**FORM      10-QSB**

**June 30, 2007**

**0-24721**

**LEXON      TECHNOLOGIES, INC.**

|                                                                          |                                      |
|-------------------------------------------------------------------------------|-------------------------------------------|
| **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)                 |

** **
**(949)752-7700**

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

**Common      Stock, par value $0.001 per share**

----

**TABLE      OF CONTENTS**

| PART                  I- FINANCIAL INFORMATION                                                                                                   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                             |   |
| ITEM                  1. FINANCIAL STATEMENTS                                                                                                    | 3      |
| ITEM                  2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION                  AND RESULTS                  OF OPERATIONS | 19     |
| ITEM                  3. CONTROLS AND PROCEDURES                                                                                                 | 20     |
|                                                                                                                                             |   |
| PART                  II- OTHER INFORMATION                                                                                                      |   |
|                                                                                                                                             |   |
| ITEM                  1. LEGAL PROCEEDINGS                                                                                                       | 21     |
| ITEM                  2. CHANGES IN SECURITIES                                                                                                   | 21     |
| ITEM                  3. DEFAULT BY THE COMPANY ON ITS SENIOR SECURITIES                                                                         | 21     |
| ITEM                  4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS                                                                   | 21     |
| ITEM                  5. OTHER INFORMATION                                                                                                       | 21     |
| ITEM                  6. EXHIBITS                                                                                                                | 22     |
|                                                                                                                                             |   |
|                                                                                                                                             |   |
| SIGNATURES                                                                                                                                       |   |
|                                                                                                                                             |   |
| EX-31.1                  (07JUN PRIN EXEC 302 CERT)                                                                                              |   |
|                                                                                                                                             |   |
| EX-31.2                  (07JUN PRIN FIN 302 CERT)                                                                                               |   |
|                                                                                                                                             |   |
| EX-32                  (07JUN PRIN EXEC AND FIN 906 CERT)                                                                                        |   |

 

----

**LEXON        TECHNOLOGIES, INC. AND SUBSIDIARIES**

**CONSOLIDATED        FINANCIAL STATEMENTS**

**(UNAUDITED)**

**JUNE        30, 2007**

----

**LEXON        TECHNOLOGIES, INC. AND SUBSIDIARIES**

**CONSOLIDATED        FINANCIAL STATEMENTS**

**(UNAUDITED)**

**JUNE        30,        2007**

| **CONTENTS**                                                                | **PAGE**                     |
|-----------------------------------------------------------------------------|------------------------------|
|                                                                        |                         |
| **FINANCIAL                      STATEMENTS**                               |                         |
|                                                                        |                         |
| Consolidated                      Balance Sheets                            | 5                            |
|                                                                        |                         |
| Consolidated                      Statements of Operations                  | 7                            |
|                                                                        |                         |
| Consolidated                      Statements of Stockholders’ Deficit | 8                            |
|                                                                        |                         |
| Consolidated                      Statements of Cash Flows                  | 10                           |
|                                                                        |                         |
| Notes                      to Consolidated Financial Statements             | 12                      - 18 |

----

| **LEXON                  TECHNOLOGIES, INC. AND SUBSIDIARIES** |
|----------------------------------------------------------------|
| **(A                  Development Stage Company)**             |
| **Consolidated                  Balance Sheets**               |
|                                                           |   |   |   |

|                                                        |   |                           |    |   |                               |   |
|-------------------------------------------------------------|--------|--------------------------------|---------|--------|------------------------------------|--------|
|                                                        |   |                           |    |   |                               |   |
| **ASSETS**                                                  |   |
|                                                        |   |                           |    |   |                               |   |
|                                                        |   |                           |    |   |                               |   |
|                                                        |   | June                  30, 2007 |    |   | December                  31, 2006 |   |
|                                                        |   | (Unaudited)                    |    |   |                               |   |
|                                                        |   |                           |    |   |                               |   |
| CURRENT                  ASSETS                             |   |                           |    |   |                               |   |
| Cash                  and cash equivalents (Note 2)         |   | $                              | 21,537  |   |                               | $      | 227 |   |
|                                                        |   |                           |    |   |                               |   |   |   |
| PROPERTY                  AND EQUIPMENT, net (Notes 1and 3) |   |                           | 1,419   |   |                               |   | - |   |
|                                                        |   |                           |    |   |                               |   |   |   |
| OTHER                  ASSETS                               |   |                           |    |   |                               |   |   |   |
| Investments                  (Note 4)                       |   |                           | 105,679 |   |                               |   | 104,839 |   |
| Deposits                  and other assets                  |   |                           | 6,155   |   |                               |   | 6,568 |   |
| Total                  Other Assets                         |   |                           | 111,834 |   |                               |   | 111,407 |   |
|                                                        |   |                           |    |   |                               |   |   |   |
| TOTAL                  ASSETS                               |   | $                              | 134,790 |   |                               | $      | 111,634 |   |
|                                                        |   |                           |    |   |                               |   |   |   |

----

| **LEXON                  TECHNOLOGIES, INC. AND SUBSIDIARIES** |
|----------------------------------------------------------------|
| **(A                  Development Stage Company)**             |
| **Consolidated                  Balance Sheets**               |
|                                                           |   |   |   |

