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, 2001

                                       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  12,838,735  shares of
Common Stock, $0.001 par value, outstanding as of March 31, 2001.

                                        1
<PAGE>


                          PART I FINANCIAL INFORMATION

ITEM 1  FINANCIAL STATEMENTS
<TABLE>
<CAPTION>

                     INDEX TO FINANCIAL STATEMENTS
                  <S>                                                                              <C>

Balance Sheet at March 31, 2001 (Unaudited) ....................................................    3

Statements of Operations for the period from inception (December 16, 1997) to March 31, 2001
and for the three months ended March 31, 2001 and 2000 (unaudited)..............................    4

Statements of Cash Flows for the period from inception (December 16, 1997) to March 31, 2001
(Unaudited) and for the three months ended March 31, 2001 and 2000 (Unaudited)..................    5

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

</TABLE>


                                        2
<PAGE>

                                   Lexon, Inc.
                          (A Development Stage Company)

                                 Balance Sheets
                                 March 31, 2001
                                   (Unaudited)



                                ASSETS                        March 31, 2001
                                                              --------------
Current assets
Cash                                                                  $1,096
Due from related parties                                               7,213
Prepaid expenses                                                       1,563
                                                              --------------
   Total current assets                                                9,872
                                                              --------------
Other assets
Licensed technology, net                                             203,778
Sponsored research, net                                               93,547
                                                              --------------
      Total other assets                                             297,325
                                                              --------------
TOTAL ASSETS                                                        $307,197
                                                              ==============
                 LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities                             $98,961
Interest payable                                                      15,294
Payable to DOCRO                                                     350,000
Payable to North Shore University                                     27,054
Payable to University of Maryland                                    124,537
Related party payables                                               177,141
                                                              --------------
   Total current liabilities                                         792,987
                                                              --------------
Shareholders' deficit
Preferred stock, $0.001 par value,
   5,000,000 shares authorized;  no shares
   issued and outstanding at March 31, 2001                                -
Common stock, $0.001 par value,
   45,000,000 shares authorized;
   12,838,735 shares issued and
   outstanding at March 31, 2001                                      12,839
Common stock subscribed                                             (750,000)
Paid in capital                                                    8,475,164
Deficit accumulated during the development stage                  (8,223,793)
                                                              --------------
                                                                    (485,790)
                                                              --------------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT                         $307,197
                                                              ==============


The accompanying notes are an integral part of the financial statements


                                        3

<PAGE>
<TABLE>
<CAPTION>

                                   Lexon, Inc.
                          (A Development Stage Company)

                            Statements of Operations
          From Inception (December 16, 1997) Through March 31, 2001 and For the
               Three Months Ended March 31, 2001 and 2000
                                   (Unaudited)



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


                                                  From inception
                                                   (December 16,      Three Months      Three Months
                                                   1997) through             Ended             Ended
                                                  March 31, 2001    March 31, 2001    March 31, 2000
                                                  --------------    --------------    --------------
Revenue                                                      $ -               $ -               $ -

Expenses
Research and development                               1,443,172            55,124            76,504
General and administrative                             6,371,298           173,120           361,866
                                                  --------------    --------------    --------------
  Total operating expenses                             7,814,470           228,244           438,370
                                                  --------------    --------------    --------------
Operating loss                                        (7,814,470)         (228,244)         (438,370)

Interest expense                                         409,323             3,541             2,854
                                                  --------------    --------------    --------------
Net loss                                            $ (8,223,793)       $ (231,785)       $ (441,224)
                                                  --------------    --------------    --------------
Weighted average shares outstanding                    6,610,365        10,697,668         6,853,098
                                                  --------------    --------------    --------------
Loss per share                                           $ (1.24)          $ (0.02)          $ (0.06)
                                                  --------------    --------------    --------------

</TABLE>


The accompanying notes are an integral part of the financial statements

                                        4

<PAGE>

<TABLE>
<CAPTION>

                                   Lexon, Inc.
                          (A Development Stage Company)

                            Statements of Cash Flows
          From Inception (December 16, 1997) through March 31, 2001 and For the
               Three Months Ended March 31, 2001 and 2000
                                   (Unaudited)


