U.S. SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-KSB

                   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
                     THE SECURITIES AND EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2002

                                  TEXXON, INC.
        (Exact name of small business issuer as specified in its charter)

           Oklahoma                     000-49648              73-1554122
           --------                     ---------              ----------
(State or other jurisdiction of     (SEC File Number)       (I.R.S. Employer
incorporation or organization)                           Identification Number)


                    331 East Chilton Dr., Chandler, AZ 85225
          (Address of Principal Executive Offices, Including ZIP Code)

                                 (480) 926-5508
              (Registrant's Telephone Number, Including Area Code)

                                 (480) 926-0688
              (Registrant's Facsimile Number, Including Area Code)


Securities registered pursuant to Section 12(b) of the Act:   None


Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.001
par value


Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. YES


Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation  S-B is not  contained  in  this  form,  and no  disclosure  will  be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.[ X ]


State issuer's revenues for its most recent fiscal year: $-0-

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates  computed by reference to the price at which the common equity
was sold,  or the average bid and asked  price of such  common  equity,  as of a
specified price within the past 60 days. $-0- as of February 28, 2003.

State the number of shares outstanding of each of the issuer's classes of common
equity,  as of the  latest  practicable  date:  As of  March  31,  2003,  we had
15,077,712 shares of common stock, $0.001 par value, outstanding.



                                       1
<PAGE>



              CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This  discussion  in this annual  report  regarding  Texxon and our business and
operations   contains   "forward-looking   statements."  These   forward-looking
statements use words such as "believes,"  "intends,"  "expects,"  "may," "will,"
"should,"  "plan,"  "projected,"   "contemplates,"   "anticipates,"  or  similar
statements. These statements are based on our beliefs, as well as assumptions we
have used  based upon  information  currently  available  to us.  Because  these
statements reflect our current views concerning future events,  these statements
involve risks,  uncertainties and assumptions.  Actual future results may differ
significantly from the results discussed in the  forward-looking  statements.  A
reader,  whether  investing in our common  stock or not,  should not place undue
reliance on these forward-looking statements, which apply only as of the date of
this report.

When used in this Annual Report on Form 10-KSB,  "Texxon," "we," "our," and "us"
refers to Texxon, Inc., an Oklahoma corporation.

                                     Part I.

Item 1.  Description of Business

(a) Business Development

(1) Form and year of organization

          Texxon,  Inc. (the "Company") was  incorporated in Oklahoma on October
     6, 1998. The Company has been in the exploration  stage since inception and
     has no operating history other than  organizational  matters until February
     of 2001. The Company will be considered to be in the  "exploration  stage,"
     as defined in the SEC regulations,  until the platinum  extraction  process
     proves  commercially  feasible to  economically  recover  platinum from the
     large quantities of water that must be processed.

          As an exploration-stage company, we presently do not have any products
     for sale. If the Company is  successful in building a production  facility,
     it may take us several  more years before we have enough  production  to be
     profitable. We may not be successful in building a production facility.

(2) There have been no bankruptcy, receivership or similar proceedings.

(3)  There  has been no  material  reclassification,  merger,  consolidation  or
purchase or sale of assets not in the ordinary course of business.

(b) Business of Issuer

(1) Principal products or services and their markets

          The  principal  product of the  Company  is  platinum.  Platinum  is a
     silvery metallic chemical element, a member of the six transition  elements
     in Group VIII of the  periodic  table known  collectively  as the  platinum
     group  metals  (ruthenium,   rhodium,   palladium,   osmium,  iridium,  and
     platinum).  Platinum has unique chemical and physical  properties that make
     it essential in a wide range of industrial and environmental  applications.
     It is also  considered  one of the finest of all  jewelry  metals.  Further
     statements  about  platinum  and the  precious  metals  market are based on
     reports published by either Anglo Platinum, the largest commercial producer
     of  platinum  or Johnson  Matthey,  the  largest  refiner of  platinum  and
     precious  metals.  Both  of  these  sources  may be  found  on  the  web at
     www.platinum.matthey.com and www.angloplatinum.com.



                                       2
<PAGE>

          Platinum is the rarest of the precious  metals.  According to Platinum
     2002 an annual report published by Johnson Matthey,  5.86 million ounces of
     platinum  were  produced  during 2001 and the industry  demand for platinum
     rose to 6.15 million ounces  exceeding 6 million ounces for the first time.
     4.1 million  ounces were  supplied by South  Africa and 1.3 million  ounces
     were supplied by Russia combining to provide over 92% of the total platinum
     supplied to the market. Using traditional mining methods,  approximately 10
     tons of raw ore must be mined to produce  one pure ounce of  platinum.  For
     example,  according to Platinum  2002,  page 13, The Anglo  Platinum  mines
     processed  26.8 million  tonnes of ore to produce  2.11  million  ounces of
     platinum.  That is an average of 12.70 tonnes of ore processed to produce 1
     ounce of platinum.

          The  Company  has  licensed  a  process  to  extract   platinum   from
     mineralized water that appears to contain no platinum when analyzed by fire
     assay.  Fire assay is an industry  standard  method to  determine  platinum
     content in suspected  ores and  solutions.  The platinum  recovery  process
     ("the process") is an  electro-chemical  procedure utilizing platinum metal
     dissolved  in Aqua  Regia,  an industry  standard  for the  dissolution  of
     platinum, as a catalyst to recover platinum from mineralized water sources.
     The process,  using a series of  electro-chemical  steps,  concentrates and
     precipitates  not only the platinum used as a catalyst in the process,  but
     additional  platinum.  The precipitate is then further refined to bring the
     purity  into the 95% to 99%  range  and  made  available  for  reuse in the
     process or sale to a refiner. The process has several distinct steps, which
     are  described  in  general  terms so as not to  disclose  any  proprietary
     information.

          Process

          1.   Mineralized  water is  pumped to a process  tank.  Chemicals  are
               added to precondition the water. Platinum dissolved in acid (Aqua
               Regia) is then added to the process tank.  Further  chemicals are
               added to the tank to precipitate the platinum out of solution.

          2.   The process tank is filtered. The spent water is pumped through a
               series of bag  filters  and then a resin  column  to  remove  any
               remaining  chemicals.  The resultant  water is then pumped to the
               drain.

          3.   The  precipitate  is dried for a period  of 12  hours.  The dried
               precipitate  is then  dissolved  in acid.  A  saturated  chloride
               solution is added to the dissolved precipitate forming a platinum
               chloride.

          4.   The  chloride  is washed and dried.  The dried  chloride  is then
               placed  in a kiln  and  allowed  to heat to 1200  degrees  F. The
               result  is  platinum  sponge  with a  purity  of 95% or  greater.
               Platinum  sponge is pure platinum  metal in a spongy form that is
               derived from the reduction of platinum chloride.  Platinum sponge
               is the  final  product  from  the  process  and  will  be sold to
               refiners previously identified by the company.

          The  Company  entered  into the Joint  Venture  agreement  with PGM to
     validate the platinum  recovery  procedure.  To test and further refine the
     recovery  procedure,  the  Company  leased  the pilot  plant  facility  and
     equipped it to process water on a larger scale.  Through testing  performed
     at the pilot facility, the inventor was able to identify potential areas of
     improvement that would not have been revealed with lab scale testing. These
     improvements were implemented and proven at the pilot facility.

          The  revisions to the process  reduced the per ounce cost of recovery,
     eliminating  a number  of  chemicals  and steps  involved  as well as waste
     streams.  Using the pilot  facility  as a model,  the  Company  can  better
     estimate  the  costs  of  production,   recovery  quantities,  utility  and
     equipment  costs used in projections and future capital  requirements.  The
     pilot facility also serves as the company's principal offices.



                                       3
<PAGE>

          Markets

          According to Platinum 2002, page 21, over 40% of the overall  platinum
     demand in 2001 was used in catalytic  converters.  European use of platinum
     in  autocatalysts  increased by 375,000oz or 55% last year to 1.055 million
     ounces.  According  to Anglo  Platinum  Annual  Report in 2001,  the diesel
     segment  used  around  70% of the  estimated  980,000  ounces  of  platinum
     required for  autocatalyst  applications in Europe.  One of the significant
     growth  areas  for  platinum  demand  is for  catalysts  fitted  to  diesel
     vehicles. The growth in this application is expected to contribute some 25%
     of the expected increase in platinum demand by 2010.

          According to Johnson Matthey,  The ability of platinum to inhibit cell
     growth has been exploited to treat various forms of cancer. Most testicular
     cancer  patients are treated with platinum  based drugs.  The cure rate for
     this type of cancer has  increased  with the  introduction  of the platinum
     anti-cancer  drug  Cisplatin.  Platinum  is also used in medical  equipment
     because of its biocompatibility,  electrical conductivity and visibility on
     x-ray images.  Platinum is used in the  electrodes of pacemakers and on the
     tips of catheters. Platinum is used to manufacture acetaminophen,  the most
     common  non-aspirin  pain  reliever.  A wide range of platinum  group metal
     catalysts  are used in the  manufacture  of a variety  of drugs,  including
     treatments for asthma, heart disease, epilepsy and bacterial infections.

