---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-K

(Mark One)

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

For the fiscal year ended:December 31, 2009

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

For the transition period from ________________to
________________

Commission File Number:0-24721

LEXON TECHNOLOGIES, INC.(Exact name of registrant as specified in charter)

|Delaware                                                             | 87-0502701                
|-------------------------------------------------------------------- | --------------------------
|(State or other jurisdiction of incorporation or
      organization) | (I.R.S. Employer I.D. No.)

|14830 Desman Road                        | 90638     
|---------------------------------------- | ----------
|(Address of principal executive offices) | (Zip Code)

Issuer's telephone number, including area code:(714)
522-0270

Securities registered pursuant to section 12(b) of the Act:

|Title of each class | Name of each exchange on which registered
|------------------- | -----------------------------------------
|None                | N/A                                      

Securities registered pursuant to section 12(g) of the Act:

Common Stock, par value $0.001 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. [    
]

Check whether the issuer (1) filed all reports required to be
filed by section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. (1)
Yes [ x ]   No [     ]    (2) Yes [
x ]   No [    ]

Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B is not contained in this form, 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-K
or any amendment to this Form 10-K. [     ]

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated filer (as defined
in Rule 12b-2 of the Act). See the definitions of large accelerated filer,
accelerated filer, and smaller reporting company in Rule 12b-2 of the
Exchange Act. (Check one):

|Large accelerated filer [     ] | Accelerated filer [    
    ] | Non-accelerated filer 
      [     ] | Smaller reporting company [ x ]
|------------------------------- | ----------------------------- | ------------------------------------ | -------------------------------

---

Indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act). Yes No[ x ]

State issuer's revenues for its most recent fiscal year:
$$5,446,742.

State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to the price at which
the stock was sold, or the average bid and asked prices of such common equity,
as of a specified date within the past 60 days.

As of April 15, 2010, Lexon had 515, 289, 722 shares of common
stock outstanding. Based on the closing price of the common stock on April 14,
2010, of $0.017 per share, the market value of shares held by non-affiliates
would be $3,213,406.96, based on 189,023,939 shares. Lexons stock is traded on
the over-the-counter bulletin board system .under the symbol LEXO however
trades are thin and sporadic. Therefore, the bid and ask price may not be
indicative of any actual value in the stock.

DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by
reference and the part of the form 10-K (e.g., part I, part II, etc.) into which
the document is incorporated: (1) Any annual report to security holders; (2) Any
proxy or other information statement; and (3) Any prospectus filed pursuant to
rule 424(b) or (c) under the Securities Act of 1933:

None.

PART I.

|ITEM 1. | DESCRIPTION OF BUSINESS
|------- | -----------------------

Lexon Technologies, Inc. ("the Company" or "Lexon") was
incorporated in April 1989 under the laws of state of Delaware, and owns 90.16%
of Lexon Semiconductor Corporation ("Lexon Semi" or formerly known as Techone
Co., Ltd ("Techone")) which had developed and manufactured Low Temperature
Cofired Ceramic (LTCC) components, including LTCC wafer probe cards, LTCC
circuit boards, LTCC Light Emitting Diode (LED) displays and related products
for the semiconductor testing and measurement, custom Printed Circuit Board
(PCB), and cellular phone industries. The Company currently has no business
activities.

Initially registered as California Cola Distributing Company,
Inc, the Company changed its name twice; first to Rexford, Inc. in October 1992,
and to the current name in July 1999.

In July 1999, Lexon acquired 100% of the outstanding common
stock of Chicago Map Corporation (CMC) in exchange for 10,500,000 shares of the
Company's common stock through a reverse acquisition accompanied by a
recapitalization. The surviving entity, Lexon, reflected the assets and
liabilities of Lexon and CMC at their historical book values. Lexon dissolved
CMC in 2002.

In April 2002, Lexon acquired 100% of the outstanding common
stock of Phacon Corporation (Phacon) in exchange for 17,500,000 shares of
Company's common stock through a reverse acquisition accompanied by a
recapitalization. As part of the agreement, the Company elected a 1 for 10
reverse stock split and the acquired shares of Phacon were entirely canceled
leaving the Company as the surviving entity.

In March 2003, the Company incorporated Lexon Korea Corporation
(Lexon Korea) as a wholly-owned subsidiary in Korea for the purpose of
entering into potential business combinations with Korean operating entities.
Lexon Korea was reorganized in August 2005, and as a result, the Companys
equity share in Lexon Korea was reduced to 10%.

In December 2004, the Company acquired 90.16% of the voting
stock of Techone Company, Ltd, a company in Korea, by investing $1,588,000. The
Company recognized goodwill of $1,851,692 in the acquisition. The Company
acquired Techone to develop it as the Companys core operating business in Korea
for manufacturing and selling LTCC related products. However, the development of
the LTCC related products was not successful, and the operations of Techone
became highly leveraged financially. In August 2005, certain creditors filed an
involuntary foreclosure and sold Techones assets through public auction to
satisfy secured debts. This disposal of assets resulted in a gain $1,315,469 for
the year ended December 31, 2005. In February 2006, Techone changed its name to
Lexon Semiconductor Corporation and all of its operation has been suspended due
to lack of operating working capital. Lexon Semi was dissolved on October 28,
2009 based on a decision of shareholders meeting. Lexon Semi has $241,000 of due
to related party and $415,000 of liabilities relation to discontinued operations
as of September 30, 2009.

On October 7, 2009, Paragon Toner Inc., a California corporation, entered
into an Agreement and Plan of Merger (the Merger Agreement) with the Company
whereby the Company issued 347,448,444 shares of common stock (the Common
Stock) of the Company (the Acquisition Shares) to the shareholders of Paragon,
representing approximately 67% of the issued and outstanding Common Stock after
completion of the merger in October 2009. The effective date of the Merger was
October 22, 2009 (Effective Date). We have decided to maintain the name of our predecessor company.

---



Overview

Lexon Technologies, Inc. or dba Paragon Toner Inc. (Paragon or the
Company) are one of the first movers in recycling toner cartridges for laser
printers, fax and multifunction copiers. We specialize in difficult to find
toner as well as color and special niche cartridges. We have a 35,000 square
foot factory, 67 employees and the capacity to manufacture 50,000 cartridges per
month and recycle 350 different models of toner cartridges. Our main clients
include multinational companies such as Micro Center, Royal Imaging, Staples,
Inc.and Royal Typewriter. We also operate an online website for the sale of its
toner products and is also a supplier numerous independent online websites.

Current Business Model

The process we employ when recycling toner cartridges is as
follows:

| | a. | Disassemble Empty (Used) Cartridges  We inspect and
      evaluate components to determine if the components can be
  recycled.     
| | -- | -------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                      
| | b. | CleanComponents  We remove old components and clean
      components to be recycled.                                                
| |    |                                                                                                                                      
| | c. | Inspect Components  We inspect all new and recycled
      components before assembly.                                               
| |    |                                                                                                                                      
| | d. | AssembleComponents  We assemble all of the components to
      create a refurbished cartridge and refill the cartridge with
  toner.
| |    |                                                                                                                                      
| | e. | Perform Quality Control Tests  We test all finished
      products using accurate testing equipment.                                
| |    |                                                                                                                                      
| | f. | Package  We package the product for shipping to the
      consumer.                                                                 

We are a vendor to:

| | a. | Big Box Clients (including Staples, Inc. and Micro Center
      by Micro Electronics, Inc.)
| | -- | -------------------------------------------------------------------------------------------
| |    |                                                                                            
| | b. | Distributors                                                                               
| |    |                                                                                            
| | c. | Online Retailers                                                                           
| |    |                                                                                            
| | d. | Small Businesses and Individuals through our online
      direct sales division.           

We havebenefited from the significant growth trends in
theglobal recycled toner industry. We have experienced a dramatic upward trend
in its overall sales and net profits.

Post Merger Strategy

We plan to focus on the following activities after the merger:

| | a. | Attract High Caliber Management- Our management
      has demonstrated the ability to create value and maintain a profitable
      operation. As a private enterprise the company has been successful in
      achieving solid growth in sales and profits. As a public company, we
      intend to both improve the efficiency of our operations to optimize our
      organic growth and expand our operationsby rapid growth through
      acquisition. Therefore, we will seek seasoned managementhaving an in-
      depth knowledge of our industry and the requisite expertise to create a
      more efficient operation, by effectively introducing new products while
      expanding our client base. In addition, we will attract talented
      individuals with experience in mergers and acquisitions who can
      successfully identify ideal target companies, maximize terms during
      negotiation and successfully integrate these targets with our companys
      operations. As a public company, we can create competitive incentive
      packages by allotting a certain percentage of the compensation in the form
      of equity and/or stock options.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | b. | Invest in Infrastructure- We will identify
      aspects of our operations that can be upgraded or improved to increase
      sales and productivity. These improvements may include factory automation
      and identification of more cost effective suppliers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | c. | Increase Marketing We have achieved growth in
      revenues and profitability with minimal expenditures towards marketing our
      products. Our current marketing efforts are comprised primarily of word of
      mouth and our staffs persistent cold-calling sales efforts. After raising
      additional funds, we expect to expand our client base by hiring a more
      seasoned                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

---

| |    | marketing staff and by investing in advertising with a
      specific focus on internet advertising.                                                                
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                     
| | d. | Growth by Acquisition- We will acquire other
      companies or assets within our industry or related industries, focusing on
      a vertical acquisition approach.



