SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549
                             ______________________

                                   FORM 10-KSB

                             Annual Report Pursuant
                          to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

                            For the fiscal year ended
                                 March 31, 2004

                                    000-17454
                             ----------------------
                            (Commission file number)


                                NOXSO CORPORATION
                ------------------------------------------------
                (Name of registrant as specified in its charter)

          Virginia                                      54-1118334
 --------------------------------            ---------------------------------
 (State or other jurisdiction of             (IRS employer identification no.)
        incorporation)

1065 South 500 West, Bountiful, Utah 84010               (801) 296-6976
------------------------------------------      --------------------------------
 (Address of principal executive offices)       (Registrant's telephone number,
                                                      including area code)

Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, par
                                                            value $.01

         Check whether the issuer (1) 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 [ ]

         Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]

         Issuers revenues for its most recent fiscal year: None.

         The aggregate market value of the common stock held by non-affiliates
(i.e., does not include directors, executive officers or ten percent
stockholders identified in Item 11 hereof) of the issuer as of July 30, 2004 was
approximately $5,310,873.

         Shares outstanding of the registrant's common stock as of July 30 and
August 6, 2004: 11,787,150.

         Check whether the issuer has filed all documents and reports required
to be filed by section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes [X] NO [ ]

<PAGE>

                                NOXSO CORPORATION


                       TABLE OF CONTENTS TO ANNUAL REPORT
                                 ON FORM 10-KSB
                            YEAR ENDED March 31, 2004



                                     PART I

Item 1.    Description of Business.............................................3

Item 2.    Description of Properties..........................................10

Item 3.    Legal Proceedings..................................................11

Item 4.    Submission of Matters to a Vote of Security Holders................11

                                     PART II

Item 5.    Market for Registrant's Common Equity, Related Stockholder
           Matters and Small Business Issuer Purchases of Equity
           Securities.........................................................11

Item 6.    Management's Discussion and Analysis or Plan of Operation..........12

Item 7.    Financial Statements...............................................18

Item 8.    Changes In and Disagreements With Accountants on Accounting
           and Financial Disclosure...........................................18

Item 8A.   Controls and Procedures............................................18


                                    PART III

Item 9.    Directors and Executive Officers of the Registrant.................19

Item 10.   Executive Compensation.............................................20

Item 11.   Security Ownership of Certain Beneficial Owners and Management.....22

Item 12.   Certain Relationships and Related Transactions.....................23

Item 13.   Exhibits and Reports on Form 8-K...................................24

Item 14.   Principal Accountant Fees and Services ............................24

                                       2
<PAGE>

                           Forward-Looking Statements

         When used in this Form 10-KSB, in the Company's filings with the
Securities and Exchange Commission ("SEC"), in the Company's press releases or
other public or stockholder communications, or in oral statements made with the
approval of an authorized executive officer, the words or phrases "would be,"
"will allow," "intends to," "will likely result," "are expected to," "will
continue," "is anticipated," "estimate," "project," or similar expressions are
intended to identify "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements
specifically include, but are not limited to, project launch dates; dates upon
which revenues may be generated or received; the execution of agreements
relating to the dry stack masonry systems; plans to rely on strategic partners
to pursue commercialization of the Company's business plan; expectations
regarding the ability of the Company's products and systems to compete with the
products of competitors; acceptance of the Company's products and systems by the
marketplace as cost-effective; sufficiency and timing of available resources to
fund operations; plans regarding the raising of capital; the size of the market
for products and systems; plans regarding sales and marketing; strategic
business initiatives; intentions regarding dividends and the launch dates of the
Company's projects.

         The Company cautions readers not to place undue reliance on any
forward-looking statements, which speak only as of the date made, are based on
certain assumptions and expectations which may or may not be valid or actually
occur, and which involve various risks and uncertainties, including but not
limited to risk of a lack of demand or low demand for the Company's products and
systems; the inability to enter into commercial arrangements relating to the
Company's products and systems; competitive products and pricing, delays in
introduction of products and systems due to manufacturing difficulties or other
factors; difficulties in product development, commercialization and technology,
changes in the regulation of planned or possible construction projects and other
risks set forth in Item 6 "Risk Factors" and elsewhere herein. If and when
revenues commence, sales may not reach the levels anticipated. As a result, the
Company's actual results for future periods could differ materially from those
anticipated or projected.

         Unless otherwise required by applicable law, the Company does not
undertake, and specifically disclaim any obligation, to update any
forward-looking statements to reflect occurrences, developments, unanticipated
events or circumstances after the date of such statement.


                                     PART I

Item 1. Description of Business

Company Background

         NOXSO Corporation (the "Company") was incorporated in Virginia on
August 28, 1979. Until June 1997, the Company was principally engaged in
developing, testing, and marketing a dry post-combustion emission control
technology process which used a regenerable sorbent to remove a high percentage
of the pollutants which cause "acid rain" and ground level ozone from flue gas
generated by burning fossil fuel.

         In 1997, an involuntary bankruptcy petition was filed against the
Company in the United States Bankruptcy Court in the Eastern District of
Tennessee. On June 4, 1997, the Company consented to the jurisdiction of the
Court and was adjudicated bankrupt. The Company converted the bankruptcy to a
proceeding under Chapter 11 of the Bankruptcy Code. Subsequently, the Company
operated as a debtor-in-possession in the proceeding.

         The Company's plan of reorganization was based on two principal
elements. These two elements were the sale of its Tennessee Facility as well as
the location of a site and the obtaining of funding (including reinstatement of
DOE funding) to construct a commercial-size demonstration of the NOXSO Process.
The Company sold the Tennessee Facility; however, the Company was unable to
effect the commercial demonstration of the NOXSO process. Accordingly, the
Company filed a second amended plan of reorganization that resulted in
liquidation of the Company's assets.

                                       3
<PAGE>

         On December 2, 1999, the Bankruptcy Court issued an Order confirming
the Company's second amended plan of reorganization under Chapter 11 of the
Bankruptcy Code. Pursuant to the terms of the Order, the Company was authorized
to separately transfer the corporate entity and it's assets. The proceeds from
these transfers were to be used for the distributions to be made pursuant to the
second amended plan, which will be in full and final satisfaction, settlement,
release and discharge as against the Company, of any and all Claims and
Interests of any nature whatsoever that arose before December 2, 1999.

         The Company's second amended plan of reorganization provided for
conveyance of the corporate entity to a group including a former officer and
Director of the Company, for $50,000. This group would own 90% of the
outstanding shares of the new common stock, and the remaining 10% of the new
common stock will be distributed to certain of the creditors. Simultaneously,
the Company's sale of assets free and clear of liens was approved.

         In connection with the distributions under the Company's second amended
plan of reorganization, equity interests based upon ownership of existing
securities or rights to acquire existing securities, including without
limitation vested and non-vested warrants, options, preemption rights or other
rights, were cancelled on the consummation date, and the equity interests
received nothing on account of those interests.

         The consummation date of the Order was effective May 25, 2000,
whereupon the Company, as a corporate entity, recorded the transactions on its
books to give effect to the terms of the Order, as described above. These
transactions comprised the elimination of fixed assets (which had been fully
reserved), recording the expected recovery of preference payments, recording of
liabilities not subject to compromise, the liquidation of prepetition
liabilities and net shareholder's equity, and the recapitalization of the
Company pursuant to the Order.

         In December 2002, the United States Bankruptcy Court held a final
hearing and issued a final order closing the Chapter 11 case.

         On April 22, 2003, Patronus Industries, LC and Heber C. Bishop
(collectively, the "Buyers") acquired 631,650 shares of common stock (the
"Shares") of the Company from Robert Long, Robert Platek, Spencer Levy and
Robert Salluzzo (collectively, the "Sellers") in consideration for $250,000 (the
"Acquisition"). Pursuant to the terms of a Stock Purchase Agreement by and
between the Buyers and the Sellers, $5,000 of the purchase price was paid in
cash and the remaining $245,000 is being paid in consideration for a promissory
note executed by the Buyers (the "Note"). The Note is non-interest bearing and
due and payable in full on the thirty (30) day anniversary of the Note. The Note
is secured by (i) a pledge agreement executed by the Buyers in favor of the
Sellers whereby the Shares were pledged as collateral, (ii) a guarantee executed
at the request of Buyers by Wynn Westmoreland and Santa Rosa Corporation, a
Nevada corporation and (iii) a Trust Deed executed by Santa Rosa Corporation as
Trustor in favor of the Sellers as beneficiaries relating to approximately 86
acres of real property in Utah. Wynn Westmoreland is a business associate of the
Buyers and Santa Rosa Corporation is an associate of Mr. Westmoreland. As of the
date of this filing, the amounts owing on the Note had not been paid.

         As a condition precedent for the closing of the Stock Purchase
Agreement, the Buyers also arranged for International Construction Concepts,
Inc., a Nevada corporation, to lend $100,000 to the Company pursuant to the
terms of a demand note that bears interest at the rate of 10% per annum. The
proceeds from this loan were used by the Company to pay all of its outstanding
liabilities, other than the liability resulting from the demand note.

         The Shares acquired by the Buyers in connection with the Stock Purchase
Agreement represented 55.6% of the Company's issued and outstanding shares of
common stock at the time of the purchase, giving the Buyers voting control of
the Company. In addition, on April 22, 2003 Messrs. Levy and Platek resigned as
officers and directors of the Company and Mr. Long resigned as an officer, but
not as a director, of the Company. Mr. Long then appointed Messrs. Bishop and
Richard J. Anderson to fill the vacancies on the board of directors created by
the resignations of Messrs. Levy and Platek. Mr. Anderson was also appointed to
act as president of the Company. Mr. Anderson is the sole manager of Patronus
Industries, LC.

         Effective April 30, 2003, Mr. Robert Long resigned as a member of the
Company's board of directors. Effective May 1, 2003, Mr. Robert Arbon was
appointed to fill the vacancy created by Mr. Long's resignation.

                                       4
<PAGE>

Business of Issuer

         The Company believes that the dry-stacked masonry wall systems it
employs provides advantages over other construction products and systems,
including: competitive cost, thermal dynamic performance, weather resistant,
fire resistant, security, environmentally friendly, adaptability, widely
available raw materials and strength due to proprietary installation methods
employed. Additionally, the Company believes that its overall system of products
combined with its installation procedures can bring economic advantages to local
economies because of the ability of the Company's direct associates to employ
and train local people in the use and installation of these products, the newly
trained people become synergistic elements in the overall positive influence and
benefit to the economy of their areas. Thus, the Company benefits from the sale
of its products and the local areas benefit from the increased availability of
local housing units and an increase in a skilled work force.

         During the past year of pre-operation preparation, the Company and
SouthWest Management Company ("SouthWest"), a significant operational associate
and affiliate of the Company, discussed the need to have a fully-trained and
effective cadre of trainers and supervisors for the projects being negotiated
and prepared in Puebla, Mexico. SouthWest, which is also the managing member of
SWAA Tepeaca Holdings, LC (see, "Recent Acquisitions"), initiated a series of
small-to-medium-sized housing development and construction projects in Florida
with a group of investors un-related to the Company, utilizing SouthWest's
system of construction. These projects have enabled SouthWest to train personnel
in its system of construction and operations, along with providing the Company
with a `hands-on operational demonstration laboratory of the system, the
workforce and actual completed units without commensurate costs for the Company.
SouthWest and the Company have a working agreement for the management and
training for initial block production operations and construction personnel for
the Mexico projects.

         This period of the development and construction of the housing projects
in Florida, has demonstrated not only positive results relating to the wall
system itself, but also the acceptance of the SouthWest's proprietary system of
construction. While the Company does not own the Florida projects, these
projects have provided positive, hands-on operational evidence to the decision
makers that have visited and toured the Florida projects from the unions and
other entities, with whom the Company has worked to obtain contractual
commitments for housing and financing arrangements in Puebla, Mexico.

         During the Company's 4th quarter, following numerous meetings and
discussions with the potential decision makers of the entitles with whom and for
whom projects and agreements were being negotiated, it was determined that in
order to provide the assurances being required, the Company would need to
enhance its focus and operational direction. In so doing, it was determined that
control of the wall system components production would not be sufficient to meet
the requirements of the contracts being negotiated. Additionally, supervisory
control of the actual system of construction would be necessary.

         In discussions and negotiations with SouthWest it was agreed that the
Company, utilizing and expanding the agreement with SouthWest, would control all
phases of the projects. This enhanced focus of the Company required
organizational and operational changes. The Company determined that the
potential capital requirements for the production operations coupled with
enhanced focus for the development and construction operations would need to be
the `first-call' on capital. Concurrent with that determination was the
necessity to obtain control of all of the negotiations, agreements and contracts
for the development and construction of housing using the system of SouthWest
and the wall system that had been done in Puebla, Mexico.

         In order to refocus capital requirements and availability, as of March
15, 2004, the Company entered into a Master Lease Agreement ("MLA") with Aguila
Leasing Group a division of Aguila Ventures Corporation ("Aguila"), an associate
company of SouthWest. Under the MLA Aguila agrees to provide all of the
necessary equipment required by the Company for all facets of its enhanced focus
of operations, both domestically and in Mexico; and, the Company agrees to lease
all of the machinery and equipment needed to produce concrete blocks, surface
bonding material and inserts, together with all other equipment needed to meet
the requirements of its expanded focus under the MLA from Aguila. The first
transaction under the Aguila agreement was for the Company to sell its rights to
the mobile block plant being manufactured, thereby relieving the Company of the
capital responsibility to fund the balance of the purchase. As a part of that
sale, Aguila agreed to accept and pay the notes payable and related accrued
interest used by the Company as partial payment to acquire the rights. Aguila
also agreed to credit the Company for the security deposit and lease payments
the balance of amount extended by the Company in the original purchase, toward
the leasing of a completed block plant to be provided by Aguila. The second
transaction under the Aguila agreement was for the Company to sell and leaseback

                                       5
<PAGE>

the mobile surface bonding plant it owned. Under this transaction, Aguila agreed
to accept the notes payable and related accrued interest used by the Company as
partial payment to acquire the rights. Aguila also agreed to credit the Company
toward the security deposit and lease payments the balance of the amount
extended by the Company in the original purchase.