(2) Distribution methods of the products or services.

          Platinum produced by the process is not in its purest form. It will be
     sold to refining  companies  for further  processing.  The platinum  sponge
     produced  via the  process  may be less than  99.99%  pure.  Refiners  will
     further  refine the  product to the 99.99%  pure form to sell on the metals
     market.

          The  company has  contacted  three  refiners  of  precious  metals and
     obtained terms under which they will purchase the product from the Company.
     The material  terms from each refiner vary,  and summaries of the terms are
     provided in the table below.


<TABLE>
<CAPTION>

<S>                   <C>                 <C>                       <C>                 <C>

      Refiner          Accountability        Refining Charges         Min Lot Size        Settlement Time
--------------------- ------------------ ------------------------- ------------------- ----------------------
Sabin Metals          100% of Assay      $15.00 per Troy Ounce     None                4 weeks from receipt
Engelhard Corp.       99% of Assay       $7.50 per Troy Ounce      50 Troy Ounces      5 weeks from receipt
Glines & Rhodes       95% of Assay       $1.00 per Troy Ounce      None                4 weeks from receipt

</TABLE>


(3) Status of any publicly announced new product or service.

          The Company has made no public announcements.

(4) Competitive business conditions and the Company's competitive position.

          There are platinum mining and processing operations located throughout
     the world. In addition to these operations there are a variety of companies
     that reclaim and re-refine platinum. All of these operations supply a world
     market that is estimated to exceed 5 million  ounces per year.  While a few
     large traditional  mining companies  dominate the platinum metals industry,
     the Company  believes  its  competitive  position is the ability to recover
     platinum from  mineralized  water at a lower cost than  traditional  mining
     methods on a per ounce  basis.  This will allow the  Company to produce and
     sell into the world  platinum  market even if the  commodity  takes a sharp
     downturn in price.

          A  few  large  traditional  mining  companies  dominate  the  platinum
     industry.  According to the USGS and Johnson Matthey,  the largest producer
     of platinum in the world is Rustenburg  Platinum Mines Limited a subsidiary
     of Anglo American  Platinum Corp. Ltd. in South Africa.  Norilisk Nickel is
     the primary PGM producer in Russia, the second largest producing country of
     the  world's  supply.  The  largest  competition  in the  United  States is
     Stillwater   Mining   Company.   The  primary   source  of  platinum   from
     non-traditional  mining  operations  is the recovery of platinum from spent
     catalysts, waste, scrap and coins.

          The precious metals market is a global  commodity  market.  As is with
     any commodity, the price of the metals market is driven based on supply and
     demand of the commodity. Since the Company is selling its product into this
     global  commodity  market in initial  quantities well below what the larger
     mining  companies  produce,  we believe the Company's  production will have
     little,  if any,  material  effect on the price  established  by the global
     metal market.



                                       4
<PAGE>

          Platinum is traded on the New York Mercantile Exchange (NYMEX),  which
     is the largest  physical  commodities  futures  exchange in the world.  The
     exchange  trades in oil,  gasoline,  heating  oil,  natural  gas,  propane,
     silver,  gold,  platinum and palladium.  The prices quoted for commodities,
     energy  products and precious metals traded on the NYMEX form the basis for
     prices consumers pay for these products worldwide. http://www.platts.com

          The  Company   has   contacted   three  major   refiners  of  precious
     metals--Engelhard  Corporation,  Sabin  Metals  Corporation,  and  Glines &
     Rhodes.  Engelhard  Corporation of Islen, NJ and Sabin Metal Corporation of
     East Hampton,  NY are listed on the NYMEX Official List of Approved Assayer
     and  Assayer/Refiners.  Each  refiner  assayed  a sample  of the  Company's
     product  on  which  to base the  afore-mentioned  contract.  Based on those
     analyses,  the Company  believes it will be able to sell the product to any
     refiner  willing to accept  platinum  with a purity of 99% or greater.  All
     contracts  based the sale of the platinum metal  recovered from the process
     on  the  daily  platinum  spot  price  less  any  applicable  refining  and
     processing charges.

          The Company does not make any claims that these refiners validated the
     recovery process,  only that the refiners have expressed the willingness to
     purchase the final product produced by the Company.

(5) Sources and availability of raw materials and the names of principal
suppliers.

          The  primary  raw  material  that the  Company  uses in the process is
     mineralized  water.  The  Company  has  identified  300  acres of land with
     sufficient  water  resources and well  capacities that have been tested for
     platinum. The land is either owned or leased by PGM Corporation.  There are
     no formal  agreements with PGM Corporation to draw  mineralized  water from
     the wells located on the property.

          The  Company  may  purchase  the other  necessary  chemicals  from any
     chemical supply business. The Company has obtained quotes from two chemical
     suppliers in the Phoenix,  AZ area. The pricing for these  chemicals is not
     definitive and is subject to change. Currently the Company has not drawn up
     agreements or supply contracts with these suppliers, but will explore those
     areas as the  need for  those  chemicals  is  increased.  The  Company  may
     purchase the platinum sponge needed in the process from either Sabin Metals
     Corporation or Engelhard Corporation and has done so in the past.

(6) Dependence on one or a few major customers.

          Buyers of platinum are located  throughout the world.  The Company has
     contacted three major refiners of precious metals,  Engelhard  Corporation,
     Sabin Metals  Corporation,  and Glines & Rhodes.  Each refiner has analyzed
     the  Company's  product  and offered  terms under which they will  purchase
     platinum from the Company.

(7) Patents, trademarks, licenses, franchises, concessions, royalty agreements
or labor contracts.

          On February 22, 2001,  the Company was granted a perpetual  license to
     use the method of precious  metal  extraction  by the inventor and owner of
     the process,  Russell Twiford.  Mr. Twiford as the owner, meaning no rights
     to the process may be claimed by anyone else,  has authorized the rights to
     the patent,  when filed and  granted,  to be assigned to Texxon,  Inc.  The
     license  agreement  provides  for a  $500,000  license  fee  payable to the
     inventor  after  the  successful  raising  of two  million  dollars  by the
     Company.  The license  agreement also provides a 5% royalty  payable to the
     inventor  based on platinum  sales made by the Company using the extraction
     process.  As of December 31, 2002, the Company had raised $660,175  through
     private  placements of the Company's  common stock.  The Company intends to
     raise the  remaining  $1,339,825  of the $2 million  with  further  private
     placements  of the  Company's  common  stock.  The  Company  will raise the
     remaining  funds to achieve the $2 million goal on a best efforts basis and
     cannot predict or anticipate when those funds will be successfully raised.


                                       5
<PAGE>

          On February  22, 2001,  the Company  signed a one-year  joint  venture
     agreement with PGM  Corporation to construct and operate a pilot plant that
     has been designed to be a model of a larger production  facility planned by
     the Company.  The  inventor,  Russell  Twiford,  is the President and Chief
     Executive Officer of PGM Corporation. As the inventor of the technology and
     Texxon, Inc. being recently granted a license to the technology,  it was in
     both parties  common  interest to enter into the one-year  joint venture to
     fully test the  procedure and attempt to recover  platinum  metal in paying
     quantities.

          On February 22, 2002,  the one-year  joint venture  agreement with PGM
     expired.  All  parties  to  the  joint  venture  agreement  felt  that  the
     objectives of the joint venture had been  achieved.  The  objectives of the
     joint  venture  were to  provide  for  organized  testing  of the  licensed
     technology  and to  produce  platinum,  using  the  technology,  in  paying
     quantities. The platinum recovery technology was tested to the satisfaction
     of both  parties.  Both parties also agreed that there would be no benefit,
     to either party, to extend the joint venture to produce  platinum in paying
     quantities. The joint venture ended on February 22, 2002, one-year from the
     conception and under the provisions of the agreement.

          On  August  1,  2001,  the  Company  entered  into  written   employee
     agreements  with Gifford M. Mabie III and Mark L. Lindsey.  The  agreements
     are the same for each employee of the company.

          On August 31,  2001,  the Company  entered  into a written  consulting
     agreement  with  Dean  Guise.  Under the  agreement,  Dean  Guise  provided
     consulting  services for compensation in common stock. Mr. Guise desired to
     act as a consultant and provide general  business,  consulting and advisory
     services to the company.

          On October 18, 2001, the Company consulted a patent attorney to file a
     provisional patent for the process. To date the patent application is still
     under  review by the attorney  and has not been filed.  The Company  cannot
     predict the filing date of our  provisional  patent  application due to the
     fact the  recovery  process is still  undergoing  process  enhancements  to
     become commercially  viable. The result of our consultation with the patent
     attorney  required  more  information  to be gathered and the process to be
     more thoroughly defined.