We will focus our merger and acquisition activities on
suppliers, distributors and online retailers. This vertical approach will
increase sales and profitability. Integratingwith these types of firms is
relatively easier sinceeach target in the vertical chain has a distinct role. By
utilizing our stock, we can acquire companies with a combination of cash and
stock to minimize excess use of our cash reserves.

| | (i)   | Suppliers(empty cartridge
      collectors and brokers) Maintaining a supply of empty cartridges is
      critical for our success. While we are proficient in both directly
      collecting and sourcing empty cartridges, an acquisition in this sector
      will ultimately increase our product quality control, sales and
      profitability. By controlling the source of our empty cartridges, we can
      insure the highest quality for our customers. In addition, by securing
      direct and preferential access to the empty cartridges, we can readily
      meet any order and reduce the raw material costs, thereby leading to
      higher net margins.                                                                                                                                                                                                                   
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (ii)  | Distributors Many of our clients are
      large distributors who buy products from us and resell them to retailers
      and end users at higher prices. We will seek acquisition of a large
      distributor with a large client database, so we can utilize its sales
      channels and offer its clients high quality product at cheaper price while
      maintaining a high degree of profitability. While we favor already
      profitable distribution companies, we also view distressed distributors as
      viable acquisition targets. We can restructure these distributors and
      realize significant value from aggressively marketing to their client
      base.                                                                                                                                                                                                         
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (iii) | Online Retailers Our online division at
      www.yourcartridges.com has significantly higher margins and real time
      cash flow. By acquiring online retailers, we can again provide the product
      at a cheaper cost and be more competitive in the internet market.
      Moreover, the cost of integration will be marginal as we already have a
      staff in place for both marketing and customer service. Based on our
      experience, online retailers can be purchased at low cost since they are
      often operated and owned by small independent business owners. By having
      access to their client database, we can create an aggressive marketing
      strategy to maximize their existing customer base. In the future, we
      intend to have more than half our revenues generated from online sources
      in order to optimize our margins and cashflow.

Quality Standards

Our laser toner cartridges not only meet OEM standards, but
often exceed OEM standards. Our defect ratio is less than 1%, which is
considered low in the toner industry. We also offer a 100% guarantee for all of
our finished products.

Profitability

---

Since our establishment and most notably for the last two years
we have seen an increase in both our profits and our revenues. This can be
attributed to our experience in maintaining a streamline operation and our
ability to reduce costs while maintaining high quality standards. The defective
rate of our products is less than 1% and our repeat and long standing business
with the major market players illustrate the high quality of our products.

Strong Online Presence

Our website YourCartridges.com is a leader in the online
industry. The website alone has annual revenue of $650,000 without any
significant marketing effort on our part. The net profit margin for the online
segment of operation is close to 20% with greater cash flow. We have also
acquired two more internet properties which have been successfully integrated
into our online division. We are currently identifying more online retailers for
possible acquisition.

Competition

We compete primarily with other small remanufacturers of toner
cartridge products. However, due to the recent economic downturn and the failure
of many individual companies to achieve profitability in this industry, many of
our direct competitors have exited the market.

Insurance

We maintain medical and accident insurance for our employees to
the extent required under federal laws and the laws of the State of California,
and we also maintain fire and general commercial insurance with respect to our
facilities. We do not have any business liability or disruption insurance
coverage for our operations.

ISO 9001, 14001, Minority Status

We have minority owned business status in the state of
California. We are in process of obtaining our ISO Certification for 9001and
14001.

The Recycled Toner Cartridge Market

The recycled toner business is a multi-billion dollar industry
with continuing growth. According to Lyra Research, the recycled toner market
size in 2008 was $6 Billion and is expected to grow to $8.2 Billion by the year
2012. As recycled toner is considerably less expensive than retail toner while
maintaining equal quality, the market is expanding annually. Moreover, the
market penetration of our products is still at its early stage. Wal-Mart, Best
Buy, Costco, Target, and most othermajor retailers do not yet carry recycled
toner. In addition, the United Nations and U.S. federal, state and local
governments have still not adopted a policy for the use of recycled toner.

Finally, recycled toner serves the protection of the
environment as plastic cartridges are now being reused numerous times. More
recently, the Obama administration is actively promoting clean technology and
recycling of all products in the U.S. For example, under the new Stimulus Plan,
tax breaks are being offered to recycling manufacturers. Staples Canada recently
held an empty cartridge drive to collect one million empty cartridges for Earth
Day April 22, 2009. Moreover, companies throughout the U.S. and internationally
are emphasizing the use of the green products. Inevitably, companies and
individuals will use products such as ours as it not only cheaper but helpful in
preserving our economy.

For the consumer there is an effort to market green products,
Wal-Mart will introduce a Sustainability Index to mark each product based on
their environmental impact.

Cartridges require tremendous energy to produce and recycling
cartridges will save energy for the environment and reduce pollution. Secondly,
an empty cartridge takes 400  1000 years to biodegrade. According to the UDC,
there are 400 million empty cartridges being disposed of every year in the U.S.
While saving costs and helping to protect the environment, the use of
refurbished toner will continue to grow in the U.S.

Our Employees

As of April 15, 2010, we employed 67 full-time employees. The
following table sets forth the number of our full-time employees by function as
of March 15, 2010:

---

As ofApril 15,Functions
    
    2010Executives Management & Sales
    
    6Technical & Engineering Staff
    
    3Production Staff
    
    50Administrative Staff
    
    8Total
    
    67


We believe that we maintain a satisfactory working relationship
with our employees and we have not experienced any significant labor disputes or
any difficulty in recruiting new employees.

|ITEM 2. | DESCRIPTION OF PROPERTIES
|------- | -------------------------

Facilities

Lexon leases office space at 14830 Desman Road, La Mirada,
California 90638. The lease will expire in 2011 and the monthly rent is
$23,000.

|ITEM 3. | LEGAL PROCEEDINGS
|------- | -----------------

To the best knowledge of management, there are two pending
legal proceedings against us.

On July 14, 2008, Advanced Digital Technology Co. Ltd., a
Korean corporation (ADT), filed a claim against Lexon and certain named
individuals who are former and current officers of the Company. The claim
alleges breach of an agreement to settle an earlier dispute, involving ADT's
investment of $150,000 in Lexon on or about January 16, 2007 and ADT's
subsequent unilateral decision to rescind and demand a refund of this
investment. The total amount of damages claimed under the pending lawsuit is the
investment amount of $150,000 plus filing costs, interest and attorney fees for
an aggregate amount of $178,522. On or about May 2, 2009, Lexon became aware of
a default judgment entered in the amount above. Such judgment was entered on
December 22, 2009. On or about May 8, 2009, Lexon has retained the law firm of
Smith, Chapman & Campbell for the purpose of setting aside the default
judgment as the Company was never in receipt of the notice of default entry. On
or about July 21, 2009, the court set aside the default as the court agreed that
service was never properly served. We are currently in the discovery stage of
the proceedings.

On September 5, 2008, Vivien and David Bollenberg, a current
shareholder (the Bollenbergs), filed a claim against Lexon and other third
parties, including Byung Hwee Hwang (also referred to as "Ben Hwang") and other
financial agents and institutions involved in the alleged fraudulent
transaction. The lawsuit is currently pending in the Orange County Superior
Court in Santa Ana, California. The filed complaint alleges that Ben Hwang
together with his representatives, including his accountant, escrow agent and
real estate agent/broker, made certain representations to and solicited the
Bollenbergs to make an investment in several companies and ventures including
Lexon with the intent to misappropriate the solicited funds for personal use.
The Bollenbergs allege that they invested a total of $1,500,000 among and
between the various companies and ventures recommended by Ben Hwang, of which
investment amount approximately $550,000 was invested in Lexon ($150,000 for
600,000 shares at $0.25 per share and $400,000 initially invested in Lexon Korea
and later converted into 1,150,000 shares in Lexon for a total of 1,750,000
shares in Lexon). The final disposition of this case has not yet been
resolved.

|ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF
      SECURITIES HOLDERS
|------- | -----------------------------------------------------------

None.

PART II

|ITEM 5. | MARKET FOR COMMON EQUITY AND RELATED
      STOCKHOLDER MATTERS
|------- | --------------------------------------------------------------

As of April 15, 2010, we have approximately 380 shareholders
and we have 515,289,722 shares outstanding.

Unregistered Sales of Securities

On November 3, 2009, 4,200,000 shares were issued to Fresh Cure
Inc. in exchange for assets as per our 8k dated November 4, 2009.

---

On November 3, 2009, 2,500,000 shares were issued to Stacey
Park for $50,000.00. Use of proceeds were for working capital purposes.

On November 9, 2009, 50,000 shares were issued to Todd W.
Henreckson for $1,000.00. Use of proceeds were for working capital purposes.

On November 9, 2009, 12,500 shares were issued to Michael T.
Henreckson for $250.00. Use of proceeds were for working capital purposes.

On November 9, 2009, 5,000 shares were issued to Sara L.
Henreckson for $100.00. Use of proceeds were for working capital purposes.

On November 9, 2009, 5,000 shares were issued to Jonathan D.
Henreckson for $100.00. Use of proceeds were for working capital purposes.

On November 9, 2009, 2,500 shares were issued to Rebecca M.
Henreckson for $50.00. Use of proceeds were for working capital purposes.

On November 9, 2009, 50,000 shares were issued to Todd
Henreckson for $1,000.00. Use of proceeds were for working capital purposes.

On November 10, 2009, 500,000 shares were issued to Paul N.
Carson for $10,000.00. Use of proceeds were for working capital purposes.

On November 11, 2009, 100,000 shares were issued to Joshua
Gluckman for $2,000.00. Use of proceeds were for working capital purposes.

On November 11, 2009, 200,000 shares were issued to Kimberly
Yoshizawa for $4,000.00. Use of proceeds were for working capital purposes.

On November 12, 2009, 25,000 shares were issued to Winton Low
for $500.00. Use of proceeds were for working capital purposes.

On November 13, 2009, 5,000,000 shares were issued to Peter Pak
for $100,000.00. Use of proceeds were for working capital purposes.

On November 13, 2009, 50,000 shares were issued to Peter Park
for $1,000.00. Use of proceeds were for working capital purposes.

On November 13, 2009, 2,500,000 shares were issued to Samuel
Shim for $50,000.00. Use of proceeds were for working capital purposes.

On November 13, 2009, 1,500,000 shares were issued to Samuel
Shim for $30,000.00. Use of proceeds were for working capital purposes.

On November 16, 2009, 50,000 shares were issued to The Wurtzer
Trust for $100,000.00. Use of proceeds were for working capital purposes.

On November 16, 2009, 375,000 shares were issued to Ji Soon Lee
for $7,500.00. Use of proceeds were for working capital purposes.

On November 16, 2009, 75,000 shares were issued to Sarah Kim
for $1,500.00. Use of proceeds were for working capital purposes.

On November 20, 2009, 100,000 shares were issued to Carol
Gluckman for $30,000.00. Use of proceeds were for working capital purposes.

