**U.
S. SECURITIES & EXCHANGE COMMISSION**


WASHINGTON,
D.C. 20549


**FORM
10-QSB**


**xQUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES**


**AND
EXCHANGE ACT OF 1934**


For
the quarterly period ended March 31, 2005





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


**ACT
OF 1934**


*Commission
file Number* 0-29711





****


**Subjex
Corporation**


(Exact
name of small business issuer)





Minnesota
      (State
      of incorporation)
    
    41-1596056
      IRS
      Employer Identification number











5720
Smetana Dr, Suite 325, Minnetonka, MN 55343


(Address
of principal executive offices)





(952)
931-0501


(Registrant's
telephone number)


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
periods that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. YES **x** NO **o**




There
were 43,373,692  shares of
common stock outstanding as of March 31, 2005.







1
 *Index*




**SUBJEX CORPORATION INDEX**




Page
      Number**PART
      I - FINANCIAL INFORMATION**ITEM
      1.**FINANCIAL
      STATEMENTS**Balance Sheets as of March 31, 2005 and December 31,
      2005
    3Statements of Operations for the Three Months Ended
      March 31, 2005 and March 31, 2004
    4Statements of Cash Flows for the Three Months Ended March 31,
      2005 and March 31, 2004
    5Notes to the Financial Statements
    ****6ITEM
      2.**PLAN
      OF OPERATION**
    **7****PART
      II - OTHER INFORMATION**ITEM 1. LEGAL PROCEEDINGSITEM 2. CHANGE IN SECURITIES AND USE OF PROCEEDSITEM 3. DEFAULTS UPON SENIOR SECURITIESITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
      HOLDERSITEM 5. OTHER INFORMATIONITEM 6. EXHIBITS AND REPORTS ON FORM
    8-K**CERTIFICATION
      PURSUANT TO SECTION 06 OF THE SABANES-OXLEY ACT OF
      2002****CERTIFICATIONS****SIGNATURES**





2
 *Index*





SUBJEX
CORPORATION


BALANCE SHEETS




March
      31,
    
    December
      31,2005
    
    2004Unaudited
    
    AuditedASSETSCurrent
      Assets:Cash
    
    $
    764
    
    $
    62,952Prepaid
      expenses
    
    
    2,000
    
    
    2,000Total
      current assets
    
    
    2,764
    
    
    64,952Fixed
      assets, net
    
    
    26,008
    
    
    17,585Total
      assets
    
    $
    28,772
    
    $
    82,537LIABILITIES
      AND STOCKHOLDERS' DEFICITCurrent
      Liabilities:Subordinated
      convertible notes payable
    
    $
    23,000
    
    $
    22,800Accounts
      payable
    
    
    79,916
    
    
    72,120Accrued
      expenses:Payroll
      and payroll taxes
    
    
    80,106
    
    
    116,503Other
    
    
    27,222
    
    
    26,654Total
      current liabilities
    
    
    210,244
    
    
    238,077Long-term
      debt:Notes
      payable
    
    
    2,783
    
    
    3,474Total
      liabilities
    
    
    213,027
    
    
    241,551Stockholders'
      deficit:Undesignated
      stock, no par or stated value;10,000,000
      shares authorized: none issuedor
      outstanding
    
    
    -
    
    
    -Common
      stock, no par or stated value;45,000,000
      shares authorized: 43,659,407 and42,558,096
      shares issued and outstanding atMarch
      31,2005 and December 31,2004,respectively
    
    
    4,391,292
    
    
    4,305,342Note
      receivable - officerAccumulated
      deficit
    
    
    (4,575,447
    )
    
    (4,464,356
    )Stockholders'
      deficit
    
    
    (184,155
    )
    
