**U.S.
      SECURITIES AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549





**Form
      10-KSB**





(Mark
      One)





**x** **ANNUAL REPORT UNDER SECTION 13 OR 15(d)**


**OF
      THE SECURITIES EXCHANGE ACT OF 1934**





For
      the
      fiscal year ended December 31, 2007





**o** **TRANSITION REPORT UNDER SECTION 13 OR 15(d)**


**OF
      THE SECURITIES EXCHANGE ACT OF 1934**





For
      the
      transition period from ______________ to ______________





*Commission
      File Number 000-30144*









**Morlex,
      Inc.**





(Exact
      name of registrant as specified in its charter)







Colorado
            84-1028977(State
                or other jurisdiction of
            (I.R.S.
                Employerincorporation
                or organization)
            Identification
                No.)31
                Pierce LaneNorwich,
                Vermont
            05055(Address
                of principal executive offices)
            (zip
                code)





Registrant’s
                telephone number, including area code:
              (802)
                649-2299









Securities
      registered under Section 12(b) of the Exchange Act:





None.





Securities
      registered under Section 12(g) of the Exchange Act:





Common
      Stock, $0.001 par value per share


(Title
      of
      Class)










Check
      whether the issuer is not required to file reports pursuant to Section 13 or
      15(d) of the Exchange Act. o





Check
      whether the registrant (1) has filed all reports required to be filed by Section
      13 or 15(d) of the Exchange Act 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 o .





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B (§229.405 of this chapter) contained herein, and no disclosure
      will 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. o





Check
      whether the issuer is a shell company (as defined in Rule 12b-2 of the Exchange
      Act). Yes x No.





The
      Company’s revenues for fiscal year end December 31, 2007 were $0.





As
      of
      January 29, 2008, there were 1,280,160 shares of common stock outstanding.





**DOCUMENTS
      INCORPORATED BY REFERENCE:**





**None**





**FORWARD-LOOKING
      STATEMENTS**





Certain
      statements made in this Annual Report on Form 10-KSB are “forward-looking
      statements” (within the meaning of the Private Securities Litigation Reform Act
      of 1995) regarding the plans and objectives of management for future operations.
      Such statements involve known and unknown risks, uncertainties and other factors
      that may cause actual results, performance or achievements of Morlex, Inc.
      (the
“Company”) to be materially different from any future results, performance or
      achievements expressed or implied by such forward-looking statements. The
      forward-looking statements included herein are based on current expectations
      that involve numerous risks and uncertainties. The Company's plans and
      objectives are based, in part, on assumptions involving the continued expansion
      of business. Assumptions relating to the foregoing involve judgments with
      respect to, among other things, future economic, competitive and market
      conditions and future business decisions, all of which are difficult or
      impossible to predict accurately and many of which are beyond the control of
      the
      Company. Although the Company believes its assumptions underlying the
      forward-looking statements are reasonable, any of the assumptions could prove
      inaccurate and, therefore, there can be no assurance the forward-looking
      statements included in this Report will prove to be accurate. In light of the
      significant uncertainties inherent in the forward-looking statements included
      herein, the inclusion of such information should not be regarded as a
      representation by the Company or any other person that the objectives and plans
      of the Company will be achieved.





Transitional
      Small Business Disclosure Format (check one): Yes o No x









**PART
      I**





**Item
      1. Description of Business.**





**Introduction**





Morlex,
      Inc. (“we”, “us”, “our”, the “Company” or the “Registrant”) was incorporated in
      the State of Colorado on April 23, 1986, as what is commonly known as a blind
      pool. In January 1987, the Company, in a stock-for-stock exchange, acquired
      America OnLine, Inc. ("AOL#1"), a then wholly owned subsidiary of InfoSource
      Information Service, Inc. The Company changed its name from Morlex, Inc. to
      America Online, Inc. on July 17, 1987. AOL #1 was never affiliated with the
      well-known company of the same name. Since the termination of the business
      of
      the former AOL#1, the Company has been, and is currently, seeking the
      acquisition of, or merger with, an existing company. In May 1998, the Company
      changed its name back to Morlex, Inc. The Company has had no active business
      and
      no employees since 1994, and is currently considered a development stage
      company.





On
      March
      25, 2003, the Company’s board of directors (the “Board of Directors”) determined
      it was in the best interest of the Company to cease its reporting obligations
      under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). On
      March 28, 2003, the Company filed a Form 15 with the Securities and Exchange
      Commission (the “SEC”), thereby deregistering the Company's securities under the
      Exchange Act.





On
      December 30, 2005, the Company filed a registration statement on Form 10-SB,
      which was thereafter amended on January 27, 2006. Since the effectiveness of
      its
      registration statement, the Company has begun efforts in consummating a business
      combination.





The
      Company, based on proposed business activities, is a "blank check" company.
      The
      SEC defines those companies as "any development stage company that is issuing
      a
      penny stock, within the meaning of Section 3 (a)(51) of the Exchange Act, and
      that has no specific business plan or purpose, or has indicated that its
      business plan is to merge with an unidentified company or companies." Many
      states have enacted statutes, rules and regulations limiting the sale of
securities of "blank check" companies in their respective jurisdictions. The
      Company, as defined in Rule 12b-2 under the Exchange Act, also is a “shell
      company,” defined as a company with no or nominal assets (other than cash) and
      no or nominal operations. The Company intends to comply with the periodic
      reporting requirements of the Exchange Act for so long as we are subject to
      those requirements.





The
      Company was organized as a vehicle to investigate and, if such investigation
      warrants, acquire a target company or business seeking the perceived advantages
      of being a publicly held corporation. The Company’s principal business objective
      for the next 12 months and beyond such time will be to achieve long-term growth
      potential through a combination with a business rather than immediate,
      short-term earnings. The Company will not restrict its potential candidate
      target companies to any specific business, industry or geographical location
      and, thus, may acquire any type of business.





**Competition**





Currently,
      with our primary goal the acquisition of a target company or business seeking
      the perceived advantages of being a publicly held corporation, the Company
      faces
      vast competition from other shell companies with the same objectives. The
      Company is in a highly competitive market for a small number of business
      opportunities which could reduce the likelihood of consummating a successful
      business combination. A large number of established and well-financed entities,
      including small public companies and venture capital firms, are active in
      mergers and acquisitions of companies that may be desirable target candidates
      for us. Nearly all these entities have significantly greater financial
      resources, technical expertise and managerial capabilities than we do;
      consequently, we will be at a competitive disadvantage in identifying possible
      business opportunities and successfully completing a business combination.
      These
      competitive factors may reduce the likelihood of our identifying and
      consummating a successful business combination.





**Employees**





The
      Company currently has no employees other than its sole officer.





1


**Risk
      Factors**





**An
      investment in our securities is highly speculative and subject to numerous
      and
      substantial risks. These risks include those set forth below and elsewhere
      in
      this Form 10-KSB. Readers are encouraged to review these risks carefully before
      making any investment decision, the Company noting that the risks provided
      are
      not exhaustive of those that may be pertinent to the Company currently or in
      the
      future.**





**There
      may be conflicts of interest between our management and our non-management
      stockholders.**





Conflicts
      of interest create the risk that management may have an incentive to act
      adversely to the interests of the Company. A conflict of interest may arise
      between our management's personal pecuniary interest and its fiduciary duty
      to
      our stockholders. Further, our management's own pecuniary interest may at some
      point compromise its fiduciary duty to our stockholders.





**Our
      business is difficult to evaluate because we have no operating
      history.**





As
      the
      Company has no operations, activity or revenue and only minimal assets since
      1994, there is a risk that we will be unable to continue as a going concern
      and
      consummate a business combination. We will, in all likelihood, sustain operating
      expenses without corresponding revenue, at least until the consummation of
      a
      business combination. This may result in our incurring a net operating loss
      that
      will increase continuously until we can consummate a business combination with
      a
      profitable business opportunity. We cannot assure you that we can identify
      a
      suitable business opportunity and consummate a business
      combination.





