UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-QSB

               X QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 2000

                                       OR

         TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

            For the Transition Period from ___________ to____________

                         COMMISSION FILE NUMBER 0-26915

                                   LEXON, INC.
                 (Name of Small Business Issuer in its charter)

               OKLAHOMA                                73-1533326

--------------------------------------- ----------------------------------------
   (State or other jurisdiction of               (IRS Employer I.D. No.)
    incorporation or organization)

                        8908 SOUTH YALE AVENUE, SUITE 409

                           TULSA, OKLAHOMA 74137-3545

              (Address of principal executive offices and Zip Code)

                                 (918) 492-4125

              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

YES  X            No   __

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: There were 7,252,735 shares of Common
Stock, $0.001 par value, outstanding as of March 31, 2000.

                                       1
<PAGE>


                          PART I FINANCIAL INFORMATION

ITEM 1  FINANCIAL STATEMENTS
<TABLE>
<CAPTION>

                          INDEX TO FINANCIAL STATEMENTS
                       <S>                                                                           <C>

     Balance Sheet at March 31, 2000 (Unaudited) and December 31, 1999............................    3

     Statement of Operations for the period from inception (December 16, 1997) to March 31, 2000
     and for the three months ended March 31, 2000 and 1999 (Unaudited)...........................    4

     Statement of Cash Flows for the period from inception (December 16, 1997) to March 31, 2000
     (Unaudited) and for the three months ended March 31, 2000 and 1999 (Unaudited)...............    5

     Notes to Financial Statements (Unaudited)....................................................    6

</TABLE>


                                       2
<PAGE>

<TABLE>
<CAPTION>


                                   LEXON, INC.

                          (A Development Stage Company)

                                  BALANCE SHEETS

                March 31, 2000 (Unaudited) and December 31, 1999

      <S>                                                   <C>                  <C>

                                                        March 31, 2000    December 31, 1999
                             ASSETS                       (Unaudited)
                                                        --------------    -----------------
Current assets
Cash                                                           $89,656              $10,041
Due from related parties                                         8,464                9,703
Prepaid consulting expenses                                     17,031                4,062
                                                        --------------    -----------------
      Total current assets                                     115,151               23,806
                                                        --------------    -----------------
Other assets
Licensed technology, net                                       218,254              146,794
Sponsored research, net                                        257,182               77,813
                                                        --------------    -----------------
      Total other assets                                       475,436              224,607
                                                        --------------    -----------------
TOTAL ASSETS                                                  $590,587             $248,413
                                                        ==============    =================
              LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities                       $49,783              $37,214
Interest payable                                                 1,310                4,900
Payable to North Shore University                               27,054               54,108
Payable to University of Maryland                              124,537                    -
Related party payables                                         218,250              251,627
                                                        --------------    -----------------
   Total current liabilities                                   420,934              347,849
                                                        --------------    -----------------
Shareholders' equity
Preferred stock, $0.001 par value,
   5,000,000 shares authorized;  no shares
   issued and outstanding at March 31, 2000 and
   December 31, 1999, respectively                                   -                    -
Common stock, $0.001 par value,
   45,000,000 shares authorized;
   7,252,735 shares and 6,809,513 shares
   issued and outstanding at March 31, 2000 and
   December 31, 1999, respectively                               7,253                6,810
Paid in capital                                              3,827,428            3,249,558
Deficit accumulated during the development stage            (3,665,028)          (3,355,804)
                                                        --------------    -----------------
                                                               169,653              (99,436)
                                                        --------------    -----------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                    $590,587             $248,413
                                                        ==============    =================

</TABLE>


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

                                       3
<PAGE>

<TABLE>
<CAPTION>


                                   LEXON, INC.

                          (A Development Stage Company)

                             STATEMENT OF OPERATIONS

                   For the period from inception (December 16,
                    1997) to March 31, 2000 and for the three
                      months ended March 31, 2000 and 1999
                                  (Unaudited)

            <S>                                    <C>                 <C>               <C>

                                               From inception
                                                (December 16,      Three Months      Three Months
                                                 1997)through             Ended             Ended
                                               March 31, 2000    March 31, 2000    March 31, 1999
                                               --------------    --------------    --------------
Revenue                                                   $ -               $ -               $ -

Expenses
Research and development                              884,159            76,504           413,774
General and administrative                          2,528,613           361,866           432,080
                                               --------------    --------------    --------------
   Total operating expenses                         3,412,772           438,370           845,854
                                               --------------    --------------    --------------

Operating loss                                     (3,412,772)         (438,370)         (845,854)

Interest expense                                      384,256             2,854             3,418
                                               --------------    --------------    --------------
Net loss                                         $ (3,797,028)       $ (441,224)       $ (849,272)

Weighted average shares outstanding                 5,627,400         6,853,098         6,366,974
                                               --------------    --------------    --------------
Loss per share                                        $ (0.67)          $ (0.06)          $ (0.13)
                                               --------------    --------------    --------------

</TABLE>


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

                                       4
<PAGE>

<TABLE>
<CAPTION>


                                   LEXON, INC.

                          (A Development Stage Company)

                             STATEMENT OF CASH FLOWS

                   For the period from inception (December 16,
                    1997) to March 31, 2000 and for the three
                      months ended March 31, 2000 and 1999
                                   (Unaudited)