         Then, in April, 2004, in order to obtain control of all of the
negotiations, agreements and contracts for the development and construction of
housing using the system of SouthWest and the wall system that had been done in
Puebla, Mexico, the Company, in concert with SouthWest, held discussions with
the owners of the Mexican corporation, Grupo Industrial Potro S.A. de C.V.
("Grupo"). Grupo was the entity with whom SouthWest had agreed to work in the
development and construction of housing in Puebla, Mexico. Those discussions
resulted in the acquisition of Grupo becoming a wholly owned subsidiary of the
Company. The Company plans to use Grupo to assist it in developing its
constructions systems, project development and the products business in Mexico.

         During the month of May 2004, the Company hosted a tour of the Florida
projects for union officials from Puebla, Mexico, representing in excess of
15,000,000 union members in Mexico. These officials are seeking affordable
housing sources for their members, and had been in ongoing discussions with the
principals of Grupo for a period of time. Since neither Grupo, SouthWest nor the
Company had any housing units in Mexico, the need to see actual construction and
completed units became a significant step in the negotiations with potential
project partners that own real estate; that are interested in participating in
the development of such real estate, and that have the resources to provide
qualified buyers and guaranteed payment for completed houses. The hosted tour of
the Florida operations of SouthWest were extremely positive and resulted in the
agreement described below.

         In June, 2004, the Company and its wholly owned subsidiary, Advanced
Construction and Manufacturing Technologies De Mexico S.A. de C.V., entered into
an Agreement of Association for Development of Real Property and Construction of
Houses in Mexico (the "CIFASA Agreement") with Constructor and Inmobilaria
Cifasa S.A. de C.V. ("CIFASA") and Southwest Management Solutions Corporation
("SMSC"). Under the Agreement, five real estate projects are expected to be
developed in and adjacent to the city of Puebla, in the state of Puebla, Mexico.
The development and construction of the first four projects have been approved
by local authorities for approximately 772 single-family residential houses -
comprised of 520 one-bedroom houses in duplex format and 252 three-bedroom
houses in duplex format. The fifth project is a multi-phase mixed-use project
that is anticipated to include approximately 7,000 single-family residential
homes, several commercial sites and school, hospital and shopping center sites.

         Under the CIFASA Agreement, CIFASA is to provide the real property,
together with all development, construction and related `licenses' or permits,
and then, enter into certain sales arrangements that provide for guaranteed
sales to pre-qualified buyers together with payment for such sales within 3 days
of completion of the houses by government-based programs and commercial banks
domiciled in Mexico, and, in addition provide other related services. The
Agreement provides that the Company is to obtain and provide development and
construction financing, provide construction services using the proprietary
construction systems of SMSC, staff the development and construction phases of
the projects and provide other services. Neither party has in place the required
sales guarantees, development or construction financing to complete the projects
and there can be no assurance that such guarantees and financing will be
available or, if available, that it will be obtained on favorable terms. In
addition, the Agreement contemplates that detailed definitive master development
and construction agreements relating to the projects will be drafted and
executed. Although all parties are in general agreement as to such master
development and construction agreements, there can be no assurance that such
agreements will be successfully consummated, and, as a result, until such
agreements are executed, and the guarantees and financings are achieved, there
can be no assurance that the projects will be successfully completed.

Recent Acquisitions and Arrangements

         Since the date of the Acquisition, the Company has been seeking to
enter into arrangements for the acquisition of proven construction components,
products and systems that can be combined and utilized to produce and supply
components of dry-stacked masonry wall systems for residential, commercial and
industrial buildings, as well as other complimentary construction elements and
the acquisition of real property that may be used in connection with a site to
establish a production facility to produce such components and products to be
available for construction projects. In preparation to commence operations by
supplying products and systems in and related to the dry-stacked masonry wall
system, the Company has made the following acquisitions.

                                       6
<PAGE>

         In May 2003, the Company also began paying SouthWest Management Company
and its independent contractors for site preparation, development, supervisory,
security along with public and governmental relations services in connection the
Company's efforts to utilize the Property as a site to produce and supply
components of dry-stacked masonry wall systems for residential construction
projects in Puebla, Mexico and in connection with other opportunities.

         On May 14, 2003, the Company and SWAA Tepeaca Holdings, LC ("SWAA")
closed on a Purchase and Sale Agreement whereby the Company purchased
approximately twenty-one acres of real property (the "Property") made up of
several individual parcels that are collectively located at one site in the
immediate vicinity of the city of Tepeaca, State of Puebla, Country of Mexico.
This Property is anticipated to be used as a site to establish the Company's
proposed production facility as described above. In consideration for the
Property, the Company issued to SWAA (i) an initial promissory note in the
principal amount of $10,000 US, as an earnest money deposit, which promissory
note bears interest at the rate of ten percent per annum, and is due and payable
in a single balloon payment on the one year anniversary of the note; (ii) a
promissory note in the principal amount of $1,640,000 US, which promissory note
bears interest at the rate of ten percent per annum, is secured by the Property
and is due and payable in a single balloon payment on the earlier of (a) on
demand or (b) on the one year anniversary of the note, which note was renewed
for a period of six months as of the anniversary date, and (iii) 5,167,150
shares of the Company's restricted common stock.

         On May 14, 2003, the Company acquired all of the issued and outstanding
securities of Advanced Construction & Manufacturing Technologies De Mexico SA De
CV or ACMT De Mexico ("ACMT"), a Mexican corporation domiciled in Mexico City,
Mexico. ACMT, as a wholly-owned subsidiary of the Company, holds title to the
Property. Also, it is anticipated that ACMT will be used by the Company in
connection with its production facility, as described above. As consideration
for the ACMT purchase, the Company issued to the owners of ACMT (i) promissory
notes in the aggregate principal amount of $150,000 US, which promissory notes
bear interest at the rate of ten percent per annum, and are due and payable on
the earlier of (a) the one year anniversary of the notes, which notes were
renewed for a period of six months as of the anniversary date, or (b) on demand,
and (ii) 350,000 shares of the Company's restricted common stock.

         On May 14, 2003, the Company also acquired all of the issued and
outstanding securities of International Construction Concepts, Inc. ("ICC"), a
Nevada corporation. ICC has relationships that may be utilized in connection
with the Company's proposed acquisition of constructions systems used to produce
and supply components of dry-stacked masonry systems. As consideration for the
ICC purchase, the Company issued to the owners of ICC 100,000 shares of the
Company's restricted common stock. The Company determined that it would be most
efficient and corporately effective to operate ICC as a division and utilize it
contacts and relationships within the Company's existing structure.

         On May 30, 2003, the Company acquired from SouthWest Management Company
("SouthWest") its existing rights to purchase from the manufacturers a mobile
block processing plant and related know how in consideration for 400,000 shares
of the Company's restricted common stock, a promissory note in the principal
amount of $250,000 and the assumption of obligations in the approximate
principal amount of $440,000 relating to the plant. Additionally on this date,
the Company acquired from Santa Rosa Corporation, an affiliate of SouthWest, a
completed mobile surface bonding plant and related know-how in consideration for
335,000 shares of the Company's restricted common stock, a promissory note in
the principal amount of $245,000 and the assumption of obligations in the
approximate principal amount of $25,000 relating to the plant. On this date the
Company also acquired the rights of SouthWest Management Company under a license
agreement granting the right to utilize the Haener Block production system in
Mexico and part of the United States in consideration for 400,000 shares of the
Company's restricted common stock, the assumption of obligations under the
initial license agreement and the assumption of obligations in the approximate
principal amount of $140,000.

         On December 18, 2003, the Company and SWAA Tepeaca Holdings, LC
("SWAA") concluded negotiations whereby, in January 2004 the Company issued
1,550,000 shares of its restricted Common Stock as payment in full for the $
389,634 that the Company owed SWAA for funds expended, cash advances and accrued
interest on the SWAA promissory note through December 31, 2003. The immediate
effect on the financial statements is the reduction of current liabilities by
that amount and an increase stockholder's equity by the same amount.

                                       7
<PAGE>

         On December 22, 2003, the Company negotiated the acquisition of an
undivided interest in 1,600,000 tons of "in-situ" Perlite from the Foundation
for Advanced Research ("FAR") in exchange for 1,600,000 shares of its restricted
Common Stock. The Company completed and executed an Asset Purchase Agreement as
of January 21, 2004. Perlite is a mineral with insulating and smoothing
qualities that the Company believes can be profitably utilized to benefit and
enhance the value of its products. It is estimated that the processed market
value of refined perlite, depending on which stage of the refining process the
product is utilized, ranges in value from a low of approximately from $15.00 per
ton for agricultural purposes to potentially in excess of $110.00 per ton when
used as commercial products and industrial additives. FAR carried the asset on
its books and records at the historically appraised fair market value of such
"in-situ" Perlite of $5.00 per ton. While the Company and FAR believe and agree
that the value of $5.00 per ton of Perlite is economically appropriate, the
Company has been unable to obtain sufficient current independent data to verify
that historical valuation data reflects current market conditions. Therefore,
since the Perlite was acquired by the Company with shares of its restricted
Common Stock, valuation of the Perlite purchase, for financial statement
purposes was reported using the value of the shares of restricted Common Stock
at the value of the most recent transaction, wherein shares of restricted Common
Stock were involved. That value was $1.25 per share for the cash purchase of
shares of restricted Common Stock. The Company intends to use the processed
Perlite in several applications with its concrete block and related products
production operations, initially in the construction operations in Mexico.

         Following a series of meetings with officers of the Haener Block in
January, 2004, it became evident that due to some irreconcilable issues, the
effort to move forward under the license agreement acquired would be extremely
expensive and severely restrictive. The Company determined that due to
structural system changes initiated by Haener Block combined with an intractable
position on past-due minimum royalties accruing during a period when the mold
manufactured from the specifications delivered to the license holder were wrong,
made the availability for reasonable negotiations impossible. On February 29,
2004, the Company, in a mutually accommodating agreement for both parties, sold
the license rights back to SouthWest Management Company.

         Effective March 15, 2004, the Company entered in to the a Master Lease
Agreement ("MLA") with Aguila Leasing Group, a division of Aguila Ventures
Corporation ("Aguila") for the purpose of leasing all of the equipment needed by
the Company to produce, transport, develop and construct products and structures
in Puebla, Mexico. As a part of that agreement, the Company agreed to sell its
existing rights to purchase from the manufacturer a mobile block processing
plant currently in process for $389,093, and to lease the equipment when it is
completed. Aguila agreed to assume promissory notes in the principal amount of
$250,000, used as partial payment to initially purchase the rights, together
with the accrued interest thereon that approximates $21,900 The balance of the
sales price is being paid for by Aguila with the recognition that part of the
price will be a 5% security deposit, estimated to be $40,000, on a completed
block production plant; then, approximately $37,550 of the purchase price shall
be utilized to make the first and last month's lease payments; and, the
remaining amount of approximately $39,643 shall be ratably offset against the
remaining lease payments over the term of the lease.

         An integral part of the MLA negotiations was that the Company agreed to
sell its completed mobile surface bonding plant currently being readied for
shipment to Puebla, Mexico, to Aguila for approximately $245,000, and, then to
lease-back the equipment from Aguila under the terms of the MLA. Aguila agreed
to assume promissory notes in the principal amount of $120,000, used as partial
payment to initially purchase the rights, together with the accrued interest
thereon that approximates $10,520, and a final payment of $25,000 due to the
manufacturer. The balance of the sales price is being paid for by Aguila with
the recognition that part of the price will be a 5% security deposit of $13,250;
then, $12,430 of the purchase price shall be utilized to make the first and last
month's lease payments; and, the remaining amount of approximately $63,740 800
shall be ratably offset against the remaining lease payments over the term of
the lease.

         On May 5, 2004, the Company entered into a Security Purchase Agreement
with two sole owners of Grupo Industrial Potro S.A. DE C.V. ("Grupo"), domiciled
in Puebla, Mexico. The agreement is effective as of April 29, 2004. Under the
terms of the agreement, the Company acquired all of the outstanding equity
securities of Grupo in consideration for promissory notes in the aggregate
principal amount of $100,000 and 350,000 shares of the Company's restricted
common stock. As a result, Grupo became a wholly owned subsidiary of the
Company. The Company plans to use Grupo to assist it in developing its
constructions systems, project development and the products business in Mexico.

                                       8
<PAGE>

         On June 22, 2004, the Company, through its wholly owned subsidiary,
Advanced Construction and Manufacturing Technologies De Mexico S.A. de C.V.,
entered into the CIFASA Agreement. The Company is moving forward under the
enhanced focus to finalize detailed development and construction agreements as
called for in the CIFASA agreement. Preliminary drafts have been prepared by
CIFASA and just received by the Company. They are being translated for review by
all parties and counsel. These agreements, when completed, are expected to
provide the basis for additional projects in Puebla, Mexico.

         The Company expects to enter into additional agreements relating to its
acquisition of construction systems used to produce and supply components of
dry-stacked masonry systems as well as other complimentary construction elements
and begin production utilizing such systems. However, no definitive arrangements
have been executed and there can be no assurance that any definitive
arrangements will be completed or that the Company will have sufficient funding
to execute its business plan or that its business plan will be successful.

Distribution and Sales

         The Company has begun to develop direct associations with businesses
that are in the construction trades in Puebla, Mexico, that are familiar with
the construction methods required to use the Company's products, have projects
available where the Company's products meet the necessary requirements, and sell
products directly to such businesses.

         It is anticipated that initially the products would be used in the
residential market. Preliminary meetings, discussions and negotiations have
indicated that this plan for distribution of the products will allow the Company
to enter targeted markets with minimum of costs and expense related to
marketing.

         The Company recognizes the requirements to locate its potential
production site in an area where the raw materials necessary for cost effective
operations were readily available, and where finished products would have ready
access to the transport and distribution system. The Company believes that it
has addressed this issue with respect to its anticipated operations in the
Puebla, Mexico by acquiring the Property. The Property is anticipated to be used
as a site to establish a production facility. During the past 7 months, initial
development of the property has commenced with manufacturing pad sites being
created, and excavations for utilities and footings being completed.

Construction Materials

         The construction materials used in the Company's dry-stacked masonry
wall systems are widely available. The Company has not entered into arrangement
for the supply of the raw materials that it anticipates using, but, due to wide
availability, the Company does not anticipate any difficulty in entering into
such arrangements.