|  **LIABILITIES                  AND STOCKHOLDERS' DEFICIENCY** |
|---------------------------------------------------------------------|
|                                                                |   |   |   |   |   |   |
|                                                                |   |   |   |   |   |   |
|                                                                |   | June                    30, 2007 |   |   | December                    31, 2006 |   |
|                                                                |   | (Unaudited) |   |   |   |   |
|                                                                |   |   |   |   |   |   |
| CURRENT                    LIABILITIES                              |   |   |   |   |   |   |
| Accounts                    payable                                 |   | $ | 542,996 |   |   | $ | 546,764 |   |
| Due                    to related parties (Note 5)                  |   |   | 400,502 |   |   |   | 421,753 |   |
| Accrued                    expenses (Note 6)                        |   |   | 800,409 |   |   |   | 1,658,316 |   |
| Convertible                    notes payable (Note 11)              |   |   | 86,960 |   |   |   | 128,575 |   |
| Notes                    payable (Note 7)                           |   |   | 174,982 |   |   |   | 25,000 |   |
| Total                    Current Liabilities                        |   |   | 2,005,849 |   |   |   | 2,780,408 |   |
|                                                                |   |   |   |   |   |   |   |   |
| CONTINGENT                    LIABILITIES (Note 6)                  |   |   | 274,610 |   |   |   | 274,610 |   |
|                                                                |   |   |   |   |   |   |   |   |
| STOCKHOLDERS'                    DEFICIENCY                         |   |   |   |   |   |   |   |   |
| Common                    stock, par value $0.001 per share;        |   |   |   |   |   |   |   |   |
| 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 (Note 10)   |   |   | (125,685 | ) |   |   | (119,837 | ) |
| Deficit                    accumulated during the development stage |   |   | (5,121,007 | ) |   |   | (5,924,570 | ) |
| Total                    Stockholders' Deficiency                   |   |   | (2,145,669 | ) |   |   | (2,943,384 | ) |
|                                                                |   |   |   |   |   |   |   |   |
| TOTAL                    LIABILITIES AND STOCKHOLDERS' DEFICIENCY   |   | $ | 134,790 |   |   | $ | 111,634 |   |
|                                                                |   |   |   |   |   |   |   |   |

----

| **LEXON                      TECHNOLOGIES, INC. AND SUBSIDIARIES**                                                                          |
|---------------------------------------------------------------------------------------------------------------------------------------------|
| **(A                      Development Stage Company)**                                                                                      |
| **Consolidated                      Statements of Operations**                                                                              |
| **For                      the Three Months and the Six Months Ended June 30, 2007 and                      2006                      and** |
| **the                      Period from Inception on July 18, 2001 through June 30,                      2007**                              |
| **(Unaudited)**                                                                                                                             |
|                                                                                                                                        |   |   |   |   |   |   |   |   |   |

|                                                              |   |                                            |       |   |                                          |   |       |                          |   |   |       |   |   |                                  |       |
|-------------------------------------------------------------------|--------|-------------------------------------------------|------------|--------|-----------------------------------------------|--------|------------|-------------------------------|--------|--------|------------|--------|--------|---------------------------------------|------------|
|                                                              |   |                                            |       |   |                                          |   |       |                          |   |   |       |   |   | From                      Inception   |       |
|                                                              |   |                                            |       |   |                                          |   |       |                          |   |   |       |   |   | on                      July 18, 2001 |       |
|                                                              |   | For                      the Three Months Ended |       |   | For                      the Six Months Ended |   |       | Through                       |   |
|                                                              |   | June                      30,                   |       |   | June                      30,                 |   |       | June                      30, |   |
|                                                              |   | 2007                                            |       |   | 2006                                          |   |       | 2007                          |   |   | 2006       |   |   | 2007                                  |       |
|                                                              |   |                                            |       |   |                                          |   |       |                          |   |   |       |   |   |                                  |       |
| REVENUES                                                          |   | $                                               | -          |   |                                          | $      | -          |                          |   | $      | -          |   |   | $                                     | -          |   |   | $ | 22,031 |   |
|                                                              |   |                                            |       |   |                                          |   |       |                          |   |   |       |   |   |                                  |       |   |   |   |   |   |
| EXPENSES                                                          |   |                                            |       |   |                                          |   |       |                          |   |   |       |   |   |                                  |       |   |   |   |   |   |
| Research                      and development                     |   |                                            | -          |   |                                          |   | 9,729      |                          |   |   | -          |   |   |                                  | 22,523     |   |   |   | 495,688 |   |
| Selling,                      general and administrative          |   |                                            | (7,729     | )      |                                          |   | 250,388    |                          |   |   | 79,845     |   |   |                                  | 527,481    |   |   |   | 3,906,186 |   |
| Bad                      debt expense                             |   |                                            | -          |   |                                          |   | -          |                          |   |   | -          |   |   |                                  | -          |   |   |   | 52,784 |   |
| Depreciation                      and amortization                |   |                                            | 272        |   |                                          |   | 12,979     |                          |   |   | 501        |   |   |                                  | 25,632     |   |   |   | 100,590 |   |
| Total                      Expenses                               |   |                                            | (7,457     | )      |                                          |   | 273,096    |                          |   |   | 80,346     |   |   |                                  | 575,636    |   |   |   | 4,555,248 |   |
|                                                              |   |                                            |       |   |                                          |   |       |                          |   |   |       |   |   |                                  |       |   |   |   |   |   |
| INCOME                      (LOSS) FROM OPERATIONS                |   |                                            | 7,457      |   |                                          |   | (273,096   | )                             |   |   | (80,346    | )      |   |                                  | (575,636   | ) |   |   | (4,533,217 | ) |
|                                                              |   |                                            |       |   |                                          |   |       |                          |   |   |       |   |   |                                  |       |   |   |   |   |   |
| OTHER                      INCOME (EXPENSES)                      |   |                                            |       |   |                                          |   |       |                          |   |   |       |   |   |                                  |       |   |   |   |   |   |
| Interest                      income                              |   |                                            | -          |   |                                          |   | 695        |                          |   |   | -          |   |   |                                  | 714        |   |   |   | 40,543 |   |
| Other                      income                                 |   |                                            | -          |   |                                          |   | -          |                          |   |   | -          |   |   |                                  | -          |   |   |   | 6,000 |   |
| Gain                      (loss) on sale or foreclosure of assets |   |                                            | -          |   |                                          |   | (7,441     | )                             |   |   | -          |   |   |                                  | (17,520    | ) |   |   | 1,296,367 |   |
| Gain                      on forgiveness of debt (Note 6)         |   |                                            | 888,000    |   |                                          |   | -          |                          |   |   | 888,000    |   |   |                                  | -          |   |   |   | 907,872 |   |
| Interest                      expense                             |   |                                            | (2,093     | )      |                                          |   | (2,872     | )                             |   |   | (4,091     | )      |   |                                  | (5,712     | ) |   |   | (772,449 | ) |
| Impairment                      of goodwill                       |   |                                            | -          |   |                                          |   | -          |                          |   |   | -          |   |   |                                  | -          |   |   |   | (1,851,692 | ) |
| Loss                      from investment                         |   |                                            | -          |   |                                          |   | -          |                          |   |   | -          |   |   |                                  | -          |   |   |   | (11,667 | ) |
| Loss                      from discontinued operation             |   |                                            | -          |   |                                          |   | -          |                          |   |   | -          |   |   |                                  | -          |   |   |   | (202,764 | ) |
| Total                      Other Income (Expenses)                |   |                                            | 885,907    |   |                                          |   | (9,618     | )                             |   |   | 883,909    |   |   |                                  | (22,518    | ) |   |   | (587,790 | ) |
|                                                              |   |                                            |       |   |                                          |   |       |                          |   |   |       |   |   |                                  |       |   |   |   |   |   |
| NET                      INCOME (LOSS)                            |   | $                                               | 893,364    |   |                                          | $      | (282,714   | )                             |   | $      | 803,563    |   |   | $                                     | (598,154   | ) |   | $ | (5,121,007 | ) |
|                                                              |   |                                            |       |   |                                          |   |       |                          |   |   |       |   |   |                                  |       |   |   |   |   |   |
| BASIC                      EARNING (LOSS) PER SHARE               |   | $                                               | 0.03       |   |                                          | $      | (0.01      | )                             |   | $      | 0.02       |   |   | $                                     | (0.02      | ) |   |   |   |   |
|                                                              |   |                                            |       |   |                                          |   |       |                          |   |   |       |   |   |                                  |       |   |   |   |   |   |
| WEIGHTED                      AVERAGE NUMBER OF                   |   |                                            |       |   |                                          |   |       |                          |   |   |       |   |   |                                  |       |   |   |   |   |   |
| COMMON                      STOCKS OUTSTANDING                    |   |                                            | 34,183,778 |   |                                          |   | 34,183,778 |                          |   |   | 34,183,778 |   |   |                                  | 34,183,778 |   |   |   |   |   |