    (159,014
    )Total
      liabilities and stockholders’ deficit
    
    $
    28,872
    
    $
    82,537




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




3
 *Index*





SUBJEX
CORPORTION


STATEMENTS OF OPERATIONS


Unaudited




Three
      Months Ended March 31,2005
    
    2004Revenues
    
    $
    18,305
    
    $
    5,042Expenses:Selling,
      general and administrative
    
    
    128,929
    
    
    57,940Total
      operating expense
    
    
    128,929
    
    
    57,940Operating
      loss
    
    
    (110,624
    )
    
    (52,898
    )Other
      income (expense)Interest
      expense
    
    
    (567
    )
    
    (161
    )Net
      loss
    
    $
    (111,191
    )
    $
    (53,059
    )Net
      loss per basic and diluted common share
    
    $
    (0.003
    )
    $
    (0.002
    )Weighted
      average common sharesoutstanding
      - basic and dilutes
    
    
    43,373,692
    
    
    34,300,236




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




4
 *Index*





SUBJEX
CORPORTION


STATEMENTS OF CASH FLOWS


Unaudited


Three
      Months Ended March 31,2005
    
    2004Cash
      flow from operating activities:Net
      loss
    
    $
    (111,191
    )
    $
    (53,059
    )Adjustments
      to reconcile net loss tonet
      cash from operating activities:Depreciation
      and amortization
    
    
    2,123
    
    
    1,192Non
      cash stock compensation expenses
    
    
    12,450Changes
      in operating assets and liabilities:Accounts
      receivable
    
    
    
    
    
    300Prepaid
      expenses
    
    
    -Accounts
      payable
    
    
    7,796
    
    
    (5
    )Payroll
      and payroll taxes payable
    
    
    (36,397
    )
    
    (17,952
    )Other
      accrued expenses
    
    
    568
    
    
    999Net
      cash used by operating activities
    
    
    (124,651
    )
    
    (68,525
    )Cash
      flow from investing activities:Purchase
      of property and equipment
    
    
    (10,546
    )
    
    -Net
      cash flows used in investing activities
    
    
    (10,546
    )
    
    -Cash
      flow from financing activities:Proceeds
      from issuance of capital stock
    
    
    73,500
    
    
    65,500Proceeds
      from stock subscriptions
    
    
    -Proceeds
      from notes from stockholder
    
    
    -(Payments)
      Proceeds from subordinated note payable
    
    
    200
    
    
    (200
    )Principal
      payments on long-term debt
    
    
    (691
    )
    
    (483
    )Principal
      payments on note payable - related party
    
    
    -Net
      cash provided by financing activities
    
    
    73,009
    
    
    64,817Decrease
      in cash
    
    
    (62,188
    )
    
    (3,708
    )Cash
      at beginning of period
    
    
    62,952
    
    
    3,753Cash
      at end of period
    
    $
    764
    
    $
    45


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


5
 *Index*




Notes to the Financial Statements (unaudited)






Note 1.
Basis of Presentation





The
accompanying unaudited condensed financial statements of Subjex Corporation (the
Company) have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Item
310(b) of Regulation S-B. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States of America for complete financial statements. All
adjustments which, in the opinion of management, are considered necessary for a
fair presentation of the results of operations for the periods shown are of a
normal recurring nature and have been reflected in the unaudited condensed
financial statements. There are no additional material subsequent events or
material contingencies that require disclosure. The results of operations for
the periods presented are not necessarily indicative of the results expected for
the full fiscal year or for any future period. The information included in these
unaudited condensed financial statements should be read in conjunction with Plan
of Operation contained in this report and with the financial statements and
accompanying notes included in the Annual Report on Form 10-KSB for the year
ended December 31, 2004.





Note 2.
Going Concern





The
accompanying financial statements were prepared assuming that the Company will
continue as a going concern. This basis of accounting contemplates the
realization of assets and the satisfaction of its liabilities in the normal
course of operations. Since inception the Company has incurred losses of
approximately $4,575,447 and has a working capital deficit of $184,155 as of
March 31, 2005. These issues raise substantial doubt about the Company's ability
to continue as a going concern.