**There
      is competition for those private companies suitable for a merger transaction
      of
      the type contemplated by management.**





The
      Company is in a highly competitive market for a small number of business
      opportunities which could reduce the likelihood of consummating a successful
      business combination. We are and will continue to be an insignificant
      participant in the business of seeking mergers with, joint ventures with and
      acquisitions of small private and public entities. A large number of established
      and well-financed entities, including small public companies and venture capital
      firms, are active in mergers and acquisitions of companies that may be desirable
      target candidates for us. Nearly all these entities have significantly greater
      financial resources, technical expertise and managerial capabilities than we
      do;
      consequently, we will be at a competitive disadvantage in identifying possible
      business opportunities and successfully completing a business combination.
      These
      competitive factors may reduce the likelihood of our identifying and
      consummating a successful business combination.





**Future
      success is highly dependent on the ability of management to locate and attract
      a
      suitable acquisition.**





The
      nature of our operations is highly speculative and there is a consequent risk
      of
      loss of your investment. The success of our plan of operation will depend to
      a
      great extent on the operations, financial condition and management of the
      identified business opportunity. While management intends to seek business
      combination(s) with entities having established operating histories, we cannot
      assure you that we will be successful in locating candidates meeting that
      criterion. In the event we complete a business combination, the success of
      our
      operations may be dependent upon management of the successor firm or venture
      partner firm and numerous other factors beyond our control.





**The
      Company has no existing agreement for a business combination or other
      transaction.**





We
      have
      no arrangement, agreement or understanding with respect to engaging in a merger
      with, joint venture with or acquisition of, a private or public entity. No
      assurances can be given that we will successfully identify and evaluate suitable
      business opportunities or that we will conclude a business combination.
      Management has not identified any particular industry or specific business
      within an industry for evaluation. We cannot guarantee that we will be able
      to
      negotiate a business combination on favorable terms, and there is consequently
      a
      risk that funds allocated to the purchase of our shares will not be invested
      in
      a company with active business operations.





2


**Management
      intends to devote only a limited amount of time to seeking a target company
      which may adversely impact our ability to identify a suitable acquisition
      candidate.**





While
      seeking a business combination, management anticipates devoting very limited
      time to the Company's affairs. Our sole officer has not entered into a written
      employment agreement with us and is not expected to do so in the foreseeable
      future. This limited commitment may adversely impact our ability to identify
      and
      consummate a successful business combination.





**The
      time and cost of preparing a private company to become a public reporting
      company may preclude us from entering into a merger or acquisition with the
      most
      attractive private companies.**





Target
      companies that fail to comply with SEC reporting requirements may delay or
      preclude acquisition. Sections 13 and 15(d) of the Exchange Act require
      reporting companies to provide certain information about significant
      acquisitions, including certified financial statements for the company acquired,
      covering one, two, or three years, depending on the relative size of the
      acquisition. The time and additional costs that may be incurred by some target
      entities to prepare these statements may significantly delay or essentially
      preclude consummation of an acquisition. Otherwise suitable acquisition
      prospects that do not have or are unable to obtain the required audited
      statements may be inappropriate for acquisition so long as the reporting
      requirements of the Exchange Act are applicable.





**The
      Company may be subject to further government regulation which would adversely
      affect our operations.**





Although
      we are subject to the reporting requirements under the Exchange Act, management
      believes we are not subject to regulation under the Investment Company Act
      of
      1940, as amended (the “Investment Company Act”), since we are not engaged in the
      business of investing or trading in securities. If we engage in business
      combinations which result in our holding passive investment interests in a
      number of entities, we could be subject to regulation under the Investment
      Company Act. If so, we would be required to register as an investment company
      and could be expected to incur significant registration and compliance costs.
      We
      have obtained no formal determination from the SEC as to our status under the
      Investment Company Act and, consequently, violation of the Investment Company
      Act could subject us to material adverse consequences.





**Any
      potential acquisition or merger with a foreign company may subject us to
      additional risks.**





If
      we
      enter into a business combination with a foreign company, we will be subject
      to
      risks inherent in business operations outside of the United States. These risks
      include, for example, currency fluctuations, regulatory problems, punitive
      tariffs, unstable local tax policies, trade embargoes, risks related to shipment
      of raw materials and finished goods across national borders and cultural and
      language differences. Foreign economies may differ favorably or unfavorably
      from
      the United States economy in growth of gross national product, rate of
      inflation, market development, rate of savings, capital investment, resource
      self-sufficiency and balance of payments positions, and in other
      respects.





**There
      is currently no trading market for our common stock, and liquidity of shares
      of
      our common stock is limited.**





Many
      of
      our shares of common stock are not registered under the securities laws of
      any
      state or other jurisdiction. Further, there is currently no public trading
      market for our common stock. A market maker has initiated the
      application process with the NASD, and the Company has engaged a stock transfer
      agent, all in an effort to create a trading market for its non-restricted shares
      of common stock. There can be no assurance that such a trading market will
      develop and/or continue.





For
      those
      shares of our common stock that are restricted, such shares cannot be offered,
      sold, pledged or otherwise transferred unless subsequently registered pursuant
      to, or exempt from registration under, the Securities Act and any other
      applicable federal or state securities laws or regulations. Our restricted
      shares of common stock cannot be sold under the exemptions from registration
      provided by Rule 144 under or Section 4(1) of the Securities Act, in accordance
      with the letter from Richard K. Wulff, Chief of the Office of Small Business
      Policy of the Securities and Exchange Commission’s Division of Corporation
      Finance, to Ken Worm of NASD Regulation, dated January 21, 2000. This letter
      provides that certain private transfers of the shares of common stock also
      may
      be prohibited without registration under federal securities laws. Compliance
      with the criteria for securing exemptions under federal securities laws and
      the
      securities laws of the various states is extremely complex, especially in
      respect of those exemptions affording flexibility and the elimination of trading
      restrictions in respect of securities received in exempt transactions and
      subsequently disposed of without registration under the Securities Act or state
      securities laws.





3


**There
      are issues impacting liquidity of our securities with respect to the SEC’s
      review of a future resale registration statement.**





Since
      our shares of common stock issued prior to a business combination or reverse
      merger cannot currently, nor will they for a considerable period of time after
      we complete a business combination, be available to be offered, sold, pledged
      or
      otherwise transferred without being registered pursuant to the Securities Act,
      we will likely file a resale registration statement on Form SB-2 or Form S-1,
      or
      some other available form, to register for resale such shares of common
      stock.  We cannot control this future registration process in all respects
      as some matters are outside our control.  Even if we are successful in
      causing the effectiveness of the resale registration statement, there can be
      no
      assurances that the occurrence of subsequent events may not preclude our ability
      to maintain the effectiveness of the registration statement. Any of the
      foregoing items could have adverse effects on the liquidity of our shares of
      common stock.