----

| **LEXON                        TECHNOLOGIES, INC. AND SUBSIDIARIES**                                                             |   |
|----------------------------------------------------------------------------------------------------------------------------------|--------|
| **(A                        Development Stage Company)**                                                                         |   |
| **Consolidated                        Statements of Stockholders' Equity and Other Comprehensive                        Income** |   |
| **the                        Period from Inception on July 18, 2001 through June 30,                        2007**               |   |
| **(Unaudited)**                                                                                                                  |   |
|                                                                                                                             |   |

|                                                        |   |                                    |       |   |        |   |   |             |   |   |              |   |   |                                     |     |   | **Deficit**                           |   |
|-------------------------------------------------------------|--------|-----------------------------------------|------------|--------|-------------|--------|--------|------------------|--------|--------|-------------------|--------|--------|------------------------------------------|----------|--------|---------------------------------------|--------|
|                                                        |   |                                    |       |   |        |   |   |             |   |   |              |   |   | **Accumulated**                          |     |   | **Accumulated**                       |   |
|                                                        |   |                                    |       |   |        |   |   | **Additional**   |   |   |              |   |   | **Other**                                |     |   | **During                        the** |   |
|                                                        |   | **Common                        Stock** |       |   | **Paid-in** |   |   | **Subscription** |   |   | **Comprehensive** |   |   | **Development**                          |     |
|                                                        |   | **Shares**                              |       |   | **Amount**  |   |   | **Capital**      |   |   | **Receivable**    |   |   | **Income                        (loss)** |     |   | **Stage**                             |   |
|                                                        |   |                                    |       |   |        |   |   |             |   |   |              |   |   |                                     |     |   |                                  |   |
| Balance,                        July 18, 2001               |   |                                    | -          |   |        | $      | -      |             |   | $      | -                 |   |   | $                                        | -        |   |                                  | $      | - |   |   | $ | - |   |
|                                                        |   |                                    |       |   |        |   |   |             |   |   |              |   |   |                                     |     |   |                                  |   |   |   |   |   |   |   |
| July                        2001 - stock issued for         |   |                                    |       |   |        |   |   |             |   |   |              |   |   |                                     |     |   |                                  |   |   |   |   |   |   |   |
| services                        at $0.001 per share         |   |                                    | 13,720,000 |   |        |   | 13,720 |             |   |   | -                 |   |   |                                     | -        |   |                                  |   | - |   |   |   | - |   |
|                                                        |   |                                    |       |   |        |   |   |             |   |   |              |   |   |                                     |     |   |                                  |   |   |   |   |   |   |   |
| August                        2001 - stock issued for       |   |                                    |       |   |        |   |   |             |   |   |              |   |   |                                     |     |   |                                  |   |   |   |   |   |   |   |
| cash                        at $0.25 per share              |   |                                    | 2,280,000  |   |        |   | 2,280  |             |   |   | 567,720           |   |   |                                     | (220,000 | )      |                                  |   | - |   |   |   | - |   |
|                                                        |   |                                    |       |   |        |   |   |             |   |   |              |   |   |                                     |     |   |                                  |   |   |   |   |   |   |   |
| October                        2001 - stock issued for      |   |                                    |       |   |        |   |   |             |   |   |              |   |   |                                     |     |   |                                  |   |   |   |   |   |   |   |
| technology                        at $0.25 pr share         |   |                                    | 1,500,000  |   |        |   | 1,500  |             |   |   | 373,500           |   |   |                                     | -        |   |                                  |   | - |   |   |   | - |   |
|                                                        |   |                                    |       |   |        |   |   |             |   |   |              |   |   |                                     |     |   |                                  |   |   |   |   |   |   |   |
| Net                        loss for the period ended        |   |                                    |       |   |        |   |   |             |   |   |              |   |   |                                     |     |   |                                  |   |   |   |   |   |   |   |
| December                        31, 2001                    |   |                                    | -          |   |        |   | -      |             |   |   | -                 |   |   |                                     | -        |   |                                  |   | - |   |   |   | (522,180 | ) |
|                                                        |   |                                    |       |   |        |   |   |             |   |   |              |   |   |                                     |     |   |                                  |   |   |   |   |   |   |   |
| Balance,                        December 31, 2001           |   |                                    | 17,500,000 |   |        |   | 17,500 |             |   |   | 941,220           |   |   |                                     | (220,000 | )      |                                  |   | - |   |   |   | (522,180 | ) |
|                                                        |   |                                    |       |   |        |   |   |             |   |   |              |   |   |                                     |     |   |                                  |   |   |   |   |   |   |   |
| Receipt                        of subscription receivable   |   |                                    | -          |   |        |   | -      |             |   |   | -                 |   |   |                                     | 220,000  |   |                                  |   | - |   |   |   | - |   |
|                                                        |   |                                    |       |   |        |   |   |             |   |   |              |   |   |                                     |     |   |                                  |   |   |   |   |   |   |   |
| April                        2002 - stock issued to acquire |   |                                    |       |   |        |   |   |             |   |   |              |   |   |                                     |     |   |                                  |   |   |   |   |   |   |   |