                  <S>                                                       <C>                 <C>            <C>

                                                                        From inception
                                                                         (December 16,     Three Months    Three Months
                                                                         1997) through            Ended           Ended
                                                                        March 31, 2000   March 31, 2000  March 31, 1999
                                                                        --------------   --------------  --------------
Operating activities
Net loss                                                                  $ (3,797,028)      $ (441,224)     $ (849,272)
Plus non-cash charges to earnings:
   Amortization of license and sponsored research agreements                   321,353           73,708          41,274
   Value of common stock options granted to non-employees for services       1,299,219                -         372,500
   Amortization of Stock Options Issued to Non-employee Lenders                356,346                -               -
   Value of services contributed by employees                                  566,479           65,000          70,000
   Value of stock issued for services                                          500,738          279,063         284,000
   Future Obligation for research and consulting expenses                      213,162                -               -
Change in working capital accounts:
   Increase in prepaid expenses                                                (17,031)         (12,968)              -
   Increase in other receivables                                                (8,464)           1,239         (16,240)
   Increase in accounts payable and accrued liabilities                         49,782           12,568          (5,251)
   Increase (decrease) in interest payable                                         (67)          (4,967)        (16,739)
Decrease in obligation to North Shore                                          (54,108)         (27,054)
                                                                        --------------   --------------  --------------
      Total operating activities                                              (569,619)         (54,635)       (119,728)
                                                                        --------------   --------------  --------------
Financing activities
Loans from related parties                                                     399,627           50,000               -
Repayment of loans from related parties                                       (330,000)        (100,000)       (230,000)
Sale of common stock for cash:
   To founders                                                                   5,000                -
   To third-party investors                                                    926,208                -         473,550
   Less:  issue costs                                                         (140,498)               -         (72,211)
   To employees upon exercise of employee stock options                        320,188          234,250               -
                                                                        --------------   --------------  --------------
      Total financing activities                                             1,180,525          184,250         171,339
                                                                        --------------   --------------  --------------
Investing activities
Purchase of property and equipment                                                   -                -          (9,014)
Purchase of Cancer Diagnostics Inc.                                            (50,000)         (50,000)
Purchase of exclusive licenses                                                (160,000)               -               -
Payment of sponsored research contract                                        (311,250)               -               -
                                                                        --------------   --------------  --------------
      Total investing activities                                              (521,250)         (50,000)         (9,014)
                                                                        --------------   --------------  --------------
Change in cash                                                                  89,656           79,615          42,597
Cash at beginning of period                                                          -           10,041          31,164
                                                                        --------------   --------------  --------------
Cash at end of period                                                         $ 89,656         $ 89,656        $ 73,761
                                                                        ==============   ==============  ==============
Supplemental disclosure of cash flow information:
   Cash paid for interest and taxes during the period                                -            1,544           3,418
                                                                        --------------   --------------  --------------
Non-cash financing and investing activities:
   Common stock issued in Gentest Merger                                         1,000                -               -
                                                                        --------------   --------------  --------------

</TABLE>


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS


                                       5
<PAGE>


                                   LEXON, INC.

                          (A Development Stage Company)

                               NOTES TO FINANCIAL
                    STATEMENTS For the period from inception
                  (December 16, 1997) to March 31, 2000 and for
                 the three months ended March 31, 2000 and 1999
                                   (Unaudited)

NOTE 1--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting  principles for interim financial  statements
and do not include all information and footnotes  required by generally accepted
accounting   principles  for  complete  financial   statements.   However,   the
information  furnished  reflects  all  adjustments,  consisting  only of  normal
recurring  adjustments  which are, in the opinion of  management,  necessary  in
order to make the financial statements not misleading.

ORGANIZATION AND NATURE OF OPERATIONS

Lexon,  Inc.  ("Lexon" or "the Company") is a development stage corporation that
acquires,  develops,  and markets emerging medical technologies.  Lexon owns the
exclusive  worldwide license to develop,  manufacture,  obtain FDA approval for,
and market a cancer  screening  test kit for detecting  the ebaf protein,  which
allows for early,  non-invasive  screening for colon cancer and certain types of
ovarian  and  testicular  cancers.  The  Company  also owns,  through  CDI,  the
exclusive  worldwide license to the Telomerase Assay, a blood screening test for
lung cancer.

DEVELOPMENT STAGE OPERATIONS

The Company was incorporated on December 16, 1997 under the laws of the state of
Oklahoma.  Since inception, the Company's primary focus has been raising capital
and developing the Ebaf blood screening process.

CASH AND CASH EQUIVALENTS

The Company considers highly liquid  investments with maturities of three months
or less to be cash equivalents.

INCOME TAXES

The Company  uses the  liability  method of  accounting  for income taxes as set
forth in Statement of Financial  Accounting  Standards No. 109,  "Accounting for
Income Taxes".  Under the liability method,  deferred taxes are determined based
on the differences between the financial  statements and tax basis of assets and
liabilities at enacted tax rates in effect in the years in which the differences
are expected to reverse.

COMPENSATION OF OFFICERS AND EMPLOYEES

The Company's  sole officer and director and its other  employees  serve without
pay or other  non-equity  compensation.  The fair  value  of these  services  is
estimated by management  and is recognized  as a capital  contribution.  For the
three  months  ended March 31,  2000 and 1999 and for the period from  inception
(December 16, 1997) to March 31, 2000 the Company recorded $65,000, $70,000, and
$556,479,  respectively,  as a  capital  contribution  by its sole  officer  and
director and its other employees.

FAIR MARKET VALUE OF STOCK OPTIONS AND STOCK ISSUED FOR SERVICES

The fair market  value of stock  options  granted or stock issued as payment for
services is equal to the closing price of the Company's common stock on the date
options are  granted or on the date  agreements  for  services  are  signed.  On
November 4, 1998,  the Company's  common stock began trading on the OTC Bulletin
Board  under  the  symbol  "LXXN".  Prior to  trading,  the  Board of  Directors
determined  the fair market  value of stock  options  granted or stock issued as
payment for services.

                                       6
<PAGE>

STOCK-BASED COMPENSATION

The Company  accounts for  stock-based  compensation  arrangements in accordance
with Accounting  Principles Board ("APB") Opinion No. 25,  "Accounting for Stock
Issued to Employees",  and complies with the  disclosure  provisions of SFAS No.
123, "Accounting for Stock-Based  Compensation".  Under APB No. 25, compensation
expense is based on the  difference,  if any, on the date of grant,  between the
fair value of the Company's stock and the exercise price.  The Company  accounts
for stock issued to  non-employees in accordance with the provisions of SFAS No.
123 and the Emerging Issues Task Force Consensus in Issue No. 96-18.

USE OF ESTIMATES

The preparation of financial  statements in conformity  with generally  accepted
principles requires management to make estimates and assumptions that affect the
reported  amounts  of  assets  and  liabilities  at the  date  of the  financial
statements and the reported  revenues and expenses during the reporting  period.
Actual results could differ from those estimates.