In
      addition, the SEC has recently disclosed that it has developed internal
      guidelines concerning the use of a resale registration statement to register
      the
      securities issued to certain investors in private investment in public
      equity (PIPE) transactions, where the issuer has a market capitalization of
      less
      than $75 million and, in general, does not qualify to file a Registration
      Statement on Form S-3 to register its securities.  The SEC has taken the
      position that  these smaller issuers may not be able to rely on Rule 415
      under the Securities Act, which generally permits the offer and sale of
      securities on a continued or delayed basis over a period of time, but instead
      would require that the issuer offer and sell such securities in
      a  direct or "primary" public offering, at a fixed price, if the facts
      and circumstances are such that the SEC believes the investors seeking to
      have their shares registered are underwriters and/or affiliates of the
      issuer.  It appears that the SEC in most cases will permit a
      registration for resale of up to one third of the total number of shares of
      common stock then currently owned by persons who are not affiliates of such
      issuer and, in some cases, a larger percentage depending on the facts and
      circumstances.  Staff members also have indicated that an issuer in most
      cases will have to wait until the later of six months after effectiveness
      of the first registration or such time as substantially all securities
      registered in the first registration are sold before filing a subsequent
      registration on behalf of the same investors.  Since, following a reverse
      merger or business combination, we may have little or no tradable shares of
      common stock, it is unclear as to how many, if any, shares of common stock
      the
      SEC will permit us to register for resale, but SEC staff members have
      indicated a willingness to consider a higher percentage in connection with
      registrations following reverse mergers with shell companies such as the
      Company.  The SEC may require as a condition to the declaration of
      effectiveness of a resale registration statement that we reduce or “cut back”
the number of shares of common stock to be registered in such registration
      statement.   The result of the foregoing is that a stockholder’s
      liquidity in our common stock may be adversely affected in the event the SEC
      requires a cut back of the securities as a condition to allow the Company to
      rely on Rule 415 with respect to a resale registration statement, or, if the
      SEC
      requires us to file a primary registration statement.




**We
      have never paid dividends on our common stock.**





We
      have
      never paid dividends on our common stock and do not presently intend to pay
      any
      dividends in the foreseeable future. We anticipate that any funds available
      for
      payment of dividends will be re-invested into the Company to further its
      business strategy.





**The
      Company may be subject to certain tax consequences in our business, which may
      increase our cost of doing business.**





We
      may
      not be able to structure our acquisition to result in tax-free treatment for
      the
      companies or their stockholders, which could deter third parties from entering
      into certain business combinations with us or result in being taxed on
      consideration received in a transaction. Currently, a transaction may be
      structured so as to result in tax-free treatment to both companies, as
      prescribed by various federal and state tax provisions. We intend to structure
      any business combination so as to minimize the federal and state tax
      consequences to both us and the target entity; however, we cannot guarantee
      that
      the business combination will meet the statutory requirements of a tax-free
      reorganization or that the parties will obtain the intended tax-free treatment
      upon a transfer of stock or assets. A non-qualifying reorganization could result
      in the imposition of both federal and state taxes that may have an adverse
      effect on both parties to the transaction.





4


**Our
      business will have no revenue unless and until we merge with or acquire an
      operating business.**





We
      are a
      development stage company and have had no revenue from operations. We may not
      realize any revenue unless and until we successfully merge with or acquire
      an
      operating business.





**The
      Company intends to issue more shares in a merger or acquisition, which will
      result in substantial dilution.**





Our
      Certificate of Incorporation authorizes the issuance of a maximum of
      1,000,000,000 shares of common stock. Any merger or acquisition effected by
      us may result in substantial dilution in the percentage of our common stock
      held
      by our then existing stockholders. Moreover, the common stock issued in any
      such
      merger or acquisition transaction may be valued on an arbitrary or
      non-arm’s-length basis by our management, resulting in an additional reduction
      in the percentage of common stock held by our then existing stockholders. To
      the
      extent that additional shares of common stock are issued in connection with
      a
      business combination or otherwise, dilution to the interests of our stockholders
      will occur and the rights of the holders of common stock might be materially
      adversely affected.





**One
      of our former principal stockholders engaged in a transaction to cause the
      Company to repurchase his shares of common stock, and the Company may enter
      into
      a similar transaction in the future.**




In
      order
      to provide an interest in the Company to a third party, the Company sold Company
      securities to a third party and used the proceeds of such sale to repurchase
      shares of common stock held by a former principal stockholder. As a result
      of
      such transaction, our management, one of our principal stockholders and our
      Board of Directors changed in 2006. The Company, in the future, may agree to
      consummate a similar transaction, whereby it sells securities to a third party
      and uses such proceeds from the sale to repurchase shares of common stock held
      by current shareholders of the Company. If the Company completes a similar
      transaction, our management, principal stockholders and Board of Directors
      may
      change once again.





**The
      Company has conducted limited market research or identification of business
      opportunities, which may affect our ability to identify a business to merge
      with
      or acquire.**





The
      Company has conducted limited market research concerning prospective business
      opportunities. Therefore, we have no assurances that market demand exists for
      a
      merger or acquisition as contemplated by us. Our management has not identified
      any specific business combination or other transactions for formal evaluation
      by
      us, such that it may be expected that any such target business or transaction
      will present such a level of risk that conventional private or public offerings
      of securities or conventional bank financing will not be available. There is
      no
      assurance that we will be able to acquire a business opportunity on terms
      favorable to us. Decisions as to which business opportunity to participate
      in
      will be unilaterally made by our management, which may act without the consent,
      vote or approval of our stockholders.





**Because
      we may seek to complete a business combination through a “reverse merger”,
      following such a transaction we may not be able to attract the attention of
      major brokerage firms.**




Additional
      risks may exist since we will assist a privately held business to become public
      through a “reverse merger.” Securities analysts of major brokerage firms may not
      provide coverage of our Company since there is no incentive to brokerage firms
      to recommend the purchase of our common stock. No assurance can be given that
      brokerage firms will want to conduct any secondary offerings on behalf of our
      post-merger company in the future.




**We
      cannot assure you that following a business combination with an operating
      business, our common stock will be listed on NASDAQ or any other securities
      exchange.**




Following
      a business combination, we may seek the listing of our common stock on NASDAQ
      or
      the American Stock Exchange. However, we cannot assure you that following such
      a
      transaction, we will be able to meet the initial listing standards of either
      of
      those or any other stock exchange, or that we will be able to maintain a listing
      of our common stock on either of those or any other stock exchange. After
      completing a business combination, until our common stock is listed on the
      NASDAQ or another stock exchange, we expect that our common stock would be
      eligible to trade on the OTC Bulletin Board, another over-the-counter quotation
      system, or on the “pink sheets,” where our stockholders may find it more
      difficult to dispose of shares or obtain accurate quotations as to the market
      value of our common stock. In addition, we would be subject to an SEC rule
      that,
      if it failed to meet the criteria set forth in such rule, imposes various
      practice requirements on broker-dealers who sell securities governed by the
      rule
      to persons other than established customers and accredited investors.
      Consequently, such rule may deter broker-dealers from recommending or selling
      our common stock, which may further affect its liquidity. This would also make
      it more difficult for us to raise additional capital following a business
      combination.




5


**This
      report on Form 10-KSB contains forward-looking statements and information
      relating to us, our industry and to other businesses.**





These
      forward-looking statements are based on the beliefs of our management, as well
      as assumptions made by and information currently available to our management.
      When used in this prospectus, the words "estimate," "project," "believe,"
      "anticipate," "intend," "expect" and similar expressions are intended to
      identify forward-looking statements. These statements reflect our current views
      with respect to future events and are subject to risks and uncertainties that
      may cause our actual results to differ materially from those contemplated in
      our
      forward-looking statements. We caution you not to place undue reliance on these
      forward-looking statements, which speak only as of the date of this prospectus.
      We do not undertake any obligation to publicly release any revisions to these
      forward-looking statements to reflect events or circumstances after the date
      of
      this prospectus or to reflect the occurrence of unanticipated
      events.





**Item
      2. Description of Property.**





The
      Company neither rents nor owns any properties. The Company utilizes the office
      space and equipment of its management at no cost. Management estimates such
      amounts to be immaterial. The Company currently has no policy with respect
      to
      investments or interests in real estate, real estate mortgages or securities
      of,
      or interests in, persons primarily engaged in real estate
      activities.





**Item
      3. Legal Proceedings.**





Presently,
      there are not any material pending legal proceedings to which the Registrant
      is
      a party or as to which any of its property is subject, and no such proceedings
      are known to the Registrant to be threatened or contemplated against it.





