UNITEDSTATES

|                                                                |                            |
|---------------------------------------------------------------------|---------------------------------|
| Delaware                                                            | 87-0502701                      |
| (State      or other jurisdiction of incorporation or organization) | (I.R.S.      Employer I.D. No.) |
|                                                                |                            |
|                                                                |                            |
| 8 Corporate Park,      Suite 300, Irvine, California                | 92606                           |
| (Address      of principal executive offices)                       | (Zip      Code)                 |

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

----

| PART I- FINANCIAL      INFORMATION                                                                       | F-1    |
|---------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                          |   |
| ITEM 1. FINANCIAL      STATEMENTS                                                                        | F-1    |
| ITEM 2. MANAGEMENT'S      DISCUSSION AND ANALYSIS OF FINANCIAL      CONDITION AND RESULTS OF OPERATIONS  | 3      |
| ITEM 3. QUANTITATIVE      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                  | 4      |
| ITEM 4. CONTROLS AND      PROCEDURES                                                                     | 5      |
| ITEM 4T. CONTROLS      AND PROCEDURES                                                                    | 5      |
|                                                                                                          | 5      |
| PART II- OTHER      INFORMATION                                                                          |   |
|                                                                                                          | 5      |
| ITEM 1. LEGAL      PROCEEDINGS                                                                           |   |
| ITEM 1A. RISK      FACTORS                                                                               | 5      |
| ITEM 2. UNREGISTERED SALES OF      EQUITY SECURITIES AND USE OF PROCEEDS                                 | 5      |
| ITEM 3. DEFAULT      UPON SENIOR      SECURITIES                                                         | 5      |
| ITEM 4. SUBMISSION      OF MATTERS TO A VOTE OF SECURITY HOLDERS                                    | 5      |
| ITEM 5. OTHER      INFORMATION                                                                           | 5      |
| ITEM 6.      EXHIBITS                                                                                    | 5      |
|                                                                                                          |   |
| SIGNATURES                                                                                               | 6      |

----

PART I- FINANCIAL INFORMATION

|                                                                                              |   | Page   |
|---------------------------------------------------------------------------------------------------|--------|--------|
|                                                                                              |   |   |
| Consolidated      Financial Statements (unaudited):                                               |   |   |
| Consolidated      Balance Sheets                                                                  |   | F-2    |
| Consolidated Statements of      Operations                                                        |   | F-3    |
| Consolidated Statement of      Shareholders’ Deficiencyand Comprehensive Income      (Loss) |   | F-4    |
| Consolidated Statements of Cash      Flows                                                        |   | F-7    |
| Notes to Consolidated Financial      Statements                                                   |   | F-9    |

----

|                             |   |
|----------------------------------|--------|
|                             |   | March      31, |   |   | December      31, |   |
|                             |   | 2009 |   |   | 2008 |   |
|                             |   | (Unaudited) |   |   |   |   |
|                             |   |   |   |   |   |   |
|  ASSETS                     |   |   |   |   |   |   |   |   |
|                             |   |   |   |   |   |   |   |   |
| Current      Assets              |   |   |   |   |   |   |   |   |
|                             |   |   |   |   |   |   |   |   |
| Cash      and cash equivalents   |   | $ | - |   |   | $ | 3,727 |   |
|                             |   |   |   |   |   |   |   |   |
| Property      and equipment, net |   |   | 971 |   |   |   | 1,012 |   |
|                             |   |   |   |   |   |   |   |   |
| Total      assets                |   | $ | 971 |   |   | $ | 4,739 |   |

| LIABILITIES      AND STOCKHOLDERS' DEFICIENCY                      |   |
|--------------------------------------------------------------------|--------|
|                                                               |   |   |   |   |   |   |
| Current      liabilities:                                          |   |   |   |   |   |   |
| Accounts      payable                                              |   | $ | 27,408 |   |   | $  | 26,847 |   |
| Due      to related parties                                        |   |   | 1,306,994 |   |   |   | 1,320,481 |   |
| Accrued      expenses                                              |   |   | 52,556 |   |   |   | 49,276 |   |
| Notes      payable                                                 |   |   | 169,982 |   |   |   | 169,982 |   |
| Liabilities      related to discontinued operations                |   |   | 355,260 |   |   |   | 390,776 |   |
| Total      current liabilities                                     |   |   | 1,912,200 |   |   |   | 1,957,362 |   |
|                                                               |   |   |   |   |   |   |   |   |
| Contingent      liabilities                                        |   |   | 274,610 |   |   |   | 274,610 |   |
|                                                               |   |   |   |   |   |   |   |   |
| Stockholders’      deficiency:                               |   |   |   |   |   |   |   |   |
| Common      stock, $0.001 par value;                               |   |   |   |   |   |   |   |   |
| 100,000,000      shares authorized;                                |   |   |   |   |   |   |   |   |
|  34,183,778      shares issued and outstanding                |   |   | 34,184 |   |   |   | 34,184 |   |
| Additional      paid-in capital                                    |   |   | 3,066,839 |   |   |   | 3,066,839 |   |
| Accumulated      other comprehensive loss                          |   |   | (101,216 | ) |   |   | (151,800 | ) |
| Deficit      accumulated during the development stage              |   |   | (5,027,642 | ) |   |   | (5,012,932 | ) |
| Total      Lexon Technologies, Inc. stockholders’ deficiency |   |   | (2,027,835 | ) |   |   | (2,063,709 | ) |
| Noncontrolling      interest                                       |   |   | (158,004 | ) |   |   | (163,524 | ) |
| Total      stockholders' deficiency                                |   |   | (2,185,839 | ) |   |   | (2,227,233 | ) |
|                                                               |   |   |   |   |   |   |   |   |
| Total      liabilities and stockholders' deficiency                |   | $ | 971 |   |   | $ | 4,739 |   |