| Phacon                        Corporation (Note 1)          |   |                                    | 1,648,778  |   |        |   | 1,649  |             |   |   | (641,346          | )      |   |                                     | -        |   |                                  |   | - |   |   |   | - |   |
|                                                        |   |                                    |       |   |        |   |   |             |   |   |              |   |   |                                     |     |   |                                  |   |   |   |   |   |   |   |
| September                        2002 - stock issued for    |   |                                    |       |   |        |   |   |             |   |   |              |   |   |                                     |     |   |                                  |   |   |   |   |   |   |   |
| cash                        at $0.25 per share              |   |                                    | 280,000    |   |        |   | 280    |             |   |   | 69,720            |   |   |                                     | -        |   |                                  |   | - |   |   |   | - |   |
|                                                        |   |                                    |       |   |        |   |   |             |   |   |              |   |   |                                     |     |   |                                  |   |   |   |   |   |   |   |
| December                        2002 - stock issued for     |   |                                    |       |   |        |   |   |             |   |   |              |   |   |                                     |     |   |                                  |   |   |   |   |   |   |   |
| cash                        at $0.83 per share              |   |                                    | 120,000    |   |        |   | 120    |             |   |   | 99,880            |   |   |                                     | -        |   |                                  |   | - |   |   |   | - |   |
|                                                        |   |                                    |       |   |        |   |   |             |   |   |              |   |   |                                     |     |   |                                  |   |   |   |   |   |   |   |
| Net                        loss for the period ended        |   |                                    |       |   |        |   |   |             |   |   |              |   |   |                                     |     |   |                                  |   |   |   |   |   |   |   |
| December                        31, 2002                    |   |                                    | -          |   |        |   | -      |             |   |   | -                 |   |   |                                     | -        |   |                                  |   | - |   |   |   | (473,510 | ) |
|                                                        |   |                                    |       |   |        |   |   |             |   |   |              |   |   |                                     |     |   |                                  |   |   |   |   |   |   |   |
| Balance,                        December 31, 2002           |   |                                    | 19,548,778 |   |        |   | 19,549 |             |   |   | 469,474           |   |   |                                     | -        |   |                                  |   | - |   |   |   | (995,690 | ) |
|                                                        |   |                                    |       |   |        |   |   |             |   |   |              |   |   |                                     |     |   |                                  |   |   |   |   |   |   |   |
| January                        2003 - stock issued for      |   |                                    |       |   |        |   |   |             |   |   |              |   |   |                                     |     |   |                                  |   |   |   |   |   |   |   |
| cash                        at $0.83 per share              |   |                                    | 240,000    |   |        |   | 240    |             |   |   | 199,760           |   |   |                                     | -        |   |                                  |   | - |   |   |   | - |   |
|                                                        |   |                                    |       |   |        |   |   |             |   |   |              |   |   |                                     |     |   |                                  |   |   |   |   |   |   |   |
| March                        2003 - stock issued for        |   |                                    |       |   |        |   |   |             |   |   |              |   |   |                                     |     |   |                                  |   |   |   |   |   |   |   |
| cash                        at $0.25 per share              |   |                                    | 840,000    |   |        |   | 840    |             |   |   | 209,160           |   |   |                                     | -        |   |                                  |   | - |   |   |   | - |   |
|                                                        |   |                                    |       |   |        |   |   |             |   |   |              |   |   |                                     |     |   |                                  |   |   |   |   |   |   |   |
| December                        2003 - stock issued for     |   |                                    |       |   |        |   |   |             |   |   |              |   |   |                                     |     |   |                                  |   |   |   |   |   |   |   |
| cash                        at $0.25 per share              |   |                                    | 60,000     |   |        |   | 60     |             |   |   | 14,940            |   |   |                                     | -        |   |                                  |   | - |   |   |   | - |   |
|                                                        |   |                                    |       |   |        |   |   |             |   |   |              |   |   |                                     |     |   |                                  |   |   |   |   |   |   |   |
| Foreign                        currency translation         |   |                                    | -          |   |        |   | -      |             |   |   | -                 |   |   |                                     | -        |   |                                  |   | 4,729 |   |   |   | - |   |
|                                                        |   |                                    |       |   |        |   |   |             |   |   |              |   |   |                                     |     |   |                                  |   |   |   |   |   |   |   |
| Net                        loss for the period ended        |   |                                    |       |   |        |   |   |             |   |   |              |   |   |                                     |     |   |                                  |   |   |   |   |   |   |   |
| December                        31, 2003                    |   |                                    | -          |   |        |   | -      |             |   |   | -                 |   |   |                                     | -        |   |                                  |   | - |   |   |   | (611,808 | ) |
|                                                        |   |                                    |       |   |        |   |   |             |   |   |              |   |   |                                     |     |   |                                  |   |   |   |   |   |   |   |
| Balance,                        December 31, 2003           |   |                                    | 20,688,778 |   |        | $      | 20,689 |             |   | $      | 893,334           |   |   | $                                        | -        |   |                                  | $      | 4,729 |   |   | $ | (1,607,498 | ) |