(8) Need for any government approval of principal products or services

          The Company is not aware of any government  approval  required for the
     product.

(9) Effects of existing or probable governmental regulations on the business.

          The Company may require a mining  permit from the State of Arizona for
     the  operations  and may  require  an  Aquifer  Protection  Permit if it is
     determined  that  the  processing  facility  discharges.  (Arizona  Revised
     Statutes (A.R.S.) 49-241 - 252)).

          A  "discharge"  (A.R.S.  49-201.12)  means the addition of a pollutant
     from a facility either directly to an aquifer or to the land surface of the
     vadose zone in such a manner that there is a  reasonable  probability  that
     the pollutant will reach an aquifer.  In addition to the general definition
     above,  the following are considered to be  "discharging"  facilities  that
     require  permits,  unless  exempted,  or the director  determines  that the
     facility will be designed,  constructed, and operated so that there will be
     no migration of pollutants directly to the aquifer or to the vadose zone.

          We  believe  that the  process  does not create  any  pollutants.  The
     Company  believes that an Aquifer  Protection  Permit will not be required.
     The  Company  would  also be  required  to  comply  with any  environmental
     restrictions  under the Clean  Water  Act of the  Environmental  Protection
     Agency if the water  sources are within the United  States,  or comply with
     foreign  environmental  regulations  and submit written  permits from those
     governmental agencies.

(10) Research and Development expenditures during each of the last two fiscal
years.

          During the last two years, the Company spent approximately  $98,543 on
     research and development expenditures.  Included in this amount are $72,687
     for the purchase of manufacturing equipment and $15,256 for the purchase of
     chemicals and platinum sponge.



                                       6
<PAGE>

(11) Costs and effects of compliance with environmental laws.

          The Company is currently  using resin  columns to remove any potential
     contaminants  from the post-process  water. The resin columns,  designed by
     Ionics Pure  Solutions  of  Phoenix,  AZ,  implement a bed of ion  exchange
     resin.  The Company leases the resin columns from Ionics Pure Solutions for
     use in the Pilot  Plant  Facility  in  Chandler,  AZ to meet the  discharge
     requirements  for the City of Chandler  Water  Department.  Increasing  the
     throughput  of the columns  would not  significantly  impact the  financial
     viability  of the  Company.  The  columns  are located on site at the pilot
     plant. The monthly lease payment of $37.74 provides for the regeneration or
     replacement of the resin column beds by Ionics Pure Solutions.  The current
     lease is open-ended and the Company will continue to lease the columns from
     Ionics Pure Solutions unless a more cost effective procedure is available.

          If it is determined by the Arizona Department of Environmental Quality
     (ADEQ) that an Aquifer  Protection  Permit (APP) is  required,  the Company
     will have to comply with the regulations  and submit a permit  application.
     The  costs  to  obtain  an APP are  estimated  to be  $75,000.  The  yearly
     maintenance and sampling requirements are estimated to be $7,500 per year.

          The  Company has had the  chemical  waste  stream  analyzed by a waste
     disposal company.  The chemical waste disposal for the Company is estimated
     to be $3,000  per month or  $36,000  per year  with 2  production  lines in
     operation.

(12) Number of total employees and number of full time employees.

          The Company  currently  has no full time  employees.  We have two part
     time  employees.  On August 1, 2001,  we entered  into  written  employment
     agreements with Gifford M. Mabie III and Mark L. Lindsey. Our employees are
     each engaged in other business  activities,  subject to the  limitations of
     their respective  employment  agreements.  Therefore,  potential  conflicts
     exist as the  employees  must divide their time and divide their efforts in
     areas that are common to exploration stage companies.

(c) Reports to security holders

          We file annual,  quarterly and periodic reports,  proxy statements and
     other  information  with the Securities and Exchange  Commission  using the
     Commission's   EDGAR  system.   The   Commission   maintains  a  web  site,
     http://www.sec.gov, that contains reports, proxy and information statements
     and other information  regarding  registrants that file electronically with
     the  Commission.  You may read and copy any materials filed with the SEC at
     the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
     20549. You may obtain  information on the operation of the Public Reference
     Room by calling the SEC at 1-800-SEC-0330.

          We furnish our  shareholders  with annual reports  containing  audited
     financial  statements and with such other periodic reports as we, from time
     to time, deem appropriate or as may be required by law. We use the calendar
     year as our fiscal year.

          You should rely only on the  information  contained in this filing and
     the  information  to which we have referred you. We have not authorized any
     person to provide you with any information that is different.

          The Company's website is http://www.texxoninc.com

Item 2.  Description of Property

(a) Location

          The  Company  currently  leases  a Pilot  Plant  facility  at 331 East
     Chilton Drive,  Chandler,  AZ 85225.  The lease is through a non-affiliated
     party to the Company and expires May 31,  2003.  The lease amount of $4,080
     is due on the 1st of the month. The pilot plant now serves as the Company's
     principal  executive office. The pilot plant facility is approximately 5800
     square  feet,  and  allows  room  for  simulation  of  production  facility
     equipment.  The Company intends to test any equipment to be utilized in the
     proposed production  facility at the pilot plant location.  Due to the lack
     of space, the entire production line cannot be constructed and tested.  The
     Company  intends to test these pieces of equipment on a smaller  production
     line scale



                                       7
<PAGE>

(b) Investment Policies

          The  Company  does  not  currently  engage  in  investment  activities
     relating to real estate, interests in real estate, real estate mortgages or
     securities  of or  interest  in person  primarily  engaged  in real  estate
     activities.

(c) Description of Real Estate and Operating Data

          None

Item 3.  Legal Proceedings

          None

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

          None

                                     PART II

Item 5.  Market of Common Equity Related Stockholder Matters

(a) Market Information

     (1)  The  Company's  Common  Stock is  currently  not  traded on any public
          trading  market.  Management  does not currently  anticipate  that any
          market for its Common Stock will develop  until such time,  if any, as
          the Company has successfully implemented its business plan.

(b) Holders

          As of March 31,  2003,  there  were 73 holders of record of our common
     stock.

(c) Dividends

          The Board  has not  declared  and does not  anticipate  declaring  any
     dividends.  We have not declared or paid, and for the foreseeable future we
     do not anticipate declaring or paying, dividends on our common stock.



                     RECENT SALES OF UNREGISTERED SECURITIES

     The Company issued 3,000,000 shares of its common stock at par value to its
founders in exchange for subscriptions during 2000.

     During 2001, the subscriptions were paid in full in cash. In addition,  the
Company issued 3,500,000 shares of its common stock at par value to its founders
on June 1, 2001.  The shares were issued without  registration  in reliance upon
the exemption  provided by  Regulation  D, Rule 504. The Company  relied on this
exemption based on its current "non-reporting" status.

     In August  2001,  the Company sold  3,146,784  shares of common stock to 23
accredited  and 22  non-accredited  investors  for  aggregate  consideration  of
$440,550 under a private  offering at $.14 per share.  This price was determined
by the  Board  of  Directors  of the  Company.  The  shares  were  sold  without
registration in reliance upon the exemption  provided by Regulation D, Rule 504.
The Company relied on this exemption based on its current "non-reporting" status
and  having  not had  sales of  securities  exceeding  $1,000,000  in a 12 month
period.



                                       8
<PAGE>

     In August 2001, the Company issued 25,000 shares of its common stock with a
basis of $.14 a share for a Toshiba  Phone System  valued at $3,500.  This price
was based on the price per share used in the recent  offering.  The shares  were
sold without  registration in reliance upon the exemption provided by Regulation
D,  Rule  504.  The  Company  relied  on this  exemption  based  on its  current
"non-reporting"  status  and  having  not  had  sales  of  securities  exceeding
$1,000,000 in a 12 month period.

     In August 2001,  the Company  issued  1,000,000  shares of its common stock
with a basis of $.14 a share for  consulting  services  pursuant to a consulting
agreement with Dean Guise. The consulting services were valued at $140,000. This
price was based on the price per share used in the recent  offering.  The shares
were sold  without  registration  in  reliance  upon the  exemption  provided by
Regulation  D, Rule 504.  The  Company  relied  on this  exemption  based on its
current  "non-reporting"  status and have not had sales of securities  exceeding
$1,000,000 in a 12 month period.

     During April 2002 the company sold  another  33,000  shares of common stock
for aggregate  consideration  of $16,500 under another private  offering at $.50
per share and 7,500  shares of common stock to an existing  shareholder  for the
aggregate  consideration of $2,625 at $.35 per share. The share price was raised
from the previous price of $.14 based on the recent successful sale of 3,146,784
shares of common stock for $440,550  from a previous  offering.  The shares were
sold without  registration in reliance upon the exemption provided by Regulation
D,  Rule  504.  The  Company  relied  on this  exemption  based  on its  current
"non-reporting"  status  and  having  not  had  sales  of  securities  exceeding
$1,000,000 in a 12 month period.