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





None.





**PART
      II**





**Item
      5. Market for Common Equity, Related Stockholder Matters and Issuer Purchases
      of
      Equity Securities.**





**Common
      Stock**





Our
      Certificate of Incorporation authorizes the issuance of up to 1,000,000,000
      shares of common stock, par value $.001 per share (the “Common Stock”). The
      Common Stock is currently traded on the “Pink Sheets,” an over the counter
      secondary market. Such trading is extremely limited, the most recent bid price
      is $.30 and asked price $4.50. As of January 29, 2008, there were approximately
      275 holders of record of the Common Stock.





**Preferred
      Stock**





The
      Company is not authorized to issue any preferred stock.




**Dividend
      Policy**





The
      Company has not declared or paid any cash dividends on its common stock and
      does
      not intend to declare or pay any cash dividend in the foreseeable future. The
      payment of dividends, if any, is within the discretion of the Board of Directors
      and will depend on the Company’s earnings, if any, its capital requirements and
      financial condition and such other factors as the Board of Directors may
      consider.





6


**Recent
      Sales of Unregistered Securities**





On
      December 18, 2006, the Company sold 558,962 and 75,000 shares of Common Stock
      to
      the new president, secretary, treasurer and director, and to a director and
      principal shareholder of the Company, respectively. The Company sold such shares
      of Common Stock in exchange for cash proceeds of $107,500 and $7,500,
      respectively.





On
      May 7,
      2007, the Company issued 50,000 shares of the Company’s common stock, par value
      $.001, in exchange for cash proceeds of $5,000. The shares were issued to a
      director and principal shareholder of the Company.





On
      July
      18, 2007, the Company issued 50,000 shares of the Company’s common stock, par
      value $.001, in exchange for cash proceeds of $5,000. The shares were issued
      to
      the Company’s president, secretary, treasurer and director.





On
      January 4, 2007 the Company received capital contributions of $5,500 from the
      Company’s former president, secretary, treasurer and director.




All
      purchasers represented in writing that they acquired the securities for their
      own accounts. A legend was placed on the stock certificates stating that the
      securities have not been registered under the Securities Act and cannot be
      sold
      or otherwise transferred without an effective registration or an exemption
      therefrom, but may not be sold pursuant to the exemptions provided by Section
      4(1) of the Securities Act or Rule 144 under the Securities Act, in accordance
      with the letter from Richard K. Wulff, Chief of the Office of Small Business
      Policy of the Securities and Exchange Commission’s Division of Corporation
      Finance, to Ken Worm of NASD Regulation, Inc., dated January 21,
      2000.





**Small
      Business Issuer Sale of Equity Securities**





The
      following table sets forth all sales made by or on behalf of the Company of
      its
      shares of Common Stock in the fiscal year ended December 31, 2007.





Period
            
            Total
                Number of Shares Purchased
              (a)
            
            Average
                Price Paid per Share
              (b)
            
            Total
                Number of Shares Purchased as part of Publicly Announced Plans or
                Programs
              (c)
            
            Maximum
                Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased
                Under the Plans or Programs
              (d)January
                1 to December 31, 2007
            
            
            100,000
            (1)
                (2)
            $
            0.10
            
            
            N/A
            
            
            N/ATotal
            
            
            100,000
            (1)(2)
            $
            0.10
            
            
            N/A
            
            
            N/A





(1)
            On
                May 7, 2007, the Company issued 50,000 shares of the Company’s common
                stock, par value $.001, in exchange for cash proceeds of $5,000.
                The
                shares were issued to a director and principal shareholder of the
                Company.





(2)
            On
                July 18, 2007, the Company issued 50,000 shares of the Company’s common
                stock, par value $.001, in exchange for cash proceeds of $5,000.
                The
                shares were issued to the Company’s president, secretary, treasurer and
                director.





**Transfer
      Agent**





The
      Company has engaged Corporate Stock Transfer, Inc. as its stock transfer agent.





7


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





**Plan
      of Operation**





The
      Company has not realized any revenues from operations since inception, and
      its
      plan of operation for the next twelve months shall be to locate a suitable
      acquisition or merger candidate and consummate a business combination. The
      Company may need additional cash advances from stockholders or loans from other
      parties to pay for operating expenses until the Company consummates the merger
      with a privately-held company. Although it is currently anticipated that the
      Company can satisfy its cash requirements with additional cash advances or
      loans
      from other parties, if needed, for at least the next twelve months, the Company
      can provide no assurance that it can continue to satisfy its cash requirements
      for such period.





**Results
      of Operations**





The
      Company has not conducted any active operations since inception, except for
      its
      efforts to locate suitable acquisition or merger transactions. No revenue has
      been generated by the Company during such period, and it is unlikely the Company
      will have any revenues unless it is able to consummate or effect an acquisition
      of, or merger with, an operating company, of which there can be no
      assurance.





8


**Item
      7. Financial Statements.**





**INDEX
      TO FINANCIAL STATEMENTS**




**Page(s)****Report
                of Independent Registered Public Accounting Firm**
            
            F-2**Financial
                Statements**Balance
                Sheets as of December 31, 2007 and 2006
            
            F-3Statements
                of Operations for the years ended December 31, 2007 and 2006 and
                the
                cumulative period during the development stage (January 1, 2000 to
                December 31, 2007)
            
            F-4Statement
                of Changes in Shareholders’ Equity for the period from Inception (January
                1, 2000) to December 31, 2007, including the years ended December
                31,
                2006, 2005, 2004, 2003, 2002, 2001 and 2000
            
            F-5Statements
                of Cash Flows for the years ended December 31, 2007 and 2006 and
                the
                cumulative period during the development stage (January 1, 2000 to
                December 31, 2007)
            
            F-6Notes
                to Financial Statements
            
            F-7
                - F-9









F-1





**ARIK
      ESHEL, CPA & ASSOC., PC**


Certified
      Public Accountants and Consultants





**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**





To
      the
      Board of Directors and Shareholders


Morlex,
      Inc.





We
      have
      audited the accompanying balance sheet of Morlex, Inc., a development stage
      company (the Company), as of December 31, 2007 and 2006, and the related
      statement of operations, shareholders’ equity (deficit), and cash flows for the
      years ended December 31, 2007 and 2006. These financial statements are the
      responsibility of the Company’s management. Our responsibility is to express an
      opinion on these financial statements based on our audits. The financial
      statements of Morlex, Inc. as of December 31, 2005 and for the cumulative period
      (January 1, 2000 to December 31, 2005) during the development stage were audited
      by other auditors whose report dated April 24, 2006, included an explanatory
      paragraph regarding the Company’s ability to continue as a going concern. The
      other auditor’s report has been furnished to us, and our opinion, insofar as it
      relates to amounts included for such prior periods, is based solely on the
      report of such other auditors.





We
      conducted our audit in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the
      consolidated financial statements are free of material misstatement. The Company
      is not required to have, nor were we engaged to perform, an audit of its
      internal control over financial reporting. Our audit included consideration
      of
      internal control over financial reporting as a basis for designing audit
      procedures that are appropriate in the circumstances, but not for the purpose
      of
      expressing an opinion on the effectiveness of the Company’s internal control
      over financial reporting. Accordingly we express no such opinion. An audit
      also
      includes examining, on a test basis, evidence supporting the amounts and
      disclosures in the consolidated financial statements. An audit also includes
      assessing the accounting principles used and significant estimates made by
      management, as well as evaluating the overall consolidated financial statement
      presentation. We believe that our audit provides a reasonable basis for our
      opinion.