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

                                                                        From inception
                                                                         (December 16,      Three Months      Three Months
                                                                         1997) through             Ended             Ended
                                                                        March 31, 2001    March 31, 2001    March 31, 2000
                                                                        --------------    --------------    --------------
Operating activities
Net loss                                                                  $ (8,223,793)       $ (231,785)       $ (441,224)
Plus non-cash charges to earnings:
   Amortization of license and sponsored research agreements                   499,464            34,801            73,708
   Value of common stock options granted to non-employees for services       1,299,218                 -                 -
   Amortization of Stock Options Issued to Non-employee Lenders                356,346                 -                 -
   Value of services contributed by employees                                1,011,479           100,000            65,000
   Value of stock issued for services                                        3,375,336                 -           279,063
Change in working capital accounts:
   Increase in prepaid expenses                                                 (1,563)           (1,563)          (12,968)
  (Increase) decrease in other receivables                                      (7,213)             (681)            1,239
   Increase in accounts payable and accrued liabilities                         98,961             7,532            12,568
   Increase (decrease) in interest payable                                      23,374             3,540            (4,967)
   Increase in payable to DOCRO                                                350,000                 -           (27,054)
   Increase (decrease) in payable to North Shore                                27,054                 -                 -
                                                                        --------------    --------------    --------------
      Total operating activities                                            (1,191,337)          (88,156)          (54,635)
                                                                        --------------    --------------    --------------
Financing activities
Loans from related parties                                                     533,309                 -            50,000
Repayment of loans from related parties                                       (356,168)          (11,568)         (100,000)
Sale of common stock for cash:
   To founders                                                                   5,000                 -                 -
   To third-party investors                                                  1,471,727           100,000                 -
   Payment of issue costs                                                     (140,498)                -                 -
   To employees upon exercise of employee stock options                        320,313                 -           234,250
                                                                        --------------    --------------    --------------
      Total financing activities                                             1,833,683            88,432           184,250
                                                                        --------------    --------------    --------------
Investing activities
Purchase of Cancer Diagnostics Inc.                                           (170,000)                -           (50,000)
Purchase of exclusive licenses                                                (160,000)                -                 -
Payment of sponsored research contract                                        (311,250)                -                 -
                                                                        --------------    --------------    --------------
      Total investing activities                                              (641,250)                -           (50,000)
                                                                        --------------    --------------    --------------
Change in cash                                                                   1,096               276            79,615
Cash at beginning of period                                                          -               820            10,041
                                                                        --------------    --------------    --------------
Cash at end of period                                                         $  1,096          $  1,096          $ 89,656
                                                                        --------------    --------------    --------------
Supplemental disclosure of cash flow information:
   Cash paid for interest during the period                                   $ 29,470           $ 8,081           $ 1,544
                                                                        --------------    --------------    --------------
Non-cash financing and investing activities:
   Common stock issued in Gentest Merger                                       $ 1,000               $ -               $ -
   Common stock issued to employees upon exercise
   of their options                                                                              750,000
   Common stock subscribed through promissory notes                                             (750,000)
                                                                        --------------    --------------    --------------


</TABLE>

The accompanying notes are an integral part of the financial statements


                                        5

<PAGE>


                                   Lexon, Inc.
                          (A Development Stage Company)

                          Notes to Financial Statements
          From Inception (December 16, 1997) through March 31, 2001 and For the
               Three Months Ended March 31, 2001 and 2000


Note 1--  Organization and Summary of Significant Accounting Policies

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  Cancer
Diagnostics,  Inc.  ("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.

Income Taxes
The Company  uses the  liability  method of  accounting  for income taxes as set
forth  in  Statement  of  Financial   Accounting  Standards  ("SFAS")  No.  109,
"Accounting for Income Taxes".  Under the liability  method,  deferred taxes are
determined  based on the  differences  between the financial  statements and tax
bases 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, 2001 and 2000,  and for the period from  inception
(December 16, 1997) to March 31, 2001, the Company recorded  $100,000,  $65,000,
and $1,011,479,  respectively, as a capital contribution by its sole officer and
director and its other employees.

Fair Market Value of Stock Issued for Services
The fair market  value of stock  issued as payment for  services is equal to the
closing price of the Company's Common Stock on the date shares 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 issued as payment for services.