----

|                                                                    |   |                                 |       |    |           |   |       | From      July 18, 2001 |   |
|-------------------------------------------------------------------------|--------|--------------------------------------|------------|---------|----------------|--------|------------|------------------------------|--------|
|                                                                    |   |                                 |       |    |           |   |       | (Inception)                  |   |
|                                                                    |   | For      the Three Months Ended |       |    | through        |   |
|                                                                    |   | March      31,                       |       |    | March      31, |   |
|                                                                    |   | 2009                                 |       |    | 2008           |   |       | 2009                         |   |
|                                                                    |   |                                 |       |    |           |   |       |                         |   |
| Revenue                                                                 |   | $                                    | -          |    |           | $      | -          |                         |   | $ | 22,031 |   |
|                                                                    |   |                                 |       |    |           |   |       |                         |   |   |   |   |
| Operating      expenses:                                                |   |                                 |       |    |           |   |       |                         |   |   |   |   |
| Research      and development                                           |   |                                 | -          |    |           |   | -          |                         |   |   | - |   |
| Selling,      general and administrative                                |   |                                 | 11,429     |    |           |   | 22,570     |                         |   |   | 3,820,144 |   |
| Total      operating expenses                                           |   |                                 | 11,429     |    |           |   | 22,570     |                         |   |   | 3,820,144 |   |
| Loss      from operations                                               |   |                                 | (11,429    | )       |           |   | (22,570    | )                            |   |   | (3,798,113 | ) |
|                                                                    |   |                                 |       |    |           |   |       |                         |   |   |   |   |
| Other      income (expenses):                                           |   |                                 |       |    |           |   |       |                         |   |   |   |   |
| Interest      income                                                    |   |                                 | -          |    |           |   | -          |                         |   |   | 39,817 |   |
| Other      income                                                       |   |                                 | -          |    |           |   | -          |                         |   |   | 6,000 |   |
| (Loss)      on sale of assets                                           |   |                                 | -          |    |           |   | -          |                         |   |   | (1,134 | )  |
| Gain      on debt cancellation                                          |   |                                 | -          |    |           |   | -          |                         |   |   | 907,872 |   |
| Interest      expense                                                   |   |                                 | (3,281     | )       |           |   | (2,094     | )                            |   |   | (799,610 | ) |
| Loss      from investment                                               |   |                                 | -          |    |           |   | -          |                         |   |   | (11,667 | ) |
| Net      other income (expenses)                                        |   |                                 | (3,281     | )  |           |   | (2,094     | )                            |   |   | 141,278 |   |
|                                                                    |   |                                 |       |    |           |   |       |                         |   |   |   |   |
| Loss      before income taxes and noncontrolling interest               |   |                                 | (14,710    | )       |           |   | (24,664    | )                            |   |   | (3,656,835 | )) |
| Income      taxes                                                       |   |                                 | -          |    |           |   | -          |                         |   |   | 6,326 |   |
| Loss      from continuing operations, net of tax                        |   |                                 | (14,710    | )       |           |   | (24,664    | )                            |   |   | (3,663,161 | ) |
| Loss      from discontinued operations, net of income tax               |   |                                 | -          |    |           |   | -          |                         |   |   | (1,513,399 | ) |
| Net      loss before noncontrolling interest                            |   |                                 | (14,710    | )       |           |   | (24,664    | )                            |   |   | (5,176,560 | ) |
| Less:      Net loss attributable to the noncontrolling interest         |   |                                 | -          |    |           |   | -          |                         |   |   | (148,918 | ) |
| Net      loss attributable to Lexon Technologies, Inc.                  |   | $                                    | (14,710    | )       |           | $      | (24,664    | )                            |   | $ | (5,027,642 | ) |
|                                                                    |   |                                 |       |    |           |   |       |                         |   |   |   |   |
| Basic      earnings per share attributable to Lexon Technologies,Inc.   |   |                                 |       |    |           |   |       |                         |   |   |   |   |
| Continued      operations                                               |   | $                                    | (0.00      | )       |           | $      | (0.00      | )                            |   |   |   |   |
| Discontinued      operations                                            |   |                                 | (0.00      | )       |           |   | (0.00      | )                            |   |   |   |   |
| Basic      income per common share                                      |   | $                                    | (0.00      | )       |           | $      | (0.00      | )                            |   |   |   |   |
|                                                                    |   |                                 |       |    |           |   |       |                         |   |   |   |   |
| Diluted      earnings per share attributable to Lexon Technologies,Inc. |   |                                 |       |    |           |   |       |                         |   |   |   |   |
| Continued      operations                                               |   | $                                    | (0.00      | )       |           | $      | (0.00      | )                            |   |   |   |   |
| Discontinued      operations                                            |   |                                 | (0.00      | )       |           |   | (0.00      | )                            |   |   |   |   |
| Diluted      income per common share                                    |   | $                                    | (0.00      | )       |           | $      | (0.00      | )                            |   |   |   |   |
|                                                                    |   |                                 |       |    |           |   |       |                         |   |   |   |   |
| Weighted-average      shares outstanding:                               |   |                                 |       |    |           |   |       |                         |   |   |   |   |
| Basic                                                                   |   |                                 | 34,183,778 |    |           |   | 34,183,778 |                         |   |   |   |   |
| Diluted                                                                 |   |                                 | 34,183,778 |    |           |   | 34,183,778 |                         |   |   |   |   |
|                                                                    |   |                                 |       |    |           |   |       |                         |   |   |   |   |
| Amounts      attributable to Lexon Technologies, Inc.                   |   |                                 |       |    |           |   |       |                         |   |   |   |   |
| Loss      from continuing operations, net of tax                        |   | $                                    | (14,710    | )       |           | $      | (24,664    | )                            |   | $ | (3,663,161 | ) |
| Loss      from discontinued operations, net of tax                      |   |                                 | -          |    |           |   | -          |                         |   |   | (1,364,481 | ) |
| Net      loss attributable to Lexon Technologies, Inc.                  |   | $                                    | (14,710    | )       |           | $      | (24,664    | )                            |   | $ | (5,027,642 | ) |
|                                                                    |   |                                 |       |    |           |   |       |                         |   |   |   |   |