     On May 13, 2002,  the Company issued 20,000 shares of its common stock with
a basis of $.35 a share for  consulting  services to Dr. Mick  Bjelopavlic.  The
consulting  services  were  valued at  $7,000.  This price was  selected  by the
Company  based on the recent sale of common stock at $.35 per share.  The shares
were sold  without  registration  in  reliance  upon the  exemption  provided by
Regulation  D, Rule 504.  The  Company  relied  on this  exemption  based on its
current  "non-reporting"  status  and  the  Company  not  having  had  sales  of
securities exceeding $1,000,000 in a 12 month period.

     On October 1, 2002,  the company  sold  285,714  shares of common stock for
aggregate  consideration  of  $40,000.  The  shares  were  sold  to an  existing
accredited  shareholder  for $.14 per share based on the  shareholders  original
purchase price.  The shares were sold without  registration in reliance upon the
exemption  provided  by  Regulation  D, Rule  506.  The  Company  relied on this
exemption based on the shareholder's "accredited investor" status and having not
exceeded the 35 purchaser limitation.

     In December  2002,  the company issued  approximately  3,515,714  shares of
common stock for consulting  services.  The  consulting  services were valued at
$492,200 and were made in the ordinary course of business.

     On December 31, 2002, the Company issued 300,000 shares of its common stock
as repayment to shareholders who had made loans to the Company over the past 12
months. The loans and accumulated interest totaled $42,963. The price per share
of $0.14 was based on the most recent sales of common stock.


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

(a) Plan of Operation

     (i)  Cash Requirements

          The Company's  plan of operation for the next 12 months is to fund the
     acquisition  of a  license  for the  precious  metal  recovery  technology.
     Provisions  of the  license  agreement  call  for  the  company  to pay the
     inventor, Russell Twiford, $500,000 upon successfully raising $2,000,000 or
     more. To date, a payment of $25,000 toward the $500,000  license  agreement
     has been paid.  The  company's  plan is also to fund the  expansion  of the
     pilot plant and to fund, construct and operate a production  facility.  The
     Company will have to raise  approximately  $6,000,000  to operate the pilot
     plant and construct and equip the processing facility.



                                       9
<PAGE>

     (ii) Research and Development objectives during the next 12 months are:

          1.   Verify the platinum recovery using water from different sources.
          2.   Investigate  alternative  filtering  methods to decrease the time
               required to filter platinum concentrate from the water.
          3.   Investigate  drying  techniques  to  increase  the yield from the
               platinum concentrate.
          4.   Design  remedial  systems to insure that the production  facility
               does not discharge improperly.
          5.   Using the process  described  above,  investigate the recovery of
               other platinum group metals.

     (iii)Any expected purchase or sale of plant and significant equipment

          If successful in acquiring the necessary  capital and  completing  the
     process  enhancements,   the  Company  intends  to  purchase  the  required
     equipment to scale up production at its pilot  facility.  Until the process
     enhancements  are  completed,  we cannot  estimate to any certain degree of
     accuracy the amount or costs of such equipment.

     (iv) Any expected significant changes in number of employees

          We do not expect any significant changes in the number of employees.


Item 7. Financial Statements

          See Part F/S

Item  8.  Changes  In and  Disagreements  With  Accountants  on  Accounting  and
Financial Disclosure

     The following information can be found in the Company's Form 8-K filed with
the Securities and Exchange Commission on March 14, 2003.

     On March 7, 2003,  the Company  notified  Rodefer  Moss and  Company,  PLLC
("Rodefer  Moss") the principal  accountants that were engaged to audit Texxon's
financial  statements,   that  it  had  been  dismissed  as  Texxon's  principal
accountants.  Rodefer  Moss was engaged by Texxon on October 26, 2001 and issued
reports on the  financial  statements  of Texxon  from that time until  March 7,
2003.  During the period  subsequent to October 26, 2001 and  preceding  Rodefer
Moss'  dismissal,  there were no  disagreements  between Texxon on any matter of
accounting principles or practices,  financial statements disclosure or auditing
scope of procedure,  which disagreement(s),  if not resolved to the satisfaction
of Rodefer  Moss,  would have caused  Rodefer  Moss to make a  reference  to the
subject  matter  of the  disagreement(s)  in  connection  with it's  reports  on
Texxon's financial statements.

     Rodefer Moss' reports on Texxon's financial statements for the period since
their   engagement  on  October  26,  2001  contained  no  adverse  opinions  or
disclaimers of opinion but were modified as to uncertainty  relating to Texxon's
ability to continue as a going concern.  There were no modifications relating to
audit scope or accounting principles.

     Texxon  requested a letter from  Rodefer  Moss as to whether  Rodefer  Moss
agrees or disagrees with the above statements and received response from Rodefer
Moss dated March 12, 2003 that stated that it agreed with the above statements.

     On March 7,  2003,  Texxon  engaged  Tullius  Taylor  Sartain  and  Sartain
("Tullius Taylor") to replace Rodefer Moss as Texxon's new principal accountants
to audit Texxon's financial statements.  The decision to change accountants from
Rodefer Moss to Tullius Taylor was recommended and approved by Texxon's Board of
Directors.



                                       10
<PAGE>

                                    Part III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
With Section 16(a) of the Exchange Act

(a) Directors and Executive Officers

     Gifford  Mabie III, age 33, has been  President and Director of the Company
since January 1, 2001 and will continue to devote  approximately 70% of his time
toward the business.  From June 1998 to March 2000, Mr. Mabie completed the Year
2000  (Y2K)  Audit for  Nissan  Motor  Manufacturing  Corporation,  the  largest
manufacturing  facility (6 million square feet) under one roof in North America.
This included the project  management and  documentation for 8 individual plants
located on the Smyrna,  TN and  Decherd,  TN sites.  From 1996 to 1999 Mr. Mabie
worked  as  a  senior   engineer   for   Instrument   Controls   Service.   with
responsibilities  including project  management and engineering team management.
From 1999 to 2001, Mr. Mabie was previously  the  Engineering  Sales Manager for
Performance  Technical  Services,  Inc., an integration and engineering  firm in
Murfreesboro,  TN. His  responsibilities  included business  development for the
Mid-South Region,  engineering sales and regional office management.  He holds a
Bachelors of Science degree in Engineering  Technology  with a major in computer
systems from Memphis State University.

     Mark L.  Lindsey,  age 33,  has been Vice  President  and  Director  of the
Company since January 1, 2001 and will continue to devote  approximately  70% of
his time  toward  the  business.  From 1991 to 2001,  Mr.  Lindsey  worked as an
electrical  engineer  in  industrial  automation,  process  design  and  process
automation.   This  experience  was  gained  under  the  employment  of  several
engineering and automation firms including; Instrument Controls Service, Behrent
Engineering,  AZO Inc. and  Performance  Technical  Services,  Inc. From 1996 to
2001, he was a Senior Project Engineer with  responsibilities  including project
cost tracking, hardware design, control system specification and implementation,
and management of staff Project Engineers. From 1999 to 2001, Mr. Lindsey served
as  the  Engineering  Manager  for  Performance  Technical  Services,  Inc.,  an
integration  and  engineering  firm in  Murfreesboro,  TN. His  responsibilities
included project cost analysis,  project  feasibility and viability  studies and
management  of  engineers  from both the home and regional  offices.  He holds a
Bachelors of Science degree in Engineering Technology with a major in electrical
engineering from Memphis State University.

     Dr. Robert Yoe, age 68, is a director of the Company. Dr Yoe is currently a
retired  cardiologist  after the  operation of a private  practice for nearly 35
years. Dr. Yoe served in the United States Army in a MASH unit during the Korean
War. After  returning from the war in 1945, Dr. Yoe operated a private  practice
in Birmingham Alabama until he retired in 1990. During those years he has served
as a board  member of two local  foundations  and  Co-Founded  both an Insurance
Company and a  multi-surgeon  Cardiovascular  Private  Practice.  Dr Yoe holds a
Bachelor of Science degree from Birmingham  Southern and a Doctorate of Medicine
Degree from the prestigious Vanderbilt Medical School.

(b) Significant Employees

     None

(c) Family relationships

     None

(d) Involvement in certain legal proceedings

     None

Item 10. Executive Compensation

     Mr. Mabie and Mr. Lindsey have been compensated for consulting services. It
is anticipated that upon funding of the production  facility,  Mr. Mabie and Mr.
Lindsey will each  receive an annual  salary and devote full time to the affairs
of the Company.