In
      our
      opinion, based on our audits and the report of other auditors, the financial
      statements referred to above present fairly, in all material respects, the
      financial position of Morlex, Inc., a development stage Company, as of December
      31, 2007 and 2006, the results of its operations changes in shareholders’ equity
      (deficit) and its cash flows for the years ended December 31, 2007 and 2006
      and
      for the cumulative period (January 1, 2000 to December 31, 2007) during the
      development stage, in conformity with accounting principles generally accepted
      in the United States of America.





The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. As more fully described in Note 1 to the
      financial statements, the Company has incurred recurring losses and has an
      accumulated deficit. These conditions raise substantial doubt about the
      Company’s ability to continue as a going concern. Management’s plans in regard
      to these matters are described in Note 1. The financial statements do not
      include any adjustments that may result from the outcome of this
      uncertainty.











ARIK
      ESHEL, CPA & ASSOC., PC


February
      1, 2008




F-2




**MORLEX,
      INC.**


**(A
      DEVELOPMENT STAGE COMPANY)**


**BALANCE
      SHEETS**





**December
                31,**
            
            **December
                31,****2007**
            
            **2006****Assets**Current
                assets:Cash
            
            $
            6,124
            
            $
            14,176Prepaid
                expenses
            
            
            5,000Amount
                due from former shareholder
            
            
            
            
            
            5,500Total
                assets
            
            $
            11,124
            
            $
            19,676**Liabilities
                and Shareholders' Equity (Deficit)**Current
                liabilities:Accrued
                expenses and other payables
            
            $
            15,157
            
            $
            7,892Notes
                payables
            
            
            6,041Total
                current liabilities
            
            
            21,198
            
            
            7,892Commitments
                and contingencies**Shareholders'
                Equity (Deficit)**Common
                Stock, $0.001 par value; 1,000,000,000 shares authorized;1,501,765
                and 1401,765 shares issued as of December 31, 2007and
                2006, respectively; 1,280,160 and 1,180,160 sharesoutstanding
                as of December 31, 2007 and 2006, respectively
            
            
            1,502
            
            
            1,402Additional
                paid-in capital
            
            
            460,768
            
            
            450,868Accumulated
                deficit
            
            
            (341,027
            )
            
            (341,027
            )Deficit
                accumulated during the development stage
            
            
            (131,095
            )
            
            (99,237
            )Treasury
                stock, at per - 221,605 shares
            
            
            (222
            )
            
            (222
            )Total
                shareholders' equity (deficit)
            
            
            (10,074
            )
            
            11,784Total
                liabilities and shareholders' equity (deficit)
            
            $
            11,124
            
            $
            19,676





See
      accompanying notes to financial statements.




F-3




**MORLEX,
      INC.**


**(A
      DEVELOPMENT STAGE COMPANY)**


**STATEMENTS
      OF OPERATIONS**





**Year
                Ended December 31,**
            
            **Cumulative
                During the Development Stage (January 1, 2000 to December 31,
                2007)****2007**
            
            **2006**Revenues
            
            $
            -
            
            $
            -
            
            $
            -Costs
                and expenses:Professional
                fees
            
            
            26,450
            
            
            19,348
            
            
            108,476Filing
                fees
            
            
            5,248
            
            
            4,819
            
            
            20,940Other
                expenses
            
            
            119
            
            
            252
            
            
            1,638Total
                costs and expenses
            
            
            31,817
            
            
            24,419
            
            
            131,054Interest
                expenses
            
            
            41
            
            
            
            
            
            41Net
                loss
            
            $
            (31,858
            )
            $
            (24,419
            )
            $
            (131,095
            )Net
                loss per share - basic and diluted
            
            $
            (0.03
            )
            $
            (0.03
            )Weighted
                average number ofcommon
                shares outstanding
            
            
            1,235,502
            
            
            942,461




See
      accompanying notes to financial statements.




F-4




**MORLEX,
      INC.**


**(A
      DEVELOPMENT STAGE COMPANY)**


**STATEMENT
      OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)**





**Common
                Stock**
            
            **Additional
                Paid-In Capital**
            
            **Accumulated
                Deficit**
            
            **Deficit
                Accumulated During the Development Stage**
            
            **Treasury
                Stock**
            
            **Total
                Shareholders Equity (Deficit)****Number**
            
            **Amount****Balance
                at January 1, 2000**
            
            
            971,765
            
            $
            972
            
            $
            341,898
            
            $
            (341,027
            )
            $
            -
            
            $
            (222
            )
            $
            1,621Capital
                contributed
            
            
            -
            
            
            -
            
            
            16,500
            
            
            -
            
            
            -
            
            
            -
            
            
            16,500Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (18,938
            )
            
            -
            
            
            (18,938
            )**Balance
                at December 31, 2000**
            
            
            971,765
            
            
            972
            
            
            358,398
            
            
            (341,027
            )
            
            (18,938
            )
            
            (222
            )
            
            (817
            )Capital
                contributed
            
            
            -
            
            
            -
            
            
            12,400
            
            
            -
            
            
            -
            
            
            -
            
            
            12,400Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (12,938
            )
            
            -
            
            
            (12,938
            )**Balance
                at December 31, 2001**
            
            
            971,765
            
            
            972
            
            
            370,798
            
            
            (341,027
            )
            
            (31,876
            )
            
            (222
            )
            
            (1,355
            )Capital
                contributed
            
            
            -
            
            
            -
            
            
            13,000
            
            
            -
            
            
            -
            
            
            -
            
            
            13,000Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (16,406
            )
            
            -
            
            
            (16,406
            )**Balance
                at December 31, 2002**
            
            
            971,765
            
            
            972
            
            
            383,798
            
            
            (341,027
            )
            
            (48,282
            )
            
            (222
            )
            
            (4,761
            )Capital
                contributed
            
            
            -
            
            
            -
            
            
            10,000
            
            
            -
            
            
            -
            
            
            -
            
            
            10,000Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (2,828
            )
            
            -
            
            
            (2,828
            )**Balance
                at December 31, 2003**
            
            
            971,765
            
            
            972
            
            
            393,798
            
            
            (341,027
            )
            
            (51,110
            )
            
            (222
            )
            
            2,411Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (620
            )
            
            -
            
            
            (620
            )**Balance
                at December 31, 2004**
            
            
            971,765
            
            
            972
            
            
            393,798
            
            
            (341,027
            )
            
            (51,730
            )
            
            (222
            )
            
            1,791Capital
                contributed
            
            
            -
            
            
            -
            
            
            6,000
            
            
            -
            
            
            -
            
            
            -
            
            
            6,000Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (23,088
            )
            
            -
            
            
            (23,088
            )**Balance
                at December 31, 2005**
            
            
            971,765
            
            $
            972
            
            $
            399,798
            
            $
            (341,027
            )
            $
            (74,818
            )
            $
            (222
            )
            $
            (15,297
            )Issuance
                of common stock
            
            
            913,962
            
            
            914
            
            
            142,086
            
            
            -
            
            
            -
            
            
            -
            
            
            143,000Capital
                contributed
            
            
            -
            
            
            -
            
            
            8,500
            
            
            -
            
            
            -
            
            
            -
            
            
            8,500Redemption
                of common stock
            
            
            (483,962
            )
            
            (484
            )
            
            (99,516
            )
            
            
            
            
            
            
            
            
            
            
            (100,000
            )Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (24,419
            )
            
            -
            
            
            (24,419
            )**Balance
                at December 31, 2006**
            
            
            1,401,765
            
            $
            1,402
            
            $
            450,868
            
            $
            (341,027
            )
            $
            (99,237
            )
            $
            (222
            )
            $
            11,784Issuance
                of common stock
            
            
            100,000
            
            
            100
            
            
            9,900
            
            
            
            
            
            
            
            
            
            
            
            10,000Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (31,858
            )
            
            -
            
            
            (31,858
            )**Balance
                at December 31, 2007**
            
            
            1,501,765
            
            $
            1,502
            
            $
            460,768
            
            $
            (341,027
            )
            $
            (131,095
            )
            $
            (222
            )
            $
            (10,074
            )





See
      accompanying notes to financial statements.