----

|                                                           |   |              |             |   |    |   |   |         |   |       |          |   |   |               |     |    |           |   |            | Deficit             |   |   |       |    |   |   |   |
|----------------------------------------------------------------|--------|-------------------|------------------|--------|---------|--------|--------|--------------|--------|------------|---------------|--------|--------|--------------------|----------|---------|----------------|--------|-----------------|---------------------|--------|--------|------------|---------|--------|--------|--------|
|                                                           |   |              |             |   |    |   |   |         |   |       |          |   |   |               |     |    | Accumulated    |   |            | Accumulated         |   |   |       |    |   |   |   |
|                                                           |   |              |             |   |    |   |   |         |   | Additional |          |   |   |               |     | Other   |           |   | During      the |                |   |   |       |    | Total  |   |
|                                                           |   | Common      Stock |             |   | Paid-in |   |   | Subscription |   |       | Comprehensive |   |   | Development        |     |    | Noncontrolling |   |            | Shareholders’ |   |
|                                                           |   | Shares            |             |   | Amount  |   |   | Capital      |   |       | Receivable    |   |   | Income      (loss) |     |    | Stage          |   |            | Interest            |   |   | Equity     |    |
|                                                           |   |              |             |   |    |   |   |         |   |       |          |   |   |               |     |    |           |   |            |                |   |   |       |    |   |   |   |
| Balance,      Jul 18, 2001                                     |   |              | -                |   |    | $      | -      |         |   |  $    | -             |   |   | $                  | -        |    |           | $      | -               |                |   | $      | -          |    |   | $      | -      |   |   | $ | - |   |
|                                                           |   |              |             |   |    |   |   |         |   |       |          |   |   |               |     |    |           |   |            |                |   |   |       |    |   |   |   |   |   |   |   |   |
| Jul      2001 - stock issued for services at $0.001 per share  |   |              |  13,720,000 |   |    |   | 13,720 |         |   |       | -             |   |   |               | -        |    |           |   | -               |                |   |   | -          |    |   |   | -      |   |   |   | 13,720 |   |
|                                                           |   |              |             |   |    |   |   |         |   |       |          |   |   |               |     |    |           |   |            |                |   |   |       |    |   |   |   |   |   |   |   |   |
| Aug      2001 - stock issued for cash at $0.25 per share       |   |              |  2,280,000  |   |    |   | 2,280  |         |   |       | 567,720       |   |   |               | (220,000 | )       |           |   | -               |                |   |   | -          |    |   |   | -      |   |   |   | 350,000 |   |
|                                                           |   |              |             |   |    |   |   |         |   |       |          |   |   |               |     |    |           |   |            |                |   |   |       |    |   |   |   |   |   |   |   |   |
| Oct      2001 - stock issued for technology at $0.25 per share |   |              |  1,500,000  |   |    |   | 1,500  |         |   |       | 373,500       |   |   |               | -        |    |           |   | -               |                |   |   | -          |    |   |   | -      |   |   |   | 375,000 |   |
|                                                           |   |              |             |   |    |   |   |         |   |       |          |   |   |               |     |    |           |   |            |                |   |   |       |    |   |   |   |   |   |   |   |   |
| Net      loss for the year ended Dec 31, 2001                  |   |              |  -          |   |    |   | -      |         |   |       | -             |   |   |               | -        |    |           |   | -               |                |   |   | (522,180   | )  |   |   | -      |   |   |   | (522,180 | ) |
|                                                           |   |              |             |   |    |   |   |         |   |       |          |   |   |               |     |    |           |   |            |                |   |   |       |    |   |   |   |   |   |   |   |   |
| Balance,      Dec 31, 2001                                     |   |              | 17,500,000       |   |    |   | 17,500 |         |   |       | 941,220       |   |   |               | (220,000 | )  |           |   | -               |                |   |   | (522,180   | )       |   |   | -      |   |   |   | 216,540 |   |
|                                                           |   |              |             |   |    |   |   |         |   |       |          |   |   |               |     |    |           |   |            |                |   |   |       |    |   |   |   |   |   |   |   |   |
| Receipt      of subscription receivable                        |   |              |  -          |   |    |   | -      |         |   |       | -             |   |   |               | 220,000  |    |           |   | -               |                |   |   | -          |    |   |   | -      |   |   |   | 220,000 |   |
|                                                           |   |              |             |   |    |   |   |         |   |       |          |   |   |               |     |    |           |   |            |                |   |   |       |    |   |   |   |   |   |   |   |   |
| Apr      2002 - stock issued to acquire Phacon Corp (Note 1)   |   |              |  1,648,778  |   |    |   | 1,649  |         |   |       | (641,346      | )      |   |               | -        |    |           |   | -               |                |   |   | -          |    |   |   | -      |   |   |   | (639,697 | )  |
|                                                           |   |              |             |   |    |   |   |         |   |       |          |   |   |               |     |    |           |   |            |                |   |   |       |    |   |   |   |   |   |   |   |   |