FISCAL YEAR END

The Company's fiscal year ends on December 31.

RESEARCH AND DEVELOPMENT ("R&D") COSTS

The Company is amortizing  the $311,250 paid pursuant to the Sponsored  Research
Agreement  for the Ebaf assay over two years,  which is the life of the  service
agreement.  The $249,458 to be paid pursuant to the Sponsored Research Agreement
for the Telomerase  assay acquired  through the purchase of Cancer  Diagnostics,
Inc.  is being  amortized  over  two  years,  which  is the life of the  service
agreement (See Note 5). Any other costs relating to the  development of the Ebaf
and Telomerase  Assays are expensed as incurred.  Compensation  cost  associated
with stock options granted to Dr. Tabibzadeh, the inventor of the Ebaf Assay, is
recorded by the Company as R&D expense.

NEW ACCOUNTING STANDARDS

The Company adopted SFAS No. 130, "Reporting  Comprehensive Income" and SFAS No.
131,  "Disclosures  about  Segments of an  Enterprise  and Related  Information"
during 1998. The Company has no comprehensive  income items during 2000 or 1999.
Therefore,  net loss equals  comprehensive  income. The Company operates in only
one  business  segment.  The Company  will adopt SFAS No. 133,  "Accounting  for
Derivative  Instruments  and Hedging  Activities"  during 2001.  Currently,  the
Company  does  not  engage  in  hedging  activities  or  transactions  involving
derivatives.

NOTE 2--GENTEST MERGER

On May 11, 1998,  the Company  entered into an Agreement and Plan of Merger with
Gentest,  Inc.,  a Florida  corporation,  whereby  the  Company  agreed to issue
1,000,000  shares of its common stock for all the issued and outstanding  common
stock of  Gentest,  Inc.  Gentest  was formed in March  1998 for the  purpose of
securing the License Agreement and Sponsored  Research  Agreement related to the
Ebaf Assay.  Under the terms of the  Agreement  and Plan of Merger,  the Company
issued to UTEK Corporation ("UTEK"), the sole shareholder of Gentest,  1,000,000
shares  of  common  stock of  Lexon.  Gentest  ceased  to exist by reason of the
merger,  and the assets and  liabilities of Gentest,  including those rights and
obligations  associated with the exclusive  License  Agreement and the Sponsored
Research  Agreement,  became assets and liabilities of Lexon. The obligations of
Gentest were to pay $105,000 for the exclusive license,  $311,250 to develop the
test kit and $55,000 for  services  rendered in  connection  with  securing  the
agreements.  Lexon paid the  obligations  in full on July 8, 1998.  The  Gentest
merger was accounted for as a purchase.  The purchase  price of $1,000 was based
on the number of shares issued at par value of $0.001 per share.

Par value per share was used to value the purchase  because all  previous  share
issuances,  consisting solely of issuances to founders, were based on par value,
and  there  was no public  market  for the  Company's  stock.  Gentest  had only
recently  been formed for the purpose of entering into the License and Sponsored
Research  Agreements.  The value assigned to the License and Sponsored  Research
Agreements and the related obligations,  were therefore based on Gentest's cost.
Since Gentest had no prior  operations,  no pro forma  financial  information is
presented.

                                       7
<PAGE>

The Gentest assets acquired and liabilities assumed are summarized as follows:

                License Agreements                              $161,000
                Sponsored Research Agreement                     311,250
                                                             -----------

                Total Cost of Assets Acquired                   $472,250
                Obligations Assumed                            $(471,250)
                                                             -----------
                Purchase Cost                                     $1,000
                                                             ===========

NOTE 3--EXCLUSIVE LICENSE--EBAF ASSAY

On July 8, 1998,  the Company paid  $100,000 to the  University of South Florida
Research  Foundation  ("USFRF")  and $5,000 to North Shore  University  Hospital
Research  Foundation  ("North  Shore") for the  exclusive  worldwide  license to
develop and market the cancer screening test kits. In addition, the Company paid
$55,000 to UTEK for services  rendered in  connection  with securing the license
agreements.  The exclusive  license is being  amortized  over 17 years using the
straight-line method. At March 31, 2000, the amount of accumulated  amortization
related to the Exclusive License was $16,574.

NOTE 4--SPONSORED RESEARCH CONTRACT--EBAF ASSAY

On July 8, 1998,  the Company paid  $311,250 to North Shore under the terms of a
Sponsored  Research  Agreement to develop the cancer  screening  test kits.  The
contract  specifies  a  24-month  development  period  with  costs not to exceed
$311,250.  The Sponsored  Research Agreement is amortized over 2 years using the
straight-line method, with amortization costs recorded as R&D expenses. At March
31,  2000,  the amount of  accumulated  amortization  related  to the  Sponsored
Research Agreement was $272,344.

NOTE 5--PURCHASE OF CANCER DIAGNOSTICS, INC.

     On January 29,  2000,  Lexon  purchased  100% of the common stock of Cancer
Diagnostic,  Inc. ("CDI"),  a Florida  corporation,  according to the terms of a
Stock  Purchase  Agreement.  By  reason  of the  stock  purchase,  CDI  became a
wholly-owned  subsidiary of Lexon. CDI owns the exclusive  worldwide  license to
the  Telomerase  Assay,  a  patent-pending  blood  test  for lung  cancer  being
developed at the University of Maryland,  Baltimore  ("UMB").  CDI is party to a
two-year   sponsored   research   agreement   to  fund   the   development   and
commercialization of the Telomerase Assay for the ELISA format at the University
of Maryland, Baltimore.