The
Company continues to seek debt and equity financing to fund its working capital
needs.  Failure of the Company raise additional debt and equity financing
in the near future and achieve profitable operations in the long-term could
result in the Company being unable to continue as a going concern.  No
estimate can be made of the range of loss that is reasonably possible should the
Company be unsuccessful.





The
financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the inability of the
Company to continue as a going concern.





Note 3.
Payroll and Payroll Taxes





In March
2004, the Company agreed to a payment plan with the IRS related to employee
payroll withholdings and payroll taxes in which the Company did not pay from
October 1, 2000 through June 30, 2003 aggregating approximately $88,000 at
December 31, 2003. This liability is included in accrued expenses - payroll and
payroll taxes. The payment plan requires 24 monthly installments of $2,000
beginning April 15, 2004 and ending March 15, 2006. On March 15, 2006, the
Company will work with the IRS to determine the resolution for final payment.
Until all amounts owed are paid to the IRS, the IRS will maintain a federal tax
lien on the Company’s property. The Company has made all monthly payments as
agreed for the year 2004 and the first quarter of 2005.


6
 *Index*





Note 4.
During the first quarter of 2005, the Company issued 1,011,311 shares of common
stock for $73,500. In addition, the Company issued 90,000 shares of common stock
to employees for services performed which were valued $12,450.





**ITEM
      2.**
    **Plan of Operation**





CAUTIONARY
STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995





Statements
in this discussion which are not historical facts may be considered "forward
looking statements" within the meaning of Section 21E of the Securities Act of
1934, as amended. The words "believe", "expect", "anticipate", "estimate", and
similar expressions identify forward looking statements. Any forward looking
statement involves risks and uncertainties that could cause actual events or
results to differ, perhaps materially, from the events described in the forward
looking statements. Readers are cautioned not to place undue reliance on these
forward looking statements. The Company undertakes no obligation to publicly
update or revise any forward looking statement, whether as a result of new
information, future events or otherwise. The risks associated with the Company's
forward looking statements include, but are not limited to, risks associated
with the Company's history of losses and uncertain profitability, sales and
marketing strategies, competition, general economic conditions, reliance on key
management and production people, current and future capital needs, dilution,
effects of outstanding notes and convertible debentures, limited public market
for the Company’s capital Stock, low stock price, and lack of
liquidity.





The
following discussion and analysis should be read in conjunction with the
Financial Statements, related notes and other information included in this
report.





Description
of Business





Overview





Subjex
Corporation is an innovative provider of intelligent customer service solutions.
Subjex Corporation has developed and sells an Artificial Intelligence Software
platform that is used to create virtual personalities for company web sites. The
software chats with web site visitors, answers questions, and sells products for
its clients. Making complex web site processes simple for web site visitors has
become the key to rapid sales and customer retention. Subjex Corporation is
setting a new standard in customer service technology that is both easily
deployable and astoundingly inexpensive. The Subjex Corporation mission is to
give massive value to our client base while providing clear-continuous revenue
and profit growth for our investor base. We are committed to fostering a
community of developers from which our customers draw virtual personality’s
expert in all areas of business.





Principal
Products and Services





SubjexCSR
(Customer Service Representative) is Subjex Corporation’s flagship Artificial
Intelligence product. SubjexCSR is used in conjunction with SubjexOPS (Operator
Training System) which allows clients to train their implementation to sell
their products and communicate with their users on their web site. This
technology is used on the Subjex.com web site to sell itself by conducting
dialogue with business owners (through text) to dynamically converse with a
normal, human-like conversation chat. SubjexCSR can lower costs dramatically for
companies who have web sites, and inbound calls from users of their web site.
The system can converse eloquently with hundreds of simultaneous users for far
less than the cost of one live operator, and can drastically increase sales
(closing ratios) by recommending ideal products for that specific individual.
The key to this product is its iterative "back and forth" methodology which
actually conducts an interview conversation. The system is able to learn users’
needs in a way users are already familiar with - by "text based
dialogue".