                                       11
<PAGE>

(a) Summary compensation table

<TABLE>
<CAPTION>

                           SUMMARY COMPENSATION TABLE


<S>                    <C>     <C>              <C>        <C>           <C>              <C>                 <C>           <C>
                                                                                     Long Term Compensation
                                                                        --------------------------------------------------
                                          Annual Compensation                         Awards                   Payouts
                               ---------------------------------------- ------------------------------------- ------------
           (a)          (b)         (c)            (d)        (e)             (f)                (g)              (h)         (i)
                                                             Annual       Restricted         Securities                    All Other
        Name and                   Other                  Compen-sation Stock Award(s)       Underlying          LTIP       Compen-
   Principle Position   Year     Salary ($)     Bonus($)     ($)             ($)         Options/SARs (#)     Payout($)    sation($)
---------------------- ------- --------------- ---------- ------------- ---------------- -------------------- ------------ ---------
Gifford M. Mabie III   2001    $0              $0         $35,000 (1)   $0               750,000              $0           $0
President & CEO
                       2002    $120,000 (2)    $0         $5,000 (1)    $0               0                    $0           $0
Mark L. Lindsey        2001    $0              $0         $35,000 (3)   $0               750,000              $0           $0
Vice Pres, Treasurer
                       2002    $120,000 (4)    $0         $5,000 (3)    $0               0                    $0           $0

</TABLE>

     (1)  $35,000 paid to Gifford M. Mabie III as a consulting  fee during 2001.
          $5,000 paid to Gifford M. Mabie III as a consulting fee during 2002.

     (2)  Represents  salary accrued but not paid during 2002. As of the date of
          this filing, the Company has not paid this accrual.

     (3)  $35,000  paid to Mark L.  Lindsey as a  consulting  fee  during  2001.
          $5,000 paid to Mark L. Lindsey as a consulting fee during 2002.

     (4)  Represents  salary accrued but not paid during 2002. As of the date of
          this filing, the Company has not paid this accrual.


<PAGE>



Item 11.   Security Ownership of Certain Beneficial Owners and Management

     The  following  table sets forth  information  as of March 31,  2003,  with
respect to Common Stock of the Company  owned by, the  directors and officers of
the Company,  and other  individuals who own more than 5% of the outstanding and
voting Common Stock.


<TABLE>
<CAPTION>


 <S>              <C>                                    <C>                          <C>                  <C>

 Title of Class   Name and Address of Beneficial Owner    Relationship to Company    Common Shares Owned   Percent of Class
                                                                                                              Outstanding
----------------- ------------------------------------- ---------------------------- -------------------- --------------------
     Common       Andreas Cyppek                                Consultant                     1,500,000                9.94%
                  Auf der Brueck 24
                  51674 Gummersbach
                  Germany

     Common       Madison & Wall Worldwide, Inc.                Consultant                     1,500,000                9.94%
                  195 Wekiva Springs Road
                  Suite 200
                  Longwood, FL 32779

     Common       Gifford M. Mabie III                     Officer and Director                1,321,429                8.76%
                  1460 East Oxford Lane
                  Gilbert, AZ 85296

     Common       Mark L. Lindsey                          Officer and Director                1,300,000                8.62%
                  4069 East Wrangler Ct
                  Gilbert, AZ 85297

     Common       Dr. Robert H. Yoe Jr.                          Director                      1,000,000                6.63%
                  2844 Shook Hill Road
                  Birmingham, AL 35223

     Common       Robert H. Yoe III                          Beneficial Owner                  1,000,000                6.63%
                  1000 Laurel Lane
                  Ft. Payne, AL 35967

     Common       Dean Guise                                    Consultant                       821,200                5.45%
                                                                                     --------------------
                  1393 Kenny Street
                  Coquitlam, BC V3E2R1
                  Canada

Officers, Directors and Employees as a Group (3 Persons)                                       3,621,429               24.01%
                                                                                     --------------------

Consultants as a Group (3 Persons)                                                             3,821,200               25.33%
                                                                                     --------------------

Officers, Directors, Beneficial Owners and Consultants as a Group (7 Persons)                  8,442,629               55.97%
                                                                                     --------------------

</TABLE>

(b) Changes in Control

     There are no  arrangements  that may  result in a change in  control of the
Company



                                       12
<PAGE>



Item 12. Certain Relationships and Related Transactions

     To this date,  the Company has had no operating  business and engaged in no
transactions  in which Mr.  Mabie or Mr.  Lindsey has had any direct or indirect
material  interest.  Should the Company  engage in any such  transaction  in the
future, Mr. Mabie's and Mr. Lindsey's interest therein would arise only from his
ownership of Common  Stock of the Company and would  receive no extra or special
benefit that was not shared equally (pro rata) by all holders of Common Stock of
the Company.

     The Company currently does not have written into its By-Laws or Articles of
Incorporation any procedures for resolving conflicts of interest.  However,  the
By-Laws do provide for the amendment of the Articles of Incorporation to include
such procedures if deemed necessary by the board of directors.

     On January 1, 2003, the Company appointed Dr. Robert H. Yoe to its Board of
Directors.  For  further  information  about  Dr.  Yoe see  Item  9.  Directors,
Executive Officers, Promoters and Control Persons; Compliance With Section 16(a)
of the Exchange Act.

Item 13.   Exhibits and Reports on Form 8-K

     Exhibits: See Part III Index to Exhibits

     Form 8-K:  Form 8-K filed with the  Securities  and Exchange  Commission on
March 14, 2003 in relation to change in accountants.

Item 14. Controls and Procedures

     (a)  Within  the 90 days prior to the date of this  report,  the  Company's
Chief  Executive  Officer  and  principal   financial  officer  carried  out  an
evaluation  of the  effectiveness  of the design and  operation of the Company's
disclosure controls and procedures pursuant to Exchange Act Rules 13a-14.  Based
on that evaluation,  the Chief Executive Officer and principal financial officer
concluded that the Company's disclosure controls and procedures are effective in
timely  alerting  them to material  information  related to the Company  that is
required to be included in the Company's periodic SEC filings.

     (b) Subsequent to the date of this  evaluation,  there have been no changes
in the Company's internal controls or in other factors that could  significantly
affect these  controls,  and no discoveries of any  significant  deficiencies or
material  weaknesses  in such  controls  that would  require the Company to take
corrective action.



                                       13
<PAGE>


                                    Part F/S

Report of Independent Auditors




To the Board of Directors and Stockholders
Texxon, Inc.
Chandler, Arizona

We have audited the accompanying balance sheet of Texxon, Inc. as of December
31, 2001, and the related statements of operations, changes in stockholders'
equity, and cash flows for the period from inception (October 6, 1998) to
December 31, 2001, and for the year ended December 31, 2001. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit. The financial statements of Texxon, Inc. as of and for the year ended
December 31, 2000 and for the period from inception to December 31, 2000, were
audited by other auditors whose report dated May 4, 2001, expressed an
unqualified opinion on those financial statements.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the 2001 financial statements referred to above present fairly,
in all material respects, the financial position of Texxon, Inc. as of December
31, 2001, and the results of its operations and its cash flows for the year then
ended in conformity with accounting principles generally accepted in the United
States of America.

As discussed in Note 7 to the financial statements, the Company is an
Exploration stage company with insufficient revenues to fund development and
operating expenses. This condition raises substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 7. These financial statements do not include any
adjustments that might result from the outcome of this uncertainty.



RODEFER MOSS & COMPANY, PLLC

Knoxville, Tennessee
January 7, 2002




                                      14
<PAGE>

                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Stockholders
of Texxon, Inc.

We have audited the accompanying  balance sheet of Texxon,  Inc., an Exploration
Stage  Company,  as  of  December  31,  2002,  and  the  related  statements  of
operations,  cash flows and stockholders'  equity for the year then ended. These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audit in accordance  auditing  standards  generally accepted in
the United States of America.  Those standards  require that we plan and perform
the audit to obtain reasonable  assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.  An
audit also includes  assessing the accounting  principles  used and  significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statement  presentation.  We believe that our audit provides a reasonable  basis
for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Texxon, Inc. as of December 31,
2002,  the results of its  operations and its cash flows for the year then ended
in conformity with accounting principles generally accepted in the United States
of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 2 to the
financial  statements,   the  Company  is  an  exploration  stage  company  with
insufficient revenues to fund development and operating expenses. This condition
raises  substantial  doubt about its  ability to  continue  as a going  concern.
Management's  plan  concerning  this  matter  is also  described  in Note 2. The
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.


