UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549




FORM
10-K




x Annual Report Pursuant
to Section 13 or 15(D) of the Securities Exchange Act of 1934




for the
fiscal year ended December
31, 2008




 ̈ Transition Report Under
Section 13 or 15(D) of the Securities Exchange Act of 1934




for the
transition period from _______________ to _______________




Commission
File Number:  000-33131




LEXICON UNITED
INCORPORATED


(Exact
name of small Business Issuer as specified in its charter)




Delaware
                  
                  06-1625312(State
      or other jurisdiction of incorporation or
                  
                  (IRS
      Employer Identification No.)organization)4500
      Steiner Ranch Blvd., Suite 1708Austin, TX
                  
                  78732(Address
      of principal executive offices)
                  
                  (Zip
      Code)




Issuer's
telephone number, including area code: (512)
266-3507




n/a


____________________________________________


Former
address if changed since last report




Securities
registered under Section 12(b) of the Exchange Act:   None




Securities
registered under Section 12(g) of the Exchange Act:




Common Stock, par value
$0.001 per share




Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 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
x  No
 ̈




Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-K contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.   ̈




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.









Large Accelerated
              Filer o
            
            Accelerated
              Filer o
            
            Non-Accelerated Filer o (Do not check if a
              smaller reporting company)
            
            Smaller Reporting Company
              þ




Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).


 ̈ Yes x No




State
issuer's revenues for its most recent fiscal year: $4,331,355




As of
April 14, 2009, the aggregate market value of voting Common Stock held by
non-affiliates of the registrant based on the most recent quote on the OTCBB of
$1.90 per share is $741,950.




State the
number of shares outstanding of each of the issuer's classes of common equity,
as of the latest practicable date: 8,696,134 shares of
common stock par value $0.001 as of April 14, 2009.


2


TABLE
OF CONTENTS





PART
      IITEM
      1.
                          
                          BUSINESS
                          
                          4ITEM
      1A.
                          
                          RISK
      FACTORS
                          
                          9ITEM
      1B.
                          
                          UNRESOLVED
      STAFF COMMENTS
                          
                          16ITEM
      2.
                          
                          PROPERTIES
                          
                          16ITEM
      3.
                          
                          LEGAL
      PROCEEDINGS
                          
                          16ITEM
      4.
                          
                          SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS
                          
                          17PART
      II17ITEM
      5.
                          
                          MARKET
      FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
      PURCHASES OF EQUITY SECURITIES
                          
                          17ITEM
      6.
                          
                          SELECTED
      FINANCIAL DATA
                          
                          18ITEM
      7.
                          
                          MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATION
                          
                          18ITEM
      7A.
                          
                          QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
                          
                          27ITEM
      8.
                          
                          FINANCIAL
      STATEMENTS AND SUPPLEMENTARY DATA
                          
                          28ITEM
      9.
                          
                          CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE
                          
                          31ITEM
      9A(T).
                          
                          CONTROLS
      AND PROCEDURES
                          
                          31ITEM
      9B.
                          
                          OTHER
      INFORMATION
                          
                          32PART
      IIIITEM
      10.
                          
                          DIRECTORS,
      EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
                          
                          32ITEM
      11.
                          
                          EXECUTIVE
      COMPENSATION
                          
                          35ITEM
      12.
                          
                          SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS
                          
                          36ITEM
      13.
                          
                          CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
      INDEPENDENCE
                          
                          37ITEM
      14
                          
                          PRINCIPAL
      ACCOUNTANT FEES AND SERVICES
                          
                          37PART
      IVITEM
      15.
                          