         Lexon purchased all of the  outstanding  common stock of CDI from CDI's
sole shareholder UTEK Corporation  ("UTEK") for a total of $200,000.  Lexon paid
$50,000  in cash and gave  UTEK a  secured  promissory  note for  $150,000.  The
secured  promissory  note bears interest at 10% per year and is payable in three
monthly installments of $50,000 each, due on April 30, May 31 and June 30, 2000.
As of May 15,  2000,  the  Company was current in its  obligation  to UTEK.  The
interest  rate will  increase  to 12% per year on any unpaid  principal  balance
after June 30, 2000.  To secure the  promissory  note,  Lexon pledged all of the
shares of common stock of CDI pursuant to a Pledge and Security  Agreement.  The
shares  were  placed in escrow  and will be  released  upon  payment  in full of
Lexon's obligation to UTEK.

         UTEK, a Florida corporation,  is a technology merchant that specializes
in  the  transfer  of  technology  from  universities  and  government  research
facilities to the private sector. UTEK has relationships with major universities
and  government  research  facilities  in the  U.S.  and in  Europe.  UTEK  owns
approximately  1,000,000  shares (or about 14.7% of the  outstanding  shares) of
Lexon Common Stock.

                                       8
<PAGE>


NOTE 6--EXCLUSIVE LICENSE--TELOMERASE ASSAY

Lexon owns the exclusive  worldwide  license to the Telomerase Assay through its
wholly-owned  subsidiary CDI. In exchange for the license, CDI agreed to pay UMB
a royalty  of 4% of Net  Sales of  products  sold  using  the  Telomerase  Assay
technology.  The exclusive  license is being  amortized  over 15 years using the
straigh-line  method. At March 31, 2000, the amount of accumulated  amortization
related to the exclusive license was $1,251.

NOTE 7--SPONSORED RESEARCH CONTRACT--TELOMERASE ASSAY

On August 27, 1999, CDI agreed to pay University of Maryland, Baltimore $249,458
to fund the development of the Telomerase  Assay for the ELISA format over a two
year  period  beginning  January  4, 2000 and ending  January 3, 2002.  CDI paid
$124,921 upon signing the sponsored research agreement.  The balance of $124,537
is due on or before January 1, 2001. The Sponsored  Research  Agreement is being
amortized over 2 years using the straight-line  method,  with amortization costs
recorded as R&D expenses. At March 31, 2000, of accumulated amortization related
to the Sponsored Research Agreement was $31,182.

NOTE 8--NOTES PAYABLE

During 1998,  the Company  borrowed  $50,000 from an officer and $180,000 from a
shareholder. The Company executed notes payable which were due December 31, 1998
at an interest rate of 12% per year,  which  increased to 14% per year after the
due date. The notes payable and accrued  interest were paid in full during 1999.
On October 15, 1998, in connection  with these notes,  the Board granted  50,000
options  to the  officer  and  180,000  options to the  shareholder,  each at an
exercise price of $1.20 per share.  Details about  compensation  cost related to
the  granting  of the  options  can be  found  in  Note  11 to  these  financial
statements.

During 1999, the Company borrowed  $100,000 and $18,250 from  shareholders.  The
Company  executed notes payable,  which are due December 31, 2000 at an interest
rate of 10% per year.  As of March  31,  2000,  the  $100,000  note and  accrued
interest was paid in full.

During  the  first  quarter  of  2000,  the  Company  borrowed  $50,000  from  a
shareholder. The Company executed a note payable, which is due December 31, 2000
at an interest  rate of 10% per year.  As of March 31, 2000,  the balance of the
note was $50,000.

NOTE 9--COMMITMENTS AND CONTINGENCIES

FUTURE ROYALTY OBLIGATIONS UNDER EXCLUSIVE LICENSE AGREEMENT--EBAF ASSAY

In connection with the exclusive license agreement, the Company agreed to pay to
USFRF a royalty  equal to the greater of (a) five  percent  (5%) of revenue from
the  sale of  products  based  on the  concept  for the  diagnosis  of  selected
adenocarcinomas and any additions,  extensions and improvements  thereto or as a
minimum (b) zero (0) dollars for the first twenty four (24)  months;  $75,000 at
the end of year three (3); $100,000 at the end of year four (4); $125,000 at the
end of  year  five  (5);  $150,000  at the end of  year  six  (6)  and for  each
successive year thereafter during the term of the exclusive  license  agreement.
The royalty  obligation will expire after the longer of twenty (20) years or the
expiration  of the last to expire  patent that covers the licensed  intellectual
property.  The  Company  also  agreed to pay to North  Shore a royalty  equal to
one-half  percent  (0.5%)  of  revenue  from the sale of such  products  and ten
percent  (10%)  of any  consideration  received  by the  Company  from  granting
sublicenses.  No  minimum  royalty  payments  are  required  under  the  License
Agreement with North Shore.

FUTURE ROYALTY OBLIGATIONS UNDER EXCLUSIVE LICENSE AGREEMENT--TELOMERASE ASSAY

In exchange for the exclusive license agreement, CDI agreed to pay UMB a royalty
of 4% of Net Sales of products sold using the Telomerase Assay  technology.  The
license  agreement  provides for minimum  annual  royalties  for the life of the
license  agreement,  which  coincides with the life of the last to expire patent
covering the licensed technology. The minimum annual royalties range from $2,500
per year beginning in 2002 to a maximum of $4,000 per year beginning in 2006 and
continuing  each  year  thereafter  for the life of the  license  agreement.  In
addition,  the license  agreement  provides for  royalties of 2% of Net Sales of
products sold by  sublicensees of CDI and 50% of all  consideration  received by
CDI for up-front, milestone or other payments from sublicensees.

                                       9
<PAGE>

FUTURE OBLIGATIONS TO NORTH SHORE UNIVERSITY

On March 8, 1999,  the  Company  agreed to fund an  additional  $81,162 to North
Shore in six equal installments of $13,257 each, payable on or before October 1,
1999, December 1, 1999, February 1, 2000, April 1, 2000, June 1, 2000 and August
1, 2000.  As of May 15,  2000,  the  Company is  current in its  obligation  for
additional funding to North Shore.