TULLIUS TAYLOR SARTAIN & SARTAIN LLP

Tulsa, Oklahoma
March 21, 2003




                                       15
<PAGE>


                                  Texxon, Inc.
                         (An Exploration Stage Company)

                                  Balance Sheet
                                December 31, 2002



                                     ASSETS
Current Assets
Cash                                                                   $ 2,285
Inventory                                                               10,229
Prepaid expenses                                                       469,585
                                                                   -----------
Total Current Assets                                                   482,099

Property, Plant & Equipment, Net
Manufacturing equipment                                                 72,687
Automobiles                                                             29,000
Office equipment                                                        19,684
Accumulated depreciation                                               (26,055)
                                                                   -----------
Total Property, Plant & Equipment, Net                                  95,316

Other Assets
Deposits                                                                 6,375
                                                                   -----------
TOTAL ASSETS                                                         $ 583,790
                                                                   ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable                                                      $ 19,253
Notes payable - shareholders                                            14,105
Accrued interest on shareholder notes                                    1,635
Accrued salaries                                                       240,000
Current maturities of long-term debt                                     4,687
                                                                   -----------
Total Current Liabilities                                              279,680

Long-term debt - note payable                                           12,387
                                                                   -----------
Total Liabilities                                                      292,067

Stockholders' Equity
Preferred stock, $.001 par value; 5,000,000 shares
   authorized; no shares issued or outstanding                               -
Common stock, $.001 par value; 45,000,000 shares
   authorized; 14,833,712 shares issued and outstanding                 14,834
Additional paid-in capital                                           1,183,504
Deficit accumulated during the exploration stage                      (906,615)
                                                                   -----------
Total Stockholders' Equity                                             291,723
                                                                   -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                           $ 583,790
                                                                   ===========



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


                                       16
<PAGE>


<TABLE>
<CAPTION>


                                  Texxon, Inc.
                         (An Exploration Stage Company)

                            Statements of Operations
         From Inception (October 6, 1998) Through December 31, 2002, and
                 For The Years Ended December 31, 2002 and 2001

<S>                                             <C>                       <C>                    <C>


                                                           Inception                    Year Ended
                                                (October 6, 1998) to      ----------------------------------------
                                                   December 31, 2002      December 31, 2002      December 31, 2001
                                                --------------------      -----------------      -----------------

Revenue                                                         $ -                    $ -                    $ -

Expenses
Platinum and chemical purchases                            $ 14,293                $ 3,728               $ 10,565
Other operating expenses                                    889,510                504,534                384,976
                                                --------------------      -----------------      -----------------
Total operating expenses                                    903,803                508,262                395,541
                                                --------------------      -----------------      -----------------

Operating loss                                             (903,803)              (508,262)              (395,541)

Interest expense                                              3,785                  3,785                      -

Interest income                                                 973                      2                    971
                                                --------------------      -----------------      -----------------
Net loss                                                 $ (906,615)            $ (512,045)            $ (394,570)
                                                ====================      =================      =================
Weighted average shares outstanding                       1,803,979             10,739,843              6,667,698
                                                --------------------      -----------------      -----------------
Loss per share, basic and diluted                           $ (0.50)               $ (0.05)               $ (0.06)
                                                --------------------      -----------------      -----------------


</TABLE>

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



                                       17
<PAGE>


<TABLE>
<CAPTION>



                                  Texxon, Inc.
                         (An Exploration Stage Company)

                            Statements of Cash Flows
         From Inception (October 6, 1998) Through December 31, 2002, and
                 For The Years Ended December 31, 2002 and 2001


<S>                                                         <C>                      <C>                 <C>

                                                                       Inception             For The Year Ended
                                                            (October 6, 1998) to    --------------------------------------
                                                               December 31, 2002    December 31, 2002    December 31, 2001
                                                            --------------------    -----------------    -----------------
Operating Activities:
Net loss                                                             $ (906,615)          $ (512,045)          $ (394,570)
Adjustments to reconcile net loss to
 net cash used in operating activities:
Depreciation expense                                                     26,055               19,251                6,804
Issuance of stock and options for services                              645,700              502,200              143,500
Changes in operating assets and liabilities:
   Inventory                                                            (10,229)              (3,726)              (6,503)
   Prepaid expenses                                                    (469,585)            (369,503)            (100,082)
   Accrued interest                                                       2,598                2,598                    -
   Accrued salaries                                                     240,000              240,000                    -
   Accounts payable                                                      19,253                6,341               12,912
                                                            --------------------    -----------------    -----------------
Net Cash Used in Operating Activities                                  (452,823)            (114,884)            (337,939)
                                                            --------------------    -----------------    -----------------
Investing Activities:
Deposits                                                                 (6,375)                   -               (6,375)
Purchase of property and equipment                                     (117,871)              (1,332)            (116,539)
                                                            --------------------    -----------------    -----------------
Net Cash Used in Investing Activities                                  (124,246)              (1,332)            (122,914)
                                                            --------------------    -----------------    -----------------
Financing Activities:
Loans from related parties                                               81,105               81,105                    -
Proceeds on long-term debt                                               20,000               20,000                    -
Payments on loans from related parties                                  (25,000)             (25,000)                   -
Payments on long-term debt                                               (2,926)              (2,926)                   -
Sales of common stock
To third party investors                                                506,175               42,625              463,550
                                                            --------------------    -----------------    -----------------
Net Cash Provided by Financing Activities                               579,354              115,804              463,550
                                                            --------------------    -----------------    -----------------

Change in Cash                                                            2,285                 (412)               2,697
Cash at Beginning of Period                                                   -                2,697                    -
                                                            --------------------    -----------------    -----------------
Cash at End of Period                                                   $ 2,285              $ 2,285              $ 2,697
                                                            ====================    =================    =================

Supplemental disclosure of cash flow information
Cash Paid for Interest                                                    2,183                2,183                    -
                                                            --------------------    -----------------    -----------------
Non-cash investing and financing activities
Common stock issued for office equipment                                $ 3,500                  $ -              $ 3,500
Common stock issued as payment of loans to related parties               42,963               42,963                    -
                                                            --------------------    -----------------    -----------------


</TABLE>


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




                                       18
<PAGE>
<TABLE>
<CAPTION>


                                  Texxon, Inc.
                         (An Exploration Stage Company)

                  Statements of Changes in Stockholders' Equity
           From Inception (October 6, 1998) Through December 31, 2002

<S>                                     <C>        <C>      <C>         <C>       <C>           <C>           <C>          <C>

                                                                                                                  Deficit
                                                                                                              Accumulated
                                                                                   Additional       Common     During the
                                         Preferred Stock         Common Stock         Paid-In        Stock    Exploration
                                        Shares     Amount       Shares    Amount      Capital   Subscribed          Stage     Total
                                        ------     ------   ----------  --------  -----------   ----------   ------------  --------

Balance at inception  (October 6, 1998)      -     $    -            -  $      -  $         -    $      -     $        -   $      -
Common stock issued to founders              -          -    3,000,000     3,000            -      (3,000)             -          -
                                        ------     ------   ----------  --------  -----------   ----------   ------------  --------
Balance, December 31, 2000                   -          -    3,000,000     3,000            -      (3,000)             -          -

Payment of common stock subscribed           -          -            -         -            -       3,000              -      3,000
Options to non-employees                     -          -            -         -        3,500           -              -      3,500
Common stock issued to founders              -          -    3,500,000     3,500            -           -              -      3,500
Common stock issued to third parties         -          -    3,179,784     3,500      453,870           -              -    457,050
Common stock issued for services             -          -    1,000,000     1,000      139,000           -              -    140,000
Common stock issued for assets               -          -       25,000        25        3,475           -              -      3,500
Net loss                                     -          -            -         -            -           -       (394,570)  (394,570)
                                        ------     ------   ----------  --------  -----------   ----------   ------------  --------
Balance, December 31, 2001                   -          -   10,704,784    10,705      599,845           -       (394,570)   215,980

Common stock issued to third parties         -          -      293,214       293       42,332           -              -     42,625
Common stock issued for services             -          -    3,535,714     3,536      498,664           -              -    502,200
Common stock issued as payment of debt       -          -      300,000       300       42,663           -              -     42,963
Net loss                                     -          -            -         -            -           -       (512,045)  (512,045)
                                        ------     ------   ----------  --------  -----------   ----------   ------------  --------
Balance, December 31, 2002                   -     $    -   14,833,712  $ 14,834  $ 1,183,504    $      -     $ (906,615)  $291,723
                                        ======     ======   ==========  ========  ===========   ==========   ============  ========

</TABLE>

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



                                       19
<PAGE>

                                  Texxon, Inc.
                         (An Exploration Stage Company)

                          Notes to Financial Statements
                           December 31, 2002 and 2001


Note 1--Organization and Summary of Significant Accounting Policies

Organization and Nature of Operations
Texxon, Inc. ("Texxon" or "the Company") is an exploration stage company that
owns the exclusive worldwide license to a proprietary process for the extraction
of platinum group metals from water.

Exploration Stage Operations
The Company was incorporated on October 5, 1998 under the laws of the state of
Oklahoma. Since inception, the Company's primary focus has been raising capital
and paying for the exclusive license.

The Company will be considered to be in the  "exploration  stage," as defined in
the SEC regulations,  until the platinum  extraction process proves commercially
feasible to  economically  recover  platinum from the large  quantities of water
that must be  processed.  The  platinum  recovery  process  is still  undergoing
enhancements to become commercially viable.

Inventory
Inventory consists of unprocessed platinum on hand which is used in the
production process and is stated at the lower of cost (using the first-in,
first-out method) or market. Platinum inventory produced as a result of the
extraction process and held for resale is classified as a current asset and is
stated at the lower of cost (using the first-in, first-out method) or market. At
December 31, 2002, there was no processed platinum inventory.