On January 25, 2010, 5,000,000 shares were issued to Fresh Cure
Inc. in exchange for assets as per our 8k dated January 28, 2010.

On February 3, 2010, 250,000 shares were issued to Juan Wozniak
for $5,000.00. Use of proceeds were for working capital purposes.

On February 16, 2010, 300,000 shares were issued to Kyungwhan
Doh for $6,000.00. Use of proceeds were for working capital purposes.

---

|ITEM 6. | SELECTED FINANCIAL STATEMENT DATA
|------- | ---------------------------------

None.

|ITEM 7. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF
      FINANCIAL CONDITION AND RESULTS **OF OPERATIONS**
|------- | -----------------------------------------------------------------------------------------------

Cautionary Statement Regarding Forward-Looking Statements

This report may contain forward-looking statements. Examples
of forward-looking statements include, but are not limited to: (a) projections
of revenues, capital expenditures, growth, prospects, dividends, capital
structure and other financial matters; (b) statements of plans and objectives of
our management or Board of Directors; (c) statements of future economic
performance; (d) statements of assumptions underlying other statements and
statements about us and our business relating to the future; and (e) any
statements using the words anticipate, expect, may, project, intend or
similar expressions. All forward-looking statements included in this Report are
based on information available to the Company on the date hereof, and the
Company assumes no obligation to update any such forward-looking statement. It
is important to note that the Company's actual results could differ materially
from those in such forward-looking statements. Additionally, the following
discussion and analysis should be read in conjunction with the Financial
Statements and notes thereto appearing elsewhere in this Report.

General

Effective December 8, 2004, we acquired a majority control
(90.16%) of Techone Company, Ltd., a Republic of South Korea corporation
(Techone), through an investment of $1,585,000 financed through the sale of
our restricted common stock to two accredited investors. During February 2006,
the Company changed the name of Techone to Lexon Semiconductor Corporation
(Lexon Semi). Lexon Semi is a corporation that manufactures and sells Low
Temperature Cofired Ceramic (LTCC) components. The Company has operated Lexon
Semi as a majority-owned subsidiary and the business of Lexon Semi has been the
operating business of the Company.

On October 22, 2009, Lexon successfully completed a reverse
merger with Paragon Toner Inc. Thereafter our source of liquidity stemmed from
the operation of the existing business of Paragon.

Results of Operations for the Year Ended December 31, 2009
compared to December 31, 2008

Revenues. Total revenues during the year ended December 31,
2009 were $5,446,742 compared to $6,707,301 for the year ended December 31,
2008.

Operating Expenses. Total operating expenses during the year
ended December 31, 2009 were $1,446,036 in selling, general and administrative
expenses compared to $1,588,655 for the year ended December 31, 2008.

Other Income (Expense). Other income for the year ended
December 31, 2009 was $374,595 which consisted of interest expense of $47,903
and gain on forgiveness of debt of 418,970 compared to other income of ($66,039) for the year
ended in 2008 which consisted of interest expense of $66,039.

Liquidity and Capital Resources

At December 31, 2009, we had current assets of $1,386,702 and
current liabilities of $1,476,763, for negative working capital of $90,061.
Current assets consisted solely of cash and cash equivalents, accounts
receivables, inventory and other current assets. We also had net property and
equipment of $112,392, intangibles, net of amortization of $276,365, security
deposits of $20,748 and goodwill of $3,214,289 for total assets of $5,200,496.

Current liabilities at December 31, 2009, consisted of accounts
payable of $552,634, accounts payable-related parties of $91,960, line of credit
of $450,000, current accrued expenses of $110,747, notes payable of $249,534,
capital lease obligations of $21,888, for total current liabilities of
$1,476,763. We also had contingent liabilities of $274,610.

For the year ended December 31, 2009, net cash flows used in
operating activities totaled $180,096, compared to net cash flows provided by
operating activities of $488,988 in the prior year.

For the year ended December 31, 2009, there was $53,089 cash
provided by investing activities compared to the net cash used in investing
activities of $210,859.

Net cash provided by financing activities for the year ended
December 31, 2009 was $108,405, compared net cash used of $209,970 for the prior
year which consisted of cash paid on notes payable of $89,268, payment on
capital lease obligations of $32,152 and distribution to shareholder of
$193,285, offset by proceeds from line of credit of $104,735.

Going forward, with a viable cash flow positive operation in
place, we expect to fund our business with cash flow from our current

---

business. To date, we have retained earnings of $130,510 and a
working capital deficit of approximately $90,000 at December 31, 2009.

|ITEM 8. | FINANCIAL STATEMENTS
|------- | --------------------

Our financial statements for the reporting period are set forth
immediately following the signature page to this form 10-K.

|ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH
      ACCOUNTANTS ON ACCOUNTING AND **FINANCIAL DISCLOSURE**
|------- | ----------------------------------------------------------------------------------------------

None

|ITEM 9 A. | CONTROLS AND PROCEDURES
|--------- | -----------------------

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer (the
Certifying Officers) are responsible for establishing and maintaining our
disclosure controls and procedures. The Certifying Officers have designed such
disclosure controls and procedures to ensure that material information is made
known to them, particularly during the period in which this report was prepared.
The Certifying Officers have evaluated the effectiveness of our disclosure
controls and procedures as of the end of the period covered by this Report.
Based on that evaluation, the Certifying Officers have concluded that our
disclosure controls and procedures were not effective at the reasonable
assurance level due to the material weakness described below.

Managements Report on Internal Control Over Financial
Reporting

Our management is responsible for establishing and maintaining
adequate internal control over financial reporting (as defined in Rule 13a-15(f)
under the Exchange Act) and for assessing the effectiveness of our internal
control over financial reporting. Our internal control system is designed to
provide reasonable assurance to our management and board of directors regarding
the preparation and fair presentation of published financial statements in
accordance with United States generally accepted accounting principles.

Our internal control over financial reporting is supported by
written policies and procedures that pertain to the maintenance of records that,
in reasonable detail, accurately and fairly reflect the transactions and
dispositions of our assets; provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles and that our receipts
and expenditures are being made only in accordance with authorizations of our
management and our board of directors; and provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use or
disposition of our assets that could have a material effect on our financial
statements.

Our management has assessed the effectiveness of our internal
control over financial reporting as of the end of our most recent fiscal year.
Managements assessment included an evaluation of the design of our internal
control over financial reporting and testing of the operational effectiveness of
our internal control over financial reporting. Based on this assessment, our
management has concluded that our internal control over financial reporting was
not effective at the reasonable assurance level due to the material weaknesses
described below.

In light of the material weaknesses described below, we
performed additional analysis and other post-closing procedures to ensure our
consolidated financial statements were prepared in accordance with generally
accepted accounting principles. Accordingly, we believe that the consolidated
financial statements included in this Report fairly present, in all material
respects, our financial condition, results of operations and cash flows for the
periods presented.

A material weakness is a control deficiency (within the meaning
of the Public Company Accounting Oversight Board (PCAOB) Auditing Standard No.
2) or combination of control deficiencies that result in more than a remote
likelihood that a material misstatement of the annual or interim financial
statements will not be prevented or detected. The Certifying Officers have
identified the following three material weaknesses which have caused the
Certifying Officers to conclude that our disclosure controls and procedures were
not effective at the reasonable assurance level:

1. We do not yet have written documentation of our internal
control policies and procedures. Written documentation of key internal controls
over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley
Act and will be applicable to us for the year ending December 31, 2008. The
Certifying Officers evaluated the impact of our failure to have written
documentation of our internal controls and procedures on our assessment of our
disclosure controls and procedures and has concluded that the control deficiency
that resulted represented a material weakness.

2. We do not have a sufficient segregation of duties within
accounting functions, which is a basic internal control. Due to our size and
nature, segregation of all conflicting duties may not always be possible and may
not be economically feasible. However, to the extent possible, the initiation of
transactions, the custody of assets and the recording of transactions should be
performed by separate

---

individuals. The Certifying Officers evaluated the impact of
our failure to have segregation of duties on our assessment of our disclosure
controls and procedures and has concluded that the control deficiency that
resulted represented a material weakness.

To remediate the material weaknesses in our disclosure controls
and procedures identified above, in addition to working with our independent
auditors, we have continued to refine our internal procedures to begin to
implement segregation of duties and to prepare a written documentation of our
internal control policies and procedures.

This Report does not include an attestation report of our
independent registered public accounting firm regarding internal control over
financial reporting. Managements report was not subject to attestation by our
independent registered public accounting firm pursuant to temporary rules of the
SEC that permit the Company to provide only managements report in this Annual
Report.

There were no changes in our internal control over financial
reporting that occurred during our most recent fiscal quarter that have
materially affected, or reasonably likely to materially affect, our internal
control over financial reporting.

|ITEM 9 B. | OTHER INFORMATION
|--------- | -----------------

None.

PART III

|ITEM 10 . | DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS,
      AND CONTROL PERSONS; **COMPLIANCE WITH SECTION 16(a) OF THE
      EXCHANGE ACT**
|--------- | -----------------------------------------------------------------------------------------------------------------------------------

Directors and Executive Officers

The following table sets forth certain information relating to
our directors and executive officers as of April 15, 2010. The business address
of all of our directors and executive officers is our registered office at 14830
Desman Road, La Mirada, CA 90638.

Name
    Age
    PositionJames Park
    42
    President, Chief Executive
      Officer and Chairman of the Board of DirectorsYoung Won
    48
    Chief Operating Officer and DirectorBong S. Park
    75
    Chief Financial Officer and
      DirectorHyung Soon Lee
    58
    Director


James Park is the founder of We and has worked at the
company since 1993. Mr. Park was instrumental to our growth from a small
independent business. Mr. Park is a graduate of the University of California of
Los Angeles.

Young Won has worked at We for the last 14 years. Mr.
Won is in charge of the production, operation, research and development of the
company. He is has been integral in the success of We. Previously, he worked for
the Los Angeles Metropolitan Water District as a metallurgical engineer. Mr.
Wonreceived a B.S. in mechanical engineering from Korea University. He also
graduated from the University of Southern California with an M.S.in material
science.

Bong S. Parkwas the Chief Financial Officer of the
Company since 1997. He was previously the CEO of Tokyo Printing Ink, Corp. USA
from 1985-1997. His experience as a seasoned executive and his extensive
knowledge in the ink and toner industryhas been instrumental for the growth of
the Company. Mr. Parkreceived a B.A. degree in business administration from
Korea University.

Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Securities and Exchange Act of 1934, as
amended, requires our directors and certain officers, as well as persons who own
more than 10% of a registered class of our equity securities, (Reporting
Persons) to file reports of ownership and changes in ownership on Forms 3, 4
and 5 with the Securities and Exchange Commission. To the best of our knowledge,
we believe that all Reporting Persons have complied on a timely basis with all
filing requirements applicable to them.

Code of Ethics

None.

|ITEM 11. | EXECUTIVE COMPENSATION
|-------- | ----------------------

Summary Compensation Table Fiscal Year Ended December 31,
2009

---

The following table sets forth information concerning all cash
and non-cash compensation awarded to, earned by or paid to the named persons for
services rendered in all capacities during the noted periods. No other executive
officers received total annual salary and bonus compensation in excess of
$100,000 during the fiscal year ended December 31, 2009.

Name and
    
    
    
    
    
    
    
    Stock
    
    
    Option
    
    
    All OtherPrincipal
    
    Salary
    
    
    
    
    
    Awards
    
    
    Awards
    
    
    Compensation
    
    
    TotalPosition
      (1)
    
    ($)
    
    
    Bonus ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)James Park
    
    98,000
    
    
    0
    
    
    0
    
    
    0
    
    
    0
    
    
    98,000Young Won
    
    98,000
    
    
    0
    
    
    0
    
    
    0
    
    
    0
    
    
    98,000Bong S. Park
    
    98,000
    
    
    0
    
    
    0
    
    
    0
    
    
    0
    
    
    98,000


Note: The above three executives became Executive Officers of
the Company as of October 22, 2010 which is the effective date of the Reverse
Merger between Lexon Technologies Inc. and Paragon Toner Inc.

Employment Agreements

As the incoming CEO of the Company, Mr. Park has entered into a
new employment contract with the Company. Under the terms of the contract, he
will receive a salary of $168,000 for a one-year term. No bonus or stock options
are included in the contract. Any change in compensation will be determined by
the Board of Directors after conclusion of the initial one-year term.

Director Compensation

For the fiscal year 2009, no director received compensation for
services as a director.

Compensation Committee Interlocks and Insider
Participation

During the last fiscal year we did not have a standing
Compensation Committee. The Board was responsible for the functions that would
otherwise be handled by the compensation committee.

Indemnification of Directors and Executive Officers and
Limitation of Liability

The General Corporation Law of Delaware, Section 102(b)(7)
provides that directors, officers, employees or agents of Delaware corporations
are entitled, under certain circumstances, to be indemnified against expenses
(including attorneys fees) and other liabilities actually and reasonably
incurred by them in connection with any suit brought against them in their
capacity as a director, officer, employee or agent, if they acted in good faith
and in a manner they reasonably believed to be in or not opposed to the best
interests of the corporation, and with respect to any criminal action or
proceeding, if they had no reasonable cause to believe their conduct was
unlawful. This statute provides that directors, officers, employees and agents
may also be indemnified against expenses (including attorneys fees) actually
and reasonably incurred by them in connection with a derivative suit brought
against them in their capacity as a director, if they acted in good faith and in
a manner they reasonably believed to be in or not opposed to the best interests
of the corporation, except that no indemnification may be made without court
approval if such person was adjudged liable to the corporation

Compensation Pursuant to Plans

None.

Pension Table

Not Applicable.

Other Compensation

None.

Compensation of Directors

Our directors do not receive any cash compensation, but are
entitled to reimbursement of their reasonable expenses incurred in attending
directors meetings.

---

|ITEM 12 . | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
      OWNERS AND MANAGEMENT
|--------- | --------------------------------------------------------------------

The following table sets forth as of April 15, 2010 the name
and address and the number of shares of our Common Stock, par value $0.001 per
share, held of record or beneficially by each person who held of record, or was
known by us to own beneficially, more than 5% of the shares of our Common Stock
issued and outstanding.

|               |  | Number of    |  |  |              | 
|-------------- |  | ------------ |  |  | ------------ | 
|               |  | Shares       |  |  | Percentage   | 
|               |  | Beneficially |  |  | Beneficially | 
|Name           |  | Owned        |  |  | Owned        | 
|               |  |              |  |  |              | 
|James Park     |  | 198,406,990  |  |  | 38.50%       | 
|Young Won      |  | 99,030,531   |  |  | 19.22%       | 
|Hyung Soon Lee |  | 28,828,333   |  |  | 5.59%        | 

Securities Ownership of Officers and Directors

The following table sets forth certain information relating to
the shareholdings of our Executive and Directors. The business address is our
registered office at 14830 Desman Road, La Mirada, CA 90638.

|                                  |  | Number of    |  |  |              | 
|--------------------------------- |  | ------------ |  |  | ------------ | 
|                                  |  | Shares       |  |  | Percentage   | 
|                                  |  | Beneficially |  |  | Beneficially | 
|Name                              |  | Owned        |  |  | Owned        | 
|Management and Directors          |  |              |  |  |              | 
|James Park (CEO and Director)     |  | 198,406,990  |  |  | 38.50%       | 
|Young Won (COO and Director)      |  | 99,030,531   |  |  | 19.22%       | 
|Hyung Soon Lee (Director)         |  | 28,828,333   |  |  | 5.59%        | 
|Total of Management and Directors |  | 326,265,854  |  |  | 63.31%       | 

|ITEM 13 . | CERTAIN RELATIONSHIPS AND RELATED
      TRANSACTIONS
|--------- | ----------------------------------------------------

Our directors are not independent as that term is defined under
the Nasdaq Marketplace Rules.

Joon Ho Chang, a former director of the Company, received
8,000,000 shares of Common Stock as a fee for professional services rendered in
the merger transaction.

|ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES
|-------- | --------------------------------------

Choi, Kim & Park LLP (CKP)

CKP was our independent auditor and examined our financial
statements for the year ended December 31, 2009, and reviewed the financial
statements included in our quarterly reports on Form 10-QSB in the year 2009.
The audit and review of the annual financial statements for the year ended
December 31, 2008 was performed by Choi, Kim and Park LLP (CKP), as our new
independent auditor as of April 24, 2009

Audit Fees

CKP was paid aggregate fees of $6,000 for the year ended
December 31, 2008 for professional services rendered for the reviews of the
financial statements included in our quarterly reports on Form 10-QSB during
this period.

Audit for Reverse Merger

CKP was paid $40,000 in total for the audit of Paragon Toner
Inc. for the filing of the Form 8-K on October 8, 2009 which was necessary to
complete the reverse merger.

Audited-Related Fees

---

CKP was not paid additional fees for either the year ended
December 31, 2009, or the fiscal year ended December 31, 2009 for assurance and
related services reasonably related to the performance of the audit or review of
our financial statements.

All Other Fees

CKP was not paid any other fees for professional services
during the year ended December 31, 2009 or the fiscal year ended December 31,
2008.

---

PART IV

|ITEM 15. | EXHIBITS
|-------- | --------

(a)(1) FINANCIAL STATEMENT SCHEDULES. The following financial
statement schedules are included as part of this report.

(a)(2) EXHIBITS. The following exhibits are included as part of
this report:

|Exhibit No. | Description                                                                                                         
|----------- | --------------------------------------------------------------------------------------------------------------------
|31.1        | Certification of Chief
      Executive Officer per Section 302 of the Sarbanes-Oxley Act of 2002                    
|31.2        | Certification of Chief Financial Officer per
      Section 302 of the Sarbanes-Oxley Act of 2002                    
|32          | Certification of Chief
      Executive and Financial Officer per Section 906 of the Sarbanes-Oxley Act
      of 2002

SIGNATURES

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

|                     | LEXON TECHNOLOGIES, INC.
|-------------------- | ------------------------
|                     |                         
|Date: April 15, 2010 | By:                     
|                     |                         
|                     |                         

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 stated.

---

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

|                                                              | 
|------------------------------------------------------------- | 
|                                                              | 
|Report of Independent
      Registered Public Accounting Firm | 
|Financial Statements:                                         | 
|Balance Sheets                                                | 
|Statements of Operations                                      | 
|Statement of Shareholders Deficiency                         | 
|Statements of Cash Flows                                      | 
|Notes
      to Financial Statements                           | 

---

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Lexon
Technologies, Inc.

We have audited the accompanying balance sheets of Lexon
Technologies, Inc. the Company) as of December 31, 2009 and 2008 and the
related statements of operations, stockholders equity, and cash flows for the
years then ended. 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.

We conducted our audits 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 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, such financial statements present fairly, in
all material respects, the financial position of Lexon Technologies, Inc. as of
December 31, 2009 and 2008, and the results of their operations and cash flows
for the years then ended, in conformity with accounting principles generally
accepted in the United States of America.

/s/ Choi, Kim & Park LLP

Los Angeles, California Certified Public Accountants

April 12, 2010

---

LEXON TECHNOLOGIES, INC. Balance Sheets
December 31, 2009 and 2008

|ASSETS                           |   |              |  |   |              | 
|-------------------------------- | - | ------------ |  | - | ------------ | 
|                                 |   | December 31, |  |   | December 31, | 
|                                 |   | 2009         |  |   | 2008         | 
|Current assets:                  |   |              |  |   |              | 
|Cash and cash equivalents        | $ | 61,661       |  | $ | 80,263       | 
|Accounts receivable,
      net   |   | 468,821      |  |   | 464,789      | 
|Inventory                        |   | 838,220      |  |   | 458,936      | 
|Other current assets             |   | 18,000       |  |   | 1,800        | 
|                                 |   |              |  |   |              | 
|Total current assets             |   | 1,386,702    |  |   | 1,005,788    | 
|                                 |   |              |  |   |              | 
|Due from related parties         |   | 190,000      |  |   | 273,650      | 
|                                 |   |              |  |   |              | 
|Property and equipment, net      |   | 112,392      |  |   | 214,659      | 
|                                 |   |              |  |   |              | 
|Other assets:                    |   |              |  |   |              | 
|Intangibles, net of amortization |   | 276,365      |  |   | 30,284       | 
|Security deposits                |   | 20,748       |  |   | 20,748       | 
|Other assets                     |   | -            |  |   | 245          | 
|Goodwill                         |   | 3,214,289    |  |   | -            | 
|                                 |   |              |  |   |              | 
|Total other assets               |   | 3,511,402    |  |   | 51,277       | 
|                                 |   |              |  |   |              | 
|                                 |   |              |  |   |              | 
|Total Assets                     | $ | 5,200,496    |  | $ | 1,545,374    | 

The accompanying notes are an integral part of the financial
statements.