Competition

         The market for residential, commercial and industrial buildings,
whether using a dry-stacked masonry wall system or other construction methods,
is intensely competitive. The Company expects competition to continue and likely
intensify in the future. Many of the Company's potential competitors have longer
operating histories, greater name recognition, larger installed customer bases
and significantly greater financial, technical and marketing resources than the
Company. Such competition could materially adversely affect the Company's
business, operating results and financial condition. The Company may face
intense competition from other companies directly involved in the same business
and also from many other companies offering building products that can be used
in lieu of those offered by the Company. Many of these companies in related
businesses are substantially larger and have more capital and other resources
than the Company. However, the Company does have a definite competitive
advantage in the use and implementation of the proven proprietary SouthWest
system of block construction of houses. There can be no assurance that the
Company will be able to compete successfully against current or future
competitors or that competitive pressures faced by the Company will not
materially adversely affect the Company's business, operating results or
financial condition. Moreover, there can be no assurance that competitors will
not develop building products that are superior to those that are planned to be
utilized by the Company.

                                       9
<PAGE>

Government Regulation

         The Company, as it continues to develop its business plan, will be
subject to the governmental regulations of the country of Mexico along with the
states, regions and municipalities in which it operates. The anticipated
projects where the Company's products will be used will be subject to various
laws and governmental regulations, such as zoning regulations relating to the
projects and developments where the Company's products are used. As required by
local statutes, the Company would obtain and keep current various licenses,
permits and regulatory approvals for its products that are used in the
development projects. The Company believes that it has made arrangements that
will result in its compliance with all laws, rules and regulations applicable to
its projects.

         Due to the increasing levels of development in the areas of Mexico
where the Company currently plans to focus its operations, it is possible that
new laws, rules and/or regulations may be adopted that could effect the use of
its products and systems in proposed projects. The enactment of such laws, rules
or regulations in the future could have a negative impact on the Company's
project growth or profitability, which could decrease its projected revenues or
increase its costs of doing business.

         The Company believes that it has involved qualified and competent
professionals who have been involved in significant discussions, negotiations
and subsequent acquisitions to help insure compliance with all applicable
governmental approvals and regulations. The Company is also seeking to develop
direct associations with businesses that are in the construction business,
familiar with the construction methods required to use the Company's products,
have projects available where the Company's products meet the necessary
requirements, and sell products directly to such businesses.

Research and Development

         The products that are expected to be the core production business of
the Company as it develops its overall business plan have all been tested by the
inventors and others over the years. As a result, the Company does not
anticipate any expenditure for research and development related to its
operations in the near future.

Employees

         As of August 6, 2004, the Company had two contract employees; one works
for the Company on a part-time basis one works on a full-time basis. The Company
presently maintains its business office at 1065 South 500 West, Bountiful, Utah
84010.

Item 2. Description of Properties.

         Our principal offices are located at 1065 South 500 West, Bountiful,
Utah, under the terms of a lease with an unaffiliated lessor, which expires on
June 30, 2005. The Company believes that its current office space will be
adequate to meet the needs of current and expected growth for the foreseeable
future. It may, however, require additional office space in the future depending
upon the growth of the business.

         The Company, through ACMT, purchased approximately twenty-one acres of
real property made up of several individual parcels that are collectively
located at one site in the immediate vicinity of the city of Tepeaca, State of
Puebla, Country of Mexico. This Property is anticipated to be used as a site to
establish the Company's proposed production facility as described above. The
Property was not acquired for the primary purpose of generating capital gain or
income from leases or similar arrangements. In consideration for the Property,
the Company issued to SWAA (i) an initial promissory note in the principal
amount of $10,000 US, as an earnest money deposit, which promissory note bears
interest at the rate of ten percent per annum, and is due and payable in a
single balloon payment on the one year anniversary of the note; (ii) a
promissory note in the principal amount of $1,640,000 US, which promissory note
bears interest at the rate of ten percent per annum, is secured by the Property
and is due and payable in a single balloon payment on the earlier of (a) on
demand or (b) on the one year anniversary of the note, which note was renewed
for a period of six months as of the anniversary date, and (iii) 5,167,150
shares of the Company's restricted common stock.

                                       10
<PAGE>

Item 3. Legal Proceedings.

         The Company is not a party to, nor are its properties the subject of,
any pending legal proceedings and no such proceedings are known to the Company
to be threatened or contemplated by or against it.

Item 4. Submission of Matters to a Vote of Security Holders

         No matter was submitted to a vote of the security holders during the
4th quarter of the fiscal year covered by this report. On May 6, 2004,
subsequent to the end of the fiscal year, the Company held a Special
Stockholder's Meeting for the purpose of submitting to a vote the proposal to
amend the Company's Articles of Incorporation to increase the number of
authorized shares of capital stock from 20,000,000 to 100,000,000, comprised of
80,000,000 shares of common stock with a par value of $.01 per share and
20,000,000 shares of blank check preferred stock with a par value of $.01 per
share. The proposal passed with holders of 10,357,487 shares voting for the
proposal, holders of -0-- shares voting against the proposal and holders of 220
shares abstained from voting on the proposal.


                                     PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and
Small Business Issuer Purchases of Equity Securities

Dividend Policy

         To date, the Company has not paid dividends on its common stock. The
payment of dividends on the common stock, if any, is at the discretion of the
board and will depend upon the Company's earnings, if any, the Company's capital
requirements and financial condition, and other relevant factors. See Item 6.
"Management's Discussion and Analysis or Plan of Operation." The Company does
not intend to declare any dividends in the foreseeable future, but instead
intend to retain all earnings, if any, for use in the Company's operations.

Share Price History

         There has been very limited and sporadic trading of the Company's
common stock in the over-the-counter market in what is commonly referred to as
the "Electronic" or "OTC Bulletin Board" or the "OTCBB" under the trading symbol
"NXSO." The following table sets forth the high and low bid information of the
common stock for the periods indicated. The price information contained in the
table was obtained from America Online ("AOL") and its information suppliers.
Note that the over-the-counter market quotations reflect inter-dealer prices,
without retail mark-up, mark-down or commission, and that the quotations may not
necessarily represent actual transactions in the common stock. Also note that
there was no reported trading in the Company's securities from December 11, 2002
to March 31, 2004.

         Quarter Ended                              High              Low
         -------------                              ----              ---
         2002 (1)
         --------
         June 30...............................       $.10             $.10
         September 30..........................        --               --
         December 31...........................      $1.01             $.09

         Quarter Ended                              High              Low
         -------------                              ----              ---
         2003
         ----
         March 31 .............................        --               --
         June 30 ..............................        --               --
         September 30..........................        --               --
         December 31...........................        --               --
         2004
         ----
         March 31..............................        --               --

         (1) From June 13, 2002 through November 21, 2002 the stock was not
             quoted or traded.

                                       11
<PAGE>

Holders of Record

         At August 6, 2004, there were approximately 106 holders of record of
the Company's common stock. The number of holders of record was calculated by
reference to the Company's stock transfer agent's books.

Issuance of Securities

         In January 2004 the Company issued 1,550,000 shares of its restricted
common stock to SWAA as payment in full for the $ 389,634 that the Company owed
SWAA for funds expended, cash advances and accrued interest on the SWAA
promissory note through December 31, 2003.

         In January 2004, the Company acquired an undivided interest in
1,600,000 tons of "in-situ" Perlite ore from FAR in exchange for 1,600,000
shares of its restricted common stock.

         In May 2004, the Company acquired all of the outstanding equity
securities of Grupo in consideration for promissory notes in the aggregate
principal amount of $100,000 and 350,000 shares of the Company's restricted
common stock.

         The issuance of the securities in the transactions described above were
exempt from registration pursuant to Sections 4(2) and 4(6) of the Securities
Act of 1933 and pursuant to Regulations D and S as promulgated under the
Securities Act of 1933. The Company did not use an underwriter in connection
with these transactions.

Item 6. Management's Discussion and Analysis or Plan of Operation

         The following discussion and analysis provides information which
management believes is relevant to an assessment and understanding of the
Company's plan of operation. The discussion should be read in conjunction with
the consolidated financial statements and notes thereto.

Financial Position

         The Company had $4,702,642 in total assets and total liabilities of
$2,223,166 as of March 31, 2004. The Company's working capital deficit as of
March 31, 2004, was ($2,181,674). The Company does not currently have sufficient
funding to execute its business plan. The Company had $226 in total assets
(comprised entirely of cash) and total liabilities of $90,870 as of March 31,
2003. Working capital deficit as of March 31, 2003 was ($90,644). The Company
does not currently have sufficient funding to execute its business plan.

Plan of Operation

         At March 31, 2003, the Company had no business operations, and very
limited assets and capital resources. The Company's business plan was to seek
one or more potential business ventures that, in the opinion of management, may
warrant involvement by the Company.

         Since the date of the Acquisition, the Company has been seeking to
enter into arrangements for the acquisition of proven construction components,
products and systems that can be combined and utilized to produce and supply
components of dry-stacked masonry wall systems for residential, commercial and
industrial buildings, as well as other complimentary construction elements and
the acquisition of real property that may be used in connection with a site to
establish a production facility to produce such components and products to be
available for construction projects. In preparation to commence operations by
supplying products and systems in and related to the dry-stacked masonry wall
system, the Company has made the following acquisitions.

         In May 2003, the Company also began paying SouthWest Management Company
and its independent contractors for site preparation, development, supervisory,
security along with public and governmental relations services in connection the
Company's efforts to utilize the Property as a site to produce and supply
components of dry-stacked masonry wall systems for residential construction
projects in Puebla, Mexico and in connection with other opportunities.

                                       12
<PAGE>

         On May 14, 2003, the Company and SWAA closed on a Purchase and Sale
Agreement whereby the Company purchased approximately twenty-one acres of real
property made up of several individual parcels that are collectively located at
one site in the immediate vicinity of the city of Tepeaca, State of Puebla,
Country of Mexico. This Property is anticipated to be used as a site to
establish the Company's proposed production facility as described above. In
consideration for the Property, the Company issued to SWAA (i) an initial
promissory note in the principal amount of $10,000 US, as an earnest money
deposit, which promissory note bears interest at the rate of ten percent per
annum, and is due and payable in a single balloon payment on the one year
anniversary of the note; (ii) a promissory note in the principal amount of
$1,640,000 US, which promissory note bears interest at the rate of ten percent
per annum, is secured by the Property and is due and payable in a single balloon
payment on the earlier of (a) on demand or (b) on the one year anniversary of
the note, which note was renewed for a period of six months as of the
anniversary date, and (iii) 5,167,150 shares of the Company's restricted common
stock.

         On May 14, 2003, the Company acquired all of the issued and outstanding
securities of ACMT. ACMT, as a wholly-owned subsidiary of the Company, holds
title to the Property. Also, it is anticipated that ACMT will be used by the
Company in connection with its production facility, as described above. As
consideration for the ACMT purchase, the Company issued to the owners of ACMT
(i) promissory notes in the aggregate principal amount of $150,000 US, which
promissory notes bear interest at the rate of ten percent per annum, and are due
and payable on the earlier of (a) the one year anniversary of the notes, which
notes were renewed for a period of six months as of the anniversary date, or (b)
on demand, and (ii) 350,000 shares of the Company's restricted common stock.

         On May 14, 2003, the Company also acquired all of the issued and
outstanding securities of ICC. ICC has relationships that may be utilized in
connection with the Company's proposed acquisition of constructions systems used
to produce and supply components of dry-stacked masonry systems. As
consideration for the ICC purchase, the Company issued to the owners of ICC
100,000 shares of the Company's restricted common stock. The Company determined
that it would be most efficient and corporately effective to operate ICC as a
division and utilize it contacts and relationships within the Company's existing
structure.

         On May 30, 2003, the Company acquired from SouthWest Management Company
its existing rights to purchase from the manufacturers (i) a mobile block
processing plant and related know how in consideration for 400,000 shares of the
Company's restricted common stock, a promissory note in the principal amount of
$250,000 and the assumption of obligations in the approximate principal amount
of $440,000 relating to the plant. Additionally on this date, the Company
acquired from Santa Rosa Corporation, an affiliate of SouthWest, a completed
mobile surface bonding plant and related know-how in consideration for 335,000
shares of the Company's restricted common stock, a promissory note in the
principal amount of $245,000 and the assumption of obligations in the
approximate principal amount of $25,000 relating to the plant. On this date the
Company also acquired the rights of SouthWest Management Company under a license
agreement granting the right to utilize the Haener Block production system in
Mexico and part of the United States in consideration for 400,000 shares of the
Company's restricted common stock, the assumption of obligations under the
initial license agreement and the assumption of obligations in the approximate
principal amount of $140,000.

         On December 18, 2003, the Company and SWAA concluded negotiations
whereby, in January 2004 the Company issued 1,550,000 shares of its restricted
Common Stock as payment in full for the $384,373 that the Company owed SWAA for
funds expended, cash advances and accrued interest on the SWAA promissory note
through December 31, 2003. The immediate effect on the financial statements is
the reduction of current liabilities by that amount and an increase
stockholder's equity by the same amount.

         On December 22, 2003, the Company negotiated the acquisition of an
undivided interest in 1,600,000 tons of "in-situ" Perlite from FAR in exchange
for 1,600,000 shares of its restricted common stock. The Company completed and
executed an Asset Purchase Agreement as of January 21, 2004. Perlite is a
mineral with insulating and smoothing qualities that the Company believes can be
profitably utilized to benefit and enhance the value of its products. It is
estimated that the processed market value of perlite, depending on which stage
of the refining process the product is utilized, ranges in value from a low of
approximately from $15.00 per ton for agricultural purposes to potentially in
excess of $110.00 per ton when used as commercial products and industrial
additives. FAR carried the asset on its books and records at the historically
appraised fair market value of such "in-situ" Perlite of $5.00 per ton. While
the Company and FAR believe and agree that the value of $5.00 per ton of Perlite
is economically appropriate, the Company has been unable to obtain sufficient
current independent data to verify that historical valuation data reflects
current market conditions. Therefore, since the Perlite was acquired by the
Company with shares of its restricted Common Stock, valuation of the Perlite

                                       13
<PAGE>

purchase, for financial statement purposes was reported using the value of the
shares of restricted Common Stock at the value of the most recent transaction,
wherein shares of restricted Common Stock were involved. That value was $1.25
per share for the cash purchase of shares of restricted Common Stock. The
Company intends to use the processed Perlite in several applications with its
concrete block and related products production operations, initially in the
construction operations in Mexico.

         Following a series of meetings with officers of the Haener Block in
January 2004, it became evident that due to some irreconcilable issues, the
effort to move forward under the license agreement acquired would be extremely
expensive and severely restrictive. The Company determined that due to
structural system changes initiated by Haener Block combined with an intractable
position on past-due minimum royalties accruing during a period when the mold
manufactured from the specifications delivered to the license holder were wrong,
made the availability for reasonable negotiations impossible. On February 29,
2004, the Company, in a mutually accommodating agreement for both parties, sold
the license rights back to SouthWest Management Company. At the present time,
the Company has initiated contact with other dry-stacked block systems to
replace the Haener system.