F-5




**MORLEX,
      INC.**


**(A
      DEVELOPMENT STAGE COMPANY)**


**STATEMENTS
      OF CASH FLOWS**





**Year
                Ended December 31,**
            
            **Cumulative
                During the Development Stage (January 1, 2000 to December 31,
                2007)****2007**
            
            **2006****Operating
                activities**Net
                loss
            
            $
            (31,858
            )
            $
            (24,419
            )
            $
            (131,095
            )Adjustments
                to reconcile net loss to net cash usedin
                operating activities:Change
                in assets and liabilities:Prepaid
                expenses
            
            
            (5,000
            )
            
            
            
            
            (5,000
            )Amount
                due from former shareholder
            
            
            5,500
            
            
            (5,500
            )
            
            -Accrued
                expenses and other payables
            
            
            7,265
            
            
            (7,496
            )
            
            13,677Net
                cash used in operating activities
            
            
            (24,093
            )
            
            (37,415
            )
            
            (122,418
            )**Financing
                activities**Issuance
                of common stock
            
            
            10,000
            
            
            43,000
            
            
            53,000Capital
                contributed
            
            
            -
            
            
            8,500
            
            
            66,400Notes
                payables
            
            
            6,041
            
            
            
            
            
            6,041Net
                cash provided by financing activities
            
            
            16,041
            
            
            51,500
            
            
            125,441Net
                increase (decrease) in cash and cashequivalents
            
            
            (8,052
            )
            
            14,085
            
            
            3,023Cash
                at beginning of the year
            
            
            14,176
            
            
            91
            
            
            3,101Cash
                at end of the year
            
            $
            6,124
            
            $
            14,176
            
            $
            6,124





See
      accompanying notes to financial statements.




F-6




**MORLEX,
      INC.**


**(A
      DEVELOPMENT STAGE COMPANY)**


**NOTES
      TO FINANCIAL STATEMENTS**








**NOTE
      1 - Description of the Company**





Morlex,
      Inc., the Company, was incorporated under the laws of the State of Colorado
      on
      April 23, 1986. The primary activity of the Company was to seek merger or
      acquisition candidates. In January 1987, the Company, in a stock-for-stock
      exchange acquired America OnLine, Inc., a then wholly-owned subsidiary of Info
      Source Information Service, Inc. The Company simultaneously changed its name
      to
      America OnLine, Inc. (“AOL #1”). AOL #1 was never affiliated with the well-known
      company of the same name. On December 28, 1992, the Company terminated the
      business of AOL #1 and has had no active business operations since. On May
      15,
      1998, the name of the Company was changed back to Morlex, Inc. The Company
      is
      currently seeking potential business opportunities.





As
      shown
      in the financial statements, the Company has incurred net losses and has an
      accumulated deficit of $472,122 at December 31, 2007. It is management’s
      assertion that these circumstances may hinder the Company’s ability to continue
      as a going concern. Historically, management has been able to raise funds from
      shareholders’ contributions and/or shareholders’ loans for the Company’s short
      term needs. There is no certainty that such funds will be available in the
      future as and when needed. These financial statements do not include any
      adjustments to the recoverability and classification of recorded asset amounts
      and classification of liabilities that might be necessary should the Company
      be
      unable to continue as a going concern.





In
      accordance with Statement of Financial Accounting Standards No. 7 “Accounting
      and Reporting by Development Stage Enterprises”, the Company is being treated as
      a development stage company since January 1, 2000, the date the Company began
      devoting substantially all of their efforts to establish a new business.





As
      of
      April 4, 2007, the Company’s shares of common stock have commenced trading on
      the Over the Counter Bulletin Board and Pink Sheets under the symbol “MORX.”
While the Company currently conducts no business operations, except that of
      seeking a suitable acquisition or merger candidate with which the Company
      consummate a business combination, management believes that creating a public
      market for the Company’s shares of common stock will enhance the Company’s
      marketability and improve the ability to locate an acquisition
      target.





**NOTE
      2 - Summary of Significant Accounting Policies**





**Basis
      of Presentation**





The
      Company’s accounting policies are in accordance with accounting principles
      generally accepted in the United States of America.





**Use
      of Estimates**


In
      preparing financial statements in accordance with accounting principles
      generally accepted in the United States of America, management makes certain
      estimates and assumptions, where applicable, that affect the reported amounts
      of
      assets and liabilities and disclosures of contingent assets and liabilities
      at
      the date of the financial statements, as well as the reported amounts of
      revenues and expenses during the reporting period. While actual results could
      differ from those estimates, management does not expect such variances, if
      any,
      to have a material effect on the financial statements.





F-7




**MORLEX,
      INC.**


**(A
      DEVELOPMENT STAGE COMPANY)**


**NOTES
      TO FINANCIAL STATEMENTS - (Continued)**








**Net
      Loss per Common Share**


Basic
      and
      diluted loss per share is calculated by dividing net income available to common
      shareholders by the weighted average number of common shares outstanding during
      the period. There are no potentially dilutive securities outstanding as of
      December 31, 2007 and 2006.





**Fair
      Value**


The
      carrying value of accrued expenses approximates fair value due to the short-term
      nature of the liability.





**Income
      Taxes**


Potential
      benefits of income tax losses are not recognized in the accounts until it is
      estimated that realization is more likely than not. The Company has adopted
      SFAS
      No. 109 as of its inception. Pursuant to SFAS No. 109 the Company is required
      to
      compute tax asset benefits for net operating losses carried forward. As of
      December 31, 2007 the Company did not have a deferred tax asset or
      liability.








**NOTE
      3 - Notes payables**





On
      November 27, 2007, each of the mother of a director and principal shareholder
      of
      the Company and the Company’s president, secretary, treasurer and director,
      loaned the Company $3,000. The Company issued them a promissory notes, pursuant
      to which the principal amounts thereunder shall accrue interest at an annual
      rate of 8.25%, and such principal and all accrued interest shall be due and
      payable on or before the earlier of (i) the first anniversary of the date of
      the
      Note or (ii) the date the Company consummates a merger or other business
      combination with an operating business or any other event pursuant to which
      the
      Company ceases to be a “shell company,” as defined by Rule 12b-2 under the
      Securities Exchange Act of 1934, as amended and a “blank check company,” as
      defined by Rule 419 of the Securities Act of 1933, as amended.








**NOTE
      4 - Shareholders’ Equity**





On
      December 5, 2000, the shareholders of the Company, approved a reverse stock
      split whereby each issued and outstanding share of common stock, was converted
      into 0.001927029 of a share of common stock. Shareholders’ equity was
      retroactively restated to give recognition to the reverse stock split by
      reclassifying from common stock to additional paid-in capital the par value
      of
      the number of shares that were eliminated as a result of the reverse stock
      split. In addition, all references in the financial statements and notes to
      the
      number of shares and per share amounts, reflect this reverse stock
      split.





On
      March
      3, 2003, the Company filed a Form 15 which terminated the registration of the
      Company’s common stock under the Securities Exchange Act of 1934 (“Exchange
      Act”).  On December 30, 2005, a new registration statement was filed to
      once again register the Company’s common stock under the Exchange Act.  The
      Form 10-SB filing became effective March 1, 2006.





On
      March
      8, 2006, the Company issued 180,000 shares of the Company’s common stock, par
      value $.001, in exchange for cash proceeds of $18,000. The shares were equally
      issued to the Company’s former president, secretary, treasurer and director and
      another principal shareholder, under a written consent of the sole member of
      the
      Board of Directors.