----

| **LEXON                          TECHNOLOGIES, INC. AND SUBSIDIARIES**                                                                                                    |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **(A                          Development Stage Company)**                                                                                                                |
| **Consolidated                          Statements of Stockholders' Equity and Other Comprehensive                          Income                          (Continued)** |
| **the                          Period from Inception on July 18, 2001 through June 30,                          2007**                                                    |
|                                                                                                                                                                      |

|                                                      |   |                                      |       |   |        |   |   |             |   |   |              |   |   |                                       |   |   | **Deficit**                             |   |
|-----------------------------------------------------------|--------|-------------------------------------------|------------|--------|-------------|--------|--------|------------------|--------|--------|-------------------|--------|--------|--------------------------------------------|--------|--------|-----------------------------------------|--------|
|                                                      |   |                                      |       |   |        |   |   |             |   |   |              |   |   | **Accumulated**                            |   |   | **Accumulated**                         |   |
|                                                      |   |                                      |       |   |        |   |   | **Additional**   |   |   |              |   |   | **Other**                                  |   |   | **During                          the** |   |
|                                                      |   | **Common                          Stock** |       |   | **Paid-in** |   |   | **Subscription** |   |   | **Comprehensive** |   |   | **Development**                            |   |
|                                                      |   | **Shares**                                |       |   | **Amount**  |   |   | **Capital**      |   |   | **Receivable**    |   |   | **Income                          (loss)** |   |   | **State**                               |   |
|                                                      |   |                                      |       |   |        |   |   |             |   |   |              |   |   |                                       |   |   |                                    |   |
| Balance,                          December 31, 2003       |   |                                      | 20,688,778 |   |        | $      | 20,689 |             |   | $      | 893,334           |   |   | $                                          | -      |   |                                    | $      | 4,729 |   |   | $ | (1,607,498 | ) |
|                                                      |   |                                      |       |   |        |   |   |             |   |   |              |   |   |                                       |   |   |                                    |   |   |   |   |   |   |   |
| October                          2004 - stock issued for  |   |                                      |       |   |        |   |   |             |   |   |              |   |   |                                       |   |   |                                    |   |   |   |   |   |   |   |
| cash                          at $0.25 per share          |   |                                      | 4,000,000  |   |        |   | 4,000  |             |   |   | 996,000           |   |   |                                       | -      |   |                                    |   | - |   |   |   | - |   |
|                                                      |   |                                      |       |   |        |   |   |             |   |   |              |   |   |                                       |   |   |                                    |   |   |   |   |   |   |   |
| December                          2004 - stock issued for |   |                                      |       |   |        |   |   |             |   |   |              |   |   |                                       |   |   |                                    |   |   |   |   |   |   |   |
| cash                          at $0.11 per share          |   |                                      | 6,125,000  |   |        |   | 6,125  |             |   |   | 693,875           |   |   |                                       | -      |   |                                    |   | - |   |   |   | - |   |
|                                                      |   |                                      |       |   |        |   |   |             |   |   |              |   |   |                                       |   |   |                                    |   |   |   |   |   |   |   |
| December                          2004 - stock issued for |   |                                      |       |   |        |   |   |             |   |   |              |   |   |                                       |   |   |                                    |   |   |   |   |   |   |   |
| services                          at $0.25 pr share       |   |                                      | 1,000,000  |   |        |   | 1,000  |             |   |   | 249,000           |   |   |                                       | -      |   |                                    |   | - |   |   |   | - |   |
|                                                      |   |                                      |       |   |        |   |   |             |   |   |              |   |   |                                       |   |   |                                    |   |   |   |   |   |   |   |
| December                          2004 - stock issued     |   |                                      |       |   |        |   |   |             |   |   |              |   |   |                                       |   |   |                                    |   |   |   |   |   |   |   |
| in                          lieu of outstanding debt      |   |                                      |       |   |        |   |   |             |   |   |              |   |   |                                       |   |   |                                    |   |   |   |   |   |   |   |
| at                          $0.10 per share               |   |                                      | 2,370,000  |   |        |   | 2,370  |             |   |   | 234,630           |   |   |                                       | -      |   |                                    |   | - |   |   |   | - |   |
|                                                      |   |                                      |       |   |        |   |   |             |   |   |              |   |   |                                       |   |   |                                    |   |   |   |   |   |   |   |
| Foreign                          currency translation     |   |                                      | -          |   |        |   | -      |             |   |   | -                 |   |   |                                       | -      |   |                                    |   | 1,589 |   |   |   | - |   |
|                                                      |   |                                      |       |   |        |   |   |             |   |   |              |   |   |                                       |   |   |                                    |   |   |   |   |   |   |   |