         Effective March 15, 2004, the Company entered in to a Master Lease
Agreement with Aguila, for the purpose of leasing all of the equipment needed by
the Company to produce, transport, develop and construct products and structures
in Puebla, Mexico. As a part of that agreement, the Company agreed to sell its
existing rights to purchase from the manufacturer a mobile block processing
plant currently in process for $389, 093, and to lease the equipment when it is
completed; or, another compatible mobile block plant that Aguila may secure.
Aguila agreed to assume promissory notes in the principal amount of $250,000,
used as partial payment to initially purchase the rights, together with the
accrued interest thereon that approximates $21,900. The balance of the sales
price is being paid for by Aguila with the recognition that part of the price
will be a 5% security deposit, estimated to be $40,000, on a completed block
production plant; then, approximately $37, 550 of the purchase price shall be
utilized to make the first and last month's lease payments; and, the remaining
amount of approximately $39,643 shall be ratably offset against the remaining
lease payments over the term of the lease.

         As an integral part of the MLA the Company agreed to sell its completed
mobile surface bonding plant currently being readied for shipment to Puebla,
Mexico, to Aguila for approximately $245,00, and, then to lease-back the
equipment from Aguila under the terms of the MLA. Aguila agreed to assume
promissory notes in the principal amount of $120,000, used as partial payment to
initially purchase the rights, together with the accrued interest thereon that
approximates $10,520, and a final payment of $25,000 due to the manufacturer.
The balance of the sales price is being paid for by Aguila with the recognition
that part of the price will be a 5% security deposit of $13,250; then, $12,430
of the purchase price shall be utilized to make the first and last month's lease
payments; and, the remaining amount of approximately $63,800 shall be ratably
offset against the remaining lease payments over the term of the lease.

         On May 5, 2004, the Company entered into a Security Purchase Agreement
with the two sole owners of Grupo Industrial Potro S.A. de C.V. ("Grupo"). The
agreement is effective as of April 29, 2004. Under the terms of the agreement,
the Company acquired all of the outstanding equity securities of Grupo in
consideration for promissory notes in the aggregate principal amount of $100,000
and 350,000 shares of the Company's restricted common stock. As a result, Grupo
became a wholly owned subsidiary of the Company. The Company plans to use Grupo
to assist it in developing its constructions systems, project development and
the products business in Mexico.

         On June 22, 2004, the Company, through its wholly owned subsidiary,
Advanced Construction and Manufacturing Technologies De Mexico S.A. de C.V.,
entered into the CIFASA Agreement. The Company is moving forward under the
enhanced focus to finalize detailed development and construction agreements as
called for in the CIFASA agreement. Preliminary drafts have been prepared by
CIFASA and just received by the Company. They are being translated for review by
all parties and counsel. These agreements, when completed, are expected to
provide the basis for additional projects in Puebla, Mexico.

                                       14
<PAGE>

         The Company expects to enter into additional agreements relating to its
acquisition of construction systems used to produce and supply components of
dry-stacked masonry systems as well as other complimentary construction elements
and begin production utilizing such systems. However, no definitive arrangements
have been executed and there can be no assurance that any definitive
arrangements will be completed or that the Company will have sufficient funding
to execute its business plan or that its business plan will be successful.

         The Company does not have sufficient funding to meet its short or
long-term cash needs. The Company anticipates that it will need at least
$5,000,000 to execute its business plan during the next twelve months. The
Company has been in discussions to secure the capital required under its
business plan. To date, the Company has no firm commitments to secured the
required capital. To the extent possible, the Company may seek to raise
additional funds through the sale of equity securities or by borrowing money to
fund its business plan. There can be no assurance that the Company will be able
to raise needed funds or that such funding will be available on reasonable
terms.

         The Company has experienced net losses since inception and has had no
significant revenues during recent years. During the past two fiscal years the
Company has had no business operations. In light of these circumstances, the
ability of the Company to continue as a going concern is significantly in doubt.
The attached financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

Off Balance Sheet Arrangements

         The Company does not have any off-balance sheet arrangements that have
or are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that is
material to investors.

Critical Accounting Policies

The Company's Officers and Management believe that all of its financial reports
and the accounting policies and procedures used to record transactions in its
books and records, adhere to Generally Accepted Accounting Principles.
Currently, management believes that all of the transactions and accounting
policies and procedures being utilized fairly and accurately report the
Company's financial condition and results. Since the Company is in the
development stage, certain accounting policies that will be critical have not
yet been established. Policies that have been established and are considered
critical include accounting for property and equipment and related impairment
and for acquisitions of assets and licenses.

Recent Accounting Pronouncements

In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No.
4, 44, and 64, Amendment of SFAS No. 13, and Technical Corrections." This
Statement amends existing authoritative pronouncements to make various technical
corrections, clarify meanings, or describe their applicability under changed
conditions. This statement became effective on May 1, 2003 and did not have a
material impact on the Company's operating results or financial position.

         In November 2002, the FASB issued FASB Interpretation No. ("FIN") 45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others." The disclosure requirements of
FIN 45 were effective for financial statements of interim or annual periods
ending after December 15, 2002 and did not have a material impact on the
Company's consolidated financial statements.

         In November 2002, the Emerging Issues Task Force ("EITF") reached a
consensus on Issue No. 00-21, "Revenue Arrangements with Multiple Deliverables."
EITF Issue No. 00-21 provides guidance on how to account for arrangements that
involve the delivery or performance of multiple products, services and/or rights
to use assets. The provisions of EITF Issue No. 00-21 will apply to revenue
arrangements entered into in fiscal periods beginning after June 15, 2003. The
adoption of this consensus is not expected to have a material impact on the
Company's consolidated financial statements.

         In January 2003, the FASB issued FIN 46, "Consolidation of Variable
Interest Entities." FIN 46 requires the Company to consolidate a variable
interest entity if it is subjected to a majority of the risk of loss from the
variable interest entity's activities or entitled to receive a majority of the
entity's residual returns, or both. The Company does not believe it currently
has any interests in variable interest entities and, accordingly does not expect
the adoption of FIN 46 to have a material impact on the consolidated financial
statements.

                                       15
<PAGE>

         In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity." SFAS
No. 150 establishes standards for how an issuer classifies and measures in its
balance sheet certain financial instruments with characteristics of both
liabilities and equity. It is effective for such financial instruments entered
into after May 31, 2003, and otherwise is effective at the beginning of the
first interim period beginning after June 15, 2003. The adoption of SFAS No. 150
did not have a material effect on the financial statements.

Risk Factors

         In addition to the risks set forth above, the Company is subject to
certain other risk factors due to the nature of the general overall economy of
both the United States of America and Mexico, possible currency fluctuations,
along with the industries in which the Company competes and the nature of its
operations. These risk factors include the following:

         Limited Operating History/Profitability Uncertain. The Company's
operations were only recently begun and are subject to all risks inherent in the
creation of a new business and the structuring of multi-national operations to
produce products and services, including the absence of a history of significant
operations and of proven capacity to produce and sell products and services over
a significant period of time. The Company is continuing to establish many
functions which are necessary to conduct business, including without limitation,
managerial and administrative structure, marketing activities, financial
systems, computer programming, system development and personnel recruitment. The
Company has only limited operating history and no sales revenues. There can be
no assurance that the Company will be able to achieve significant levels of
sales or profitability.

         Operating Losses/Need for Additional Funds. The Company's financial
statements, attached hereto, show $4,702,642 in total assets, total liabilities
of $2,223,166 and a working capital deficit of ($2,181,674) as of March 31,
2004. The financial statements also show a net loss of ($1,012,340) for the year
ended March 31, 2004. The Company's financial statements reflected $226 in total
assets, total liabilities of $90,870 and a working capital deficit of ($90,644)
as of March 31, 2003. The financial statements also reflected a net loss of
($13,517) for the year ended March 31, 2003. These figures raise substantial
doubt about the Company's ability to continue as a going concern. Moreover, the
Company estimates that it needs at least $5,000,000 in funding to execute its
business plan over the next twelve months and the Company does not have
commitments in place to provide any funding. In addition, the Company may
require additional funding because some expenditures may be unforeseeable at the
present time. Moreover, the Company's business plans may change or unforeseen
events may occur which affect the amount of additional funds required by the
Company. If additional funds are not obtained if and when required, the lack
thereof will have a material adverse effect on the Company. Further, there is no
assurance that any future funding will be available or if it is available that
it will be on terms that are favorable to the Company or its current
stockholders.

         Product Acceptance. The process of using dry stacked masonry wall
systems, while successfully proven in a broad range of structures, worldwide, is
not widely utilized in the United States. Masonry structures in Mexico are
utilized. However, the market where the Company's business plan is currently
focused, may not accept the Company's building products and systems. The
acceptance of such products will depend in large part on the Company's ability
to demonstrate to the project sponsors and contractors, the operational
advantages, safety, efficacy, and cost-effectiveness of its products and systems
in comparison with competing products and systems, together with its ability to
make its products and systems available wherever product demand may arise. There
can be no assurance that the Company's building products and systems will
achieve wide spread market acceptance.

         Competition. The market for residential, commercial and industrial
buildings, whether using a dry-stacked masonry wall system or other construction
methods, is intensely competitive. The Company expects competition to continue
and likely intensify in the future. Many of the Company's potential competitors
have longer operating histories, greater name recognition, larger installed
customer bases and significantly greater financial, technical and marketing
resources than the Company. Such competition could materially adversely affect
the Company's business, operating results or financial condition. The Company

                                       16
<PAGE>

may face intense competition from other companies directly involved in the same
business and also from many other companies offering building products that can
be used in lieu of those offered by the Company. Many of these companies in
related businesses are substantially larger and have more capital and other
resources than the Company. However, the Company does have a definite
competitive advantage in the use and implementation of the proven proprietary
SouthWest system of block construction of houses. There can be no assurance that
the Company will be able to compete successfully against current or future
competitors or that competitive pressures faced by the Company will not
materially adversely affect the Company's business, operating results or
financial condition. Moreover, there can be no assurance that competitors will
not develop building products that are superior to those that are planned to be
utilized by the Company.

         Dependence on Management. The success of the Company depends upon the
skills, experience and efforts of its President, Richard J. Anderson., along
with others that have complimentary skills, capacities and expertise in the
areas of focus of the Company. Mr. Anderson has been associated with the
companies in the real estate development and residential, commercial and
industrial construction industries since 1980 and has expertise in developing
new companies, structuring and installing responsive computerized management
reporting and accounting systems. Should the services of Mr. Anderson become
unavailable to the Company for any reason, the business of the Company could be
adversely affected. The Company is in the process of finalizing the negotiations
of an employment agreement with Mr. Anderson. Until a final agreement is signed
and in effect, Mr. Anderson is free to terminate his employment with the Company
at any time. There is no assurance that the Company will be able to retain Mr.
Anderson or that Mr. Anderson's efforts will result in a commercially viable
company.

         Ability to Manage Growth. The Company currently has one full time and
one part time contract employees. The Company plans to rely on independent
contractors as a method for managing growth. The Company's plan may not
successfully or adequately manage any future periods of rapid growth or
expansion, which could be expected to place a significant strain on managerial,
operating, financial and other resources. The Company's future performance will
depend, in part, on its ability to find individuals and companies with specific
expertise with the ability to manage growth effectively, which will require it
to (i) create and implement management information systems, operating,
administrative, financial and accounting systems and controls; (ii) maintain
close coordination among its independent contractors and between them and
operational personnel in the areas of production, engineering, accounting,
finance, marketing, and sales; and (iii) retain and train additional management,
technical and marketing personnel. There is intense competition for management,
technical and marketing personnel in the Company's business. The Company's
failure to attract and retain additional key employees when and if needed could
have a material adverse effect on the Company's ability to continue as a going
concern.

         Limited Number of Projects. The Company's profitability is expected to
depend on revenues from the sale of its produced products under contractual
agreements with contractors engaged in major projects. The Company recognizes
that its production capacity will permit only a specific number of projects at
any one time. If the Company finishes one large project and does not have
another large project to start on, revenues and results of operations within any
particular quarter and possibly subsequent periods could suffer. Customers may
also cancel or defer existing contracts resulting in reduced revenues for any
particular quarter.

         Reliance on Third Parties. The Company anticipates that it will rely on
qualified independent contractors or third parties for its supervisory,
training, logistics and project staffing. The Company anticipates using a labor
leasing company as its source for the labor force required to operate its
production facility. The Company's ability to enter into agreements with third
parties or outside employment companies, to meet all of the requirements and
demands or to engage the business in a profitable manner will be harmed if its
access to these important resources is limited or becomes too costly. If the
Company fails to obtain what it needs from these providers, it may not be able
to successfully compete for business or to enter into engagements profitably.

         Warranty Coverage. If the Company is successful in obtaining funding
and providing products to contractors engaged in large projects, it could become
subject to substantial claims for warranty coverage which, if such claims arise,
could materially and negatively affect its financial condition.

         No Assurance of Dividends. The Company has never paid dividends on its
common stock. The payment of dividends, if any, in the future is at the
discretion of the board and will depend upon the Company's earnings (if any),
capital requirements, financial condition and other relevant factors. The board
does not intend to declare any dividends on the common stock in the foreseeable
future.

         Limited Trading Activity. There has been very limited and sporadic
trading of the Company's common stock in the over-the-counter market in what is
commonly referred to as the "Electronic" or "OTC Bulletin Board" or the "OTCBB"
under the trading symbol "NXSO." The Company does not currently meet the listing

                                       17
<PAGE>

criteria of any recognized U.S. stock exchange. No assurance can be given that
the OTCBB trading market will continue or as to the depth or liquidity of any
market for the Company's common stock or the prices at which holders may be able
to sell their shares. As a result, an investment in the Company's common stock
may be totally liquid, and investors may not be able to liquidate their
investment readily or at all when they need or desire to sell.

         Low priced stock risk disclosure requirement. The Company's common
stock may be considered a low priced security under rules promulgated under the
Securities Exchange Act of 1934. Under these rules, broker-dealers participating
in transactions in low priced securities must first deliver a risk disclosure
document which describes the risks associated with such stocks, the
broker-dealer's duties, the customer's rights and remedies, and certain market
and other information, and make a suitability determination approving the
customer for low priced stock transactions based on the customer's financial
situation, investment experience and objectives. Broker-dealers must also
disclose these restrictions in writing to the customer, obtain specific written
consent of the customer, and provide monthly account statements to the customer.
With these restrictions, the likely effect of designation as a low priced stock
will be to decrease the willingness of broker-dealers to make a market for the
stock, to decrease the liquidity of the stock and to increase the transaction
cost of sales and purchases of such stock compared to other securities.