On
      August
      7, 2006, the Company issued 100,000 shares of the Company’s common stock, par
      value $.001, in exchange for cash proceeds of $10,000. The shares were equally
      issued to the Company’s former president, secretary, treasurer and director and
      another principal shareholder, under a written consent of the sole member of
      the
      Board of Directors.




F-8




**MORLEX,
      INC.**


**(A
      DEVELOPMENT STAGE COMPANY)**


**NOTES
      TO FINANCIAL STATEMENTS - (Continued)**








**NOTE
      4 - Shareholders’ Equity (Continued)**





On
      December 18, 2006, the company redeemed 483,962 shares of its common stock,
      par
      value $.001 per share from its former president, secretary, treasurer and
      director, in exchange for cash payment of $100,000. On January 4, 2007 the
      Company’s former president, secretary, treasurer and director voluntarily
      contributed $5,500 to the Company in response to an alleged violation of section
      16(b) of the Exchange Act. His contribution commitment was done at December
      2006.





On
      December 18, 2006, the Company sold 558,962 and 75,000 shares of Common Stock
      to
      the new president, secretary, treasurer and director, and to a director and
      principal shareholder of the Company, respectively. The Company sold such shares
      of Common Stock in exchange for cash proceeds of $107,500 and $7,500,
      respectively.





On
      May 7,
      2007, the Company issued 50,000 shares of the Company’s common stock, par value
      $.001, in exchange for cash proceeds of $5,000. The shares were issued to a
      director and principal shareholder of the Company.





On
      July
      18, 2007, the Company issued 50,000 shares of the Company’s common stock, par
      value $.001, in exchange for cash proceeds of $5,000. The shares were issued
      to
      the Company’s president, secretary, treasurer and director.





On
      October 23, 2007, a director and principal shareholder of the Company gifted
      196,981 of her previously owned shares to two of her family
      members.





On
      January 4, 2007 the Company received capital contributions of $5,500 from the
      Company’s former president, secretary, treasurer and director.





During
      the years 2006, 2005, 2003, 2002, 2001 and 2000, the Company received capital
      contributions of $3,000, $6,000, $10,000, $13,000 $12,400 and $16,500,
      respectively from its officers.





**NOTE
      5 - Income Taxes**





The
      Company has a net operating loss carryforward of approximately $187,000 which
      begins to expire in 2010. However, the Company’s ability to utilize such losses
      to offset future taxable income is subject to various limitations imposed by
      the
      rules and regulations of the Internal Revenue Service. A portion of the
      Company’s net operating losses are limited each year to offset future taxable
      income, if any, due to the change of ownership in the Company’s outstanding
      shares of common stock. Accordingly, no deferred tax asset has been reflected
      due to the fact that it is not likely to be utilized at the current
      time.





**NOTE
      6 - Related Parties**





On
      November 27, 2007, each of the mother of a director and principal shareholder
      of
      the Company and the Company’s president, secretary, treasurer and director,
      loaned the Company $3,000. The Company issued them promissory notes, pursuant
      to
      which the principal amounts thereunder shall accrue interest at an annual rate
      of 8.25%, please see “Notes Payable” under Note 3.





On
      October 23, 2007, a director and principal shareholder of the Company gifted
      196,981 of her previously owned shares to two of her family
      members.





F-9




**Item
      8. Changes in and Disagreements with Accountants on Accounting and Financial
      Disclosure.**





None.




**Item
      8A :** **Form
      10-K**  **Representations
      re Controls and Procedures** **and
      Internal Control Over Financial Reporting**





Within
      90
      days prior to the date of this Report, Michael Miller, our sole office
      (including CEO and CFO), carried out an evaluation, of the effectiveness of
      the
      design and operation of our disclosure controls and procedures. Based on this
      evaluation, Mr. Miller concluded that our disclosure controls and procedures
      are
      effective in timely alerting the Company to material information required to
      be
      included in our periodic reports that are filed with the Securities and Exchange
      Commission. It should be noted that the design of any system of controls is
      based in part upon certain assumptions about the likelihood of future events,
      and there can be no assurance that any design will succeed in achieving its
      stated goals under all potential future conditions, regardless of how remote.
      In
      addition, Mr. Miller reviewed our internal controls, and there have been no
      significant changes in our internal controls or in other factors that could
      significantly affect those controls subsequent to the date of their last
      valuation.





There
      have been no significant changes in the Company's internal controls or in other
      factors since the date of Mr. Miller’s evaluation that could significantly
      affect these internal controls during the period covered by this report or
      from
      the end of the reporting period to the date of this Form 10-KSB, including
      any
      corrective actions with regard to significant deficiencies and material
      weakness.





**Item
      8B. Other Information.**





None.





**PART
      III**





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





(a)
      Identification of Directors and Executive Officers. The following table sets
      forth certain information regarding the Company’s directors and executive
      officers for the fiscal year ended December 31, 2007:





**Name**
            
            **Age**
            
            **Position**
            
            **Term**Michael
                Miller
            
            62
            
            President,
                Secretary, Treasurer, Director
            
            December
                18, 2006 thru PresentJeanne
                Baer
            
            61
            
            Director
            
            December
                18, 2006 thru PresentMichelle
                Kaplan
            
            33
            
            Director
            
            December
                18, 2006 thru Present




The
      Company’s officers and directors are elected annually for a one year term or
      until their respective successors are duly elected and qualified or until
      their earlier resignation or removal.





**Michael
      Miller.** Michael
      Miller has served as Chairman of the Board of Directors and Chief Executive
      Officer of Miller Investment Company, Inc., a private venture capital firm
      since
      1989. Mr. Miller has been a partner in Independence Realty, which owns and
      manages real estate properties, also since 1989. Since 1992, he has served
      as a
      member of the Board of Directors of Celadon Group, Inc., which is listed on
      Nasdaq, serving as its Lead Director and Chairman of the Compensation Committee.
      Mr. Miller earned his Bachelor of Science in Finance from New York University
      in
      1966.




9


**Jeanne
      Baer.** Jeanne
      Baer has maintained a private psychotherapy practice in New York for the past
      13
      years. Ms. Baer received her Bachelor of Arts from Brooklyn College in 1967,
      her
      Masters in Education from the Bank Street College of Education in 1974 and
      her
      Masters in Social Work from Smith College School for Social Work in 1993.





**Michelle
      Kaplan.** Michelle
      Kaplan has been employed at the Manhattan Psychiatric Center in New York since
      January 2006. Prior to starting at Manhattan Psychiatric Center, during December
      2005, Ms. Kaplan took some personal time off. From October 2002 until November
      2005, Ms. Kaplan completed her residency in Psychiatry at the Long Island Jewish
      Hospital Medical Center at Zucker Hillside Hospital. Prior to that, Ms. Kaplan
      studied at Ross University School of Medicine. Ms. Kaplan received her Bachelor
      of Science in Biology from Washington University in 1996 and her Doctor of
      Medicine from Ross University School of Medicine in 2005.





(b)
      Significant Employees.





As
      of the
      date hereof, the Company has no significant employees.




(c)
      Family Relationships.





Michael
      Miller and Jeanne Baer are husband and wife.




(d)
      Involvement in Certain Legal Proceedings.




There
      have been no events under any bankruptcy act, no criminal proceedings and no
      judgments, injunctions, orders or decrees material to the evaluation of the
      ability and integrity of any director, executive officer, promoter or control
      person of Registrant during the past five years.




**Compliance
      with Section 16(a) of the Exchange Act**




Section 16(a)
      of the Exchange Act requires the Company’s directors and officers, and persons
      who beneficially own more than 10% of a registered class of the Company’s equity
      securities, to file reports of beneficial ownership and changes in beneficial
      ownership of the Company’s securities with the SEC on Forms 3, 4 and 5.
      Officers, directors and greater than 10% stockholders are required by SEC
      regulation to furnish the Company with copies of all Section 16(a) forms
      they file.