Prepaid Expenses
Prepaid expenses represent the unamortized portion of the cost of consulting
agreements for process enhancement, financing, and investor relations.

Income Taxes
The Company uses the liability method of accounting for income taxes as set
forth in Statement of Financial Accounting Standards ("SFAS") No. 109,
"Accounting for Income Taxes." Under the liability method, deferred taxes are
determined based on the differences between the financial statements and tax
bases of assets and liabilities at enacted tax rates in effect in the years in
which the differences are expected to reverse.

Stock-based Compensation
The Company accounts for stock-based compensation arrangements for employees in
accordance with Accounting Principles Board ("APB") Opinion No. 25, "Accounting
for Stock Issued to Employees," and complies with the disclosure provisions of
SFAS No. 123, "Accounting for Stock-Based Compensation." Under APB No. 25,
compensation expense is based on the difference, if any, on the date of grant,
between the fair value of the Company's stock and the exercise price. The
Company accounts for stock issued to non-employees in accordance with the
provisions of SFAS No. 123 and related interpretations.

On January 1, 2001, the Company issued to its officers options to purchase
1,500,000 shares of the Company's common stock at an exercise price of $0.001
per share. These options expire ten years from the date of grant and are only
exercisable upon the completion of the first quarter of profitable production
plant operation.

Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported revenues and expenses
during the reporting period. Actual results could differ from those estimates.




                                       20
<PAGE>

Earnings (Loss) per Share The Company computes net income (loss) per share in
accordance with SFAS No. 128, "Earnings per Share". Under the provision of SFAS
No. 128, basic net income (loss) per share is calculated by dividing net income
(loss) available to Common Stockholders for the period by the weighted average
shares of Common Stock of the Company outstanding during the period. Diluted net
income (loss) per share is computed by dividing the net income (loss) for the
period by the weighted average number of common and common equivalent shares
outstanding during the period. The calculation of diluted income (loss) per
share of Common Stock assumes the dilutive effect of stock options. All
1,500,000 options outstanding at December 31, 2002 were excluded from the EPS
calculation as their effect was anti-dilutive.

Long-Lived Assets
Property, plant and equipment, including significant improvements, are stated at
cost and are depreciated using the straight line method over the estimated
useful lives of the assets ranging from 5 to 7 years. Expenditures for
maintenance and repairs are charged to operating expenses as incurred. When
properties are retired or otherwise disposed of, the cost of the asset and the
related accumulated depreciation are removed from the accounts with the
resulting gain or loss being reflected in results of operations.

Management assesses the recoverability of long-lived assets whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable from its future undiscounted cash flows. If it is determined that
impairment has occurred, an impairment loss is recognized for the amount by
which the carrying amount of the asset exceeds its estimated fair value.

Reclassifications
Certain reclassifications have been made to the prior year financial statements
to conform to the current period presentation.

New Accounting Standards
The Financial Accounting Standards Board ("FASB") periodically issues new
accounting standards in a continuing effort to improve standards of financial
accounting and reporting. Management has reviewed the recently issued
pronouncements and concluded that the following new accounting standards are
potentially applicable to the Company.

In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No.
4, 44, and 64, amendment of FASB Statement No. 13, and Technical Corrections".
SFAS No. 145 rescinds SFAS No. 4, which required all gains and losses from
extinguishment of debt to be aggregated and, if material, classified as an
extraordinary item. As a result, the criteria in APB Opinion No. 30 will now be
used to classify those gains and losses. SFAS No. 64 amended SFAS No. 4, and is
no longer necessary because SFAS No. 4 has been rescinded. SFAS No. 44 was
issued to establish accounting requirements for the effects of transition to the
provisions of the Motor Carrier Act of 1980. Because the transition has been
completed, SFAS No. 44 is no longer necessary. SFAS No. 145 amends SFAS No. 13
to require that certain lease modifications that have economic effects similar
to sale-leaseback transactions be accounted for in the same manner as
sale-leaseback transactions. SFAS No. 145 also makes technical corrections to
other existing pronouncements. The provisions of SFAS No. 145 are generally
applicable for fiscal years beginning or transactions occurring after May 15,
2002. The Company does not expect a material impact from the adoption of SFAS
No. 145 on its financial statements.



                                       21
<PAGE>

In June 2002, the FASB voted in favor of issuing SFAS No. 146, "Accounting for
Exit or Disposal Activities". SFAS No. 146 addresses significant issues
regarding the recognition, measurement, and reporting of costs that are
associated with exit and disposal activities, including restructuring activities
that are currently accounted for pursuant to the guidance that the Emerging
Issues Task Force ("EITF") has set forth in EITF Issue No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring)". The scope of
SFAS No. 146 also includes (1) costs related to terminating a contract that is
not a capital lease and (2) termination benefits that employees who are
involuntarily terminated receive under the terms of a one-time benefit
arrangement that is not an ongoing benefit arrangement or an individual
deferred-compensation contract. The Company will be required to adopt SFAS No,
146 for exit or disposal activities initiated after December 31, 2002. The
Company does not expect a material impact from the adoption of SFAS No. 146 on
its financial statements.

Note 2--Uncertainties

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. The Company is in the early exploration stage
and has not yet established sources of revenues sufficient to fund the
development of business and pay current operating expenses. As shown in the
accompanying financial statements, the Company incurred a net loss of $906,615
during the period from October 6, 1998 (date of inception) to December 31, 2002.
Management intends to provide the necessary development and operating capital
through sales of its common stock and commencement of sales of the platinum
derived from the licensed product. The ability of the Company to continue as a
going concern during the next year depends on the successful completion of the
Company's efforts to raise capital and commencement of sales of the platinum
derived from the licensed product. The financial statements do not include any
adjustments that might be necessary if the Company is unable to continue as a
going concern.

Note 3--Accrued Salaries

Effective January 1, 2002, the Company began accruing compensation pursuant to
employment agreements dated August 1, 2001. The accrued salaries balance at
December 31, 2002, includes $240,000 that the Company owes its officers pursuant
to the employment agreements. The Company has breached the employment
agreements, and there is no assurance that the officer and employees subject to
such agreements will continue to serve the Company without being paid.

Note 4--Notes Payable

Included in current liabilities is $14,105 in notes payable to two stockholders.
The notes are unsecured, accrue interest at a default rate of 16% and are due on
demand (see Note 8 "Related Party Transactions). As of December 31, 2002, the
Company had recorded accrued interest in the amount of $1,635 related to these
notes as shown on the Balance Sheet.

Note 5--Long-term Debt

Long-term Debt - note payable is comprised of the following:

o    Note payable to a bank, interest at 7.88%,  principal and interest payments
     of $489 due monthly through April 2005, secured by an automobile

     Principal  maturities  in years  subsequent  to  December  31,  2002 are as
     follows:

       Year Ending
       December 31,

           2003                 $   4,687
           2004                     5,070
           2005                     5,484
           2006                     1,833
                               ------------
                               ------------

                               $ 17,074
                               ------------



                                       22
<PAGE>


Note 6--Commitments and Contingencies

Texxon leases approximately 5,800 square feet of commercial office space under a
one year operating lease dated May 20, 2002 and effective June 1, 2002. The
contract calls for monthly payments of $4,080. The current lease is a renewal of
the original lease dated July 20, 2001. Under the original lease agreement, the
Company was obligated to pay $3,908 per month. For the period from inception to
December 31, 2002 and for the years ended December 31, 2002 and 2001, the
Company recorded rent expense of $73,107, $53,177 and $19,930, respectively. The
Company was required to pay a deposit for this space in the amount of $5,435.
This amount is included in "Deposits" on the Company's balance sheet.


Note 7--Related Party Transactions

In January and June 2002, the Company borrowed $20,000 and $5,000, respectively,
from a shareholder. The loans were unsecured and bore a combined interest of
$1,125. During 2002, Texxon paid the full balance of these notes.

During 2002, the Company borrowed $56,105 from its President and Vice-President
and certain related parties. The loans were unsecured, were due December 31,
2002 and provided for an interest rate of 12% that changed to 16% upon default.
During December 2002, the Company repaid $42,000 of the outstanding loans and
$963 of accrued interest on those loans with 300,000 shares of the Company's
common stock, par value $0.001. The shares were valued at $.14 per share which
is the price that has been used to calculate other recent stock transactions. At
December 31, 2002, the remaining unpaid portion of these loans is $14,105 and
the related accumulated interest is $1,635. Currently, these loans are in
default and bear interest at the default rate of 16%.

Note 8--Common Stock and Paid In Capital

Texxon is authorized to issue 45,000,000 Shares of Common Stock, par value
$0.001 per share, of which 14,833,712 shares were outstanding as of December 31,
2002. Texxon is also authorized to issue 5,000,000 Shares of Preferred Stock,
par value $0.001 per share, of which there are no shares presently outstanding.