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" ("SFAS 123"). 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
accounting 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.


                                        6
<PAGE>



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 CDI 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 will adopted SFAS No. 133,  "Accounting  for Derivative  Instruments
and Hedging Activities" during the first quarter of 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.

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
                                             ================


                                        7
<PAGE>


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, 2001, the amount of accumulated  amortization
related to the Exclusive License was $26,044.

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  research  and
development expenses. At March 31, 2001, the asset was fully amortized.

Note 5--  Purchase of Cancer Diagnostics, Inc.

On January 29, 2000,  Lexon purchased 100% of the Common Stock of 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.
The Company has paid $70,000 to UTEK to date. The interest rate increased to 12%
per year on any unpaid principal  balance beginning 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. On March 27, 2001,
the Company issued to UTEK 236,000 shares of Lexon, Inc. Common Stock as payment
in full for the remaining  principal of $30,000 and associated  accrued interest
of $8,080 on the secured promissory note.

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  1,236,000  shares  (or about 9.6% of the  outstanding  shares) of
Lexon Common Stock.

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
straight-line method. At March 31, 2001, the amount of accumulated  amortization
related to the exclusive license was $6,257.


                                        8
<PAGE>


Note 7--  Sponsored Research Contract--Telomerase Assay

On August 27, 1999,  CDI agreed to pay UMB $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
research and development  expenses. At March 31, 2001, the amount of accumulated
amortization related to the Sponsored Research Agreement was $155,911.

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.  Because  no  trading  market for the Common
Stock was yet  established,  the  option  exercise  price of $1.20 per share was
determined  by the Board  based on the most recent  offering  price of $2.00 per
share less a 40%  discount.  The discount was  determined to be  appropriate  as
stock issued when these options are exercised may be restricted.

The  Company  recorded  no  compensation  cost for the  options  granted  to the
officer.  For the year ended December 31, 1998, the Company recorded $356,346 as
interest  expense  for  the  options  granted  to the  shareholder  based  on an
estimated  fair value of $1.98 per share.  The fair value of $1.98 per share was
estimated on the date of grant 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  borrowed  $1,377 from a related party. As of March 31,
2001, the balance on this loan was $1,377.

During 1999, the Company borrowed $118,250 from non-affiliated shareholders. The
Company executed notes payable, which were due December 31, 2000, at an interest
rate of 10% per year.  Subsequent  to December  31,  2000,  these  notes  accrue
interest at a default  rate of 16%. As of March 31,  2001,  the balance on these
loans was $18,250.

During 2000, the Company  borrowed  $76,500 from its  shareholders.  The Company
executed notes payable, which were due December 31, 2000, at an interest rate of
10% per year.  Subsequent  to  December  31,  2000,  these notes began to accrue
interest at a default rate of 16%. As of March 31, 2001,  the remaining  balance
on these notes was $76,500

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.


                                        9
<PAGE>

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.

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. At March 31, 2001, the balance on the Company's obligation is $27,054.

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 the
three  months  ended March 31, 2001 and 2000,  the Company  recorded  $2,250 and
$2,400,  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
------------------------ ------------------------ ---------------------
       2001                              $45,587                $9,090
       2002                               11,462                 2,280

Swartz Investment Agreement
The Company  entered into an investment  agreement on May 19, 2000,  with Swartz
Private  Equity,  LLC to raise up to $30  million  through  a series of sales of
Lexon's Common Stock ("the Investment Banking Agreement").  The dollar amount of
each sale is limited by the  Company's  Common  Stock's  trading  volume,  and a
minimum  period of time must  elapse  between  each  sale.  Each sale will be to
Swartz. In turn, Swartz will either sell Lexon's stock in the open market, place
Lexon's stock through  negotiated  transactions  with other  investors,  or hold
Lexon's stock in their own portfolio.

If Lexon has not put at least  $1,000,000  of Common Stock to Swartz  during any
six calendar month period  following the effective  date of the Agreement,  then
Lexon shall pay a non-usage fee of $100,000 less 10% of the aggregate put dollar
amount put to Swartz during the period.

Lexon may  terminate  its right to initiate  puts or  terminate  the  Investment
Banking  Agreement at any time by providing Swartz with notice of such intention
to terminate;  however, any such termination will not affect any other rights or
obligations Lexon has concerning the Investment Banking Agreement or any related
agreement.