         Currency Fluctuations. The Company plans to initially target potential
markets and project sponsors in Mexico. Currency fluctuations could materially
and adversely affect the revenues reported by the Company. If the U.S. dollar
strengthens suddenly against foreign currencies, and particularly the Mexican
Peso, the conversion of net non-U.S. dollar proceeds to U.S. dollars could
adversely impact the Company's operating results

         Political Factors. Political factors in the U.S. and abroad could have
a major impact on the Company. International trade and fiscal policies
implemented in the U.S. could impact the Company's ability to begin and grow its
business abroad, and particularly in Mexico. U.S. foreign relations with Mexico
and other countries and any related restrictions imposed could also have a
significant negative impact on the Company's ability to begin and grow its
operations.

Item 7. Financial Statements

         See attached financial statements.

Item 8. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure

         The Company is not aware, and has not been advised by its auditors, of
any disagreement on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure. In connection with a
change in control of the Company, on April 22, 2003 the Company's board of
directors elected to retain Tanner + Co. ("Tanner") as its independent auditor
and to dismiss Baier & Williams, LLP ("B&W"), its former independent auditor.
The change in auditors was previously reported by the Company in a Current
Report on Form 8-K, dated April 22, 2003.

Item 8A. Controls and Procedures.

         We have evaluated, with the participation of our Chief Executive
Officer and Chief Financial Officer, the effectiveness of the design and
operation of our disclosure controls and procedures as of March 31, 2004,
pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, the Chief
Executive Officer and Chief Financial Officer concluded that our disclosure
controls and procedures are effective in timely alerting them to material
information relating to that which is required to be included in our periodic
SEC filings. There have been no significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation.

                                       18
<PAGE>

                                    PART III


Item 9. Directors and  Executive Officers of the Registrant

Identify Directors and Executive Officers

         Set forth below is certain information concerning each of the directors
and executive officers of the Company as of August 6, 2004:

                                                                  With Company
         Name             Age            Position                     Since
         ----             ---            --------                 -------------
Richard J. Anderson       60       Director, President and
                                   Chief Financial Officer            2003
Dr. Robert A. Arbon       67       Director                           2003
Donald L. Stevens         75       Director                           2004

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

         Richard J. Anderson. Mr. Anderson is the president, chief financial
officer and a director of the Company. His term as a director expires at the
next annual meeting of stockholders. Mr. Anderson holds a bachelor's degree in
Accounting and Business Management from Brigham Young University. Mr. Anderson
started his career in business in 1968, working in public accounting for Arthur
Andersen & Co. in Los Angeles. He served as an audit manager in the State
Auditor's Office of Utah under two elected State Auditors. Over the past twenty
years, Mr. Anderson has principally been an independent self-employed consultant
providing professional advisory and operational services in accounting, business
development, capital structuring, financial and integrated computerized
financial accounting and data systems to a broad range of clientele including
early stage and mezzanine companies that have included companies engaged in
acquisition, development and construction of residential, commercial and
industrial real estate projects; natural resources acquisition and development;
and electrical power development and production. He has experience in the
development of international product licenses and production operations. Mr.
Anderson has served as an Officer and Director of several private companies
during his career.

         Dr. Robert A. Arbon. Dr. Arbon is a director of the Company. His term
as a director expires at the next annual meeting of stockholders. Dr. Arbon
graduated from the University of Utah with a bachelor's degree in 1962 and from
the University of Utah College of Medicine in 1964. Dr. Arbon served in the
United States Army with the 82nd and the 101st Airborne Divisions in Vietnam.
Following general surgical residency in Oakland, California, Dr. Arbon began his
medical career in private practice and continues in that practice today. During
the past five years, Dr. Arbon has engaged in broad range of private investments
including all forms of real estate. He has served and continues to serve as a
consultant and director of several private companies.

         Donald L. Stevens. Mr. Stevens is a director of the Company. His term
as a director expires at the next annual meeting of stockholders. Mr. Stevens
served in the United States Marine Corps from 1951-1953, was posted to Korea and
Pearl Harbor. Mr. Stevens graduated from the University of Utah with a
bachelor's degree in 1954, in marketing and management. Following graduation,
Mr. Stevens co-founded Stevens Brown Sporting Goods. In 1961 Mr. Stevens entered
the securities industry with a local brokerage and then was recruited to such
firms as Paine Webber, Thomson McKinnon Securities, and E.F. Hutton Company. A
Charter Member of the Edward F. Hutton Club, Mr. Stevens was twice recognized as
one of top managers, nationally for the E.F. Hutton Company. Mr. Stevens retired
from the securities industry in 1989 as a Senior Vice-President of Boettcher &
Company. Mr. Stevens has also been involved in residential real estate
development in the Utah area for nearly 40 years. Mr. Stevens has been
extensively involved in business his entire life, helping to organize and fund
several new businesses. Since retirement, Mr. Stevens has worked with state,
regional and local governmental and quasi-governmental units to sponsor and
encourage economic development, serving for 5 years on the Lincoln Unita
Association of Governments, and as a board member of the Unita County affiliate
of the Wyoming Community Foundation. Mr. Stevens has served as an Officer and
Director of several private companies during his career.

                                       19
<PAGE>

         Executive officers will be elected by the board of directors, are
expected to be employed under written agreements that are approved by the board
and serve at the discretion of the board.

Identify Significant Employees

         Except as identified above, the Company has no significant employees.

Family Relationships

         No family relationships exist with any of the Company's officers and
directors.

Involvement in Certain Legal Proceedings

         None of the officers and directors have been involved in any material
legal proceedings which occurred within the last five years of any type as
described in Regulation S-B.

Audit Committee

         The Company has only one full time employee and one part-time employee
and has limited operations and limited resources. Therefore, the Company has no
audit, compensation or nominating committee and, as a result, the Company does
not have a financial expert serving on its audit committee.

Compliance With Section 16(a) of the Exchange Act

         Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers, directors and persons who beneficially own more
than 10% of the Company's common stock to file initial reports of ownership and
reports of changes in ownership with the SEC. Such persons are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms filed
by such persons.

         Based solely on the Company's review of forms furnished to the Company
and representations from reporting persons, the Company believes that all filing
requirements applicable to the Company's executive officers, directors and more
than 10% stockholders were complied with during the fiscal year ending March 31,
2004, except that FAR has not filed a Form 3 reporting its acquisition of
1,695,000 shares of common stock in January 2004 and SWAA has not filed reports
showing the disposition of 398,246 shares of common stock that it once held.

Code of Ethics

         Due to the fact that the Company has limited activities and inadequate
funding, the Company has not adopted a Code of Ethics, but it will consider
doing so during the next fiscal year.

Item 10. Executive Compensation

         The table below sets forth certain information concerning compensation
paid by the Company to its Chief Executive Officer and all other executive
officers with annual compensation in excess of $100,000 (determined for the year
ended March 31, 2004) (the "Named Executive Officers").

         Summary Compensation Table. The following table provides certain
information regarding compensation paid by the Company to the Named Executive
Officers.

                                       20
<PAGE>
<TABLE>
<CAPTION>
                                                   SUMMARY COMPENSATION TABLE


                                             Annual Compensation                    Awards           Payouts
                                   ---------------------------------------- ---------------------  -----------
                                                                            Restricted  Stock                     All Other
        Name and                                           Other Annual     Stock       Options/    LTIP        Compensation
    Principal Position       Year  Salary ($)  Bonus($)  Compensation($)(1) Awards ($)    SAR(#)    Payouts($)       ($)
    ------------------       ----  ----------  --------  ------------------ ----------  --------    ----------  -------------
<S>                          <C>      <C>        <C>            <C>            <C>         <C>         <C>           <C>
Richard J. Anderson (1)      2004     ---        ---            ---            ---         ---         ---           ---
President & Director         2003

Robert Long (2)              2001     ---        ---            ---            ---         ---         ---           ---
Former President, CEO &      2002     ---        ---            ---            ---         ---         ---           ---
Director                     2003     ---        ---            ---            ---         ---         ---           ---
-----------------
</TABLE>
(1)  Mr. Anderson became the chief executive officer and a director of the
     Company on April 22, 2003. Prior to that time he was not affiliated with
     the Company.
(2)  Mr. Long resigned as an officer of the Company on April 22, 2003 and as a
     director of the Company on April 30, 2003.

         Option Grants in Fiscal Year Ended March 31, 2004. No options were
granted by the Company to any Named Executive Officers or others during the
fiscal year ended March 31, 2004.

Compensation of Directors

         No cash fees or other consideration were paid to the Company's
directors for service on the board during the fiscal year ended March 31,
2004.The Company has made no agreements regarding compensation of directors. All
directors are entitled to reimbursement for reasonable out-of-pocket travel
related expenses incurred in the performance of their duties as board members.

Employment Agreements

         The Company is in the process of finalizing negotiations and terms of
an employment agreement with its president, but as yet, negotiations have not
been completed. Mr. Anderson is currently serving as an "at will" employee of
the Company.

Indemnification for Securities Act Liabilities

         The Company's Articles of Incorporation and Bylaws provide for
indemnification of the Company's directors and officers against claims,
liabilities, amounts paid in settlement and expenses in a variety of
circumstances. Indemnification for liabilities arising under Virginia law may be
permitted for the Company's directors, officers and controlling persons pursuant
to the foregoing or otherwise. However, the Company has been advised that, in
the opinion of the SEC, such indemnification is against public policy as
expressed in the Securities Exchange Act of 1934 and is, therefore,
unenforceable.

Stock Options and Warrants

         The Company has no stock options or warrants outstanding.

                                       21
<PAGE>

Compensation Committee Interlocks and Insider Participation

         None of the Company's executive officers serve on its compensation
committee or in a like capacity in any other entity.

Item 11. Security Ownership of Certain Beneficial Owners and Management.

         The following table sets forth certain information with respect to the
beneficial ownership of the common stock of the Company as of August 6, 2004,
for: (i) each person who is known by the Company to beneficially own more than 5
percent of the Company's common stock, (ii) each of the Company's directors,
(iii) each of the Company's Named Executive Officers, and (iv) all directors and
executive officers as a group. As of August 6, 2004, the Company had 11,787,150
shares of common stock outstanding.

                                         Shares
           Name and Address           Beneficially  Percentage of
        of Beneficial Owner(1)          Owned(2)       Total(2)    Position
        ----------------------        ------------  -------------  --------

Richard J. Anderson (3)                  660,096         5.6%    President and
                                                                   Director

Robert A. Arbon (4)                      715,336         6.1%      Director

Donald L. Stevens                              0           --      Director

Jenet R. Hansen                           45,000         0.4%      Secretary

Executive Officers and Directors as a  1,420,432        12.1%
   Group  (4 persons)

SWAA Tepeaca Holdings, LC (4)          4,768,904        40.5%
887 West Center Street,
Orem, UT 84058

The Foundation for Advanced Research   1,695,000        14.4%
661 36th Street
Manhattan Beach, CA 90266
----------------------

(1)   Except where otherwise indicated, the address of the beneficial owner is
      deemed to be the same address as the Company.
(2)   Beneficial ownership is determined in accordance with SEC rules and
      generally includes holding voting and investment power with respect to the
      securities. Shares of common stock subject to options or warrants
      currently exercisable, or exercisable within 60 days, are deemed
      outstanding for computing the percentage of the total number of shares
      beneficially owned by the designated person, but are not deemed
      outstanding for computing the percentage for any other person.
(3)   Represents 500,000 shares that are held of record by Patronus Industries,
      LC. Because Mr. Anderson is the general manager of Patronus Industries,
      LC, he may be deemed to have voting or investment power with respect to
      these securities. As a result, Mr. Anderson is shown in the table as a
      beneficial owner of these securities. Also represents 95,096 shares that
      are held of record by AFT Investments and 65,000 shares owned by JES
      Investments. Because Mr. Anderson and his wife act as trustees of a trust
      that owns AFT Investments and Mrs. Anderson is the sole owner of JES
      Investments, Mr. Anderson is shown in the table as the beneficial owner of
      these shares.
(4)   These shares are held of record by SWAA Tepeaca Holdings, LC. Because Dr.
      Arbon is a manager of the Company and a member holding a 15% interest in
      SWAA Tepeaca Holdings, LC, he may be deemed to have voting or investment
      power with respect to these securities. As a result, Dr. Arbon is also
      shown in the table as a beneficial owner of his proportionate share of the
      securities held by SWAA Tepeaca Holdings, LC.

         The Company is not aware of any arrangements that may result in a
change in control of the issuer. The changes in control of the Company during
the last year are detailed in above under the heading "Certain Relationships and
Related Transactions."

                                       22
<PAGE>

Equity Compensation Plan Information

         The Company does not have any equity compensation plans.

Item 12. Certain Relationships and Related Transactions.

         On April 22, 2003, the Patronus Industries, LC and Heber C. Bishop
acquired 631,650 shares of common stock of the Company from Robert Long, Robert
Platek, Spencer Levy and Robert Salluzzo in consideration for $250,000. Pursuant
to the terms of a Stock Purchase Agreement by and between the parties, $5,000 of
the purchase price was paid in cash and the remaining $245,000 is being paid in
consideration for a promissory note executed by the Buyers. The Note is
non-interest bearing and due and payable in full on the thirty (30) day
anniversary of the Note. The Note is secured by (i) a pledge agreement executed
by the Buyers in favor of the Sellers whereby the shares were pledged as
collateral, (ii) a guarantee executed by Wynn Westmoreland and Santa Rosa
Corporation, a Nevada corporation and (iii) a Trust Deed executed by Santa Rosa
Corporation as Trustor in favor of the Sellers as beneficiaries relating to
approximately 86 acres of real property in Utah. Wynn Westmoreland is a business
associate of the Buyers and Santa Rosa Corporation is an affiliate of Mr.
Westmoreland.

         As a condition precedent for the closing of the Stock Purchase
Agreement, the Buyers also arranged for ICC to lend $100,000 to the Company
pursuant to the terms of a demand note that bears interest at the rate of 10%
per annum. The proceeds from this loan were used by the Company to pay its
outstanding liabilities.