Based
      solely on the Company’s review of the copies of the forms received by it during
      the fiscal year ended December 31, 2007 and written representations that no
      other reports were required, the Company believes that no director, officer
      or
      beneficial owner of more than 10% of the Company’s common stock has failed to
      comply with all Section 16(a) filing requirements during such fiscal
      years.




**Code
      of Ethics**





We
      have
      not adopted a Code of Business Conduct and Ethics that applies to our principal
      executive officer, principal financial officer, principal accounting officer
      or
      controller, or persons performing similar functions in that our sole officer
      serves in all the above capacities.





**Nominating
      Committee**





We
      have
      not adopted any procedures by which security holders may recommend nominees
      to
      our Board of Directors.





**Audit
      Committee**





The
      Board
      of Directors acts as the audit committee. The Company does not have a qualified
      financial expert at this time because it has not been able to hire a qualified
      candidate. Further, the Company believes that it has inadequate financial
      resources at this time to hire such an expert. The Company intends to continue
      to search for a qualified individual for hire.


10


**Item
      10. Executive Compensation.**





The
      following table sets forth the cash compensation paid by the Company to its
      President and all other executive officers for services rendered during the
      fiscal years ended December 31, 2006 and December 31, 2005.





Name
                and Position
            
            Year
            
            Other
                CompensationMichael
                Miller, President, Secretary, Treasurer
            
            2007
            
            None2006
            
            None




**Director
      Compensation**





We
      do not
      currently pay any cash fees to our directors, but we pay directors' expenses
      in
      attending board meetings. During the year ended December 31, 2007 no director
      expenses were reimbursed.





**Employment
      Agreements**





The
      Company is not a party to any employment agreements.





**Item
      11. Security Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters.**





The
      following tables set forth certain information as of February 14, 2007,
      regarding (i) each person known by the Company to be the beneficial owner of
      more than 5% of the outstanding shares of Common Stock, (ii) each director,
      nominee and executive officer of the Company and (iii) all officers and
      directors as a group.





Name
                and Address
            
            Amount
                and Nature of Beneficial Ownership
            
            Percentage
                of ClassMichael
                Miller (1)
              c/o
                Morlex, Inc.
              31
                Pierce Lane
              Norwich,
                VT 05055
            
            608,962
                (2)
            
            47.56%Jeanne
                Baer (3)
              c/o
                Morlex, Inc.
              31
                Pierce Lane
              Norwich,
                VT 05055
            
            See
                Footnote (2)
            
            See
                Footnote (2)Michelle
                Kaplan (4)
              401
                East 86th Street, Apt 3H
              New
                York, New York 10028
            
            215,000
                (5)
            
            16.79%All
                Directors and Officers as a Group (3 individuals)
            
            1,332,924
            
            64.35%





(1)
            Mr.
                Miller is President,Secretary,Treasurer and director of the
                Company.


(2)
            Mr.
                Miller and Ms.Baer are husband and wife, and own jointly, 608,962
                shares.


(3)
            Ms.
                Baer is a director of the Company.


(4)
            Ms.
                Kaplan is a director of the
                Company.


(5)
            During
                2007, Ms. Kaplan gifted 196,981 of her previously owned 558,962 shares
                to
                each of two familymembers,
                Robert Kaplan and Helaine Kaplan,
                respectively.





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





Except
      as
      otherwise indicated herein, there have been no related party transactions,
      or
      any other transactions or relationships required to be disclosed pursuant to
      Item 404 of Regulation S-B.





11


**Item
      13. Exhibits.**





(a)
            Index
                to Exhibits





Exhibit
            
            Description3.1*
            
            Articles
                of Incorporation3.2**
            
            Amended
                and Restated By-Laws3.3***
            
            Articles
                of Amendment to the Articles of Incorporation10.1****
            
            Redemption
                Agreement dated December 18, 200610.2****
            
            Common
                Stock Purchase Agreement by and between the Company and Michael Miller
                dated December 18, 200610.3****
            
            C
                Common Stock Purchase Agreement by and between the Company and Michelle
                Kaplan dated December18, 200616.1*****
            
            Letter
                from Lazar Levine & Felix LLP regarding change in certifying
                accountant.31.1
            
            Certification
                of the Company’s Principal Executive Officer and Principal Financial
                Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,
                with
                respect to the registrant’s Annual Report on Form 10-KSB for the year
                ended December 31, 200732.1
            
            Certification
                of the Company’s Principal Executive Officer and Principal Financial
                Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
                Section
                906 of the Sarbanes Oxley Act of
                2002.




*
            Filed
                as an exhibit to the Company's registration statement on Form 10-SB/A,
                as
                filed with the Securities and Exchange Commission on January 27,
                2006, and
                incorporated herein by this
                reference.





**
            Filed
                as an exhibit to the Company's annual report on Form 10-KSB, as filed
                with
                the Securities and Exchange Commission on March 29, 2001, and incorporated
                herein by this reference.





***
            Filed
                as an exhibit to the Company's registration statement on Form 10-SB/A,
                as
                filed with the Securities and Exchange Commission on June 14, 1999,
                and
                incorporated herein by this
                reference.





****
            Filed
                as an exhibit to the Company's current report on Form 8-K, as filed
                with
                the Securities and Exchange Commission on December 19, 2006, and
                incorporated herein by this
                reference.





*****
            Filed
                as an exhibit to the Company's current report on Form 8-K/A, as filed
                with
                the Securities and Exchange Commission on July 21, 2006, and incorporated
                herein by this reference.





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





Since
      July 6, 2006, Arik Eshel, CPA & Assoc., PC (“Arik Eshel”) has served as the
      Company’s independent registered public accounting firm. Prior to July 6, 2006
      and for the fiscal year ended December 31, 2005 and the interim period preceding
      its dismissal, Lazar, Levine & Felix, LLP (“Lazar Levine”) was the Company’s
      independent registered public accounting firm.





12


**Audit
      Fees**





The
      aggregate fees billed by Arik Eshel for professional services rendered for
      the
      audit of our annual financial statements and review of financial statements
      included in our quarterly reports on Form 10-QSB or services that are normally
      provided in connection with statutory and regulatory filings were $7,000 for
      fiscal year ended December 31, 2007 and $5,000 for fiscal year ended December
      31, 2006. The aggregate fees billed by Lazar Levine for professional services
      rendered for the audit of our annual financial statements and review of
      financial statements included in our Form 10-QSBs or services that are normally
      provided in connection with statutory and regulatory filings were $6,720 for
      fiscal year ended December 31, 2006.





**Audit-Related
      Fees**





There
      were no fees billed by Arik Eshel for assurance and related services that are
      reasonably related to the performance of the audit or review of the Company’s
      financial statements for the fiscal years ended December 31, 2007 and
      2006.





**Tax
      Fees**





The
      aggregate fees billed by Arik Eshel for professional services related to tax
      compliance, tax advice, and tax planning were $500 for the fiscal years ended
      December 31, 2007 and 2006.





**All
      Other Fees**





There
      were no fees billed by Arik Eshel for other products and services for the fiscal
      year ended December 31, 2007 and 2006.





**SIGNATURES**





In
      accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
      the
      registrant has duly caused this report to be signed on its behalf by the
      undersigned, thereunto duly authorized.


**MORLEX,
                INC.**Dated:
                January 30, 2008
            By:
            /s/
                Michael MillerName:
                Michael MillerTitle: President,
                Secretary, Treasurer, Director




In
      accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
      this
      report has been signed below by the following persons on behalf of the
      Registrant and in the capacities and on the dates indicated.





Title
            
            Date/s/
                Jeanne Baer
            
            Director
            
            January
                29, 2008Jeanne
                Baer/s/
                Michelle Kaplan
            
            Director
            
            January
                29, 2008Michelle
                Kaplan





13