---

|LEXON TECHNOLOGIES, INC.  
|--------------------------
|Balance Sheets            
|December 31, 2009 and 2008

|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                                                                                           |   |              |   |   |              |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ------------ | - | - | ------------ | -
|                                                                                                                                                                                                                                                               |   | December 31, |   |   | December 31, |  
|                                                                                                                                                                                                                                                               |   | 2009         |   |   | 2008         |  
|Current liabilities:                                                                                                                                                                                                                                           |   |              |   |   |              |  
|                                                                                                                                                                                                                                                               |   |              |   |   |              |  
|Accounts payable                                                                                                                                                                                                                                               | $ | 552,634      |   | $ | 492,804      |  
|Due to related parties                                                                                                                                                                                                                                         |   | 91,960       |   |   | -            |  
|Line of credit                                                                                                                                                                                                                                                 |   | 450,000      |   |   | 600,000      |  
|Current portion of notes payable                                                                                                                                                                                                                               |   | 249,534      |   |   | 92,592       |  
|Current portion
      of capital lease obligations                                                                                                                                                                                                             |   | 21,888       |   |   | 35,761       |  
|Accrued expenses                                                                                                                                                                                                                                               |   | 110,747      |   |   | 49,436       |  
|                                                                                                                                                                                                                                                               |   |              |   |   |              |  
|Total current liabilities                                                                                                                                                                                                                                      |   | 1,476,763    |   |   | 1,270,593    |  
|Contingent liabilities                                                                                                                                                                                                                                         |   | 274,610      |   |   | -            |  
|Long-term liabilities:                                                                                                                                                                                                                                         |   |              |   |   |              |  
|                                                                                                                                                                                                                                                               |   |              |   |   |              |  
|Notes payable, net of current
      portion                                                                                                                                                                                                                    |   | 99,460       |   |   | 47,996       |  
|Capital lease
      obligations, net of current portion                                                                                                                                                                                                        |   | 28,561       |   |   | 50,449       |  
|Deferred rent                                                                                                                                                                                                                                                  |   | 53,398       |   |   | 57,984       |  
|Total long-term liabilities                                                                                                                                                                                                                                    |   | 181,419      |   |   | 156,429      |  
|                                                                                                                                                                                                                                                               |   |              |   |   |              |  
|Total liabilities                                                                                                                                                                                                                                              |   | 1,932,792    |   |   | 1,427,022    |  
|                                                                                                                                                                                                                                                               |   |              |   |   |              |  
|Stockholders equity:                                                                                                                                                                                                                                          |   |              |   |   |              |  
|                                                                                                                                                                                                                                                               |   |              |   |   |              |  
|Common
      stock - $0.001 par value;
                   
      2,000,000,000 shares authorized,
                   
      499,739,721 and 34,183,778 shares issued and
                    
      outstanding as of December 31, 2009 and 2008, respectively |   | 499,740      |   |   | 34,184       |  
|Additional paid-in capital                                                                                                                                                                                                                                     |   | 2,737,454    |   |   | 94,816       |  
|Stock
      subscription receivable                                                                                                                                                                                                                            |   | (100,000     | ) |   | -            |  
|Retained earnings (accumulated
      deficit)                                                                                                                                                                                                                  |   | 130,510      |   |   | (10,648      | )
|Total stockholders equity                                                                                                                                                                                                                                     |   | 3,267,704    |   |   | 118,352      |  
|                                                                                                                                                                                                                                                               |   |              |   |   |              |  
|Total
      liabilities and stockholders equity                                                                                                                                                                                                               | $ | 5,200,496    |   | $ | 1,545,374    |  

The accompanying notes are an integral part of the financial
statements.

---

|LEXON TECHNOLOGIES, INC.                      
|----------------------------------------------
|Statements of Operations                      
|For the Years Ended December 31, 2009 and 2008

|                                                               |   | For the Years Ended |  
|-------------------------------------------------------------- | - | ------------------- | -
|                                                               |   | December 31,        |  
|                                                               |   | 2009                |  
|Net sales                                                      | $ | 5,446,742           |  
|Cost of goods sold                                             |   | 3,899,328           |  
|Gross profits                                                  |   | 1,547,414           |  
|Selling, general and administrative expenses                   |   | 1,446,036           |  
|Income from operations                                         |   | 101,378             |  
|Other income (expenses):                                       |   |                     |  
|Gain on forgiveness of
      debt from discontinued operations |   | 418,970             |  
|Interest expense                                               |   | (47,903             | )
|Other income, net                                              |   | 3,528               |  
|Net other
      income(expense)                                |   | 374,595             |  
|                                                               |   |                     |  
|Income before income tax provision                             |   | 475,973             |  
|Provision for income taxes                                     |   | 3,883               |  
|Net income                                                     | $ | 472,090             |  

The accompanying notes are an integral part of the financial
statements.

---

|LEXON TECHNOLOGIES, INC.                      
|----------------------------------------------
|Statement of Stockholders' Equity             
|For the Years Ended December 31, 2009 and 2008

|                                                               |  | Common Stock |  |   |         |  |   |            |  |   |              |   |   |              |  
|-------------------------------------------------------------- |  | ------------ |  | - | ------- |  | - | ---------- |  | - | ------------ | - | - | ------------ | -
|                                                               |  |              |  |   |         |  |   |            |  |   | Retained     |   |   |              |  
|                                                               |  |              |  |   |         |  |   | Additional |  |   | Earnings     |   |   | Stock        |  
|                                                               |  |              |  |   |         |  |   | Paid-in    |  |   | (Accumulated |   |   | Subscription |  
|                                                               |  | Shares       |  |   | Amounts |  |   | Capital    |  |   | Deficit)     |   |   | Receivable   |  
|Balance at January 1,2008                                      |  | 34,183,778   |  | $ | 34,184  |  | $ | 94,816     |  | $ | 218,757      |   | $ | -            |  
|                                                               |  |              |  |   |         |  |   |            |  |   |              |   |   |              |  
|Distributions to stockholders for
      the year 2008          |  | -            |  |   | -       |  |   | -          |  |   | (289,439     | ) |   | -            |  
|                                                               |  |              |  |   |         |  |   |            |  |   |              |   |   |              |  
|Net income for the year 2008                                   |  | -            |  |   | -       |  |   | -          |  |   | 60,034       |   |   | -            |  
|                                                               |  |              |  |   |         |  |   |            |  |   |              |   |   |              |  
|Balance at December 31, 2008                                   |  | 34,183,778   |  |   | 34,184  |  |   | 94,816     |  |   | (10,648      | ) |   | -            |  
|                                                               |  |              |  |   |         |  |   |            |  |   |              |   |   |              |  
|Issuance of common stock for
      conversion of notes payable |  | 68,178,333   |  |   | 68,178  |  |   | 340,892    |  |   | -            |   |   | -            |  
|                                                               |  |              |  |   |         |  |   |            |  |   |              |   |   |              |  
|Merger related equity transactions                             |  | 347,448,444  |  |   | 347,448 |  |   | 1,642,426  |  |   | -            |   |   | -            |  
|                                                               |  |              |  |   |         |  |   |            |  |   |              |   |   |              |  
|Issuance of common stock                                       |  | 13,062,500   |  |   | 13,063  |  |   | 248,187    |  |   | -            |   |   | -            |  
|                                                               |  |              |  |   |         |  |   |            |  |   |              |   |   |              |  
|Issuance of stock subscription                                 |  | 16,666,666   |  |   | 16,667  |  |   | 83,333     |  |   | -            |   |   | (100,000     | )
|                                                               |  |              |  |   |         |  |   |            |  |   |              |   |   |              |  
|Stock award                                                    |  | 16,000,000   |  |   | 16,000  |  |   | 80,000     |  |   | -            |   |   | -            |  
|                                                               |  |              |  |   |         |  |   |            |  |   |              |   |   |              |  
|Acquisition of intangibles with
      common stock             |  | 4,200,000    |  |   | 4,200   |  |   | 247,800    |  |   | -            |   |   | -            |  
|                                                               |  |              |  |   |         |  |   |            |  |   |              |   |   |              |  
|Distributions to stockholders for
      the year 2009          |  | -            |  |   | -       |  |   | -          |  |   | (330,932     | ) |   | -            |  
|                                                               |  |              |  |   |         |  |   |            |  |   |              |   |   |              |  
|Net income for the year 2009                                   |  | -            |  |   | -       |  |   | -          |  |   | 472,090      |   |   | -            |  
|                                                               |  |              |  |   |         |  |   |            |  |   |              |   |   |              |  
|Balance at December 31, 2009                                   |  | 499,739,721  |  | $ | 499,740 |  | $ | 2,737,454  |  | $ | 130,510      |   | $ | (100,000     | )

The accompanying notes are an integral part of the financial
statements.