| Sep      2002 - stock issued for cash at $0.25 per share       |   |              |  280,000    |   |    |   | 280    |         |   |       | 69,720        |   |   |               | -        |    |           |   | -               |                |   |   | -          |    |   |   | -      |   |   |   | 70,000 |   |
|                                                           |   |              |             |   |    |   |   |         |   |       |          |   |   |               |     |    |           |   |            |                |   |   |       |    |   |   |   |   |   |   |   |   |
| Dec      2002 - stock issued for cash at $0.83 per share       |   |              |  120,000    |   |    |   | 120    |         |   |       | 99,880        |   |   |               | -        |    |           |   | -               |                |   |   | -          |    |   |   | -      |   |   |   | 100,000 |   |
|                                                           |   |              |             |   |    |   |   |         |   |       |          |   |   |               |     |    |           |   |            |                |   |   |       |    |   |   |   |   |   |   |   |   |
| Net      loss for the year ended Dec 31, 2002                  |   |              |  -          |   |    |   | -      |         |   |       | -             |   |   |               | -        |    |           |   | -               |                |   |   | (473,510   | )  |   |   | -      |   |   |   | (473,510 | ) |
|                                                           |   |              |             |   |    |   |   |         |   |       |          |   |   |               |     |    |           |   |            |                |   |   |       |    |   |   |   |   |   |   |   |   |
| Balance,      Dec 31, 2002                                     |   |              | 19,548,778       |   |    |   | 19,549 |         |   |       | 469,474       |   |   |               | -        |    |           |   | -               |                |   |   | (995,690   | )  |   |   | -      |   |   |   | (506,667 | ) |
|                                                           |   |              |             |   |    |   |   |         |   |       |          |   |   |               |     |    |           |   |            |                |   |   |       |    |   |   |   |   |   |   |   |   |
| Jan      2003 - stock issued for cash at $0.83 per share       |   |              |  240,000    |   |    |   | 240    |         |   |       | 199,760       |   |   |               | -        |    |           |   | -               |                |   |   | -          |    |   |   | -      |   |   |   | 200,000 |   |
|                                                           |   |              |             |   |    |   |   |         |   |       |          |   |   |               |     |    |           |   |            |                |   |   |       |    |   |   |   |   |   |   |   |   |
| Mar      2003 – stock issued for cash at $0.25 per share |   |              |  840,000    |   |    |   | 840    |         |   |       | 209,160       |   |   |               | -        |    |           |   | -               |                |   |   | -          |    |   |   | -      |   |   |   | 210,000 |   |
|                                                           |   |              |             |   |    |   |   |         |   |       |          |   |   |               |     |    |           |   |            |                |   |   |       |    |   |   |   |   |   |   |   |   |
| Dec      2003 - stock issued for cash at $0.25 per share       |   |              |  60,000     |   |    |   | 60     |         |   |       | 14,940        |   |   |               | -        |    |           |   | -               |                |   |   | -          |    |   |   | -      |   |   |   | 15,000 |   |
|                                                           |   |              |             |   |    |   |   |         |   |       |          |   |   |               |     |    |           |   |            |                |   |   |       |    |   |   |   |   |   |   |   |   |
| Comprehensive      income                                      |   |              |             |   |    |   |   |         |   |       |          |   |   |               |     |    |           |   |            |                |   |   |       |    |   |   |   |   |   |   |   |   |
|                                                           |   |              |             |   |    |   |   |         |   |       |          |   |   |               |     |    |           |   |            |                |   |   |       |    |   |   |   |   |   |   |   |   |
| Net      loss for the year ended Dec 31, 2003                  |   |              |  -          |   |    |   | -      |         |   |       | -             |   |   |               | -        |    |           |   | -               |                |   |   | (611,808   | )  |   |   | -      |   |   |   | (611,808 | ) |
|                                                           |   |              |             |   |    |   |   |         |   |       |          |   |   |               |     |    |           |   |            |                |   |   |       |    |   |   |   |   |   |   |   |   |
| Foreign      currency translation                              |   |              | -                |   |    |   | -      |         |   |       | -             |   |   |               | -        |    |           |   | 4,729           |                |   |   | -          |    |   |   | -      |   |   |   | 4,729 |   |
|                                                           |   |              |             |   |    |   |   |         |   |       |          |   |   |               |     |    |           |   |            |                |   |   |       |    |   |   |   |   |   |   |   |   |
| Total      comprehensive (loss) income                         |   |              | -                |   |    |   | -      |         |   |       | -             |   |   |               | -        |    |           |   | -               |                |   |   | -          |    |   |   | -      |   |   |   | (607,079 | ) |
|                                                           |   |              |             |   |    |   |   |         |   |       |          |   |   |               |     |    |           |   |            |                |   |   |       |    |   |   |   |   |   |   |   |   |
| Balance,      Dec 31, 2003                                     |   |              | 20,688,778       |   |    | $      | 20,689 |         |   |  $    | 893,334       |   |   | $                  | -        |    |           | $      | 4,729           |                |   | $      | (1,607,498 | )  |   |   | -      |   |   |   | (688,746 | ) |