| Net                          loss for the period ended    |   |                                      |       |   |        |   |   |             |   |   |              |   |   |                                       |   |   |                                    |   |   |   |   |   |   |   |
| December                          31, 2004                |   |                                      | -          |   |        |   | -      |             |   |   | -                 |   |   |                                       | -      |   |                                    |   | - |   |   |   | (907,200 | ) |
|                                                      |   |                                      |       |   |        |   |   |             |   |   |              |   |   |                                       |   |   |                                    |   |   |   |   |   |   |   |
| Balance,                          December 31, 2004       |   |                                      | 34,183,778 |   |        |   | 34,184 |             |   |   | 3,066,839         |   |   |                                       | -      |   |                                    |   | 6,318 |   |   |   | (2,514,698 | ) |
|                                                      |   |                                      |       |   |        |   |   |             |   |   |              |   |   |                                       |   |   |                                    |   |   |   |   |   |   |   |
| Foreign                          currency translation     |   |                                      | -          |   |        |   | -      |             |   |   | -                 |   |   |                                       | -      |   |                                    |   | (82,678 | ) |   |   | - |   |
|                                                      |   |                                      |       |   |        |   |   |             |   |   |              |   |   |                                       |   |   |                                    |   |   |   |   |   |   |   |
| Net                          loss for the period ended    |   |                                      |       |   |        |   |   |             |   |   |              |   |   |                                       |   |   |                                    |   |   |   |   |   |   |   |
| December                          31, 2005                |   |                                      | -          |   |        |   | -      |             |   |   | -                 |   |   |                                       | -      |   |                                    |   | - |   |   |   | (448,271 | ) |
|                                                      |   |                                      |       |   |        |   |   |             |   |   |              |   |   |                                       |   |   |                                    |   |   |   |   |   |   |   |
| Balance,                          December 31, 2005       |   |                                      | 34,183,778 |   |        |   | 34,184 |             |   |   | 3,066,839         |   |   |                                       | -      |   |                                    |   | (76,360 | ) |   |   | (2,962,969 | ) |
|                                                      |   |                                      |       |   |        |   |   |             |   |   |              |   |   |                                       |   |   |                                    |   |   |   |   |   |   |   |
| Foreign                          currency translation     |   |                                      | -          |   |        |   | -      |             |   |   | -                 |   |   |                                       | -      |   |                                    |   | (20,773 | ) |   |   | - |   |
|                                                      |   |                                      |       |   |        |   |   |             |   |   |              |   |   |                                       |   |   |                                    |   |   |   |   |   |   |   |
| Investment                          loss                  |   |                                      | -          |   |        |   | -      |             |   |   | -                 |   |   |                                       | -      |   |                                    |   | (22,704 | ) |   |   | - |   |
|                                                      |   |                                      |       |   |        |   |   |             |   |   |              |   |   |                                       |   |   |                                    |   |   |   |   |   |   |   |
| Net                          loss for the period ended    |   |                                      |       |   |        |   |   |             |   |   |              |   |   |                                       |   |   |                                    |   |   |   |   |   |   |   |
| December                          31, 2006                |   |                                      | -          |   |        |   | -      |             |   |   | -                 |   |   |                                       | -      |   |                                    |   | - |   |   |   | (2,961,601 | ) |
|                                                      |   |                                      |       |   |        |   |   |             |   |   |              |   |   |                                       |   |   |                                    |   |   |   |   |   |   |   |
| Balance,                          December 31, 2006       |   |                                      | 34,183,778 |   |        |   | 34,184 |             |   |   | 3,066,839         |   |   |                                       | -      |   |                                    |   | (119,837 | ) |   |   | (5,924,570 | ) |
|                                                      |   |                                      |       |   |        |   |   |             |   |   |              |   |   |                                       |   |   |                                    |   |   |   |   |   |   |   |
| Foreign                          currency translation     |   |                                      | -          |   |        |   | -      |             |   |   | -                 |   |   |                                       | -      |   |                                    |   | (5,848 | ) |   |   | - |   |
|                                                      |   |                                      |       |   |        |   |   |             |   |   |              |   |   |                                       |   |   |                                    |   |   |   |   |   |   |   |
| Net                          income for the period ended  |   |                                      |       |   |        |   |   |             |   |   |              |   |   |                                       |   |   |                                    |   |   |   |   |   |   |   |
| June                          30, 2007                    |   |                                      | -          |   |        |   | -      |             |   |   | -                 |   |   |                                       | -      |   |                                    |   | - |   |   |   | 803,563 |   |
|                                                      |   |                                      |       |   |        |   |   |             |   |   |              |   |   |                                       |   |   |                                    |   |   |   |   |   |   |   |
| Balance,                          January 0, 1900         |   |                                      | 34,183,778 |   |        | $      | 34,184 |             |   | $      | 3,066,839         |   |   | $                                          | -      |   |                                    | $      | (125,685 | ) |   | $ | (5,121,007 | ) |