STATUTORY RIGHTS OF THE NATIONAL INSTITUTES OF HEALTH ("NIH")

The Patent & Trademark Act (Public Law 96-517),  also known as the Bayh-Dole Act
created a uniform  patent  policy among  Federal  agencies  that fund  research.
Bayh-Dole  enables small  businesses  and  non-profit  organizations,  including
universities, to retain title to materials and products they invent with Federal
funding.  In return, the U.S. government retains a nonexclusive right to make or
use the invention for government purposes.  Dr. Tabibzadeh's research was funded
in part  with  grants  from  the  National  Institutes  of  Health.  If the U.S.
government  decided to make or use Dr.  Tabibzadeh's  invention  for  government
purposes,  then it would not be obligated to pay license fees or  royalties.  In
addition,  the U.S.  government  is protected  from  lawsuits  and  infringement
claims.

FOREIGN PATENT PROTECTION

The U.S. patent covering the Ebaf Assay does not extend to foreign countries and
the Company  does not  presently  have any  foreign  patent  protection  for its
product.

LEASES

The Company's executive office is leased from a third party under the terms of a
lease  agreement  that expires  March 31, 2002.  The office is shared with other
companies  controlled by the officers and directors of the Company.  During 1999
and 1998,  the  Company  recorded  $9,600 and  $11,531,  respectively,  for rent
expense.  The minimum annual lease payments  pursuant to the lease agreement and
the Company's estimated share are scheduled as follows:

         For the Periods Ended   Minimum Annual Lease   Company's Estimated
                   December 31               Payments                 Share

         ---------------------   --------------------   -------------------
                 2000                         $44,594                $9,600
                 2001                          45,587                 9,600
                 2002                          11,462                 2,292

NOTE 10--COMMON STOCK AND PAID IN CAPITAL

During the year ended December 31, 1998, the following common stock transactions
occurred:

o    Under the terms of an  offering  dated  April 1,  1998,  the  Company  sold
     5,000,000  shares  of its  common  stock to the  founders  at par value for
     $5,000 cash.

o    On July 8, 1998, the Company issued 1,000,000 shares of its common stock in
     connection with the Gentest merger.

o    On May 18, 1998, Lexon commenced its Rule 504 private offering at $2.00 per
     share.  This price was  determined  by the Board of  Directors.  There were
     125,205 shares of common stock sold to  third-party  investors for $250,410
     in cash. The $2.00  offering was terminated on July 31, 1998,  when Lexon's
     15c211  application  was filed with the NASD.  The  Company's  common stock
     began trading on November 4, 1998 at $2.50 per share.  On November 6, 1998,
     Lexon commenced a Rule 504 private offering at $3.00 per share, which price
     was  greater  than the  closing  price  of the  Company's  common  stock on
     November 6, 1998 (the date of the offering  memorandum).  There were 39,416
     shares of common stock sold to third-party  investors for $118,248 in cash.
     The Company incurred  expenses of $48,287 in connection with the offerings.
     On  January  18,  1999,  the  Company  terminated  the $3.00  offering  and
     commenced  an offering  at $1.50 per share,  which was equal to the closing
     price of the  Company's  common stock on January 19, 1999.  Although  there
     were no obligations to do so, the Board  determined  that the investors who
     paid cash in the $2.00 and $3.00 private  offerings should be treated as if
     they had  purchased  their  shares at $1.50  per  share.  Accordingly,  the
     Company  issued an  additional  81,151  shares to those  investors  (41,735
     shares to the $2.00  investors and 39,416  shares to the $3.00  investors).
     The issuance of the additional shares was treated as a capital transaction,
     with no effect on stockholders' equity.

                                       10
<PAGE>

o    During 1998,  the Company issued 33,541 shares of its Common Stock at $2.00
     per share for services rendered in connection with the Offering.  The $2.00
     per share value was determined by the Board of Directors  based on the most
     recent offering price of $2.00 per share.

During the year ended December 31, 1999, the following common stock transactions
occurred:

o    The Company  sold 385,700  shares of common stock to third party  investors
     for $557,550 in cash.

o    The Company  issued a total of 89,500  shares of common  stock for services
     rendered  by outside  consultants.  The  shares  were  valued  based on the
     closing price of the  Company's  common stock on the date the services were
     rendered or  agreements  were  signed.  Of the shares  issued,  80,000 were
     issued at $2.50 per share to a consultant to develop and market an Internet
     web site and to prepare and distribute via e-mail a detailed profile report
     on the Company.  An additional  7,500 shares were issued at $2.34 per share
     to a public  relations  specialist in connection  with the Company's  colon
     cancer  awareness  activities.  The  remaining  2,000 shares were issued at
     $4.875 per share for legal services.

o    The  Company  issued  55,000  shares of  common  stock to an  employee  who
     exercised stock options at $1.5625 per share.  The Company received $85,938
     in cash. The exercise price was equal to the closing price of the Company's
     common stock on the date the options were granted.

During the three  months  ended  March 31,  2000,  the  following  common  stock
transactions occurred:

o    The Company  issued 150,000 shares of common stock pursuant to the exercise
     of employee stock options, for which the Company received $234,250 in cash.
     The employees  exercised  their options at $1.5625 per share.  The exercise
     price was equal to the closing price of the  Company's  common stock on the
     date the options were granted.

o    The Company  issued a total of 293,222  shares of common stock for services
     rendered  by outside  consultants.  The  shares  were  valued  based on the
     closing price of the  Company's  common stock on the date the services were
     rendered or  agreements  were signed.  Of the shares  issued,  190,000 were
     issued  at  $.9375  per  share to  consultants  for  services  rendered  in
     connection with accounting and legal services; 65,000 shares were issued at
     $.9375  per share for  general  business  consulting  services;  and 22,222
     shares  were  issued at $1.125 per share to a  consultant  to  develop  and
     maintain an  Internet  web site for the  Company.  In  connection  with the
     issuance of stock for services, the Company recorded $481,157, $281,157 and
     $12,000,  respectively,  as G&A  expense  for  the  period  from  inception
     (December 16, 1997) through March 31, 2000,  and for the three months ended
     March 31, 2000 and 1999.

Lexon is authorized to issue 45,000,000 Shares of Common Stock, par value $0.001
per share,  of which  7,252,735  shares were  outstanding  as of March 31, 2000.
Lexon is also authorized to issue 5,000,000 Shares of Preferred Stock, par value
$0.001 per share, of which there are no shares presently  outstanding.  There is
no present intent to issue any Preferred Stock.