----

|                                                                             |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            | Deficit             |   |   |       |    |   |   |     |
|----------------------------------------------------------------------------------|--------|-------------------|------------|--------|---------|--------|--------|--------------|--------|------------|---------------|--------|--------|--------------------|--------|--------|----------------|--------|-----------------|---------------------|--------|--------|------------|---------|--------|--------|----------|
|                                                                             |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   | Accumulated    |   |            | Accumulated         |   |   |       |    |   |   |     |
|                                                                             |   |              |       |   |    |   |   |         |   | Additional |          |   |   |               |   | Other  |           |   | During      the |                |   |   |       |    | Total  |   |
|                                                                             |   | Common      Stock |       |   | Paid-in |   |   | Subscription |   |       | Comprehensive |   |   | Development        |   |   | Noncontrolling |   |            | Shareholders’ |   |
|                                                                             |   | Shares            |       |   | Amount  |   |   | Capital      |   |       | Receivable    |   |   | Income      (loss) |   |   | Stage          |   |            | Interest            |   |   | Equity     |    |
|                                                                             |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |
| Balance,      Dec 31, 2003                                                       |   |              | 20,688,778 |   |    | $      | 20,689 |         |   | $          | 893,334       |   |   | $                  | -      |   |           | $      | 4,729           |                |   | $      | (1,607,498 | )  |   | $      | -        |   |   | $ | (688,746 | ) |
|                                                                             |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
| Oct      2004 - stock issued for cash at $0.25 per share                         |   |              | 4,000,000  |   |    |   | 4,000  |         |   |       | 996,000       |   |   |               | -      |   |           |   | -               |                |   |   | -          |    |   |   | -        |   |   |   | 1,000,000 |   |
|                                                                             |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
| Dec      2004 - stock issued for cash at $0.11 per share                         |   |              | 6,125,000  |   |    |   | 6,125  |         |   |       | 693,875       |   |   |               | -      |   |           |   | -               |                |   |   | -          |    |   |   | -        |   |   |   | 700,000 |   |
|                                                                             |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
| Dec      2004 - stock issued for services at $0.25 per share                     |   |              | 1,000,000  |   |    |   | 1,000  |         |   |       | 249,000       |   |   |               | -      |   |           |   | -               |                |   |   | -          |    |   |   | -        |   |   |   | 250,000 |   |
|                                                                             |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
| Dec      2004 - stock issued in lieu of outstanding debt at $0.10 per      share |   |              | 2,370,000  |   |    |   | 2,370  |         |   |       | 234,630       |   |   |               | -      |   |           |   | -               |                |   |   | -          |    |   |   | -        |   |   |   | 237,000 |   |
|                                                                             |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
| Comprehensive      income                                                        |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
|                                                                             |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
| Net      loss for the year ended Dec 31, 2004                                    |   |              | -          |   |    |   | -      |         |   |       | -             |   |   |               | -      |   |           |   | -               |                |   |   | (895,710   | )  |   |   | (11,490  | ) |   |   | (907,200 | ) |
|                                                                             |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
| Foreign      currency translation                                                |   |              | -          |   |    |   | -      |         |   |       | -             |   |   |               | -      |   |           |   | 1,433           |                |   |   | -          |    |   |   | 156      |   |   |   | 1,589 |   |
|                                                                             |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
| Total      comprehensive (loss) income                                           |   |              | -          |   |    |   | -      |         |   |       | -             |   |   |               | -      |   |           |   | -               |                |   |   | -          |    |   |   | -        |   |   |   | (905,611 | ) |
|                                                                             |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
| Balance,      Dec 31, 2004                                                       |   |              | 34,183,778 |   |    |   | 34,184 |         |   |       | 3,066,839     |   |   |               | -      |   |           |   | 6,162           |                |   |   | (2,503,208 | )  |   |   | (11,334  | ) |   |   | 592,643 |   |
|                                                                             |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
| Comprehensive      income                                                        |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
|                                                                             |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
| Net      loss for the year ended Dec 31, 2005                                    |   |              | -          |   |    |   | -      |         |   |       | -             |   |   |               | -      |   |           |   | -               |                |   |   | (459,251   | )  |   |   | 10,980   |   |   |   | (448,271 | ) |
|                                                                             |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
| Foreign      currency translation                                                |   |              | -          |   |    |   | -      |         |   |       | -             |   |   |               | -      |   |           |   | (74,542         | )              |   |   | -          |    |   |   | (8,136   | ) |   |   | (82,678 | ) |
|                                                                             |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
| Total      comprehensive (loss) income                                           |   |              | -          |   |    |   | -      |         |   |       | -             |   |   |               | -      |   |           |   | -               |                |   |   | -          |    |   |   | -        |   |   |   | (530,949 | ) |
|                                                                             |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
| Balance,      Dec 31, 2005                                                       |   |              | 34,183,778 |   |    |   | 34,184 |         |   |       | 3,066,839     |   |   |               | -      |   |           |   | (68,380         | )              |   |   | (2,962,459 | )  |   |   | (8,490   | ) |   |   | 61,694 |   |
|                                                                             |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
| Comprehensive      income                                                        |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
|                                                                             |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
| Net      loss for the year ended Dec 31, 2006                                    |   |              | -          |   |    |   | -      |         |   |       | -             |   |   |               | -      |   |           |   | -               |                |   |   | (2,797,639 | )  |   |   | (163,962 | ) |   |   | (2,961,601 | ) |
|                                                                             |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
| Foreign      currency translation                                                |   |              | -          |   |    |   | -      |         |   |       | -             |   |   |               | -      |   |           |   | (18,729         | )              |   |   | -          |    |   |   | (2,044   | ) |   |   | (20,773 | ) |
|                                                                             |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
| Investment      loss                                                             |   |              | -          |   |    |   | -      |         |   |       | -             |   |   |               | -      |   |           |   | (22,704         | )              |   |   | -          |    |   |   | -        |   |   |   | (22,704 | ) |
|                                                                             |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
| Total      comprehensive (loss) income                                           |   |              | -          |   |    |   | -      |         |   |       | -             |   |   |               | -      |   |           |   | -               |                |   |   | -          |    |   |   | -        |   |   |   | (3,005,078 | ) |
|                                                                             |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
| Balance,      Dec 31, 2006                                                       |   |              | 34,183,778 |   |    |   | 34,184 |         |   |       | 3,066,839     |   |   |               | -      |   |           |   | (109,813        | )              |   |   | (5,760,098 | )  |   |   | (174,496 | ) |   |   | (2,943,384 | ) |
|                                                                             |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
| Comprehensive      income                                                        |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
|                                                                             |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
| Net      income for the year ended Dec 31, 2007                                  |   |              | -          |   |    |   | -      |         |   |       | -             |   |   |               | -      |   |           |   | -               |                |   |   | 749,430    |    |   |   | (91      | ) |   |   | 749,339 |   |
|                                                                             |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
| Foreign      currency translation                                                |   |              | -          |   |    |   | -      |         |   |       | -             |   |   |               | -      |   |           |   | 4,083           |                |   |   | -          |    |   |   | 446      |   |   |   | 4,529 |   |
|                                                                             |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
| Total      comprehensive (loss) income                                           |   |              | -          |   |    |   | -      |         |   |       | -             |   |   |               | -      |   |           |   | -               |                |   |   | -          |    |   |   | -        |   |   |   | 753,868 |   |
|                                                                             |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
| Balance,      Dec 31, 2007                                                       |   |              | 34,183,778 |   |    |   | 34,184 |         |   |       | 3,066,839     |   |   |               | -      |   |           |   | (105,730        | )                   |   |   | (5,010,668 | )  |   |   | (174,141 | ) |   |   | (2,189,516 | ) |
|                                                                             |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
| Comprehensive      income                                                        |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
|                                                                             |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
| Net      income for the year ended Dec 31, 2008                                  |   |              | -          |   |    |   | -      |         |   |       | -             |   |   |               | -      |   |           |   | -               |                |   |   | (2,264     | )  |   |   | 15,645   |   |   |   | 13,381 |   |
|                                                                             |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
| Foreign      currency translation                                                |   |              | -          |   |    |   | -      |         |   |       | -             |   |   |               | -      |   |           |   | (46,070         | )              |   |   | -          |    |   |   | (5,028   | ) |   |   | (51,098 | ) |
|                                                                             |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
| Total      comprehensive (loss) income                                           |   |              | -          |   |    |   | -      |         |   |       | -             |   |   |               | -      |   |           |   | -               |                |   |   | -          |    |   |   | -        |   |   |   | (37,717 | ) |
|                                                                             |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
| Balance,      Dec 31, 2008                                                       |   |              | 34,183,778 |   |    | $      | 34,184 |         |   | $          | 3,066,839     |   |   | $                  | -      |   |           | $      | (151,800        | )                   |   | $      | (5,012,932 | )       |   | $      | (163,524 | ) |   | $ | (2,227,233 | ) |

