in April 2004 and  operates  under a written  charter  adopted by our
Board of Directors.

         The audit  committee has reviewed and  discussed  with  management  our
unaudited financial  statements as of and for the three-month period ended March
31, 2005. The audit committee has also discussed with Dale Matheson  Carr-Hilton
LaBonte the matters required to be discussed by Statement on Auditing  Standards
No. 61,  Communication  with  Audit  Committees,  as  amended,  by the  Auditing
Standards Board of the American Institute of Certified Public  Accountants.  The
audit committee has received and reviewed the written disclosures and the letter
from Dale Matheson Carr-Hilton LaBonte required by Independence  Standards Board
Standard No. 1, Independence Discussions with Audit Committees,  as amended, and
has discussed with Dale Matheson Carr-Hilton LaBonte their independence.

         Based on the  reviews  and  discussions  referred  to above,  the audit
committee has recommended to the Board of Directors that the unaudited financial
statements  referred to above be included in our Quarterly Report on Form 10-QSB
for the  three-month  period ended March 31, 2005 filed with the  Securities and
Exchange Commission.


PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

         Management is not aware of any legal  proceedings  contemplated  by any
governmental authority or any other party involving us or our properties.  As of
the date of this Quarterly  Report,  no director,  officer or affiliate is (i) a
party adverse to us in any legal proceeding,  or (ii) has an adverse interest to
us in any  legal  proceedings.  Management  is not  aware  of  any  other  legal
proceedings pending or that have been threatened against us or our properties.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

EXERCISE OF SHARE PURCHASE WARRANTS

         As of the date of this Quarterly Report, we have issued an aggregate of
304,367 shares of common stock to shareholders pursuant to the exercise of share
purchase  warrants this year.  During fiscal year 2004, we completed the sale of
an aggregate of 1,351,953  Units at a purchase price of $1.47 per Unit for gross
proceeds  of  approximately  $1,987,371.  Further,  the  holder  of  two  of our
outstanding  promissory notes in the aggregate principal amount of $500,000 plus

<PAGE>

accrued interest of $12,637  exchanged the promissory notes and accrued interest
for Units,  resulting in the issuance of an additional  348,733 Units. Each Unit
consists of one share of our common stock and one warrant to purchase a share of
our common  stock at an  exercise  price of $1.68.  The  November  Warrants  are
exercisable until July 23, 2005  (Registration  Statement  declared effective on
January 21, 2005 creating an expiry term of July 23, 2005).

         As of the  date of this  Quarterly  Report,  an  aggregate  of  304,367
November  Warrants were  exercised for  aggregate  proceeds of $498,903,  net of
$12,434 in brokers'  fees. The 304,367 shares of common stock were issued to the
shareholders in reliance on the registration provisions of the Securities Act of
1933, as amended, in accordance with the terms of the Registration Statement.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

         No report required.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No report required.

ITEM 5. OTHER INFORMATION

         No report required.

ITEM 5. OTHER INFORMATION

         No report required.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

         Exhibits:

         31.1 Certification  of Chief Executive  Officer  pursuant to Securities
              Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a).
         31.2 Certification  of Chief Financial  Officer  pursuant to Securities
              Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a).
         32.1 Certifications  pursuant to  Securities  Exchange Act of 1934 Rule
              13a- 14(b) or 15d-14(b)  and 18 U.S.C.  Section  1350,  as adopted
              pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

         Reports on Form 8-K:

         Report on Form 8-K Item 5.01 filed on February 18, 2005.

<PAGE>

SIGNATURES

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


                                             LEXINGTON RESOURCES, INC.

Dated: May 13, 2005                          By: /s/ Grant Atkins
                                             ---------------------------
                                             Grant Atkins, President and
                                             Chief Executive Officer


Dated: May 13, 2005                          By: /s/ Vaughn Barbon
                                             ---------------------------
                                             Vaughn Barbon, Chief Financial
                                             Officer