                                       10
<PAGE>

Should Lexon terminate the Investment Banking Agreement prior to initiating puts
in the amount of $2,000,000 during the 36 month period of the Investment Banking
Agreement,  the Company  may be required to pay a Non-Usage  fee of a maximum of
$200,000.

DOCRO Services Agreement
On June 21, 2000 and August 2, 2000,  the Company  entered  into two  consulting
agreements with Diagnostic  Oncology CRO, Inc.  ("DOCRO"),  a company engaged in
providing  technology  assessment,  technology  development,  and laboratory and
clinical trial services to medical  device  developers,  to conduct a technology
assessment and development  program for Lexon's Ebaf and Telomerase tumor marker
technologies.  For these  services,  Lexon  agreed to pay DOCRO  $1,495,000  and
$1,858,900,  respectively,  which  will be paid  upon  achievement  by  DOCRO of
specific  milestones  in the  operation.  As of March 31, 2001,  the Company had
recorded a payable to DOCRO under the agreements of $350,000.

Employment Agreements

On January 3, 2001, the Company entered into written employment  agreements with
Lexon's sole officer and  director,  and certain  employees.  The terms of their
respective  employment  agreements  are the same,  except that the agreement for
Lexon's sole officer and  director  states he will not compete with Lexon,  Inc.
for one-year after he resigns  voluntarily or is terminated for cause.  If he is
terminated  without  cause or if he  resigns  because  a change of  control  has
occurred,  then the non-compete  clause of his employment  agreement will not be
applicable.

The term of each  employment  agreement is for one year,  ending January 3, 2002
with an automatic and continuous renewal for consecutive two year periods.  Each
agreement  can be ended either by the Company or by the  employee  upon 30 days'
written  notice.  Each  agreement  provides  for an  annual  salary  of at least
$100,000 with an annual  salary  increase  equal to no less than the  percentage
increase in the Consumer  Price Index during the previous  calendar  year.  Each
employee's salary will be accrued by the Company and paid in whole or in part as
cash is available.  If an employee resigns or is terminated for any reason,  his
or her  accrued  and unpaid  salary plus  severance  pay ranging  from three (3)
months to twenty-four (24) months,  depending on the circumstances of his or her
departure,  will be due and payable within 30 days of his or her  resignation or
termination.  Under each  employment  agreement,  the Company  provides  certain
fringe benefits,  including, but not limited to, participation in pension plans,
profit-sharing plans, employee stock ownership plans, stock appreciation rights,
hospitalization  and  health  insurance,  disability  and life  insurance,  paid
vacation  and sick leave.  Lexon,  Inc.  will  reimburse  each  employee for any
reasonable and necessary business  expenses,  including travel and entertainment
expenses  that are  necessary to carry out his or her duties.  Each employee has
the right to participate in other  businesses as long as those businesses do not
compete  with Lexon,  Inc.  and so long as the  employee  devotes the  necessary
working time, as determined in his or her sole  discretion,  to Lexon's business
activities.  The Company will indemnify each employee for all legal expenses and
liabilities incurred with any proceeding involving the employee by reason of his
or her being an officer, director, employee or agent of the Company. The Company
will pay reasonable attorney fees and expenses as incurred in the event that, in
the  employee's  sole  judgment,  he or she needs to retain counsel or otherwise
expend  personal funds for his or her defense.  If there is a change in control,
each  employee  has the right to  resign.  A change in  control  is defined as a
change in the majority of Directors  within any twelve month period  without 2/3
approval of the shares  outstanding and entitled to vote, or a merger where less
than 50 percent of the  outstanding  common stock survives and a majority of the
Board of Directors  remains,  or the sale of substantially  all of the Company's
assets,  or if any other  person or group  acquires  more than 50 percent of the
voting capital.

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.


                                       11
<PAGE>


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 shareholders' equity.

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 its  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 year ended December 31, 2000, the following Common Stock transactions
occurred:

o    The  Company  issued  150,000  shares of its Common  Stock  pursuant to the
     exercise of employee stock options, for which the Company received $234,375
     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.

o    The Company issued a total of 1,000,000 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,  600,000 were
     issued at $.84 per share for  general  business  consulting  services,  and
     400,000  shares  were  issued at $.84 per  share  pursuant  to an  investor
     relations agreement.