7
 *Index*





Today,
Subjex is the only customer service solution that is targeting small business
while meeting all the demands of a web-based contact center. The company’s
Subjex dialogue platform supports each function of customer service from the
introduction to the sales process to post sale support.




Trademarks
and Patents





The
Company holds trademarks and patent protection for most of its business that
management feels are relevant to protect the company interests.





Environmental
Compliance





The
Company believes it is in compliance with all current federal and state
environmental laws.





Employees





The
Company currently has 9 full-time employees. Of the Company's full-time
employees, most are involved in sales in some way. The Company's employees are
not represented by any labor unions. The Company considers its relations with
its employees to be very good.





Competition





The
Company is aware of other companies selling solutions that appear to be similar
to Subjex; however management is not aware of any companies that are selling the
same solution as we have designed. In addition management has made the decision
to focus all of our marketing efforts directly to small businesses, which our
pricing model reflects. Our competitions solutions are less effective, extremely
complex for the small business owner, and vastly more expensive. Our demographic
target - to our knowledge - has never been exposed to this type of technology,
because no one has priced an appealing product within the budget of small
business. Management believes that while some companies my have greater
resources than Subjex, we have superior products, at a lower price, and the
experience to take a huge part of the market before our competitors realize it.
The end result is that Management believes that we can generate much more income
from our software model to small business than our competitors can from their
high priced products aimed at large business.





Recent
Developments





In 2004
and the first quarter of 2005 Subjex Corporation made signup increases with
steady growth despite major changes in its marketing approaches. Retention of
new users continues to increase, causing revenue to grow. Management feels that
the Company will become profitable on an ongoing basis relatively soon but is
not predicting a date that this will occur. In the first quarter of 2005, the
Company has been able to raise additional monies through private issuances of
its stock to accredited individuals. Receipt of these monies allowed the Company
to operate and grow the revenue of the company.





8
 *Index*





Operating
expenses have increased for the same quarter of the previous year due to
increased marketing efforts. However recent percentages of increases in sales
are significant. More importantly the Company has further improved its
client/prospect retention methods and its marketing approach and we expect to
grow considerably faster in the foreseeable future.





The
Company’s cash balances are not sufficient to meet its operational needs, which
is why the Company has relied on the on going sales of unregistered shares and
is now using debt instruments to fund operational needs. As sales increase the
Company expects future operational cash requirements to remain at their current
levels. This is because of the automation of the sales, training and
installation (i.e. delivery) of the Company’s products. Until positive cash flow
occurs, the Company requires additional capital investment to maintain its
current operations.





**PART II - OTHER INFORMATION**




**Item 1. - Legal Proceedings**




In March
2004, the Company agreed to a payment plan with the IRS related to employee
payroll withholdings and payroll taxes in which the Company did not pay from
October 1, 2000 through June 30, 2003 aggregating approximately $88,000 at
December 31, 2003. This liability is included in accrued expenses - payroll and
payroll taxes. The payment plan requires 24 monthly installments of $2,000
beginning April 15, 2004 and ending March 15, 2006. On March 15, 2006, the
Company will work with the IRS to determine the resolution for final payment.
Until all amounts owed are paid to the IRS, the IRS will maintain a federal tax
lien on the Company’s property.




**Item 2 - Changes in Securities and Use of Proceeds**




During
the three months ended March 31, 2005, the Company issued 1,011,311 of common
stock for $73,500. In addition, the Company issued 90,000 shares of common stock
to employees for services performed which were valued $12,450




**Item 3 - Defaults on Senior Securities**




None.




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




It is
acknowledged that any sale or substantial restructuring of the Company will
require a shareholders vote. No matters were submitted to the vote of the
Company’s stockholders in this quarter.




**Item 5 - Other Information**





None.




**Item 6 - Exhibits and reports on form
8-K**





None




9