Voting and Preemptive Rights
Holders of shares of Common Stock are entitled to one vote per share on all
matters submitted to a vote of the stockholders. Voting rights are
non-cumulative. No preemptive rights extend to common stockholders to subscribe
for or to purchase any stock, obligations or other securities of Texxon.

Liquidation Rights
Upon any liquidation, dissolution or winding up of Texxon, holders of shares of
Common Stock are entitled to receive pro rata all of the assets of Texxon
available for distribution to stockholders after liabilities are paid and
distributions are made to the holders of Texxon's Preferred Stock. Preferred
stock preferences, if any, will be fixed by the Company's board of directors at
the time of issuance.




                                       23
<PAGE>


Common Stock Transactions
The Company issued 3,000,000 shares of its common stock at par value to its
founders in exchange for subscriptions during 2000. During 2001, the
subscriptions were paid in full in cash. In addition, the Company issued
3,500,000 shares of its common stock at par value to its founders on June 1,
2001.

On August 22, 2001, the Company completed a private offering of common stock,
resulting in the issuance of 3,146,784 shares for $440,550 ($0.14/share).

On August 28, 2001, the Company issued 1,000,000 shares, valued at $140,000
($0.14 per share) to a consultant in exchange for general business and
consulting services. The term of the agreement was for 1 year. The shares were
valued at $0.14 based on the recent private placement of the Company's stock at
the same $0.14 per share.

In September and October 2001, the Company initiated a private offering of
common stock and issued 33,000 shares for $16,500 ($0.50/share).

In January 2002, the Company sold 7,500 shares of the Company's common stock to
an accredited investor for $0.35 per share. The Company received $2,625 in the
transaction.

In May 2002, the Company issued 20,000 shares of restricted common stock valued
at $7,000 to a consultant for consulting services related to the chemical
reactions and enhancements to the recovery process. The Term of the agreement is
for 1 year. The shares were valued at $0.35 per share based on the recent sale
of stock to an existing shareholder at the same $0.35 per share. The Company has
appropriately recorded an expense for a like amount.

On September 22, 2002, the Company sold 285,714 shares of the Company's common
stock to an accredited investor for $0.14 per share. The Company received
$40,000 as a result of the transaction.

On December 16, 2002, the Company issued 30,000 shares of the Company's common
stock to a consultant in connection with a consulting agreement signed on the
same date. The term of the agreement is six months during which time the
consultant will provide services to the Company related to the identification
and evaluation of financing options available to the Company. The shares were
valued at $0.14 per share based on the share price of other stock transactions
recently completed. The Company recorded compensation cost related to the
transaction in the amount of $4,200.

On December 19, 2002, the Company issued 485,714 shares of the Company's common
stock to a consultant in connection with a consulting agreement signed on the
same date. The term of the agreement is one year during which time the
consultant will assist the Company in the enhancement of the platinum recovery
process currently in use. The shares were valued at $0.14 per share based on the
share price of other stock transactions recently completed. The Company recorded
compensation cost related to the transaction of approximately $68,000.

On December 16, 2002, the Company issued 1,500,000 shares of common stock to a
consultant pursuant to an agreement executed on that same date. The shares were
valued at $0.14 per share based on the share price of other stock transactions
recently completed. As outlined in the agreement, the consultant will provide
services that include but are not limited to advice to the Company's management
regarding possible financing options and marketing strategies and the
performance of investor relations services. The length of the agreement is six
months.




                                       24
<PAGE>


On December 20, 2002, the Company reserved 1,000,000 shares for and issued
500,000 shares to Madison and Wall, Inc. pursuant to an investor relations
service agreement signed on that same day. The shares were valued at $0.14,
based on the share price of other stock transactions recently completed. The
1,000,000 reserved shares will be issued based on Madison and Wall's ability to
perform which will be determined at the sole discretion of the Company. At
December 31, 2002, none of the remaining 1,000,000 shares had been issued.

On December 31, 2002, the Company issued 300,000 shares of common stock to
certain stockholders as repayment of their outstanding loans to the Company. The
shares were valued at $0.14 per share based on the share price of other stock
transactions recently completed. The 300,000 shares paid an outstanding
principal balance of $42,000 and accrued interest of $963.

Stock Options
On August 28, 2001, the Company adopted a stock option plan (the "Plan"). Under
the Plan, incentive stock options (ISOs) may be granted to the Company's
officers, key employees and key advisors for the purchase of up to 3,000,000
shares of the Company's common stock. Scheduled vesting is at the discretion of
the Plan's committee, and expiration dates for the grants may extend up to ten
years from grant date. The exercise prices of the ISOs shall be not less than
100%, of the fair market value of the Company's common stock at grant date. At
December 31, 2002, there were 1,500,000 options issued pursuant to the plan.

In January, 2001, the Company granted certain consultants options to purchase up
to 2,000,000 shares of the Company's common stock at an exercise price of
$0.001. These options were exercisable only after the Company's common stock had
been trading for thirty days on a listed exchange or on the OTC Bulletin Board.
The value of these options, $2,000, was recorded as compensation expense during
2001. The value was calculated using the Black-Scholes option-pricing model with
the following weighted-average assumptions: 500% volatility, expected life of
the options of ten years, zero dividend yield, and a risk-free interest rate of
5.50%. These options were canceled during 2002.

At December 31, 2002, no options were exercisable, 2,000,000 options were
canceled, no options were granted, vested or forfeited and 1,500,000 options
were outstanding.

Note 9--Income Taxes

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The components of the
Company's deferred income tax asset are as follows:

                                               From inception
                                              (October 6, 1998)
                                                   through
                                              December 31, 2002
                                             --------------------

Net Operating Loss carryforward                          89,221
Valuation allowance for deferred tax asset             $(89,221)
                                             --------------------

Net deferred tax asset                                     $---
                                             --------------------


As the Company has generated net operating losses from its inception and these
is no assurance of the Company's ability to generate future taxable income, a
valuation allowance has been established to recognize its deferred tax assets
only to the extent of deferred tax liabilities.




                                       25
<PAGE>


                                    Part III

                      Index to and Description of Exhibits


Exhibit
Number    Description of Exhibit

2.1 *     Articles of Incorporation dated October 6, 1998
2.2 *     By-laws of Texxon, Inc. adopted October 6, 1998
3.1 *     Sample Stock Certificate
6.1 **    Texxon, Inc. Non-Qualified Stock Option Plan
6.2 *     License Agreement dated February 22, 2001
6.3 *     Joint Venture Agreement dated February 22, 2001
6.4 *     Employee Agreement for Gifford M. Mabie III dated August 1, 2001
6.5 *     Employee Agreement for Mark L. Lindsey dated August 1, 2001
6.6 *     Indemnification Agreement for Gifford M. Mabie III dated August 1,2001
6.7 *     Indemnification Agreement for Mark L. Lindsey dated August 1, 2001
6.8 *     Dean Guise Agreement dated August 28, 2001
6.9 *     Dr. Mick Bjelopavlic Agreement dated May 13, 2002
23.1 ***  Consent of Rodefer Moss & Co, PLLC
23.2 ***  Consent of Tullius Taylor Sartain and Sartain, LLP
99.1 ***  Certification of Gifford M. Mabie III


*    Filed with Amended Form 10-SB filed November 1, 2002.

**   Filed with S-8 Registration Statement filed January 27, 2003

***  Filed as an Exhibit to this Form 10-KSB




                                       26
<PAGE>


I, Gifford M. Mabie III, certify that:

     1. I have reviewed this annual report on Form 10-KSB of Texxon, Inc.;

     2. Based on my knowledge, this annual report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this annual report;

     3. Based on my knowledge, the financial statements, and other financial
     information included in this annual report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the years presented in this annual report;

     4. I am responsible for establishing and maintaining disclosure controls
     and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
     registrant and have:

          a) designed such disclosure controls and procedures to ensure that
          material information relating to the registrant, including its
          consolidated subsidiaries, is made known to me by others within those
          entities, particularly during the year in which this annual report is
          being prepared;

          b) evaluated the effectiveness of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and

          c) presented in this annual report my conclusions about the
          effectiveness of the disclosure controls and procedures based on my
          evaluation as of the Evaluation Date;

     5. I have disclosed, based on my most recent evaluation, to the
     registrant's auditors and the audit committee of registrant's board of
     directors (or persons performing the equivalent functions):

         a) all significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

          b) any fraud, whether or not material, that involves management or
          other employees who have a significant role in the registrant's
          internal controls; and

     6. I have indicated in this annual report whether or not there were
     significant changes in internal controls or in other factors that could
     significantly affect internal controls subsequent to the date of my most
     recent evaluation, including any corrective actions with regard to
     significant deficiencies and material weaknesses.





Date: April 15, 2003


                                            /s/ Gifford M. Mabie III
                                            -----------------------
                                            Gifford M. Mabie III
                                            CEO and CFO


                                       27