         In addition, the Sellers resigned as officers and directors of the
Company. Messrs. Bishop and Richard J. Anderson were appointed to fill the
vacancies on the board of directors created by the resignations of Messrs. Levy
and Platek. Mr. Anderson was also appointed to act as president of the Company.
Mr. Anderson is the sole manager of Patronus Industries, LC.

         On May 14, 2003, the Company and SWAA closed on a Purchase and Sale
Agreement whereby the Company purchased approximately twenty-one acres of real
property made up of several individual parcels that are collectively located at
one site in the immediate vicinity of the city of Tepeaca, State of Puebla,
Country of Mexico. This Property is anticipated to be used as a site to
establish the Company's proposed production facility as described above. In
consideration for the Property, the Company issued to SWAA (i) an initial
promissory note in the principal amount of $10,000 US, as an earnest money
deposit, which promissory note bears interest at the rate of ten percent per
annum, and is due and payable in a single balloon payment on the one year
anniversary of the note; (ii) a promissory note in the principal amount of
$1,640,000 US, which promissory note bears interest at the rate of ten percent
per annum, is secured by the Property and is due and payable in a single balloon
payment on the earlier of (a) on demand or (b) on the one year anniversary of
the note, and (iii) 5,167,150 shares of the Company's restricted common stock.
Dr. Arbon is a manager and a member holding a 15% interest in SWAA and Mr.
Westmoreland is an affiliate of SWAA.

         In May 2003, the Company also began paying SouthWest and its
independent contractors for site preparation, development, supervisory, security
along with public and governmental relations services in connection the
Company's efforts to utilize the Property as a site to produce and supply
components of dry-stacked masonry wall systems for residential construction
projects in Puebla, Mexico and in connection with other opportunities. SouthWest
is an affiliate of Mr. Westmoreland. The agreement calls for minimum monthly
payments of $7,500 for personnel and $1,250 for overhead related costs. These
amounts will vary based on the utilization of SouthWest personnel as the work on
the production facility is engaged, and as SouthWest personnel are deployed in
the supervision and training of construction and installation crews utilizing
the construction systems of SouthWest.

         On May 14, 2003, the Company also acquired all of the issued and
outstanding securities of ICC, a Nevada corporation. ICC has relationships that
may be utilized in connection with the Company's proposed acquisition of
constructions systems used to produce and supply components of dry-stacked
masonry systems. As consideration for the ICC purchase, the Company issued to
the owners of ICC 100,000 shares of the Company's restricted common stock. The
Company determined that it would be most efficient and corporately effective to
operate ICC as a division and utilize it contacts and relationships within the
Company's existing structure. Mr. Westmoreland is an affiliate of ICC.

                                       23
<PAGE>

         On May 30, 2003, the Company acquired from SouthWest its existing
rights to purchase from the manufacturers (i) a mobile block processing plant
and related know how in consideration for 400,000 shares of the Company's
restricted common stock, a promissory note in the principal amount of $250,000
and the assumption of obligations in the approximate principal amount of
$440,000 relating to the plant and (ii) a mobile surface bonding plant and
related know-how in consideration for 335,000 shares of the Company's restricted
common stock, a promissory note in the principal amount of $245,000 and the
assumption of obligations in the approximate principal amount of $25,000
relating to the plant. On this date the Company also acquired the rights of
SouthWest under a license agreement granting the right to utilize the Haener
Block production system in Mexico and part of the United States in consideration
for 400,000 shares of the Company's restricted common stock, the assumption of
obligations under the initial license agreement and the assumption of
obligations in the approximate principal amount of $140,000.

         On December 18, 2003, the Company and SWAA concluded negotiations
whereby, in January 2004 the Company issued 1,550,000 shares of its restricted
Common Stock as payment in full for the $ 389,634 that the Company owed SWAA for
funds expended, cash advances and accrued interest on the SWAA promissory note
through December 31, 2003. The immediate effect on the financial statements is
the reduction of current liabilities by that amount and an increase
stockholder's equity by the same amount.

         On December 22, 2003, the Company negotiated the acquisition of an
undivided interest in 1,600,000 tons of "in-situ" Perlite from FAR in exchange
for 1,600,000 shares of its restricted Common Stock. The Company completed and
executed an Asset Purchase Agreement as of January 21, 2004.

         In February 2004, the Company the Company sold the license rights to
the Haener Block back to SouthWest .

         Effective March 15, 2004, the Company entered into the MLA with Aguila
for the purpose of leasing all of the equipment needed by the Company to
produce, transport, develop and construct products and structures in Puebla,
Mexico. As a part of that agreement, the Company agreed to sell its existing
rights to purchase from the manufacturer a mobile block processing plant
currently in process for $389, 093, and to lease the equipment when it is
completed. Aguila agreed to assume promissory notes in the principal amount of
$250,000, used as partial payment to initially purchase the rights, together
with the accrued interest thereon that approximates $21,900. The balance of the
sales price is being paid for by Aguila with the recognition that part of the
price will be a 5% security deposit, estimated to be $40,000, on a completed
block production plant; then, approximately $37,550 of the purchase price shall
be utilized to make the first and last month's lease payments; and, the
remaining amount of approximately $39,643 shall be ratably offset against the
remaining lease payments over the term of the lease. Mr. Westmoreland is an
affiliate of Aguila.


Item 13. Exhibits and Reports on Form 8-K.

Exhibits

         Listed on page 26 hereof.

Reports on Form 8-K

         The Company filed a current report on Form 8-K, dated January 29, 2004,
reporting under Item 5 developments relating to the Property.

         The Company filed a current report on Form 8-K, dated February 2, 2004,
reporting under Item 1 a change in control as a result of a proposed transaction
with Cheong Tat Corporation and transactions with SWAA and FAR and reporting
under Item 2 the acquisition of perlite from FAR.

         The Company filed a current report on Form 8-K, dated March 15, 2004,
reporting under Item 5 the termination of the Agreement with Cheong Tat
Corporation.

         The Company filed a current report on Form 8-K, dated May 5, 2004,
reporting under Item 5 the acquisition of Grupo.

                                       24
<PAGE>

         The Company filed a current report on Form 8-K, dated June 22, 2004,
reporting under Item 5 property development arrangements with CIFASA.

Item 14.  Principal Accountant Fees and Services

Audit Fees

         The aggregate fees billed for professional services rendered by our
principal accountant for the audit of our financial statements, review of
financial statements included in our quarterly reports and other fees that are
normally provided by the accountant in connection with statutory and regulatory
filings or engagements for the fiscal years ended March 31, 2004 and 2003 were $
19,500 and $7,500, respectively.

Audit Related Fees

         The aggregate fees billed for assurance and related services by our
principal accountant that are reasonably related to the performance of the audit
or review of our financial statements, other than those previously reported in
this Item 14, for the fiscal years ended March 31, 2004 and 2003 were $19,500
and $ 7,500 , respectively.

Tax Fees

         The aggregate fees billed for professional services rendered by our
principal accountant for tax compliance, tax advice and tax planning for the
fiscal years ended March 31, 2004 and 2003 were $0 and $0, respectively.

All Other Fees

         The aggregate fees billed for products and services provided by the
principal accountant, other than those previously reported in this Item 14, for
the fiscal years ended March 31, 2004 and 2003 were $0 and $0, respectively.

Audit Committee

         Our Company's board of directors functions as our audit committee. It
is the Company's policy that the board of directors pre-approves all audit, tax
and related services. All of the services described above in this Item 14 were
approved in advance by board of directors. No items were approved by the board
of directors pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.


                                       25
<PAGE>

                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant has duly caused this report to be signed by the undersigned,
thereunto duly authorized.

                                              NOXSO CORPORATION
                                              (Registrant)



Date: August 6, 2004                          By   /s/ Richard J. Anderson
                                                 -------------------------------
                                                 Richard J. Anderson
                                                 President

         In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.

        Signature                        Title                          Date
        ---------                        -----                          ----

 /s/ Richard J. Anderson                                          August 6, 2004
Richard J. Anderson          Director and President (Principal
                             Executive, Financial And
                             Accounting Officer)
                                                                  August 6, 2004
 /s/ Robert A. Arbon
Robert A. Arbon              Director
                                                                  August 6, 2004
 /s/ Donald L. Stevens
Donald L. Stevens            Director


                                       26
<PAGE>

                                  EXHIBIT INDEX

       EXHIBIT
         NO.                    DESCRIPTION OF EXHIBIT
       -------                  ----------------------

         2.1      Debtor's Second Plan of Reorganization with Modifications
                  Through December 2, 1999, Order of Judge R. Thomas Stinnett
                  dated December 9, 1999 and Order Approving Disclosure
                  Statement and Confirming Second Amended Plan of Reorganization
                  Under Chapter 11 of the Bankruptcy Code (Incorporation by
                  reference to the Company's Current Report on Form 8-K, dated
                  May 23, 2000).
         2.2      Final Order Closing the Chapter 11 Case (Incorporated by
                  reference to Exhibit 2.2 of the Company's Annual Report on
                  Form 10-KSB, dated March 31, 2003).
         3(i).1   Articles of Incorporation of the Company (Incorporated by
                  reference to the Company's Registration Statement on Form S-1
                  filed with the Commission on January 13, 1989, file No.
                  33-26541).
         3(i).2   Articles of Amendment to the Articles of Incorporation
                  (Incorporated by reference to the Company's Registration
                  Statement on Form S-1 filed with the Commission on January 13,
                  1989, file No. 33-26541).
         3(ii)    Amended and Restated Bylaws of the Company (Incorporated by
                  reference to the Company's Registration Statement on Form S-1
                  filed with the Commission on January 13, 1989, file No.
                  33-26541).
         10.1     Demand Promissory Note in the principal amount of $100,000
                  (Incorporated by reference to Exhibit 10.1 to the Company's
                  Current Report on Form 8-K, dated April 22, 2003).
         10.2     Purchase and Sale Agreement By and Between the Company and
                  SWAA Tepeaca Holdings, LC, effective May 1, 2003 (Incorporated
                  by reference to Exhibit 10.1 to the Company's Current Report
                  on Form 8-K, dated May 14, 2003).
         10.3     Securities Purchase Agreement By and Between the Company and
                  the Owners of Advanced Construction & Manufacturing
                  Technologies De Mexico SA De CV, effective May 8, 2003
                  (Incorporated by reference to Exhibit 10.2 to the Company's
                  Current Report on Form 8-K, dated May 14, 2003).
         10.4     Securities Purchase Agreement By and Between the Company and
                  the Owners of International Construction Concepts, Inc.,
                  effective May 8, 2003 (Incorporated by reference to Exhibit
                  10.3 to the Company's Current Report on Form 8-K, dated May
                  14, 2003).
         10.5     Asset Purchase Agreement by and between the Company and Santa
                  Rosa Corporation, effective May 30, 2003 (Incorporated by
                  reference to Exhibit 10.5 to the Company's Quarterly Report on
                  Form 10-QSB, dated June 30, 2003).
         10.6     Asset Purchase Agreement by and between the Company and the
                  parties identified therein, effective May 30, 2003
                  (Incorporated by reference to Exhibit 10.6 to the Company's
                  Quarterly Report on Form 10-QSB, dated June 30, 2003).
         10.7     Asset Purchase Agreement between the Company and the
                  Foundation for Advanced Research (Incorporated by reference to
                  Exhibit 10.2 to the Company's Current Report on Form 8-K,
                  dated February 2, 2004).
         10.8     Master Lease Agreement between the Company for itself and as
                  agent for it subsidiaries and participants, and Aguila Leasing
                  Group, The Leasing Division Of Aguila Ventures Corporation,
                  for itself and as agent for certain participants
         10.9     Securities Purchase Agreement by and between the Company and
                  the owners of Grupo Industrial Potro S.A. de C.V., dated May
                  5, 2004. (Incorporated by reference to Exhibit 10.1 to the
                  Company's Current Report on Form 8-K, dated May 5, 2004).
         10.10    Agreement of Association for Development of Real Property and
                  Construction of Houses in Mexico by and between ACMT and
                  CIFASA (Incorporated by reference to Exhibit 10.1 to the
                  Company's Current Report on Form 8-K, dated June 22, 2004).
         21.1     Subsidiaries of the Company
         31.1     Certification by under Section 302 of the Sarbanes-Oxley Act
                  of 2002.
         31.2     Certification under Section 302 of the Sarbanes-Oxley Act of
                  2002.
         32.1     Certification pursuant to 18 U.S.C. Section 1350, as adopted
                  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

                                       27
<PAGE>


                                                               NOXSO CORPORATION
                                                   (A Development Stage Company)

                                      Index to Consolidated Financial Statements
--------------------------------------------------------------------------------


                                                                          Page

Independent Auditors' Report                                               F-2

Consolidated balance sheet                                                 F-3

Consolidated statement of operations                                       F-4

Consolidated statement of stockholders' equity                             F-5

Consolidated statement of cash flows                                       F-6

Notes to consolidated financial statements                                 F-7


                                      F-1
<PAGE>

                                                    INDEPENDENT AUDITORS' REPORT



To the Board of Directors and Stockholders
of Noxso Corporation


We have audited the accompanying consolidated balance sheet of Noxso Corporation
(a development stage company), as of March 31, 2004, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the years ended March 31, 2004 and 2003. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Noxso Corporation (a
development stage company), as of March 31, 2004, and the results of its
operations and its cash flows for the years ended March 31, 2004 and 2003 in
conformity with accounting principles generally accepted in the United States of
America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As described in Note 2 to the
consolidated financial statements, the Company has a deficit in working capital,
no source of revenues, and has no operations. These matters raise a substantial
doubt regarding the Company's ability to continue as a going concern.
Management's plans regarding these matters are also described in Note 2. The
consolidated financial statements do not include any adjustments that might
result from the outcome of these uncertainties.


/s/ Tanner + Co.