                                       12

<PAGE>

o    The  Company  sold  250,000  restricted  shares  of stock to a  third-party
     investor in conjunction with a consulting agreement signed on May 23, 2000.
     The purchase price for the shares was $.001 and the stock is restricted for
     a period of 10 months.  The $554,250  difference between the purchase price
     of the stock and the fair market value of the stock on the date of purchase
     was  recorded  as a  general  and  administrative  expense  on  the  income
     statement.

o    In connection with the issuance of stock for services, the Company recorded
     $1,895,237,  $1,673,562 and $221,675,  respectively, as G&A expense for the
     period from  inception  (December 16, 1997) through  December 31, 2000, and
     for the years ended December 31, 2000 and 1999.

o    The  Company  placed  700,000  shares of stock in escrow for a third  party
     investor  pursuant to an  investment  banking  agreement  signed on May 19,
     2000. As of December 31, 2000, 260,160 and 52,365 shares had been purchased
     through  puts.  The  sales  prices  for  the  shares  was  $0.75  and  $.40
     respectively,  which were the sales  prices  calculated  using the formulas
     outlined in the Investment Banking Agreement.  Total proceeds from sales of
     stock under the Investment Banking Agreement are $216,066.

During the three months ended March 31, 2001, the following Common Stock
transactions occurred:

o    On February 23, 2001, the employees of Lexon exercised  options to purchase
     3,000,000  shares of common stock at an exercise  price of $0.25 per share.
     Each person gave the Company an  unsecured  promissory  note.  The total of
     these notes  amounted to $750,000.  The notes are due February 23, 2008 and
     accrue interest at a rate of 8% per year.

o    On December 31, 2000, we began an Offering  Regulation D, Rule 506 offering
     to sell up to  4,000,000  Units at a price of $0.25  per  Unit.  Each  Unit
     consists of one share of Common Stock and one Common Stock purchase warrant
     exercisable at $0.50 per share that expires on December 31, 2005.  Pursuant
     to the terms of this Offering, we had the following transactions:

          During January 2001, we sold 200,000 Units to one accredited  investor
          and received  $50,000 in cash.

          During  February  2001,  we  sold  200,000  Units  to  two  accredited
          investors and received $50,000 in cash.

Lexon is authorized to issue 45,000,000 Shares of Common Stock, par value $0.001
per share,  of which  12,838,735  shares were  outstanding as of March 31, 2001.
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.

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.


                                       13

<PAGE>

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, if any.

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.

On August 7, 2000, the Board granted  1,250,000 options to purchase Common Stock
at an exercise price of $.84 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.

On January 2, 2001, the Board cancelled  2,487,500 options  previously issued to
the Company's employees pursuant to the Lexon, Inc., 1998 Incentive Stock Option
Plan dated August 15, 1998.

On January 5, 2001, the Board granted 3,000,000 options to purchase Common Stock
at an exercise price of $.25 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. All of these options were exercised
during the first quarter of 2001 (see Note 10).

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 options  granted to employees been
determined  consistent  with SFAS 123, the Company's net loss for the year ended
March 31, 2001, would have been increased and EPS would have been reduced to the
following pro forma amounts:

                                        From Inception
                                               Through
                                        March 31, 2001
         Net loss:
                  As reported             $(8,223,793)
                  Pro forma                (8,670,193)

         Basic and diluted EPS:
                  As reported             $     (1.24)
                  Pro forma                     (1.31)

Compensation cost was based on an estimated fair value of $.24 per share,  which
was calculated using the  Black-Scholes  option pricing model with the following
assumptions:  exercise  price of $.25 per share;  stock price of $.25 per share;
risk-free  interest rate of 6.0%;  expected dividend yield of 0.0; expected life
of ten years; and estimated volatility of 126%.


                                       14

<PAGE>

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 the Company financial and investment consulting services for a one-year
period.  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.

Also 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.  The Company
recorded the compensation cost of $98,985 as research and development expense on
the date the options were granted.

On October 15, 1998, the Board also 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.  The Company recorded  compensation cost of $356,346
as interest expense on the date the options were granted.