----

|                                                    |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            | Deficit             |   |   |       |    |   |   |     |
|---------------------------------------------------------|--------|-------------------|------------|--------|---------|--------|--------|--------------|--------|------------|---------------|--------|--------|--------------------|--------|--------|----------------|--------|-----------------|---------------------|--------|--------|------------|---------|--------|--------|----------|
|                                                    |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   | Accumulated    |   |            | Accumulated         |   |   |       |    |   |   |     |
|                                                    |   |              |       |   |    |   |   |         |   | Additional |          |   |   |               |   | Other  |           |   | During      the |                |   |   |       |    | Total  |   |
|                                                    |   | Common      Stock |       |   | Paid-in |   |   | Subscription |   |       | Comprehensive |   |   | Development        |   |   | Noncontrolling |   |            | Shareholders’ |   |
|                                                    |   | Shares            |       |   | Amount  |   |   | Capital      |   |       | Receivable    |   |   | Income      (loss) |   |   | Stage          |   |            | Interest            |   |   | Equity     |    |
|                                                    |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |
| Balance,      Dec 31, 2008                              |   |              | 34,183,778 |   |    | $      | 34,184 |         |   | $          | 3,066,839     |   |   | $                  | -      |   |           | $      | (151,800        | )              |   | $      | (5,012,932 | )  |   | $      | (163,524 | ) |   | $ | (2,227,233 | ) |
|                                                    |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
| Comprehensive      income                               |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
|                                                    |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
| Net      income for the three months ended Mar 31, 2009 |   |              | -          |   |    |   | -      |         |   |       | -             |   |   |               | -      |   |           |   | -               |                |   |   | (14,710    | )       |   |   | -        |   |   |   | (14,710 | ) |
|                                                    |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
| Foreign      currency translation                       |   |              | -          |   |    |   | -      |         |   |       | -             |   |   |               | -      |   |           |   | 50,584          |                |   |   | -          |    |   |   | 5,520    |   |   |   | 56,104 |   |
|                                                    |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
| Total      comprehensive (loss) income                  |   |              | -          |   |    |   | -      |         |   |       | -             |   |   |               | -      |   |           |   | -               |                |   |   | -          |    |   |   | -        |   |   |   | 41,394 |   |
|                                                    |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |
| Balance,      March 31, 2009                            |   |              | 34,183,778 |   |    | $      | 34,184 |         |   | $          | 3,066,839     |   |   | $                  | -      |   |           | $      | (101,216        | )                   |   | $      | (5,027,642 | )       |   | $      | (158,004 | ) |   |   | (2,185,839 | ) |
|                                                    |   |              |       |   |    |   |   |         |   |       |          |   |   |               |   |   |           |   |            |                |   |   |       |    |   |   |     |   |   |   |   |   |