Salt Lake City, Utah
July 9, 2004

                                      F-2
<PAGE>
<TABLE>
<CAPTION>
                                                                  NOXSO CORPORATION, AND SUBSIDIARIES
                                                                        (A Development Stage Company)
                                                                           Consolidated Balance Sheet

                                                                                       March 31, 2004
-----------------------------------------------------------------------------------------------------

Assets
<S>                                                                            <C>
Current assets:
  Cash                                                                         $           1,397
  Prepaid expenses                                                                        40,095
                                                                               -----------------

        Total current assets                                                              41,492
                                                                               -----------------

Property, plant, and equipment                                                         2,570,000
Perlite ore                                                                            2,000,000
Other assets                                                                              91,150
                                                                               -----------------

        Total assets                                                           $       4,702,642
                                                                               =================

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

Liabilities and Stockholders' Equity

Current liabilities:
  Accounts payable                                                             $          16,675
  Accrued intent related parties                                                          74,348
  Payables to related parties                                                          2,132,143
                                                                               -----------------

        Total current liabilities                                                      2,223,166
                                                                               -----------------

Commitments and contingencies                                                                  -

Stockholders' equity:
  Common stock, $.01 par value, 20,000,000 shares
    authorized; 11,787,150 shares issued
    and outstanding                                                                      117,872
  Additional paid-in capital                                                           3,687,229
  Stock issued for future consideration                                                 (117,175)
  Cancellable common stock issued for future services                                    (60,000)
  Accumulated deficit                                                                 (1,148,450)
                                                                               -----------------

        Total stockholders' equity                                             $       2,479,476
                                                                               -----------------

        Total liabilities and stockholders' equity                             $       4,702,642
                                                                               =================


-----------------------------------------------------------------------------------------------------
See accoumpanying notes to consolidated financial statements.                                     F-3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                       NOXSO CORPORATION, AND SUBSIDIARIES
                                                                              (A Development Stage Company)

                                                                       Consolidated Statement of Operations
                                                                        Years Ended March 31, 2004 and 2003
                                                                  and Cumulative Amounts Since May 25, 2000
                                                                (Date of Commencement of Development Stage)
-----------------------------------------------------------------------------------------------------------

                                                                                             Cumulative
                                                              2004          2003               Amounts
                                                         ------------------------------------------------
<S>                                                       <C>           <C>                 <C>
Revenue                                                   $          -  $          -        $          -
                                                         ------------------------------------------------

Selling, General and administrative expenses                   783,124        54,517           1,037,922
                                                         ------------------------------------------------

        Loss from operations                                  (783,124)      (54,517)         (1,037,922)

Other income (expense):
  Interest expense                                            (229,216)            -            (229,216)
  Other income                                                       -        41,000             118,688
                                                         ------------------------------------------------

        Loss before provision for income taxes              (1,012,340)      (13,517)         (1,148,450)

Income tax benefit                                                   -             -                   -
                                                         ------------------------------------------------
                                                                                                       -
        Net loss                                          $ (1,012,340) $    (13,517)       $ (1,148,450)
                                                         ================================================

Net loss per share - basic and diluted                    $      (0.11) $      (0.01)
                                                         =============================

Weighted average common and common
  equivalent shares - basic and diluted                      9,430,496     1,126,000
                                                         =============================



-----------------------------------------------------------------------------------------------------------
See accoumpanying notes to consolidated financial statements.                                           F-4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                                                                                                NOXSO CORPORATION, AND SUBSIDIARIES
                                                                                                       (A Development Stage Company)

                                                                                      Consolidated Statement of Stockholders' Equity

                                                                                                            Period From May 25, 2000
                                                                                         (Date of Commencement of Development Stage)
                                                                                                              through March 31, 2004
------------------------------------------------------------------------------------------------------------------------------------


                                                                                               Cancellable    Deficit
                                                                                     Stock       common     Accumulated
                                                   Common Stock       Additional   Issued for  stock issued   During the
                                               ---------------------    Paid-in      Future     for future   Development
                                                 Shares      Amount     Capital   Consideration  services       Stage      Total
                                               -------------------------------------------------------------------------------------
<S>                                             <C>        <C>       <C>            <C>         <C>        <C>          <C>
Balance, May 25, 2000                           1,000,000  $  10,000 $    29,216    $        -  $       -  $         -  $    39,216

Net loss                                                -          -           -                               (42,087)     (42,087)
                                               -------------------------------------------------------------------------------------

Balance, March 31, 2001                         1,000,000     10,000      29,216             -          -      (42,087)      (2,871)

Net loss                                                -          -           -             -          -      (80,506)     (80,506)
                                               -------------------------------------------------------------------------------------

Balance, March 31, 2002                         1,000,000     10,000      29,216             -          -     (122,593)     (83,377)

Common stock issued for services, at $.05
  per share                                       135,000      1,350       4,900             -          -            -        6,250

Net loss                                                -          -           -             -          -      (13,517)     (13,517)
                                               -------------------------------------------------------------------------------------

Balance, March 31, 2003                         1,135,000     11,350      34,116             -          -     (136,110)     (90,644)

Common stock issued for:
Property, plant and equipment, at $.13 per
  share                                         6,302,150     63,022     976,979      (117,175)         -            -      922,826
Acquisition of subsidiaries at $.00 per share     450,000      4,500      (4,500)            -          -            -            -
Services at $.41 per share                        750,000      7,500     302,500             -    (60,000)           -      250,000
Debt and accrued interest at $.25 per share     1,550,000     15,500     374,134                                            389,634
Perlite ore at $1.25 per share                  1,600,000     16,000   1,984,000             -          -            -    2,000,000

Sale of contractual rights                              -          -      20,000             -          -            -       20,000

Net loss                                                -          -           -             -          -   (1,012,340)  (1,012,340)
                                               -------------------------------------------------------------------------------------

Balance, March 31, 2004                        11,787,150  $ 117,872 $ 3,687,229    $ (117,175) $ (60,000) $(1,148,450) $ 2,479,476
                                               =====================================================================================



------------------------------------------------------------------------------------------------------------------------------------
See accoumpanying notes to consolidated financial statements.                                                                    F-5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                                    NOXSO CORPORATION, AND SUBSIDIARIES
                                                                                          (A Development Stage Company)

                                                                                   Consolidated Statement of Cash Flows
                                                                                    Years Ended March 31, 2004 and 2003
                                                                              and Cumulative Amounts Since May 25, 2000
                                                                            (Date of Commencement of Development Stage)
-----------------------------------------------------------------------------------------------------------------------

                                                                                                       Cumulative
                                                                            2004           2003          Amounts
                                                                       --------------------------------------------
<S>                                                                     <C>            <C>            <C>
Cash flows from operating activities:
  Net loss                                                              $ (1,012,340)  $    (13,517)  $ (1,148,450)
  Adjustments to reconcile net loss to net cash
    (used in) provided by operating activities:
    Common stock issued for services                                         250,000         6,250         256,250
    Common stock issued for interest and expenses                            422,073             -         422,073
    Impairment of acquisition costs                                          145,000             -         145,000
      Decrease (increase) in:
        Accounts receivable                                                        -         6,500               -
        Prepaid expenses                                                      (1,765)            -          (1,765)
        Funds held in escrow                                                       -        62,076          98,152
        Preference payments receivable                                             -             -          20,258
      Increase (decrease) in:
        Accounts payable                                                      16,675             -          16,675
        Accrued liabilities                                                   22,617       (56,958)         (6,804)
                                                                       --------------------------------------------

            Net cash (used in) provided by operating activities             (157,740)        4,351        (198,611)
                                                                       --------------------------------------------

Cash flows from investing activities:                                              -             -               -
                                                                       --------------------------------------------

Cash flows from financing activities:
  Amounts due related parties                                                158,911        (5,685)        198,050
                                                                       --------------------------------------------

            Net cash provided by (used in) financing activities              158,911        (5,685)        198,050
                                                                       --------------------------------------------

            Net increase (decrease) in cash and cash equivalents               1,171        (1,334)           (561)

Cash and cash equivalents at beginning of period                                 226         1,560           1,958
                                                                       ============================================

Cash and cash equivalents at end of period                              $      1,397   $       226    $      1,397
                                                                       ============================================


-----------------------------------------------------------------------------------------------------------------------
See accoumpanying notes to consolidated financial statements.                                                       F-6
</TABLE>
<PAGE>

                                             NOXSO CORPORATION, AND SUBSIDIARIES
                                                   (A Development Stage Company)

                                      Notes to Consolidated Financial Statements
                                                         March 31, 2004 and 2003
--------------------------------------------------------------------------------

1.   Business              Business
     and                   NOXSO Corporation (the Company) was incorporated in
     Summary of            the Commonwealth of Virginia on August 28, 1979, to
     Significant           engage in developing, testing and marketing a process
     Accounting            capable of removing certain emissions from flue gas
     Policies              generated by burning coal.

                           During 1998, the Company ceased operations, closed
                           and vacated its offices. Creditors of the Company
                           subsequently filed an involuntary petition of
                           bankruptcy against the Company.

                           Effective May 25, 2000, the Company emerged from
                           protection under Chapter 11 of the U.S. Bankruptcy
                           Code pursuant to a Reorganization Plan that was
                           confirmed by the Bankruptcy Court on May 25, 2000. In
                           accordance with AICPA Statement of Position 90-7, the
                           Company adopted "fresh start" accounting whereby its
                           assets, liabilities and new capital structure were
                           adjusted to reflect estimated fair value at May 25,
                           2000. As a result, the consolidated financial
                           statements for the periods subsequent to May 25, 2000
                           reflect the Successor's new basis of accounting and
                           are not comparable to the Predecessor's
                           pre-reorganization consolidated financial statements.

                           In April 2003, the Company began plans to develop a
                           new business to provide dry stacked masonry wall
                           systems materials to construct housing projects in
                           Mexico.

                           Principles of Consolidation
                           The consolidated financial statements include the
                           accounts of Noxso Corporation and its wholly owned
                           subsidiary, Advanced Construction and Manufacturing
                           Technologies De Mexico SA DE CV (ACMT) and
                           International Construction Concepts, Inc. (ICC) (see
                           Note 7) All material intercompany balances and
                           transactions have been eliminated.

--------------------------------------------------------------------------------
                                                                             F-7
<PAGE>

                                             NOXSO CORPORATION, AND SUBSIDIARIES
                                                   (A Development Stage Company)
                                      Notes to Consolidated Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

1.   Business              Development Stage Company
     and                   The Company is considered a development stage Company
     Summary of            as defined in SFAS No. 7. The Company's development
     Significant           stage activities consist of the development of dry
     Accounting            stacked masonry wall systems for the construction of
     Policies              homes in Mexico.
     Continued
                           Cash
                           For purposes of the statement of cash flows, the
                           Company considers all highly liquid debt instruments
                           with maturities of less than three months as cash
                           equivalents.

                           Income Taxes
                           Income taxes are recorded using the asset and
                           liability method. Deferred tax assets and liabilities
                           are recognized for the future tax consequences
                           attributable to differences between the financial
                           statement carrying amounts of existing assets and
                           liabilities and their respective tax bases and
                           operating loss and tax credit carryforwards. Deferred
                           tax assets and liabilities are measured using enacted
                           tax rates expected to apply to taxable income in the
                           years in which those temporary differences are
                           expected to be recovered or settled. The effect on
                           deferred tax assets and liabilities of a change in
                           tax rates is recognized in income in the period that
                           includes the enactment date.

                           Loss per Common and Common Equivalent Share
                           Basic net loss per share is computed using the
                           weighted average shares outstanding during the
                           period. Diluted net loss per share is equivalent to
                           the basic net loss per share.

                           The computation of diluted loss per common share is
                           based on the weighted average number of shares
                           outstanding during the period plus common stock
                           equivalents which would arise from the exercise of
                           stock options and warrants outstanding using the
                           treasury stock method and the average market price
                           per share during the period. The Company had no
                           common stock equivalents outstanding as of March 31,
                           2004 and 2003.

--------------------------------------------------------------------------------
                                                                             F-8
<PAGE>

                                             NOXSO CORPORATION, AND SUBSIDIARIES
                                                   (A Development Stage Company)
                                      Notes to Consolidated Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

1.   Business              Concentration of Credit Risk
     and                   The Company maintains its cash in bank deposit
     Summary of            accounts which, at times, may exceed federally
     Significant           insured limits. The Company has not experienced any
     Accounting            losses in such accounts and believes it is not
     Policies              exposed to any significant credit risk on cash and
     Continued             cash equivalents.

                           Use of Estimates in the Preparation of Financial
                           Statements
                           The preparation of financial statements in conformity
                           with accounting principles generally accepted in the
                           United States of America requires management to make
                           estimates and assumptions that affect the reported
                           amounts of assets and liabilities and disclosure of
                           contingent assets and liabilities at the date of the
                           financial statements and the reported amounts of
                           revenues and expenses during the reporting period.
                           Actual results could differ from those estimates.

                           Reclassifications
                           Certain amounts in the 2003 financial statements have
                           been reclassified for comparative purposes to conform
                           to the presentation in the current year financial
                           statements.


2.   Going                 As of March 31, 2004, the Company has a deficit in
     Concern               working capital, no source of revenues, and no
                           operations. Management is seeking, through the
                           issuance of equity or debt, to obtain the required
                           capital needed to follow its business plan and
                           commence the generation of revenues and full
                           operations. There are no assurances the Company will
                           be able to obtain the needed capital and these
                           matters raise substantial doubt about the Company's
                           ability to continue as a going concern.

--------------------------------------------------------------------------------
                                                                             F-9
<PAGE>

                                             NOXSO CORPORATION, AND SUBSIDIARIES
                                                   (A Development Stage Company)
                                      Notes to Consolidated Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

3.   Property,
     Plant, and                                                     March 31,
     Equipment                                                        2004
                                                                  ------------
                           Property, plant, and equipment:
                             Land                                 $  2,500,000
                             Capitalized land improvement costs         70,000
                                                                  ------------
                                                                  $  2,570,000
                                                                  ============

                           The land and improvements are located in Tepeaca,
                           Mexico. The Company intends to use the site for the
                           production facilities as described in note 7.

4.   Perlite Ore           The Company purchased 1,600,000 tons of un-mined
                           "in-situ" Perlite, referred to in the industry as
                           Perlite ore, in exchange for 1,600,000 shares of
                           restricted common stock. The Perlite ore, located in
                           Arizona, was valued for financial statement purposes
                           at $2,000,000 based on the value of the shares of
                           restricted common stock issued for the purchase. The
                           Company intends to use the perlite in its
                           construction operations in Mexico.


5.   Accrued               Accrued Liabilities
     Liabilities and       As of March 31, 2004, accrued liabilities consisted
     Payables to           entirely of accrued interest.
     Related Parties
     and Others            Payables to related parties and others
                           As of March 31, 2004, the Company has notes and
                           payables due to related parties for $2,132,143 with
                           stated interest accruing at 10% per annum, maturing
                           between April and May 2004, all of which are due on
                           demand. All notes are currently in default.