----

| **LEXON                            TECHNOLOGIES, INC. AND SUBSIDIARIES**                                                   |
|----------------------------------------------------------------------------------------------------------------------------|
| **(A                            Development Stage Company)**                                                               |
| **Consolidated                            Statements of Cash Flows**                                                       |
| **For                            the Six Months Ended June 30, 2007 and 2006                            and**              |
| **the                            Period from Inception on July 18, 2001 through June 30,                            2007** |
| **(Unaudited)**                                                                                                            |
|                                                                                                                       |   |   |   |   |   |

|                                                                              |   |                                                |     |   |                                |   |     |                                        |   |
|-----------------------------------------------------------------------------------|--------|-----------------------------------------------------|----------|--------|-------------------------------------|--------|----------|---------------------------------------------|--------|
|                                                                              |   |                                                |     |   |                                |   |     | From                            Inception   |   |
|                                                                              |   |                                                |     |   |                                |   |     | on                            July 18, 2001 |   |
|                                                                              |   | For                            the Six Months Ended |     |   | Through                             |   |
|                                                                              |   | June                            30,                 |     |   | June                            30, |   |
|                                                                              |   | 2007                                                |     |   | 2006                                |   |     | 2007                                        |   |
| CASH                            FLOWS FROM OPERATIONG ACTIVITIES:                 |   |                                                |     |   |                                |   |     |                                        |   |
| Net                            income (loss)                                      |   | $                                                   | 803,563  |   |                                | $      | (598,154 | )                                           |   | $ | 803,563 |   |
| Adjustments                            to reconcile net income (loss) to net cash |   |                                                |     |   |                                |   |     |                                        |   |   |   |   |
| used                            in operating activities                           |   |                                                |     |   |                                |   |     |                                        |   |   |   |   |
| Depreciation                            and amortization                          |   |                                                | 501      |   |                                |   | 25,632   |                                        |   |   | 501 |   |
| Stock                            for services                                     |   |                                                | -        |   |                                |   | -        |                                        |   |   | - |   |
| Stock                            for technology                                   |   |                                                | -        |   |                                |   | -        |                                        |   |   | - |   |
| Bad                            debt expense                                       |   |                                                | -        |   |                                |   | -        |                                        |   |   | - |   |
| Impairment                            of goodwill                                 |   |                                                | -        |   |                                |   | -        |                                        |   |   | - |   |
| Gain                            (loss) on forgiveness of debt                     |   |                                                | -        |   |                                |   | -        |                                        |   |   | - |   |
| Gain                            (loss) on sale of assets                          |   |                                                | -        |   |                                |   | 17,520   |                                        |   |   | - |   |
| Change                            in assets and liabilities (net of acquisition): |   |                                                |     |   |                                |   |     |                                        |   |   |   |   |
| (Increase)                            decrease in other assets                    |   |                                                | -        |   |                                |   | (104,875 | )                                           |   |   | - |   |
| (Increase)                            decrease in other receivable                |   |                                                | -        |   |                                |   | 22,249   |                                        |   |   | - |   |
| (Increase)                            decrease in prepaid expenses                |   |                                                | -        |   |                                |   | (2,139   | )                                           |   |   | - |   |
| (Increase)                            decrease in accrued interest                |   |                                                | -        |   |                                |   | -        |                                        |   |   | - |   |
| Decrease                            in inventory                                  |   |                                                | -        |   |                                |   | -        |                                        |   |   | - |   |
| (Decrease)                            increase in accounts payable                |   |                                                | (25,019  | )      |                                |   | 68,475   |                                        |   |   | (25,019 | ) |
| (Decrease)                            increase in accrued expenses                |   |                                                | (857,907 | )      |                                |   | 188,412  |                                        |   |   | (857,907 | ) |
| Net                            Cash Used in Operating Activities                  |   |                                                | (78,862  | )      |                                |   | (382,880 | )                                           |   |   | (78,862 | ) |
|                                                                              |   |                                                |     |   |                                |   |     |                                        |   |   |   |   |
| CASH                            FLOWS FROM INVESTING ACTIVITIES:                  |   |                                                |     |   |                                |   |     |                                        |   |   |   |   |
| Acquisition                            of property and equipment                  |   |                                                | (1,460   | )      |                                |   | (9,134   | )                                           |   |   | (1,460 | ) |
| Proceeds                            received on sale of fixed assets              |   |                                                | -        |   |                                |   | 2,898    |                                        |   |   | - |   |
| Payments                            made on related party notes                   |   |                                                | -        |   |                                |   | -        |                                        |   |   | - |   |
| Proceeds                            received on related party notes               |   |                                                | -        |   |                                |   | 167,000  |                                        |   |   | - |   |
| Acquisition                            of investments                             |   |                                                | -        |   |                                |   | -        |                                        |   |   | - |   |
| Proceeds                            from return of investments                    |   |                                                | -        |   |                                |   | 250,000  |                                        |   |   | - |   |
| Net                            Cash Provided by (Used in) Investing Activities    |   |                                                | (1,460   | )      |                                |   | 410,764  |                                        |   |   | (1,460 | ) |
|                                                                              |   |                                                |     |   |                                |   |     |                                        |   |   |   |   |
| CASH                            FLOWS FROM FINANCING ACTIVITIES:                  |   |                                                |     |   |                                |   |     |                                        |   |   |   |   |
| Receipt                            of subscription receivable                     |   |                                                | -        |   |                                |   | -        |                                        |   |   | - |   |
| Proceeds                            from related party notes                      |   |                                                | -        |   |                                |   | -        |                                        |   |   | - |   |
| Proceeds                            from notes payable                            |   |                                                | 149,982  |   |                                |   | -        |                                        |   |   | 149,982 |   |
| Payments                            made on notes payable                         |   |                                                | (41,615  | )      |                                |   | (156     | )                                           |   |   | (41,615 | ) |
| Proceeds                            from issuance of common stock                 |   |                                                | -        |   |                                |   | -        |                                        |   |   | - |   |
| Net                            Cash Provided by (Used in) Financing Activities    |   |                                                | 108,367  |   |                                |   | (156     | )                                           |   |   | 108,367 |   |
|                                                                              |   |                                                |     |   |                                |   |     |                                        |   |   |   |   |
| NET                            INCREASE IN CASH AND CASH EQUIVALENT               |   |                                                | 28,045   |   |                                |   | 27,728   |                                        |   |   | 28,045 |   |
|                                                                              |   |                                                |     |   |                                |   |     |                                        |   |   |   |   |
| EFFECT                            OF CURRENCY EXCHANGE RATE CHANGES               |   |                                                |     |   |                                |   |     |                                        |   |   |   |   |
| ON                            CASH AND CASH EQUIVALENTS                           |   |                                                | (6,735   | )      |                                |   | (36,453  | )                                           |   |   | (6,735 | ) |
|                                                                              |   |                                                |     |   |                                |   |     |                                        |   |   |   |   |
| CASH                            AND CASH EQUIVALENT AT BEGINNING OF PERIOD        |   |                                                | 227      |   |                                |   | 22,623   |                                        |   |   | - |   |
|                                                                              |   |                                                |     |   |                                |   |     |                                        |   |   |   |   |
| CASH                            AND CASH EQUIVALENT AT END OF PERIOD              |   | $                                                   | 21,537   |   |                                | $      | 13,898   |                                        |   | $ | 21,310 |   |

----

| **LEXON                              TECHNOLOGIES, INC. AND SUBSIDIARIES**                                                                                  |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **(A                              Development Stage Company)**                                                                                              |
| **Consolidated                              Statements of Cash Flows**                                                                                      |
| **For                              the Six Months Ended June 30, 2007 and 2006                              and**                                           |
| **the                              Period from Inception on July 18, 2001 through June                              30,                              2007** |
| **(Unaudited)**                                                                                                                                             |
|                                                                                                                                                        |   |   |   |   |   |

| SUPPLEMENTAL                            CASH FLOW INFORMATION          |   |   |   |   |   |   |   |   |   |   |   |   |
|------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                            Payments For:                          |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                                                               |   | $      | -      |   |   | $      | 5,712  |   |   | $      | -      |   |
| Income                            taxes                                |   | $      | -      |   |   | $      | -      |   |   | $      | -      |   |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-Cash                            Investing and Financing Activities |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock                            issued for thechnology                |   | $      | -      |   |   | $      | -      |   |   | $      | -      |   |
| Stock                            issued for services                   |   | $      | -      |   |   | $      | -      |   |   | $      | -      |   |
| Stock                            issued for in lieu of debt            |   | $      | -      |   |   | $      | -      |   |   | $      | -      |   |

----

**Note        1 – Nature of Business and Going Concern**

|  | ***(a)*** | ***Description                  of Business*** |
|--|-----------|------------------------------------------------|