----

|                                                               |   |                            |    |    |        |   |    | From      July 18, 2001 |   |
|--------------------------------------------------------------------|--------|---------------------------------|---------|---------|-------------|--------|---------|-------------------------|--------|
|                                                               |   | For      the Three Months Ended |    |    | (Inception) |   |
|                                                               |   | March      31,                  |    |    | through     |   |
|                                                               |   | 2009                            |    |    | 2008        |   |    | March      31, 2009     |   |
| Cash Flows From Operating      Activities:                         |   |                            |    |    |        |   |    |                    |   |
| Net      loss                                                      |   | $                               | (14,710 | )  |        | $      | (24,664 | )                       |   | $ | (5,176,560 | ) |
| Adjustments      to reconcile net loss to net cash                 |   |                            |    |    |        |   |    |                    |   |   |   |   |
| used      in operating activities                                  |   |                            |    |    |        |   |    |                    |   |   |   |   |
| Depreciation      and amortization                                 |   |                            | 41      |    |        |   | 266     |                    |   |   | 13,766 |   |
| Stock      for services                                            |   |                            | -       |    |        |   | -       |                    |   |   | 263,720 |   |
| Stock      for technology                                          |   |                            | -       |    |        |   | -       |                    |   |   | 375,000 |   |
| Gain      on forgiveness of debt                                   |   |                            | -       |    |        |   | -       |                    |   |   | (907,872 | ) |
| Loss      on sale of assets                                        |   |                            | -       |    |        |   | -       |                    |   |   | 1,134 |   |
| Change      in assets and liabilities:                             |   |                            |    |    |        |   |    |                    |   |   |   |   |
| (Decrease)      increase in accounts payable                       |   |                            | 561     |    |        |   | -       |                    |   |   | 27,408 |   |
| (Decrease)      increase in due to related parties                 |   |                            | 7,100   |    |        |   | -       |                    |   |   | 845,114 |   |
| (Decrease)      increase in accrued expenses                       |   |                            | 3,281   |    |        |   | 2,094   |                    |   |   | 52,556 |   |
| Increase      in contingent liabilities                            |   |                            | -       |    |        |   | -       |                    |   |   | 274,610 |   |
| Operating      cash generated by (used in) discontinued operations |   |                            | -       |    |        |   | (38,493 | )                       |   |   | 390,776 |   |
| Net      Cash Used in Operating Activities                         |   |                            | (3,727  | )       |        |   | (60,797 | )                       |   |   | (3,840,348 | ) |
|                                                               |   |                            |    |    |        |   |    |                    |   |   |   |   |
| Cash Flows From Investing      Activities:                         |   |                            |    |    |        |   |    |                    |   |   |   |   |
| Acquisition      of property and equipment                         |   |                            | -       |    |        |   | -       |                    |   |   | (16,114 | ) |
| Proceeds      received on sale of fixed assets                     |   |                            | -       |    |        |   | -       |                    |   |   | 243 |   |
| Net      Cash Used in Investing Activities                         |   |                            | -       |    |        |   | -       |                    |   |   | (15,871 | ) |
|                                                               |   |                            |    |    |        |   |    |                    |   |   |   |   |
| Cash Flows From Financing      Activities:                         |   |                            |    |    |        |   |    |                    |   |   |   |   |
| Proceeds      from related party notes                             |   |                            |    |    |        |   | 15,720  |                    |   |   | 482,468 |   |
| Proceeds      from notes payable                                   |   |                            | -       |    |        |   |    |                    |   |   | 1,356,469 |   |
| Payments      made on notes payable                                |   |                            | -       |    |        |   |    |                    |   |   | (41,615 | ) |
| Proceeds      from issuance of common stock                        |   |                            | -       |    |        |   |    |                    |   |   | 2,225,303 |   |
| Net      Cash Provided by Financing Activities                     |   |                            | -       |    |        |   | 15,720  |                    |   |   | 4,022,625 |   |
|                                                               |   |                            |    |    |        |   |    |                    |   |   |   |   |
| Net      increase (decrease) in cash and cash equivalents          |   |                            | (3,727  | )       |        |   | (45,077 | )                       |   |   | 166,406 |   |
|                                                               |   |                            |    |    |        |   |    |                    |   |   |   |   |
| Effect      of currency exchange rate changes                      |   |                            |    |    |        |   |    |                    |   |   |   |   |
| On      cash and cash equivalents                                  |   |                            | -       |    |        |   | 44,593  |                    |   |   | (166,406 | ) |
|                                                               |   |                            |    |    |        |   |    |                    |   |   |   |   |
| Cash      and cash equivalent at beginning of period               |   |                            | 3,727   |    |        |   | 5,255   |                    |   |   | - |   |
|                                                               |   |                            |    |    |        |   |    |                    |   |   |   |   |
| Cash      and cash equivalent at end of period                     |   | $                               | -       |    |        | $      | 4,771   |                    |   | $ | - |   |

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|                                             |   |                            |   |   |        |   |   | From      July 18, 2001 |   |
|--------------------------------------------------|--------|---------------------------------|--------|--------|-------------|--------|--------|-------------------------|--------|
|                                             |   | For      the Three Months Ended |   |   | (Inception) |   |
|                                             |   | March      31,                  |   |   | through     |   |
|                                             |   | 2009                            |   |   | 2008        |   |   | March      31, 2009     |   |
| Supplemental      Cash Flow Information:         |   |                            |   |   |        |   |   |                    |   |
|                                             |   |                            |   |   |        |   |   |                    |   |
| Cash      Payments For                           |   |                            |   |   |        |   |   |                    |   |
| Interest                                         |   | $                               | -      |   |        | $      | -      |                    |   | $ | 717,548 |   |
|                                             |   |                            |   |   |        |   |   |                    |   |   |   |   |
| Non-Cash      Investing and Financing Activities |   |                            |   |   |        |   |   |                    |   |   |   |   |
| Stock      issued for technology                 |   | $                               | -      |   |        | $      | -      |                    |   | $ | 375,000 |   |
| Stock      issued for services                   |   | $                               | -      |   |        | $      | -      |                    |   | $ | 263,720 |   |
| Stock      issued for in lieu of debt            |   | $                               | -      |   |        | $      | -      |                    |   | $ | 237,000 |   |

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Reclassifications. Certainamounts from prior periods have been reclassified to conform to the currentperiod’s presentation.