VOTING RIGHTS

Holders  of  shares of Common  Stock are  entitled  to one vote per share on all
matters submitted to a vote of the  shareholders.  Shares of Common Stock do not
have cumulative voting rights, which means that the holders of a majority of the
shareholder  votes  eligible to vote and voting for the election of the Board of
Directors can elect all members of the Board of Directors. Holders of a majority
of the issued and outstanding  shares of Common Stock may take action by written
consent without a meeting.

                                       11
<PAGE>

DIVIDEND RIGHTS

Holders of record of shares of Common  Stock are  entitled to receive  dividends
when and if declared by the Board of Directors. To date, Lexon has not paid cash
dividends on its Common  Stock.  Holders of Common Stock are entitled to receive
such  dividends  as may be  declared  and paid from time to time by the Board of
Directors out of funds legally available  therefor.  Lexon intends to retain any
earnings for the operation and expansion of its business and does not anticipate
paying cash dividends in the foreseeable future. Any future  determination as to
the payment of cash  dividends  will depend  upon  future  earnings,  results of
operations,  capital  requirements,  Lexon's financial  condition and such other
factors as the Board of Directors may consider.

LIQUIDATION RIGHTS

Upon any liquidation,  dissolution or winding up of Lexon,  holders of shares of
Common  Stock  are  entitled  to  receive  pro rata all of the  assets  of Lexon
available  for  distribution  to  shareholders  after  liabilities  are paid and
distributions are made to the holders of Lexon's Preferred Stock.

PREEMPTIVE RIGHTS

Holders of Common Stock do not have any preemptive rights to subscribe for or to
purchase any stock, obligations or other securities of Lexon.

NOTE 11--STOCK OPTIONS

EMPLOYEE STOCK OPTIONS

On August  15,  1998,  the Board of  Directors  and  shareholders  approved  the
adoption of the Lexon Option Plan,  pursuant to which 3,000,000 shares of Common
Stock were reserved.  Stock options granted under the Plan expire ten years from
the date of grant.

On  October  15,  1998,  the Board  granted  50,000  options to an officer at an
exercise price of $1.20 per share in connection  with a loan made by the officer
to the  Company.  The  Company  recorded  no  compensation  cost for the options
granted to the officer.

On March 4, 1999, the Board granted  1,692,500  options to purchase common stock
at an  exercise  price of $1.5625 per share to  employees  of the  Company.  The
exercise  price was equal to the closing price of the Company's  common stock on
the date of grant. No compensation cost was recorded.

SFAS No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123") provides an
alternative method of determining  compensation cost for employee stock options,
which  alternative  method  may be adopted  at the  option of the  Company.  Had
compensation  cost for the  1,692,500  options  granted to employees on March 4,
1999 been  determined  consistent  with SFAS 123, the Company's net loss for the
quarter  ended March 31, 2000 would have been  increased and EPS would have been
reduced to the following pro forma amounts:
<TABLE>
<CAPTION>

                <S>                              <C>                 <C>                 <C>
                                            From Inception     March 31, 2000     March 31, 1999
                                            --------------     --------------     --------------
        Net loss:

                 As reported                 $ (3,797,028)      $ (   441,244)    $ (   849,272)
                 Pro forma                     (5,360,560)         (2,004,756)      ( 2,412,804)

        Basic and diluted EPS:

                 As reported                 $      (0.67)      $       (0.06)    $       (0.13)
                 Pro forma                          (0.95)              (0.29)            (0.38)

</TABLE>


NON-EMPLOYEE OPTIONS

On October 15, 1998,  the Board  granted  300,000  options to a consultant at an
exercise price of $1.20 per share.  In exchange for the options,  the consultant
provided  financial and investment  consulting  services for a one-year  period.
Compensation cost was based on an estimated fair value of $1.98 per share, which
was calculated using the  Black-Scholes  option pricing model with the following
assumptions:  exercise price of $1.20 per share; stock price of $2.00 per share;
risk-free  interest rate of 6.0%;  expected dividend yield of 0.0; expected life
of ten years; and estimated volatility of 151%. During 1998 the Company recorded
$593,910 as a prepaid consulting expense and an increase to paid in capital. The
Company amortized the prepaid expense over a 12-month period, which was the life
of the agreement.  Amortization  expense included in general and  administrative
expense was $494,925 in 1999 and $98,985 in 1998.

                                       12
<PAGE>

On October 15, 1998,  the Board granted  50,000  options at an exercise price of
$1.20 per share to the inventor of the ebaf screening process. Compensation cost
was based on an estimated  fair value of $1.98 per share,  which was  calculated
using the  Black-Scholes  option  pricing model with the following  assumptions:
exercise  price of $1.20 per share;  stock  price of $2.00 per share;  risk-free
interest  rate of 6.0%;  expected  dividend  yield of 0.0;  expected life of ten
years;  and estimated  volatility of 151%. The Company recorded the compensation
cost of $98,985 as R&D expense on the date the options were granted.

On October 15, 1998, the Board granted 180,000 options to a shareholder at an
exercise  price  of  $1.20  per  share  in  connection  with a loan  made by the
shareholder  to the Company.  Compensation  cost was based on an estimated  fair
value of $1.98 per share,  which was calculated using the  Black-Scholes  option
pricing model with the following assumptions: exercise price of $1.20 per share,
stock  price of $2.00  per  share,  risk-free  interest  rate of 6.0%,  expected
dividend yield of 0.0;  expected life of ten years; and estimated  volatility of
151%. The Company recorded  compensation cost of $356,346 as interest expense on
the date the options were granted.