                          EXHIBITS,
      FINANCIAL STATEMENT SCHEDULES
                          
                          38SIGNATURES
                          
                          40


3


FORWARD
LOOKING STATEMENTS




Forward-Looking
Statements




This
Annual Report on Form 10-K (the “Report”), including ”Management’s Discussion
and Analysis of Financial Condition and Results of Operations” in Item 7
contains forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 regarding future events and the future results of
Lexicon United Incorporated and its consolidated subsidiaries (the “Company”)
that are based on management’s current expectations, estimates, projections and
assumptions about the Company’s business. Words such as “expects,”
“anticipates,” “intends,” “plans,” “believes,” “sees,” “estimates” and
variations of such words and similar expressions are intended to identify such
forward-looking statements. These statements are not guarantees of future
performance and involve risks, uncertainties and assumptions that are difficult
to predict. Therefore, actual outcomes and results may differ materially from
what is expressed or forecasted in such forward-looking statements due to
numerous factors, including, but not limited to, those discussed in the “Risk
Factors” section in Item 1A, “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” in Item 7 and elsewhere in
this Report as well as those discussed from time to time in the Company’s other
Securities and Exchange Commission filings and reports. In addition, such
statements could be affected by general industry and market conditions. Such
forward-looking statements speak only as of the date of this Report or, in the
case of any document incorporated by reference, the date of that document, and
we do not undertake any obligation to update any forward-looking statement to
reflect events or circumstances after the date of this Report. If we update or
correct one or more forward-looking statements, investors and others should not
conclude that we will make additional updates or corrections with respect to
other forward-looking statements.





When used
in this report, the terms “Lexicon,” “Company,” “we,” “our,” and “us” refer to
Lexicon United Incorporated.





PART I




ITEM 1.
            BUSINESS.




Background




Our
corporate name is Lexicon United Incorporated. We were incorporated on July 17,
2001 in the state of Delaware. We were a “blank check” company and had no
operations other than organizational matters and conducting a search for an
appropriate acquisition target until February 27, 2006 when we completed an
acquisition transaction with ATN Capital e Participacoes Ltd. ("ATN"), a
Brazilian limited company, that had commenced business in April 1997. ATN is
engaged in the business of managing and servicing accounts receivables for large
financial institutions in Brazil.





Acquisition
of ATN Capital & Participações Ltda




On
February 27, 2006, we completed an acquisition transaction with ATN whereby we
acquired 400,000 shares of ATN common stock, constituting 80% of ATN’s issued
and outstanding capital stock, from the two stockholders of ATN in exchange for
2,000,000 shares our common stock. The purchase price was subsequently adjusted
to an aggregate of 1,200,000 shares of our common stock.  Upon the
consummation of such share exchange, the two stockholders of ATN became holders
of approximately 13.8% of our outstanding common stock in the aggregate and ATN
became our majority-owned subsidiary.  When we refer in this report to
business for periods prior to the consummation of the acquisition, we are
referring to the business of ATN.





Our
Business Generally


The
Company and its subsidiary, ATN, are engaged in the business of purchasing,
managing and collecting defaulted consumer receivables for its own account and
managing, collecting and servicing portfolios of defaulted and charged-off
account receivables for large financial institutions in Brazil.  These
receivables are acquired from consumer credit originators, primarily credit card
issuers in Brazil.


4


ATN is
was formed in 1997 and is a  financial service company specialized in
collection and credit  recovery.  ATN employs a staff of
more than 300, who seek to locate and contact customers and arrange payment or
resolution of their debt on a friendly basis.





The
Company intends to continue to raise the necessary capital to facilitate its
subsidiary to purchase “selected” defaulted and charged-off account receivable
portfolios.  The Company further intends to position ATN as one of the
principal companies in the debt recovery market in Brazil with a proven
operational platform.  We believe that purchasing and servicing our
“own” debt portfolios can result in a saving of costs and time over servicing
third party collections.





We derive
our revenues primarily from collection of distressed debt by either entering
into non-binding agreements with financial institutions to collect their debt or
acquiring portfolios of distressed debt for our own account. Where we are
collecting debt for a third party, an installment agreement is established. We
are then entitled to a commission on the agreed settlement. We earn and record
the pro rata commission for each installment, when the installment payments are
received from the debtors.




The types
of receivables that we generally manage include charged-off receivables, which
are accounts receivable that have been written-off by the originators and may
have been previously serviced by collection agencies, and semi-performing
receivables, which are accounts receivable where the debtor is currently making
partial or irregular monthly payments, but the accounts may have been
written-off by the originators.