Compensation  cost for the October 15,  1998,  options 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%.

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 general and  administrative  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.  During the nine months ended September 30, 2000, the remaining
670,000  options at exercise  prices  ranging from $2.50 to $3.00 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 research and development expense. The following  assumptions for the
Black-Scholes option pricing model were used:


                                       15

<PAGE>

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%.

On March 28, 2000, the Board granted  484,809  warrants to purchase Common Stock
to Swartz Institutional Finance ("Swartz") pursuant to the Equity Line Letter of
Agreement  signed on that day. 280,000 warrants have an exercise price of $2.062
per  share.  The  exercise  price was equal to the  lowest  closing  price for 5
trading days prior to the date of execution of all Closing  Documents on May 19,
2000.  The warrants  were valued at $1.575 per share based on the  Black-Scholes
option pricing model,  and the Company  recorded  $441,000 as a deferred cost of
capital,  to be charged  against the capital  received from each put transaction
with Swartz.  The following  assumptions  for the  Black-Scholes  option pricing
model were used:  exercise  price of $2.062,  market price of $2.625,  risk-free
interest rate of 8.00%,  expected  dividend  yield of 0.0,  expected life of one
year,  and  estimate  volatility  of 142%.  Subsequent  to signing  the  banking
agreement,  Lexon filed an S-8  registration  statement  registering  additional
outstanding  shares.  An  additional  204,809  warrants were issued to Swartz to
comply with the terms of the  Investment  Banking  Agreement  which  states that
Swartz is entitled to own warrants equal to 10% of the total outstanding shares.
The warrants have an initial  exercise  price of $.68 per share.  If the date of
exercise is more than six months after the date of issuance,  the exercise price
shall be reset  according to the terms  outlined in the Warrant  Agreement.  The
warrants issued to Swartz were valued at $1.19 per share based on the S-8 filing
and a deferred cost of capital was recorded for  $243,723.  This amount is being
charged against the capital received from each put transaction  with Swartz.  As
of March 31, 2001, $4,922 had been charged against paid in capital.

On May 23, 2000, the Board granted 500,000  warrants to purchase Common Stock at
an  exercise  price of $1.625  per share to  Goodbody  International,  Inc.  for
consulting  services and guidance on any matters relating to investor relations,
financial  relations,   stock  enhancement  and  public  relations  and  to  CEO
responsibilities,   including  any  financing  mergers,  acquisitions,  contract
negotiations and the possible sale of the Company.  The term of the agreement is
three years and is being amortized using the straight-line  method. The exercise
price was equal to the closing  price of the Common Stock on May 10,  2000.  The
warrants  were  valued at $2.0595 per share  based on the  Black-Scholes  option
pricing  model and the  Company  recorded  $114,422  as  consulting  expense and
$915,328  as prepaid  consulting  expense.  The  following  assumptions  for the
Black-Scholes  option pricing model were used: exercise price of $1.625,  market
price of $2.218,  risk-free  interest rate of 8.00%,  expected dividend yield of
0.0, expected life of five years, and estimated volatility of 146%.

On September 29, 2000,  the Board  granted  26,016  warrants to purchase  Common
Stock at an exercise price of $.825 per share to Swartz in conjunction  with the
first put pursuant to the Investment Banking Agreement.

On November 3, 2000, the Board granted 5,237  warrants to purchase  Common Stock
at an  exercise  price of $.4818  per share to  Swartz in  conjunction  with the
second put pursuant to the Investment Banking Agreement

Due to the uncertainty  surrounding the Company's  ability to raise  significant
amounts of capital,  effective  December 31,  2000,  the costs  associated  with
issuing   warrants   to  Swartz  and   Goodbody   are  charged  to  general  and
administrative expenses

A summary of the status of the Company's  stock  options at March 31, 2001,  and
changes during the three months then ended is presented below:

                                                  March 31, 2001
                                       -------------------------------------
                                                           Weighted Average
                                                 Shares      Exercise Price
                                       ----------------- -------------------
Employees
Outstanding, beginning of period             2,487,500               $1.20
Granted                                      3,000,000                0.25
Exercised                                   (3,000,000)               0.25
Canceled                                    (2,487,500)               1.20
                                       ----------------- -------------------
Outstanding, March 31, 2001                         --               $  --
                                       ----------------- -------------------
Exercisable, March 31, 2001                         --               $  --
                                       ----------------- -------------------
Weighted average fair
 value of options granted                        $0.25
                                       -----------------