On November 1, 1998,  the Company  entered  into an  agreement  with an investor
relations  firm  whereby the Board  granted  the firm  options to purchase up to
1,000,000  shares of common stock over a two-year  period.  Amounts and exercise
prices are as follows:

                                                    Number of   Exercise Price

                Vesting Period                        Options        Per Share

   ------------------------------------------ ---------------- ----------------
   January 1, 1999 to March 31, 1999                   45,000            $1.20
   April 1, 1999 to June 30, 1999                      70,000            $1.50
   July 1, 1999 to September 30, 1999                  95,000            $1.75
   October 1, 1999 to December 31, 1999               120,000            $2.00
   January 1, 2000 to March 31, 2000                  135,000            $2.25
   April 1, 2000 to June 30, 2000                     160,000            $2.50
   July 1, 2000 to September 30, 2000                 175,000            $2.75
   October 1, 2000 to December 31, 2000               200,000            $3.00
                                              ----------------
   Total                                            1,000,000
                                              ----------------

The  options  are  eligible  to  vest  on a  quarterly  basis,  subject  to  the
achievement of certain market conditions surrounding the Company's stock. If the
vesting  conditions are not met, the options eligible for vesting are forfeited.
Compensation  cost will be  recorded  for the  options  when and if they  become
vested. Only vested options are exercisable.  All vested options are exercisable
until October 27, 2008. On June 30, 1999,  70,000  options  exercisable at $1.50
per share became  vested.  To determine  compensation  cost,  the 70,000  vested
options were valued at $3.26 per share based on the Black-Scholes option pricing
model  and  the  Company  recorded  $228,200  as  G&A  expense.   The  following
assumptions for the Black-Scholes option pricing model were used: exercise price
of $1.50 per share, market price on vesting date of $3.375,  risk- free interest
rate of 5.87%,  expected  dividend yield of 0.0; expected life of ten years; and
estimated  volatility of 117%. During the year ended December 31, 1999,  260,000
options at exercise  prices ranging from $1.20 to $2.00 per share were forfeited
and during the three months ended March 31, 2000, 135,000 options at an exercise
price of $2.25 per share were forfeited.

On March 4, 1999, the Board granted  250,000 options to purchase common stock at
an exercise price of $1.5625 per share to Dr.  Tabibzadeh,  inventor of the Ebaf
Assay  screening  process.  The exercise price was equal to the closing price of
the common  stock on the date of grant.  The  options  were  valued at $1.49 per
share based on the Black-Scholes  option-pricing  model and the Company recorded
$372,500 as R&D expense. The following  assumptions for the Black-Scholes option
pricing  model were used:  exercise  price of $1.5625,  market price of $1.5265,
risk- free interest rate of 5.87%, expected dividend yield of 0.0; expected life
of ten years; and estimated volatility of 117%.

                                       13
<PAGE>

A summary of the status of the Company's  stock  options at March 31, 2000,  and
changes during the three months then ended is presented below:

                                                             March 31, 2000

                                                       -------------------------

                                                                        Weighted
                                                                         Average
                                                                        Exercise
                                                           Shares          Price
                                                       -----------   -----------
   EMPLOYEES

   Outstanding, beginning of period                     1,687,500        $1.5518
   Granted                                                    ---        $1.5518
   Exercised                                            (150,000)        $1.5518
   Forfeited                                                  ---            ---
                                                       -----------   -----------
   Outstanding, March 31, 2000                         1,537,500         $1.5518
                                                       -----------   -----------
   Exercisable, March 31, 2000                         1,537,500         $1.5518
                                                                     -----------
                                                       -----------
   Weighted average fair value of options granted          $1.49
                                                       -----------

                                                            March 31, 2000

                                                       -------------------------

                                                                        Weighted
                                                                         Average
                                                                        Exercise
                                                           Shares          Price
                                                       -----------   -----------
   NON-EMPLOYEES

   Outstanding, beginning of period                    1,520,000           $1.89
   Granted or Vested                                         ---             ---
   Exercised                                                 ---             ---
   Forfeited                                            (395,000)          $1.93
                                                       -----------   -----------
   Outstanding, March 31, 2000                         1,520,000         $1.9152
   Exercisable, March 31, 2000                         1,125,000         $1.3313
                                                                     -----------
                                                       -----------
   Weighted average fair value of options granted          $1.49
                                                       -----------

The following table summarizes information about fixed stock options outstanding
at March 31, 2000:

<TABLE>
<CAPTION>
                                           Options Outstanding                  Options Exercisable

                                ------------------------------------------ ------------------------------
                <S>                   <C>             <C>          <C>            <C>          <C>
                                                    Weighted
                                                     Average     Weighted                   Weighted
                                       Number      Remaining      Average         Number     Average
         Range of exercise        Outstanding    Contractual     Exercise    Exercisable    Exercise
         prices                   at 03/31/00           Life        Price    at 03/31/00       Price
         ---------------------- -------------- -------------- ------------ -------------- -----------

         EMPLOYEES:

         $1.20-$1.5625             1,687,500      9.67 years     $1.5518      1,687,500      $1.5518

         NON-EMPLOYEES:

         $1.20-$1.5625             1,520,000      9.41 years     $1.9152      1,125,000      $1.3313

</TABLE>

                                       14
<PAGE>


NOTE 12--INCOME TAXES

The components of deferred income tax are as follows:

                                 Inception
                                 (December
                                 16, 1997)
                                  to March        Three Months      Three Months
                                  31, 2000               Ended             Ended
                                                March 31, 2000    March 31, 2000
                                -----------     --------------    --------------

  Net operating loss             $ 368,644         $ (341,390)        $ (20,075)
  Stock-based compensation         562,892            374,425           188,467
  Valuation allowance             (931,536)          ( 33,035)         (168,392)
                                -----------     --------------    --------------

  Net deferred tax asset            $    0             $    0              $  0
                                -----------     --------------    --------------


From  inception  to March 31, 2000 the Company had a net  operating  tax loss of
approximately $3,787,028, which expires 2019 and 2020, and temporary differences
related to stock-based  compensation of $1,655,565.  A valuation allowance fully
offsets the benefit of the net operating  loss,  since the Company does not meet
the "more probable than not" criteria of FASB 109.