---

|LEXON TECHNOLOGIES, INC.                      
|----------------------------------------------
|Statements of Cash Flows                      
|For the Years Ended December 31, 2009 and 2008

|                                                              |   | For the Years Ended |  
|------------------------------------------------------------- | - | ------------------- | -
|                                                              |   | December 31,        |  
|                                                              |   | 2009                |  
|Cash flows from operating
      activities:                   |   |                     |  
|                                                              |   |                     |  
|Net income                                                    | $ | 472,090             |  
|                                                              |   |                     |  
|Adjustments to reconcile net income                           |   |                     |  
|to net cash
      provided by (used in) operating activities: |   |                     |  
|Bad debt expense                                              |   | 85,611              |  
|Depreciation and amortization                                 |   | 138,747             |  
|Gain on forgiveness of debt from discontinued operations      |   | (418,970            | )
|Provision for inventory obsolescence                          |   | -                   |  
|Changes in assets and liabilities:                            |   |                     |  
|Accounts receivable                                           |   | (89,643             | )
|Inventory                                                     |   | (379,284            | )
|Other current assets                                          |   | (16,200             | )
|Other assets                                                  |   | 245                 |  
|Accounts payable                                              |   | 32,983              |  
|Accrued expenses                                              |   | (1,089              | )
|Deferred rent                                                 |   | (4,586              | )
|Total adjustments                                             |   | (652,186            | )
|Net cash provided by (used in) operating
      activities     |   | (180,096            | )
|                                                              |   |                     |  
|Cash flows from investing activities:                         |   |                     |  
|                                                              |   |                     |  
|Due from related party                                        |   | 83,650              |  
|Acquisition of
      property                                 |   | (5,561              | )
|Acquisition of intangible                                     |   | (25,000             | )
|                                                              |   |                     |  
|Net cash provided by (used in) investing
      activities     |   | 53,089              |  
|                                                              |   |                     |  
|Cash flows from financing activities:                         |   |                     |  
|Net proceeds
      from line of credit                        |   | -                   |  
|Net payments on notes payable                                 |   | (111,577            | )
|Payments on
      capital lease obligations                   |   | (35,761             | )
|Issuance of common stock                                      |   | 261,250             |  
|Issuance of
      Paragon stock (prior to Merger)             |   | 325,425             |  
|Distributions to stockholder                                  |   | (330,932            | )
|Net cash provided by (used in)
      financing activities     |   | 108,405             |  
|Net increase (decrease) in cash                               |   | (18,602             | )
|Cash at beginning of year                                     |   | 80,263              |  
|Cash at end of year                                           | $ | 61,661              |  

The accompanying notes are an integral part of the financial
statements.

---

|LEXON TECHNOLOGIES, INC.                      
|----------------------------------------------
|Statements of Cash Flows                      
|For the Years Ended December 31, 2009 and 2008

|                                                                                                    |   | For the Years Ended | 
|--------------------------------------------------------------------------------------------------- | - | ------------------- | 
|                                                                                                    |   | December 31,        | 
|                                                                                                    |   | 2009                | 
|Supplemental disclosures:                                                                           |   |                     | 
|Cash paid during the year:                                                                          |   |                     | 
|Income taxes                                                                                        | $ | 2,247               | 
|Interest expense                                                                                    | $ | 47,903              | 
|                                                                                                    |   |                     | 
|Noncash investing and financing activities:                                                         |   |                     | 
|Common stock
      issued for merger activity                                                       | $ | 1,989,874           | 
|Common stock issued pursuant to
      conversion of notes payable                                   | $ | 409,070             | 
|Common stock
      issued pursuant to acquisition of intangible                                     | $ | 252,000             | 
|Conversion of line of credit to
      note payable                                                  | $ | 150,000             | 
|Conversion of
      due to related parties to distributions to
                  
      Stockholder | $ | -                   | 

The accompanying notes are an integral part of the financial
statements.

---

|LEXON TECHNOLOGIES, INC.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|December 31, 2009 and 2008                

Note 1 - Nature of Business

Lexon Technologies, Inc. ("the Company" or "Lexon") was
incorporated in April 1989 under the laws of state of Delaware, and owns 90.16%
of Lexon Semiconductor Corporation ("Lexon Semi" or formerly known as Techone
Co., Ltd ("Techone")) which had developed and manufactured Low Temperature
Cofired Ceramic (LTCC) components, including LTCC wafer probe cards, LTCC
circuit boards, LTCC Light Emitting Diode (LED) displays and related products
for the semiconductor testing and measurement, custom Printed Circuit Board
(PCB), and cellular phone industries.

Initially registered as California Cola Distributing Company,
Inc, the Company changed its name twice; first to Rexford, Inc. in October 1992,
and to the current name in July 1999.

In July 1999, Lexon acquired 100% of the outstanding common
stock of Chicago Map Corporation (CMC) in exchange for 10,500,000 shares of the
Company's common stock through a reverse acquisition accompanied by a
recapitalization. The surviving entity, Lexon, reflected the assets and
liabilities of Lexon and CMC at their historical book values. Lexon dissolved
CMC in 2002.

In April 2002, Lexon acquired 100% of the outstanding common
stock of Phacon Corporation (Phacon) in exchange for 17,500,000 shares of
Company's common stock through a reverse acquisition accompanied by a
recapitalization. As part of the agreement, the Company elected a 1 for 10
reverse stock split and the acquired shares of Phacon were entirely canceled
leaving the Company as the surviving entity.

In March 2003, the Company incorporated Lexon Korea Corporation
(Lexon Korea) as a wholly-owned subsidiary in Korea for the purpose of
entering into potential business combinations with Korean operating entities.
Lexon Korea was reorganized in August 2005, and as a result, the Companys
equity share in Lexon Korea was reduced to 10%.

In December 2004, the Company acquired 90.16% of the voting
stock of Techone Company, Ltd, a company in Korea, by investing $1,588,000. The
Company recognized goodwill of $1,851,692 in the acquisition. The Company
acquired Techone to develop it as the Companys core operating business in Korea
for manufacturing and selling LTCC related products. However, the development of
the LTCC related products was not successful, and the operations of Techone
became highly leveraged financially. In August 2005, certain creditors filed an
involuntary foreclosure and sold Techones assets through public auction to
satisfy secured debts. This disposal of assets resulted in a gain $1,315,469 for
the year ended December 31, 2005. In February 2006, Techone changed its name to
Lexon Semiconductor Corporation and all of its operation has been suspended due
to lack of operating working capital. Lexon Semi was dissolved on October 28,
2009 based on a decision of shareholders meeting. Lexon Semi has $241,000 of due
to related party and $415,000 of liabilities relation to discontinued operations
as of September 30,2009.

On October 7, 2009, Paragon Toner, Inc. (Paragon), a California
corporation, entered into an Agreement and Plan of Merger (the Merger
Agreement) with the Company whereby the Company issued 347,448,444 shares of
common stock (the Common Stock) of the Company (the Acquisition Shares) to
the shareholders of Paragon, representing approximately 72% of the issued and
outstanding Common Stock after completion of the merger in October 2009. The
effective date of the Merger was October 22, 2009 (Effective Date). The
Company has decided to maintain the name of the predecessor company. The Merger
has been accounted for as a recapitalization of Paragon with Paragon as the
acquirer (reverse merger).

Shortly after the Merger, Lexon Semi was dissolved. The
Companys sole line of business is now in manufacturing, marketing and selling
of recycled monochrome and color toner cartridges for laser printers and other
related devices.

---

**LEXON TECHNOLOGIES, INC. Notes to Consolidated
Financial Statements December 31, 2009 and 2008**

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

This summary of significant accounting policies of the Company
is presented to assist in understanding the Companys financial statements. The
financial statements and notes are representations of the Companys management,
who is responsible for their integrity and objectivity. These accounting
policies conform to accounting principles generally accepted in the United
States of America and have been consistently applied in the preparation of the
financial statements.

Use of Estimates

The preparation of the 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 amounts
reported in the financial statements and accompanying notes. Estimates are
primarily used for depreciation of property and equipment, amortization of
intangible assets, allowances for doubtful accounts and inventory valuation.
Actual results could differ from those estimates.

Revenue Recognition

The Company recognizes revenues from product sales when earned.
Specifically, revenue is recognized when persuasive evidence of an arrangement
exists, delivery has occurred (or services have been rendered), the price is
fixed or determinable, and collectability is reasonably assured. Revenue is not
recognized until title and risk of loss have transferred to the customer. The
shipping terms for the majority of the Companys revenue arrangements are FOB
(free on board) destination. Revenue is recorded net of customer returns,
allowances and discounts that occur under arrangements established with
customers.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased
with original maturities of three months or less to be categorized as cash and
cash equivalents.

Allowance for Doubtful Accounts

The allowance for doubtful accounts is computed based upon the
managements estimate of uncollectible accounts and historical experience. The
Company performs ongoing credit evaluations of its customers to estimate
potential credit losses. Amounts are written off against the allowance in the
period the Company determines that the receivable is uncollectible. As a result,
the Company wrote off $0 and $247,793 of uncollectible amount for the years
ended December 31, 2009 and 2008, respectively. The allowance for doubtful
accounts is $85,611 and $0 as of December 31, 2009 and 2008, respectively.

Inventory

Inventory is stated at the lower of cost or market. Cost is
determined by the first-in, first-out (FIFO) method. Appropriate consideration
is given to obsolescence, slow moving items and other factors in evaluating net
realizable value.

Property and Equipment

Property and equipment are stated at cost.The straight-line
method is used to calculate depreciation over their estimated useful lives
ranging as follows:

---



**LEXON TECHNOLOGIES, INC. Notes to Consolidated
Financial Statements December 31, 2009 and 2008**



Automobile
    3 yearsFurniture & fixture
    5 to 7 yearsLeasehold improvement
    5 yearsMachinery and equipment
    5 years


Leasehold improvements are depreciated to expense over the
shorter of the life of the improvement or the remaining lease term. Capital
expenditures that enhance the value or materially extend the useful life of the
related assets are reflected as additions to property and equipment.
Expenditures for repairs and maintenance are charged to expense as incurred.
Upon a sale or disposition of assets, a gain or a loss is included in the
statement of operations.

Impairment of Long-lived Assets

The Company periodically reviews the recoverability of its
long-lived assets using the methodology prescribed in accounting guidance now
codified as FASB ASC Topic 360, Property, Plant and Equipment.The
Company also reviews these assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of these assets is determined by comparing the
forecasted undiscounted future net cash flows from the operations to which the
assets relate, based on managements best estimates using appropriate
assumptions and projections at the time, to the carrying amount of the assets.
If the carrying value is determined not to be recoverable from future operating
cash flows, the asset is deemed impaired and an impairment loss is recognized
equal to the amount by which the carrying amount exceeds the estimated fair
value of the asset. In managements opinion, no such impairment existed as of
December 31, 2009 and 2008.

Accrued Expenses

The Companys accrued expenses consist of amounts payable for
salaries, payroll taxes and sales taxes.

Deferred Rent

The Company recognizes rent expense equal to the total of the
payments and free rent received due over the lease term, divided by the number
of months of the lease term applying the straight-line method. The difference
between rent expense recorded and the amount paid is credited or charged to
deferred rent.