                                       16

<PAGE>


                                                 March 31, 2001
                                       -------------------------------------
                                                           Weighted Average
                                                 Shares      Exercise Price
                                       ----------------- -------------------
Non-employees
Outstanding, beginning of period             1,866,062                $1.44
Granted or Vested                                   --                   --
Exercised                                           --                   --
Forfeited                                           --                   --
                                       ----------------- -------------------
Outstanding, March 31, 2001                  1,866,062                $1.44
                                       ----------------- -------------------
Exercisable, March 31, 2001                  1,866,062                $1.44
                                       ----------------- -------------------
Weighted average fair
 value of options granted                        $1.71
                                       -----------------

The following table summarizes information about fixed stock options outstanding
at March 31, 2001:
<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 Price
         prices                   at 03/31/01           Life        Price    at 03/31/01
         ---------------------- -------------- -------------- ------------ -------------- ---------------
         Non-employees
         $0.4818-$2.062            1,866,062      5.72 years       $1.44      1,866,062           $1.44

</TABLE>

Note 12-- Income Taxes

The components of deferred income tax are as follows:

                                 Inception           Inception
                             (December 16,       (December 16,
                            1997) to March      1997) to March
                                  31, 2001            31, 2000
                           ----------------  -----------------
Net operating loss             $1,226,064           $ 368,644
Stock-based compensation          581,742             562,892
Valuation allowance            (1,807,806)           (931,536)
                           ----------------  -----------------

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

From  inception  to March 31,  2001,  the Company had a net  operating  tax loss
carryforward  of  approximately  $3,606,072,  which  expires 2019 and 2020,  and
temporary  differences  related to stock-based  compensation  of  $1,895,237.  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.


                                       17
<PAGE>


Note 13-- Earnings per Share


Basic and Diluted EPS Computation:             March 31, 2001  March 31, 2000
                                             ---------------- ---------------

Net loss applicable to Common Stockholders         $(231,785)     $(441,224)
                                             ---------------- ---------------
Weighted average shares outstanding              10,697,668       6,853,089
                                             ---------------- ---------------
Basic and Diluted EPS                              $  (0.02)       $  (0.06)
                                             ---------------- ---------------

For the three  months ended March 31, 2001 and 2000,  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
$231,785  for the three  months  ended  March 31,  2001.  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-- Subsequent Events

The Company is currently  negotiating  the  resolution  of a dispute with Swartz
Private  Equity,  LLC over a $100,000  non-usage  fee related to the  Investment
Agreement  dated  May 19,  2000 (see Note 9).  No legal  action  is  pending  or
threatened and both parties are working to resolve the matter.


                                       18

<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 the next twelve months,  we must raise  approximately  $4,500,000 to
complete  the  development  of the Ebaf  Assay and the  Telomerase  Assay and to
gather the  preclinical  data for the FDA. If we are  successful  in raising the
capital  required,  we  estimate  that it will take  approximately  10 months to
complete the  development of the Ebaf Assay and to gather its  preclinical  data
and we  estimate  that it will take  approximately  14 months  to  complete  the
development of the Telomerase  Assay and to gather its  preclinical  data. It is
our understanding  that preclinical data will be used to determine the extent of
the clinical trial.  The clinical trial is necessary to obtain FDA approval.  If
the  preclinical  data is acceptable to DOCRO and us, then we will meet with the
FDA to determine  the extent of a clinical  trial.  We estimate  that a clinical
trial for the Ebaf Assay will last  approximately  8-12  months and will cost us
$8-$10 million.  We estimate that a clinical trial for the Telomerase Assay will
last approximately 8-12 months and will cost us $8-$10 million.