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3.Discontinued Operations

|   |                            |   | (Unaudited)         |    |   |                   |   |    |
|--------|---------------------------------|--------|---------------------|---------|--------|------------------------|--------|---------|
|   |                            |   | March      31, 2009 |    |   | December      31, 2008 |   |    |
|   |                            |   |                |    |   |                   |   |    |
|   | Computer      and equipment     |   | $                   | 10,450  |   |                   | $      | 10,450  |   |   |
|   | Furniture      and fixture      |   |                | 4,287   |   |                   |   | 4,287   |   |   |
|   |                            |   |                | 14,737  |   |                   |   | 14,737  |   |   |
|   | Accumulated      depreciation   |   |                | (13,766 | )      |                   |   | (13,725 | ) |   |
|   |                            |   |                |    |   |                   |   |    |   |   |
|   | Net      property and equipment |   | $                   | 971     |   |                   | $      | 1,012   |   |   |

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|   |                                                                                                                                                                                                   |   | (Unaudited)         |   |   |                   |   |   |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|--------|--------|------------------------|--------|--------|
|   |                                                                                                                                                                                                   |   | March      31, 2009 |   |   | December      31, 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  |   |                   | $      | 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 |   |                   |   | 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 |   |                   |   | 56,960 |   |   |
|   |                                                                                                                                                                                                   |   |                |   |   |                   |   |   |   |   |
|   | Total      notes payable                                                                                                                                                                               |   | $                   | 91,960 |   |                   | $      | 91,960 |   |   |

----

|   |                                                                                                                                                                       |   | (Unaudited)         |    |   |                   |   |    |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|---------|--------|------------------------|--------|---------|
|   |                                                                                                                                                                       |   | March      31, 2009 |    |   | December      31, 2008 |   |    |
|   |                                                                                                                                                                       |   |                |    |   |                   |   |    |
|   | 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  |   |                   | $      | 20,000  |   |   |
|   |                                                                                                                                                                       |   |                |    |   |                   |   |    |   |   |
|   | Unsecured      note payable to an unrelated party, with interest at 7.5% per annum. As      disclosed in Note 8, the creditor has filed suit to collect on this      note. |   |                | 149,982 |   |                   |   | 149,982 |   |   |
|   |                                                                                                                                                                       |   |                |    |   |                   |   |    |   |   |
|   | Total      notes payable                                                                                                                                                   |   | $                   | 169,982 |   |                   | $      | 169,982 |   |   |

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9. Income Taxes

|                               |   | (Unaudited)         |      |                  |   |
|------------------------------------|--------|---------------------|-----------|-----------------------|--------|
|                               |   | March      31, 2009 |      | December      31,2008 |   |
|                               |   |                |      |                  |   |
| Loss      carry forwards           |   | $                   | 1,355,350 |                  | $      | 1,352,904 |   |
| Intangible      assets             |   | 793,265             |      | 793,265               |   |
| Other                              |   | 233,575             |      | 229,720               |   |
| Total      deferred tax asset      |   | 2,382,190           |      | 2,375,889             |   |
|                               |   |                |      |                  |   |
| Valuation      allowance           |   | (2,382,190          | )         | (2,375,889            | )      |
| Total      deferred tax asset, net |   | $                   | -         |                  |   | - |   |

|   |                                                        |   | (Unaudited)Three      Months Ended March 31, |   |   |
|--------|-------------------------------------------------------------|--------|----------------------------------------------|--------|--------|
|   |                                                        |   | 2009                                         |   |   | 2008 |   |   |
|   |                                                        |   |                                         |   |   |   |   |   |
|   | Expected      federal tax benefit                           |   |                                         | 34     | %      |   |   | 34 | % |   |
|   |                                                        |   |                                         |   |   |   |   |   |   |   |
|   | State      tax expense, net of expected federal tax benefit |   |                                         | 9      | %      |   |   | 9 | % |   |
|   | Foreign      loss not subject to U.S. federal income tax    |   |                                         | 0      | %      |   |   | 0 | % |   |
|   | Other                                                       |   |                                         | 0      | %      |   |   | 0 | % |   |
|   | Increase      (decrease) in valuation allowance             |   |                                         | (43    | )%     |   |   | (43 | % |   |
|   |                                                        |   |                                         |   |   |   |   |   |   |   |
|   | Total      tax provision                                    |   |                                         | 0      | %      |   |   | 0 | % |   |

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ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS

|                                                  |   | Three      Months Ended March 31,      2009 |    |          | Three Months  Ended      March 31,      2008 |   |        | Percentage Change   |   |   |
|-------------------------------------------------------|--------|--------------------------------------------------|---------|---------------|---------------------------------------------------|--------|-------------|---------------------|--------|--------|
|                                                  |   | (Unaudited)                                      |    |          | (Unaudited)                                       |   |        |                |   |   |
| Revenue                                     |   | $                                                | -       |          |                                              | $      | -           |                |   | $      | - |   |   |
|                                                  |   |                                             |    |          |                                              |   |        |                |   |   |   |   |   |
| Operating      expenses      |   |                                             | 11,429  |          |                                              |   | 22,570      |                |   |   | 49.4 | % |   |
|                                                  |   |                                             |    |          |                                              |   |        |                |   |   |   |   |   |
| Net      (loss)                                  |   | $                                                | (14,710 | )        |                                              | $      | (24,664     | )    |   | $      |  40.4 | % |   |
|                                                  |   |                                             |    |          |                                              |   |        |                |   |   |   |   |   |
| Net (loss) per      share                        |   | $                                                | (.000   | )   |                                              | $      |  (.001 | )              |   | $      | 100 | % |   |

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKETRISK

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