NOTE 13--EARNINGS PER SHARE

                                                     March 31,    March 31,
                                                          2000         1999
                                                     ---------    ---------
     BASIC AND DILUTED EPS COMPUTATION:


     Net loss applicable to common stockholders     $(441,224)   $(849,272)
                                                     ---------    ---------

     Weighted average shares outstanding             6,853,089    6,366,974
                                                     ---------    ---------

     Basic and Diluted EPS                           $  (0.06)    $  (0.13)
                                                     ---------    ---------

For the three  months ended March 31, 2000 and 1999,  all options were  excluded
from the EPS calculation, as their effect was anti-dilutive.

NOTE 14--UNCERTAINTIES

The accompanying  financial  statements have been prepared  assuming the Company
will  continue  as a going  concern.  The  Company  is in the  early  stages  of
development and has not established  sources of revenues  sufficient to fund the
development of business and pay operating  expenses,  resulting in a net loss of
$3,787,028  for the three  months ended March 31,  2000.  Management  intends to
provide the necessary  development  and operating  capital  through sales of its
common stock and increasing  revenues by gaining FDA approval for the Ebaf Assay
test kit and  marketing  the test kit to  laboratories,  research  institutions,
hospitals,  clinics,  doctors and other  medical  professionals  throughout  the
world. The ability of the Company to continue as a going concern during the next
year depends on the  successful  completion  of the  Company's  efforts to raise
capital  and gain FDA  approval.  The  financial  statements  do not include any
adjustments  that might be  necessary  if the Company is unable to continue as a
going concern.

NOTE 15--RELATED PARTY TRANSACTIONS

On August 4, 1999,  the Company  entered into a consulting  agreement  with UTEK
Corporation  for their  services in  identifying,  evaluating  and  recommending
potential cancer diagnostic testing  technologies.  UTEK, a technology merchant,
owns 1,000,000 shares of common stock of Lexon. The agreement  required Lexon to
pay UTEK $132,000,  either in cash or in stock during the year 2000. No payments
were made On January 28, 2000,  this agreement was canceled by mutual consent of
the parties.

                                       15
<PAGE>

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

     SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     Certain  statements  included in this report which are not historical facts
are forward looking statements,  including the information provided with respect
to  future  business  opportunities,  expected  financing  sources  and  related
matters.  These forward  looking  statements are based on current  expectations,
estimates,  assumptions and beliefs of management,  and words such as "expects",
"anticipates",  "intends", "believes",  "estimates", and similar expressions are
intended to identify such forward looking statements.  Since this information is
based on current  expectations  that  involve  risks and  uncertainties,  actual
results  could differ  materially  from those  expressed in the forward  looking
statements. We assume no obligation to update any forward-looking  statements or
reason why actual results might differ.

     PLAN OF OPERATION OVER THE NEXT TWELVE MONTHS

     We have no  operating  history  prior  to  December  16,  1997.  We have no
revenues  from the sale of  products  to date and  have  funded  our  activities
through the sale of our common stock and through loans by our shareholders.

     During  2000,  we  plan  to  raise  additional   capital  to  complete  the
development  of the  Ebaf  Assay  and to fund  the  gathering  of  data  for FDA
approval, and to seek strategic alliances or business combination partners.

     We plan to seek business alliance partners in the  pharmaceutical  industry
with existing manufacturing, distribution and marketing capabilities. We have no
such partners at this time.  There is no assurance that we will be successful in
making acceptable arrangements for business alliances.

     CASH REQUIREMENTS

     We require substantial  additional working capital to finish development of
the Ebaf Assay, to begin collecting data, and to commence and complete  clinical
trials required for FDA approval. We estimate that we will require approximately
$5.0 million in additional  capital during the year 2000.  There is no assurance
that the additional capital required will be available to us on acceptable terms
when needed, if at all. Any additional capital may involve substantial  dilution
to the interests of our then existing shareholders.

     PRODUCT DEVELOPMENT AND RESEARCH PLAN FOR THE NEXT TWELVE MONTHS

         EBAF ASSAY

         During the next 12 months,  Dr.  Tabibzadeh will make a small number of
Ebaf Assay  ELISA test kits and will  sample the blood of persons who have colon
cancer and of persons who do not have colon cancer.  The blood samples will then
be tested  using the  Western  Blot  method  and the ELISA  method to  determine
whether the ELISA method produces results similar to the Western Blot method. We
estimate that the comparative analysis of tests using the Western Blot and ELISA
methods will be completed by the end of the third quarter of 2000. The data from
these  tests  will then be used as the basis for our  preliminary  proposal  for
clinical  trials to the FDA.  We do not know how much data the FDA will  require
and consequently, how long the clinical trials will take.

         TELOMERASE ASSAY

         During the next 12 months,  Dr.  Highsmith  and his team will develop a
series of monoclonal antibodies to telomerase (estimated time to complete:  8-10
months) and will develop an immunoassay (ELISA format test) to detect telomerase
in human blood  (estimated  time complete:  2-4 months after  development of the
monoclonal antibodies)

     EXPECTED PURCHASE OR SALE OF PLANT AND SIGNIFICANT EQUIPMENT

     None.

     EXPECTED SIGNIFICANT CHANGES IN NUMBER OF EMPLOYEES.

     None.

                                       16
<PAGE>

                            PART II OTHER INFORMATION

ITEM 1  LEGAL PROCEEDINGS

     None

ITEM 2  CHANGES IN SECURITIES AND USE OF PROCEEDS

     None

ITEM 3  DEFAULTS UPON SENIOR SECURITIES

     None

ITEM 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None

ITEM 5  OTHER INFORMATION

     None

ITEM 6  EXHIBITS AND REPORTS ON FORM 8-K

     EXHIBITS

     27.0  Financial Data Schedule (for electronic filers only)

     REPORTS ON FORM 8-K

     On February 14, 2000,  we filed a report on Form 8-K regarding our purchase
of 100% of the common stock of Cancer  Diagnostic,  Inc.  ("CDI") on January 29,
2000.  CDI owns the  exclusive  worldwide  license to the  Telomerase  Assay,  a
patent-pending  blood test for lung cancer being  developed at the University of
Maryland, Baltimore

                                       17
<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.

                                                      LEXON, INC.

                                                      /S/ GIFFORD M. MABIE

                                                      President

Date:  May 22, 2000