     Cash Requirements

     During the next twelve months, we will require approximately $4,500,000. Of
this amount,  $1,495,000 is required by our agreement  with DOCRO to develop the
Ebaf  Assay  and to  gather  the  preclinical  data for the FDA,  $1,859,000  is
required  by our  agreement  with DOCRO to develop the  Telomerase  Assay and to
gather the preclinical  data for the FDA,  $124,527 is required by our sponsored
research  agreement  with  UMB,  $400,000  is our  estimate  of the cost for Dr.
Tabibzadeh's  continued  scientific  investigation  of  ebaf  for one  year  and
$600,000 is our estimate of the operating  expenses of the Company for one year.
There is no assurance that the $4,500,000  will be available to us on acceptable
terms when we needed it. Any additional capital may involve substantial dilution
to the interests of our existing shareholders.

     Product Development and Research Plan for the Next Twelve Months

         Ebaf Assay
         ----------
     If we are  successful  in  raising  the  $1,495,000  required,  DOCRO  will
complete the  development of the Ebaf Assay and will then gather the preclinical
data for the FDA. We estimate the  development  and data gathering  process will
take about 10 months. Our agreement with DOCRO states that DOCRO will assess the
current  technical  and clinical  performance  of the existing  ebaf reagents as
provided by Dr.  Tabibzadeh.  DOCRO must then develop purified ebaf antigens for
all four known forms of ebaf protein expressed in human tissue. Next, DOCRO will
raise a variety of  monoclonal  antibodies  and  polyclonal  antibodies to these
various  antigens  to  determine  if any ebaf  protein is  overexpressed  in the
tissue,  blood,  other fluids of people  diagnosed with  colorectal  cancer when
compared to similar  specimens  from  apparently  healthy,  normal people and to
specimens from people diagnosed with other malignant or non-malignant  diseases.
If an ebaf  protein is  determined  by DOCRO to be  overexpressed  in  malignant
disease and not in  non-malignant  disease or apparently  healthy normals and we
agree,  DOCRO will then develop an enzyme  immunoassay  for such ebaf protein to
confirm  the results in the blood or other fluid  specimens  of a  statistically
significant number of patients (maximum of 400).


                                       19

<PAGE>


         Telomerase Assay
         ----------------
     If we are  successful  in  raising  the  $1,859,000  required,  DOCRO  will
complete the development of the Telomerase Assay and will gather the preclinical
data for the FDA. We estimate the  development  and data gathering  process will
take about 14 months. Our agreement with DOCRO states that DOCRO will assess the
current technical and clinical  performance of the existing  telomerase reagents
as  provided  by Dr.  Highsmith,  then for DOCRO to develop  or obtain  purified
telomerase  antigens  (including  various peptides and, if possible,  native and
recombinant  protein,  for known forms of the  telomerase  protein/nucleic  acid
complex)  expressed  in  humans.  DOCRO  will then  raise or obtain a variety of
monoclonal  antibodies  and polyclonal  antibodies to these various  antigens to
determine if any telomerase antigen is overexpressed in the tissue, blood, other
body fluids,  and other  specimen  matrices from humans  diagnosed  with lung or
other cancers when compared to similar specimens from apparently healthy, normal
humans and from a variety of humans diagnosed with other non-malignant diseases.
Further,  if a telomerase  antigen is determined by DOCRO to be overexpressed in
malignant disease and not in non-malignant disease or apparently healthy normals
and  Lexon  agrees,  DOCRO  shall  develop  an  enzyme  immunoassay  for  such a
telomerase  antigen to confirm the results in the blood or other fluid  specimen
matrix of a statistically significant number (maximum of 400) of patients.

     Expected Purchase or Sale of Plant and Significant Equipment

     None.

     Expected Significant Changes in Number of Employees.

     None.


                                       20
<PAGE>

                            PART II OTHER INFORMATION

ITEM 1  LEGAL PROCEEDINGS

     None

ITEM 2  CHANGES IN SECURITIES AND USE OF PROCEEDS

     Our notes to the financial  statements for the three months ended March 31,
2001 contain  details  about our sales of common  stock  during the period.  The
financial  statements  for  the  three  months  ended  March  31,  2001  and the
accompanying notes are incorporated herein by reference. For each sale of common
stock during the first quarter ended March 31, 2001, we relied upon an exemption
from  registration  pursuant to  Regulation  D, Rule 506 and Section 4(2) of the
Securities Act of 1933, as amended.

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

     None

                                       21
<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 15, 2001


                                       22