----

|  | ***(b)*** | ***Going                  Concern*** |
|--|-----------|--------------------------------------|

**Note        2 - Significant Accounting Policies**

|  | ***(a)*** | ***Basis                  of Financial Statement                  Presentation*** |
|--|-----------|-----------------------------------------------------------------------------------|

|  | ***(b)*** | ***Basis                  of Consolidation*** |
|--|-----------|-----------------------------------------------|

----

|  | ***(c)*** | ***Unit                  of Estimates*** |
|--|-----------|------------------------------------------|

|  | ***(d)*** | ***Revenue                  Recognition*** |
|--|-----------|--------------------------------------------|

|  | ***(e)*** | ***Currency                  Translation*** |
|--|-----------|---------------------------------------------|

|  | ***(f)*** | ***Cash                  and Cash Equivalents*** |
|--|-----------|--------------------------------------------------|

----

|  | ***(g)*** | ***Properties                  and Equipment*** |
|--|-----------|-------------------------------------------------|

| Buildings                  and improvements | 20-40                  years |
|---------------------------------------------|------------------------------|
| Machinery                  and equipment    | 10                  years    |
| Computer                  equipment         | 3                  years     |
| Automobiles                                 | 5                  years     |
| Office                  and other equipment | 5                  years     |

|  | ***(h)*** | ***Investments*** |
|--|-----------|-------------------|

|  | ***(i)*** | ***Intangible                  Assets*** |
|--|-----------|------------------------------------------|

|  | ***(j)*** | ***Basic                  Earning (Loss) Per                  Share*** |
|--|-----------|------------------------------------------------------------------------|

|  |   | The                  computations of basic loss per share of common stock are based                  on the                  weighted average number of common shares outstanding during the                  each                  period of the consolidated financial statements.  Common stock                  equivalents, consisting of stock options and warrants, have not                  been                  included in the calculation as their effect is anti-dilutive for                  the                  periods presented. |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                               |   | **June                  30,** |       |
|------------------------------------------------------------------------------------|--------|-------------------------------|------------|
|                                                                               |   | **2007**                      |       |   | **2006** |   |
|                                                                               |   |                          |       |   |   |   |
| Numerator                  – income (loss) for the six months                |   | $                             | 803,563    |   |   | $ | (598,154 | ) |
|                                                                               |   |                          |       |   |   |   |   |   |
| Denominator                  – weighted average number of shares outstanding |   |                          | 34,183,778 |   |   |   | 34,183,778 |   |
|                                                                               |   |                          |       |   |   |   |   |   |
| Earning                  (Loss) per share                                          |   | $                             | 0.02       |   |   | $ | (0.02 | ) |

----

|  | ***(k)*** | ***Financial                  Instruments*** |
|--|-----------|----------------------------------------------|

|   | Fair                  values of cash equivalents, short-term and long-term investments                  and                  short-term debt approximate their costs.  The estimated fair                  values of other financial instruments, including debt, equity and                  risk                  management instruments, have been determined using market information                  and                  valuation methodologies, primarily discounted cash flow                  analysis.  These estimates require considerable judgment in                  interpreting market data, and changes in assumptions or estimation                  methods                  could significantly affect the fair value                  estimates. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ***(l)*** | ***Recent                  Accounting                  Pronouncements*** |
|--|-----------|--------------------------------------------------------------------------|

*Share-Based        Payment*
*Accounting for        Stock-Based Compensation. *
*Accounting for Stock Issued to Employees,*

**Note        3 - Property and        Equipment**

| Computer                  and equipment         |   | $      | 10,450  |   |
|-------------------------------------------------|--------|--------|---------|--------|
| Furniture                  and fixture          |   |   | 4,287   |   |
|                                            |   |   | 14,737  |   |
| Less:                  accumulated depreciation |   |   | (13,318 | )      |
|                                            |   |   |    |   |
| Net                  property and equipment     |   | $      | 1,419   |   |

----

**Note        4 - Investments**

**Note        5 - Related Party Transactions**

**Note        6 - Commitments and Contingencies**

The        Company has not been able to pay compensation        to its officers on time, and the past due compensation aggregated        $1,688,409.  The Company’s former officers waived $888,000, and as a        result the balance of the unpaid compensations was reduced to $800,409 as        of        June 30, 2007.

**Note        7 - Notes Payable**

| Note                  payable to a related party with interest at 7.5% per annum, unsecured.                  Note is in default and due on demand                |   | $      | 20,000  |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|
|                                                                                                                                                              |   |   |    |   |
| Note                  payable to an individual with interest at 7.5% per annum, unsecured.                  Note                  is in default and due on demand |   |   | 5,000   |   |
|                                                                                                                                                              |   |   |    |   |
| Note                  payable to an unrelated party with interest at 7.5% per annum,                  unsecured.                  Note is due on demand           |   |   | 149,982 |   |
|                                                                                                                                                              |   |   |    |   |
| Total                  notes due                                                                                                                                  |   | $      | 174,982 |   |

**Note        8 - Income Taxes**

**Note        9 - Stock Option Plan**

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**Note        10 - Other Comprehensive Income (Loss)**

| Balance,                  December 31, 2006     |   | $      | (119,837 | )      |
|-------------------------------------------------|--------|--------|----------|--------|
|                                            |   |   |     |   |
| Effect                  of currency translation |   |   | (5,848   | )      |
|                                            |   |   |     |   |
| Balance,                  June 30, 2007         |   | $      | (125,685 | )      |

 

**Note        11 - Convertible Notes Payable**

| A                  note with 7.5% interest, convertible to 30,000 shares of the Company’s                  common stock, matured on September 9, 2004 with interest accrued                  at                  $7,891. |   | $      | 30,000 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|
|                                                                                                                                                                                                                           |   |   |   |   |
| Two                  notes with 7.5% interest, convertible to 227,840 shares of common                  stock,                  matured on October 30, 2005 with interest accrued at                  $9,639.                  |   |   | 56,960 |   |
|                                                                                                                                                                                                                           |   |   |   |   |
| Total                  notes due                                                                                                                                                                                               |   | $      | 86,960 |   |

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ITEM      3. CONTROLS AND PROCEDURES

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