--------------------------------------------------------------------------------
                                                                            F-10
<PAGE>

                                             NOXSO CORPORATION, AND SUBSIDIARIES
                                                   (A Development Stage Company)
                                      Notes to Consolidated Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

6.   Income                The benefit for income taxes amount computed at the
     Taxes                 federal statutory rate as follows:
<TABLE>
<CAPTION>
                                                               Years Ended March 31,
                                                               ----------------------
                                                                  2004        2003
                                                               ----------------------
                           <S>                                 <C>         <C>
                           Income tax benefit at federal
                             statutory rate                    $ 344,000   $   5,000
                           Change in valuation allowance        (344,000)     (5,000)
                                                               ----------------------
                                                               $       -   $       -
                                                               ======================
<CAPTION>
                           Deferred tax assets are as follows:

                                                               Years Ended March 31,
                                                               ----------------------
                                                                  2004        2003
                                                               ----------------------
                           <S>                                 <C>         <C>
                           Net operating loss carryforwards    $ 389,000   $  45,000
                           Valuation allowance                  (389,000)    (45,000)
                                                               ----------------------
                                                               $       -   $       -
                                                               ======================
</TABLE>
                           At March 31, 2004, the Company has net operating loss
                           carryforwards available to offset future taxable
                           income of approximately $1,144,000 which expires
                           through 2019. The utilization of the net operating
                           loss carryforwards is dependent upon the tax laws in
                           effect at the time the net operating loss
                           carryforwards can be utilized.

                           Due to uncertainties surrounding the utilization of
                           the net operating loss carryforwards, a valuation
                           allowance has been established to offset the deferred
                           income tax asset resulting from such net operating
                           loss carryforwards.

--------------------------------------------------------------------------------
                                                                            F-11
<PAGE>

                                             NOXSO CORPORATION, AND SUBSIDIARIES
                                                   (A Development Stage Company)
                                      Notes to Consolidated Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

7.   Mergers and           On April 22, 2003, an investor group acquired a
     Acquisitions          controlling interest (631,650 shares of certain
                           directors common stock) in the Company by issuing a
                           promissory note. The Note is non-interest bearing and
                           was due May 22, 2003. The Note is secured by (i) a
                           pledge agreement executed by the buyers in favor of
                           the sellers whereby the shares were pledged as
                           collateral, (ii) a guarantee executed by third
                           parties at the request of buyers (iii) a Trust Deed
                           executed by a third party Corporation as Trustor in
                           favor of the sellers as beneficiaries relating to
                           approximately 86 acres of real property in Utah. The
                           note is currently in default and has not been paid as
                           agreed by the buyers, however, default remedies have
                           not been enforced by the sellers.

                           As a closing condition of the Stock Purchase
                           Agreement, the buyers also arranged for International
                           Construction Concepts, Inc., ("ICC") a Nevada
                           corporation, to lend $100,000 to the Company pursuant
                           to the terms of a demand note that bears interest at
                           the rate of 10% per annum. The proceeds from this
                           loan were used by the Company to pay its outstanding
                           liabilities, other than the liability resulting from
                           the demand note. ICC was subsequently acquired as
                           noted below.

                           The shares acquired by the buyers in connection with
                           the Stock Purchase Agreement represented 55.6% of the
                           Company's issued and outstanding shares of common
                           stock at the time of the agreement, giving the buyers
                           voting control of the Company.

                           On May 14, 2003, the Company closed on a Purchase and
                           Sale Agreement whereby the Company purchased
                           approximately twenty-one acres of real property (the
                           "Property") made up of several individual parcels
                           that are collectively located at one site in the
                           immediate vicinity of the city of Tepeaca, State of
                           Puebla, Country of Mexico.

--------------------------------------------------------------------------------
                                                                            F-12
<PAGE>

                                             NOXSO CORPORATION, AND SUBSIDIARIES
                                                   (A Development Stage Company)
                                      Notes to Consolidated Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

7.   Mergers and           This property is anticipated to be used as a site to
     Acquisitions          establish the Company's proposed production facility.
     Continued             In consideration for the property, the Company issued
                           (i) an initial promissory note in the principal
                           amount of $10,000, as an earnest money deposit, which
                           promissory note bears interest at the rate of ten
                           percent per annum, and is due and payable in a single
                           balloon payment on the one year anniversary of the
                           note; (ii) a promissory note in the principal amount
                           of $1,640,000, which promissory note bears interest
                           at the rate of ten percent per annum, is secured by
                           the property and is due and payable in a single
                           balloon payment on the earlier of (a) on demand or
                           (b) on the one year anniversary of the note, and
                           (iii) 5,167,150 shares of the Company's restricted
                           common stock. One of the Company's directors is a
                           member of the entity from which the property was
                           purchased. As of March 31, 2004 the note still was
                           outstanding and has been included in the payables to
                           related parties and others on the balance sheet.

                           On May 14, 2003, the Company acquired all of the
                           issued and outstanding securities of Advanced
                           Construction & Manufacturing Technologies De Mexico
                           SA De CV ("ACMT"), a Mexican corporation domiciled in
                           Mexico City, Mexico. ACMT has not initiated
                           operations, but is immediately qualified to own real
                           and personal property in Mexico. ACMT, as a
                           wholly-owned subsidiary of the Company, will own and
                           hold title to the Property purchased, as described
                           above. Also, it is anticipated that ACMT will be used
                           by the Company in connection with its production
                           facility. As consideration for the ACMT purchase, the
                           Company issued to the owners of ACMT (i) promissory
                           notes in the aggregate principal amount of $150,000,
                           which promissory notes bear interest at the rate of
                           ten percent per annum, and are due and payable on the
                           earlier of (a) the one year anniversary of the note
                           or (b) on demand, and (ii) 350,000 shares of the
                           Company's restricted common stock. The consideration
                           for the purchase was paid in two equal amounts to the
                           owners of ACMT. As of March 31, 2004 the note still
                           was outstanding and has been included in the payables
                           to related parties and others on the balance sheet.

--------------------------------------------------------------------------------
                                                                            F-13
<PAGE>

                                             NOXSO CORPORATION, AND SUBSIDIARIES
                                                   (A Development Stage Company)
                                      Notes to Consolidated Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

7.   Mergers and           On May 14, 2003, the Company also acquired all of the
     Acquisitions          issued and outstanding securities of International
     Continued             Construction Concepts, Inc. ("ICC"), a Nevada
                           corporation. ICC has relationships that may be
                           utilized in connection with the Company's proposed
                           acquisition of constructions systems used to produce
                           and supply components of dry-stacked masonry systems.
                           As consideration for the ICC purchase, the Company
                           issued to the owners of ICC 100,000 shares of the
                           Company's restricted common stock.

                           The Company expects to enter into additional
                           agreements relating to its acquisition of
                           construction systems used to produce and supply
                           components of dry-stacked masonry systems as well as
                           other complimentary construction elements. However,
                           no definitive arrangements have been made and there
                           can be no assurance that any definitive arrangements
                           will be completed or that the Company will have
                           sufficient funding to execute its business plan or
                           that its business plan will be successful.


8.   Related Party         The Company has current notes and payables due to
     Transactions          directors, shareholders, and related entities in the
                           amount of $2,132,143 at March 31, 2004. This balance
                           is included in payables to related parties and others
                           on the balance sheet. Accrued interest on the related
                           party notes is $74,348.

                           The land purchased in Tepeaca, Mexico described in
                           note 7 was purchased from a related party and has
                           been valued at the historical cost to the related
                           party.

                           Related parties and others facilitated the Company's
                           purchases of ACMT, its Mexican subsidiary, and ICC,
                           its Nevada subsidiary, under the terms in note 7.

                           The company issued 132,000 shares of common stock to
                           family of directors and related parties for services
                           during the year. These shares were valued at $79,200.

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                                                                            F-14
<PAGE>

                                             NOXSO CORPORATION, AND SUBSIDIARIES
                                                   (A Development Stage Company)
                                      Notes to Consolidated Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

9.   Supplemental          Operations reflect actual amounts paid for interest
     Disclosure of         and income taxes as follows for the years ended March
     Cash Flow             31:
     Information
                                                             2004         2003
                                                       -------------------------

                             Interest                  $       -     $        -
                                                       =========================
                             Income taxes              $       -     $        -
                                                       =========================

                           During the year ended March 31, 2004:

                           o        The Company acquired perlite ore of
                                    $2,000,000 for the issuance of common stock;

                           o        The Company acquired property, plant, and
                                    equipment of $2,500,000 in exchange for
                                    related party debt of $1,650,000 and
                                    issuance of common stock of $850,000;

                           o        The Company issued common stock in exchange
                                    for ACMT and ICC stock as part of the
                                    acquisition, intangible assets and other
                                    expenses were charged to operations;

                           o        During the first quarter ended June 30,
                                    2003, the Company acquired a completed piece
                                    of mobile equipment for the production of
                                    the surface bonding product for $245,000 in
                                    exchange of debt of $120,000, assumption of
                                    a liability of $25,000, and the issuance of
                                    restricted common stock of $100,000. During
                                    the quarter ended March 31, 2004, the
                                    Company negotiated a sale of the machine to
                                    a leasing company that has an affiliation
                                    with the original manufacturer of the
                                    equipment for $245,000. The purchasing
                                    company assumed the debt of $120,000 along
                                    with accrued interest of $10,520 and the
                                    liability of $25,000. The shares of
                                    restricted common stock issued in relation
                                    to the original purchase is still
                                    outstanding. The Company has agreed to lease
                                    the machine back from the leasing company to
                                    whom the equipment was sold, and the leasing
                                    company has agreed to lease the equipment to
                                    the Company under the Master Lease Agreement
                                    signed March 15, 2004. As an integral

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                                                                            F-15
<PAGE>

                                             NOXSO CORPORATION, AND SUBSIDIARIES
                                                   (A Development Stage Company)
                                      Notes to Consolidated Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

9.   Supplemental                   part of the lease-back, the leasing company
     Disclosure of                  issued a credit of $89,480 to the Company to
     Cash Flow                      be applied against the lease as follows: (1)
     Information                    a security deposit of $13,250; (2) first and
     Continued                      last months lease payments totaling $12,430,
                                    and (3) $1,150 to be applied each month
                                    against the stated 2nd through the 12th
                                    monthly lease payments amounts, and (4) the
                                    balance of $51,150 to be equally applied
                                    against future lease payments. The amounts
                                    reflected on the balance sheet as Prepaid
                                    expenses of $38,330, with the remaining
                                    balance of $51,150 included in Other assets;

                           o        During the first quarter ended June 30,
                                    2003, the Company acquired the right to
                                    purchase from a manufacturer a mobile block
                                    processing plant by increasing other assets
                                    $385,000 and debt of $250,000, assumption of
                                    a liability of $25,000, and the issuance of
                                    restricted common stock of $110,000. During
                                    the quarter ended March 31, 2004, the
                                    Company negotiated the sale of the right to
                                    purchase from a manufacturer a mobile block
                                    processing plant to the leasing company that
                                    has an affiliation with the original owners
                                    of this right for $389,093. The leasing
                                    company assumed the debt of $250,000 along
                                    with accrued interest of $21,900. The
                                    restricted common stock issued in relation
                                    to the original purchase of this right is
                                    still outstanding and the Company has agreed
                                    to lease the first available mobile block
                                    production plant from the leasing company,
                                    to whom the right was sold, under the Master
                                    Lease Agreement dated March 15, 2004. In
                                    consideration the leasing company has agreed
                                    to give the Company credit for the required
                                    security deposit, first and last months
                                    lease payments, and the balance to be
                                    applied against future lease payments. Since
                                    the lease is contingent upon the lessor
                                    obtaining the equipment, the value of the
                                    credit of $117,175 has been recorded as
                                    stock issued for future consideration on the
                                    balance sheet;

                           o        The Company acquired property, plant, and
                                    equipment of $70,000 in exchange for
                                    payables to related parties;

                           o        The Company issued common stock in
                                    satisfaction of interest and other payables
                                    to related parties of $389,694;

--------------------------------------------------------------------------------
                                                                            F-16
<PAGE>

                                             NOXSO CORPORATION, AND SUBSIDIARIES
                                                   (A Development Stage Company)
                                      Notes to Consolidated Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

9.   Supplemental          o        The Company issued shares of commons stock
     Disclosure of                  under a Form S-8 Registration Statement for
     Cash Flow                      services in the amount of $210,000, shares
     Information                    of restricted common stock for services not
     Continued                      qualified for Form S-8 shares in the amount
                                    of $40,000, and shares of restricted common
                                    stock as compensation for future services,
                                    subject to cancellation, in the amount of
                                    $60,000

                           o        The Company obtained other assets for
                                    $35,000 in exchange for a payable from a
                                    related party.

10.  Recent                In January 2003, the FASB issued FIN 46,
     Accounting            "Consolidation of Variable Interest Entities." FIN 46
     Pronounce-            requires the Company to consolidate a variable
     ments                 interest entity if it is subjected to a majority of
                           the risk of loss from the variable interest entity's
                           activities or entitled to receive a majority of the
                           entity's residual returns, or both. The Company does
                           not currently have any interests in variable interest
                           entities and, accordingly does not expect the
                           adoption of FIN 46 to have a material impact on the
                           consolidated financial statements.

                           In May 2003, the FASB issued SFAS No. 150,
                           "Accounting for Certain Financial Instruments with
                           Characteristics of both Liabilities and Equity." SFAS
                           No. 150 establishes standards for how an issuer
                           classifies and measures in its balance sheet certain
                           financial instruments with characteristics of both
                           liabilities and equity. It is effective for such
                           financial instruments entered into after May 31,
                           2003, and otherwise is effective at the beginning of
                           the first interim period beginning after June 15,
                           2003. The Company does not believe the adoption of
                           SFAS No. 150 will have a material effect on its
                           financial statements.


11   Subsequent            On April 29, 2004, the Company entered into an
     Events                agreement to acquire all of the securities of a
                           foreign company for a purchase price of $100,000 and
                           the issuance of 350,000 shares of common stock.

--------------------------------------------------------------------------------
                                                                            F-17
<PAGE>

                                             NOXSO CORPORATION, AND SUBSIDIARIES
                                                   (A Development Stage Company)
                                      Notes to Consolidated Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

11   Subsequent            On May 6, 2004, the Company held a Special
     Events                Stockholder's Meeting and approved an amendment to
     Continued             its Articles of Incorporation to increase the number
                           of authorized shares of common stock with a par value
                           of $.01 from 20,000,000 to 80,000,000 shares and to
                           authorize 20,000,000 shares of preferred stock with a
                           par value of $.01 per share with terms for each
                           issuance of preferred stock to be determined by
                           resolution of the Board of Directors when issued.


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                                                                            F-18