Shipping and Handling

Certain shipping and handling fees are charged to customers and
these are classified as revenue. The costs associated with all shipping to
customers are recorded as operating expenses. Shipping expenses for the years
ended December 31, 2009 and 2008 amounted to $183,602 and $157,450,
respectively.

Income Taxes

The Company elected to be subject to the S corporation
provisions of the Internal Revenue Code for federal and state income tax
purposes effective January 27, 2004. Accordingly, as an S corporation, the
Companys taxable income or losses and applicable tax credits are passed through
to its shareholder and reported on shareholders

---

**LEXON TECHNOLOGIES, INC. Notes to Consolidated
Financial Statements December 31, 2009 and 2008**

individual income tax return. However, the State of California
requires S Corporation to pay a state franchise tax (currently 1.5% on its
taxable income).

Recent Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards No. 168,The FASB
Accounting Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles  a replacement of FASB Statement No. 162 (Statement
No. 168). This Statement establishes the FASB Accounting Standards Codification
(the Codification or ASC) as the single source of authoritative GAAP. All
previous GAAP standards have been superseded by the Codification. Rules and
interpretive releases of the U.S. Securities and Exchange Commission (the SEC)
under authority of federal securities laws are also sources of authoritative
GAAP for SEC registrants, and the Codification neither replaces nor affects that
guidance. Statement No. 168 is effective for interim and annual financial
statements issued for periods ending after September 15, 2009, and references to
GAAP in this report have been updated as a result. Subsequent changes to GAAP
will be incorporated into the Codification through the issuance of Accounting
Standards Updates (ASU) rather than FASB Statements, Staff Positions,
Interpretations or Emerging Issues Task Force (EITF) Abstracts. The adoption
of Statement No. 168 did not impact the Companys financial condition, results
of operations or cash flows.

In August 2009, the FASB issued Accounting Standards Update
(ASU) 2009-05, Fair Value Measurements and Disclosures (Topic 820) 
Measuring Liabilities at Fair Value. ASU 2009-05 provides clarification that
in circumstances in which a quoted price in an active market for the identical
liability is not available, a reporting entity is required to measure fair value
of such liability using one or more of the techniques prescribed by the update.
The adoption of this guidance is not expected to have a material impact on the
Companys financial position, results of operations or cash flows.

In April 2008, the FASB issued staff position FSP FAS 142-3
(FSP 142-3), "Determination of the Useful Life of Intangible Assets", and has
subsequently been codified under FASB ASC 350-30-35, "Determining the Useful
Life of an Intangible Asset" and is hereon referred to as ASC 350-30-35, amends
the factors that should be considered in developing renewal or extension
assumptions used to determine the useful life of a recognized intangible asset.
The intent of ASC 350-30-35 is to improve the consistency between the useful
life of a recognized intangible asset and the period of expected cash flows used
to measure the fair value of the asset as outlined by the U.S. generally
accepted accounting principles (GAAP). ASC 350-30-35 is effective for fiscal
years beginning after December 15, 2008 and interim periods within those fiscal
years and should be applied prospectively to intangible assets acquired after
the effective date. Early adoption is prohibited. The Company does not expect
this to have an impact on its results of operations, financial position or cash
flows at the date of adoption, but it could have a material impact on its
results of operations, financial position or cash flows in future periods.

Business Combinations" (ASC 805) (formerly SFAS No. 141 and
its revision 141(R)) changes how business acquisitions are accounted for and
will impact financial statements both on the acquisition date and in subsequent
periods. ASC 805 as it relates to recognizing all (and only) the assets acquired
and liabilities assumed in a business combination, costs an acquirer expects but
it not obligated to incur in the future to exit an activity of an acquiree or to
terminate or relocate an acquiree's employees are not liabilities at the
acquisition date but must be expensed in accordance with other applicable
generally accepted accounting principles. Additionally, during the measurement
period, which should not exceed one year from the acquisition date, any
adjustments that are needed to assets acquired and liabilities assumed to
reflect new information obtained about facts and circumstances that existed as
of that date will be adjusted retrospectively. The acquirer will be required to
expense all acquisition-related costs in the periods such costs are incurred
other than costs to issue debt or equity securities. ASC 805 will have no impact
on the Companys results of operations, financial position or cash flows at the
date of adoption, but it could have a material impact on the Companys results
of operations, financial position or cash flows in the future when it is

---

LEXON TECHNOLOGIES, INC. Notes to Consolidated Financial
Statements December 31, 2009 and 2008

applied to acquisitions which occur in the fiscal year
beginning after November 1, 2009.

In May 2009, the FASB issued authoritative guidance
establishing general standards of accounting for and disclosure of events that
occur after the balance sheet date but before financial statements are issued.
This guidance, which was incorporated into ASC Topic 855, "Subsequent
Events", was effective for interim or annual periods ended after June 15,
2009, and the adoption did not have any impact on the Company's financial
statements.

Note 3 - Merger

On October 7, 2009, Paragon Toner, Inc. (Paragon), a California
corporation, entered into an Agreement and Plan of Merger (the Merger
Agreement) with the Company whereby the Company issued 347,448,444 shares of
common stock (the Common Stock) of the Company (the Acquisition Shares) to
the shareholders of Paragon, representing approximately 72% of the issued and
outstanding Common Stock after completion of the merger in October 2009. The
effective date of the Merger was October 22, 2009 (Effective Date). The
Company has decided to maintain the name of the predecessor company. The Merger
has been accounted for as a recapitalization of Paragon with Paragon as the
acquirer (reverse merger).

Note 4 - Inventory

Inventory consists of the following at December 31:

| |                         |   | 2009    |   |   | 2008    |  
| | ----------------------- | - | ------- | - | - | ------- | -
| |                         |   |         |   |   |         |  
| | Finished goods          | $ | 582,603 |   | $ | 170,717 |  
| | Raw materials           |   | 290,603 |   |   | 323,205 |  
| |                         |   | 873,206 |   |   | 493,922 |  
| | Less: Inventory reserve |   | (34,986 | ) |   | (34,986 | )
| | Total                   | $ | 838,220 |   | $ | 458,936 |  

The Company recorded a reserve for slow moving and obsolete
inventory of $0, and $6,143 as cost of goods sold in 2009 and 2008,
respectively. Overhead allocated to the inventory amounted to $35,640 and
$20,079 for the years ended December 31, 2009 and 2008, respectively.

Note 5- Property and Equipment

Property and equipment consist of the following as of December
31:

---



LEXON TECHNOLOGIES, INC. Notes to Consolidated Financial
Statements December 31, 2009 and 2008



| |                                |   | 2009     |   |   | 2008     |  
| | ------------------------------ | - | -------- | - | - | -------- | -
| |                                |   |          |   |   |          |  
| | Automobile                     | $ | 34,092   |   | $ | 34,092   |  
| | Furniture and fixture          |   | 53,388   |   |   | 53,388   |  
| | Leasehold improvement          |   | 5,060    |   |   | 5,060    |  
| | Machinery and equipment        |   | 439,030  |   |   | 433,469  |  
| |                                |   | 531,570  |   |   | 526,009  |  
| | Less: Accumulated depreciation |   | (419,178 | ) |   | (311,350 | )
| |                                |   |          |   |   |          |  
| | Net property and equipment     | $ | 112,392  |   | $ | 214,659  |  

Depreciation expense amounted to $107,828 and $77,653 for the
years ended December 31, 2009 and 2008, respectively.

Note 6 - Transactions with Related Parties

Due from related parties

Advances to family members of the stockholder are unsecured,
non-interest bearing and due on demand. The Company has $190,000 and $273,650
due from related parties as of December 31, 2009 and 2008, respectively.

Due to related parties

As of December 31, interest bearing notes payable to related
parties consisting of the following:

| |                                                                                                                                                                                     |   | 2009   |  |   | 2008 | 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ------ |  | - | ---- | 
| |                                                                                                                                                                                     |   |        |  |   |      | 
| | Unsecured note payable to a shareholder,
      with interest at 7.5% per annum. Note is in default and is payable on
      demand.                                                  | $ | 5,000  |  | $ | -    | 
| |                                                                                                                                                                                     |   |        |  |   |      | 
| | Expired convertible debt issued to a former
      employee, with interest at 7.5% per annum. The conversion maturity
      date was in October 2004. The note is payable on demand. |   | 30,000 |  |   | -    | 
| |                                                                                                                                                                                     |   |        |  |   |      | 
| | Expired convertible debt issued to a
      Director, with interest at 7.5% per annum. The conversion maturity
      date was in October 2005. The note is payable on demand.        |   | 56,960 |  |   | -    | 
| |                                                                                                                                                                                     |   |        |  |   |      | 
| | Total notes payable                                                                                                                                                                 | $ | 91,960 |  | $ | -    | 

---

LEXON TECHNOLOGIES, INC. Notes to Consolidated Financial
Statements December 31, 2009 and 2008

Note 7-Line of Credit

The Company has a line of credit with a bank with a maximum
borrowing limit of $450,000. The outstanding balance was $450,000 and $600,000
as of December 31, 2009 and 2008, respectively. This line of credit matures on
June 7, 2010 and is secured by the Companys accounts receivable, inventory and
other miscellaneous assets. Interest is accrued at the banks prime plus 1.00%
(4.25% as of December 31, 2009).

The Company incurred interest expenses on this line of credit
of $27,286and $35,296 for the years ended December 31 2009 and 2008,
respectively. This line of credit contains certain covenants, and in management
opinion, the Company is in compliance with the covenants as of December 31,
2009.

Note 8 - NotesPayable

As of December 31, the Company has long term notes payable as
follows:

| |                                                                                                                                                                                                                                                                                                                                                                                                     |   | 2009     |   |   | 2008    |  
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | -------- | - | - | ------- | -
| |                                                                                                                                                                                                                                                                                                                                                                                                     |   |          |   |   |         |  
| | A note payable to a bank, due in monthly
      installments of $2,931, including interest at the banks prime plus
      1.25% (4.50% as of December 31, 2009). The note matures in May 2011,
      and is collateralized by substantially all the assets of the Company.
      The note is subject to various restrictive covenants, including
      maintenance of financial ratios at all times. | $ | 48,162   |   | $ | 80,331  |  
| |                                                                                                                                                                                                                                                                                                                                                                                                     |   |          |   |   |         |  
| | A note payable to a bank, due in monthly
      installments of $3,249, including interest at the banks prime plus
      1.25% (4.50% as of December 31, 2009). The note matures in November
      2009, and is collateralized by substantially all the assets of the
      Company. The note was fully paid in November 2009.                                                                      |   | -        |   |   | 33,182  |  
| |                                                                                                                                                                                                                                                                                                                                                                                                     |   |          |   |   |         |  
| | A note payable to a bank, due in monthly
      installments of $2,533, including interest at the banks prime plus
      2.00% (5.25% as of December 31, 2009). The note matures in May 2011,
      and is collateralized by substantially all bank accounts of the
      Company. The note was fully paid in November 2009.                                                                        |   | -        |   |   | 27,075  |  
| |                                                                                                                                                                                                                                                                                                                                                                                                     |   |          |   |   |         |  
| | A note payable to a bank, due in monthly
      installments of $4,587, including interest at the banks prime plus
      1.50% (6.50% as of December 31, 2009). The note matures in January
      2012, and is collateralized by substantially all the assets of the
      Company.                                                                                                                 |   | 130,850  |   |   | -       |  
| |                                                                                                                                                                                                                                                                                                                                                                                                     |   |          |   |   |         |  
| | Unsecured note payable to an unrelated
      individual, with interest at 7.5% per annum. The note is in default
      and is payable on demand.                                                                                                                                                                                                                                                    |   | 20,000   |   |   | -       |  
| |                                                                                                                                                                                                                                                                                                                                                                                                     |   |          |   |   |         |  
| | Unsecured note payable to an unrelated
      party, with interest at 7.5% per annum. As disclosed in Note 11, the
      creditor has filed suit to collect on this note.                                                                                                                                                                                                                            |   | 149,982  |   |   | -       |  
| |                                                                                                                                                                                                                                                                                                                                                                                                     |   |          |   |   |         |  
| |                                                                                                                                                                                                                                                                                                                                                                                                     |   |          |   |   |         |  
| | Total notes payable                                                                                                                                                                                                                                                                                                                                                                                 |   | 348,994  |   |   | 140,588 |  
| |                                                                                                                                                                                                                                                                                                                                                                                                     |   |          |   |   |         |  
| | Less: Current portion                                                                                                                                                                                                                                                                                                                                                                               |   | (249,534 | ) |   | (92,592 | )
| |                                                                                                                                                                                                                                                                                                                                                                                                     |   |          |   |   |         |  
| | Notes payable, net of current                                                                                                                                                                                                                                                                                                                                                                       | $ | 99,460   |   | $ | 47,996  |  

---

**LEXON TECHNOLOGIES, INC. Notes to Consolidated
Financial Statements December 31, 2009 and 2008**

Maturities of notes payable are as follows for the years ending
December 31:

Years ending December 31,
    
    Amount2010
    $
    249,5342011
    
    66,5672012
    
    32,893Total
    $
    348,994


Total interest expenses from the notes payable were $8,024 and
$11,410 for the years ended December 31, 2009 and 2008, respectively.

Note 9 - Capital Lease Obligations

The Company entered into numerous capital lease agreements with
leasing companies to purchase certain equipment and transportation vehicles. As
of December 31, these assets are carried as follows:

2009
    
    
    2008Equipment
    $
    162,889
    
    $
    162,889Transportation vehicles
    
    32,800
    
    
    32,800Less: Accumulated depreciation
    
    (179,643
    )
    
    (126,502
    )$
    16,046
    
    $
    69,187


The related future minimum lease payments under the capital
lease obligations are as follows at December 31:

2009
    
    
    2008Total minimum lease payments
    $
    62,752
    
    $
    111,940Less: Amount representing interest
    
    (12,303
    )
    
    (25,730
    )Present value of net minimum lease payments
    
    50,449
    
    
    86,210Less: Current portion
    
    (21,887
    )
    
    (35,761
    )Capital lease obligations, net of current
      portion
    $
    28,561
    
    $
    50,449


Maturities of capital lease obligations are as follows for the
years ending December 31:

Years ending
      December 31,
    
    Amount2010
    
    21,8882011
    
    20,4472012
    
    8,114Total
    $
    50,449


Total interest expenses from the capital lease obligations were
$12,593 and $19,333 for the years ended December 31, 2009 and 2008,
respectively.

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**LEXON TECHNOLOGIES, INC. Notes to Consolidated
Financial Statements December 31, 2009 and 2008**

Note 10 - Capitalized Website Costs

The Company amortizes its website over the estimated useful
life of three years. Amortizable intangible assets are tested for impairment
when impairment indicators are present, and, if impaired, written down to fair
value based on either discounted cash flows or appraised values. No impairment
of website costs has been identified during the periods presented.The carrying
amount and accumulated amortization related to the website costs are as follows
as of December 31:

**2009**
    
    
    2008Gross balance
    $
    323,589
    
    $
    46,589Less: Accumulated amortization
    
    (47,224
    )
    
    (16,305
    )Net balance
    $
    276,365
    
    $
    30,284


Estimated aggregate amortization expense for each of the
succeeding years is as follows:

Years ending December 31,
    
    Amount2010
    $
    107,0882011
    
    92,3332012
    
    76,944Total
    $
    276,365


Total amortization expenses were $30,919 and $15,530 for the
years ended December 31, 2009 and 2008, respectively.

Note 11 - Commitments and Contingencies

Contingent Liabilities

The Company has contingent liabilities of $274,610 to various
creditors of a predecessor company. Management determined that it is reasonably
certain that the amount will be paid in future.

Legal Proceedings

On July 14, 2008, Advanced Digital Technology Co. Ltd., a
Korean corporation (ADT), filed a claim against Lexon and certain named
individuals who are former and current officers of the Company. The claim
alleges breach of an agreement to settle an earlier dispute, involving ADT's
investment of $150,000 in Lexon on or about January 16, 2007 and ADT's
subsequent unilateral decision to rescind and demand a refund of this
investment. The total amount of damages claimed under the pending lawsuit is the
investment amount of $150,000 plus filing costs, interest and attorney fees for
an aggregate amount of $178,522. On or about May 2, 2009, Lexon became aware of
a default judgment entered in the amount above. Such judgment was entered on
December 22, 2009. On or about May 8, 2009, Lexon has retained the law firm of
Smith, Chapman & Campbell for the purpose of setting aside the default
judgment as the Company was never in receipt of the notice of default entry. On
or about July 21, 2009, the court set aside the default as the court agreed that
service was never properly served.

On September 5, 2008, Vivien and David Bollenberg, a current
shareholder (the Bollenbergs), filed a claim

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LEXON TECHNOLOGIES, INC. Notes to Consolidated Financial
Statements December 31, 2009 and 2008

against Lexon and other third parties, including Byung Hwee
Hwang (also referred to as "Ben Hwang") and other financial agents and
institutions involved in the alleged fraudulent transaction. The lawsuit is
currently pending in the Orange County Superior Court in Santa Ana, California.
The filed complaint alleges that Ben Hwang together with his representatives,
including his accountant, escrow agent and real estate agent/broker, made
certain representations to and solicited the Bollenbergs to make an investment
in several companies and ventures including Lexon with the intent to
misappropriate the solicited funds for personal use. The Bollenbergs allege that
they invested a total of $1,500,000 among and between the various companies and
ventures recommended by Ben Hwang, of which investment amount approximately
$550,000 was invested in Lexon ($150,000 for 600,000 shares at $0.25 per share
and $400,000 initially invested in Lexon Korea and later converted into
1,150,000 shares in Lexon for a total of 1,750,000 shares in Lexon). The final
disposition of this case has not yet been resolved

Operating lease

The Company leases its warehouse and office from a
non-affiliate. Future minimum rental payments under these leases as of December
31, 2009 are as follows:

Years ending December 31,
    
    Amount2010
    $
    273,2352011
    
    279,6192012
    
    23,301Total
    $
    576,155


Rent expenses amounted to $252,603 and $254,777 for the years
ended December 31, 2009 and 2008, respectively. The Company allocated $242,544
and $238,015 of rent expenses to cost of goods sold for the years ended December
31, 2009 and 2008, respectively.

Note 12 - Dissolution of Subsidiary

As discussed in Note 1, on October 29, 2009, the subsidiary,
Lexon Semiconductor Corporation was formally dissolved with the approval of the
City of Pyongtaek in Korea. The subsidiary had been previously classified as a
discontinued operation. With the dissolution, the Company recognized a
forgiveness of debt totaling $418,970.

Note 13 - Distributions to Stockholder

Prior to the Merger described in Note 3, Paragon operated as a
private S Corporation. As such, Paragon made periodic distribution to the sole
stockholder at the time. Distributions paid to the stockholder aggregated
$330,932 and $289,439 for the years ended December 31, 2009 and 2008,
respectively.

Note 14 - Income Taxes

Significant components of deferred tax assets are as follows:

---

| |                               |   | Years Ended December 31, |  
| | ----------------------------- | - | ------------------------ | -
| |                               |   | 2009                     |  
| |                               |   |                          |  
| | Loss carry forwards           | $ | 1,602,904                |  
| | Other                         |   | 229,720                  |  
| | Total deferred tax asset      |   | 1,832,624                |  
| |                               |   |                          |  
| | Valuation
      allowance     |   | (1,832,624               | )
| | Total deferred tax asset, net | $ | -                        |  

As of December 31, 2009, the Company had approximately
$4,100,000 of net operating loss (NOL) carryforwards for U.S. federal income
tax purposes expiring in 2019 through 2029. In addition, the Company has
California state NOL carryforwards of approximately $2,900,000 expiring in 2012
through 2019.

The ability to realize the tax benefits associated with
deferred tax assets, which includes benefits related to NOLs, is principally
dependent upon the Companys ability to generate future taxable income from
operations. The Company has provided a full valuation allowance for its net
deferred tax assets due to the Companys net operating losses. The valuation
allowance has increased by $250,000 during 2009.

Section 382 of the Internal Revenue Code (IRC) imposes
limitations on the use of NOLs and credits following changes in ownership as
defined in the IRC. The limitation could reduce the amount of benefits that
would be available to offset future taxable income each year, starting with the
year of an ownership change.

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