In
addition, the Company also engages in the provision of oilfield services through
its two subsidiaries, Engepet Energy Enterprises, Inc. and United Oil Services,
Inc.  As of this date, these subsidiaries are in a start-up phase and
have produced only minimal revenues.





An
Overview of Our Industry





The
servicing and collection of charged-off and semi-performing consumer receivables
in Brazil is a growing industry that is driven by:





·
            increasing
      levels of consumer debt;


·
            increasing
      defaults of the underlying receivables;
and


·
            increasing
      utilization of third-party providers to collect such
      receivables.





The
Company believes that  consumer credit in Brazil has been increasing
in the past several years and will continue growing in the future.





We
believe that as a result of the difficulty in collecting these receivables and
the desire of originating institutions to focus on their core businesses and to
generate revenue from these receivables, originating institutions are
increasingly electing to outsource the servicing of these
receivables.





Strategy





Our
primary objective is to utilize our management's experience and expertise to
effectively grow our business by identifying, evaluating and servicing consumer
receivable portfolios and maximizing collections of such receivables in a cost
efficient manner.





Our
strategy includes utilizing the systemization of our operations to reduce
overhead costs and to provide intensive training to our call center
representatives to increase our percentage of successful account receivable
collections.





Our
management team also includes statisticians that have developed models that
guide our collection efforts and assist us in deciding the extent to which we
believe we can successfully recover a charged-off or semi-performing
receivable.


5


Our
Services





Engagement
Planning.





Our
approach to accounts receivable management and collection for each client is
determined by a number of factors, including account size and demographics, the
client’s specific requirements and management’s estimate of the collectibility
of the account. We have standard accounts receivable management and collection
methods that we employ to collect accounts receivable. These methods were
developed based on our 8 years of experience in this industry. In order to
properly serve our customers we carefully study our customer’s account
receivable needs and employ the proper collection method for each particular
client. In most cases, our approach to accounts receivable collection changes
over time as the relationship with the client develops and both parties evaluate
the most effective means of recovering accounts receivable. Our standard
approach, which may be tailored to the specialized requirements of each client,
defines and controls the steps that will be undertaken by us on behalf of the
client and the manner in which we will report data to the client. Through our
systematic approach to accounts receivable management and collection, we remove
most decision making from the recovery staff and ensure uniform, cost-effective
performance.





Once the
approach has been defined, we transfer pertinent client data into our
information system. When the client’s records have been established in our
system, we begin the recovery process.





Account
Notification.





We
initiate the recovery process by forwarding a preliminary letter that is
designed to seek payment of the amount due or open a dialogue with client’s
customers who cannot afford to pay at the current time. Telephone
representatives remind the client’s customer of their obligation, inform them
that their account has been placed for collection with us and begin a dialogue
to develop a friendly payment program.





Determination of Obligor
Contact Data.





In cases
where the client’s customer’s contact information is unknown, we conduct
research through the “CreditLink” system to determine a means of contacting the
customer debtor. “CreditLink” is a third-party service that assists with
investigations into customer contact information. Once we have located the
client’s customer, the notification process can begin.





Payment
Process.





After we
receive payment from the client’s customer, depending on the terms of our
contract with the client, we can either remit the amount received minus our fee
to the client or remit the entire amount received to the client and subsequently
bill the client for our collection services.  Where we own the
accounts, the proceeds of collection are retained by the Company.





Activity
Reports.





Clients
are provided with a system-generated set of customized reports that fully
describe all account activity and current status. These reports are typically
generated daily; however, the information included in the report and the
frequency that the reports are generated can be modified to meet the needs of
the client.


Quality
Tracking.





We
emphasize quality control throughout all phases of the accounts receivable
management and collection process. Some clients may specify an enhanced level of
supervisory review and others may request customized quality reports. Large
financial services organizations will typically have exacting performance
standards which require sophisticated capabilities, such as documented complaint
tracking.





6




Collection
Strategy





In
connection with each collection matter, we perform a collectibility analysis
utilizing information prepared by our statisticians. This analysis is the basis
for our collection efforts and dictates our strategy for any particular
receivable or group of receivables. We continuously refine this analysis to
determine the most effective collection strategy to pursue for each
account.





Our
collection strategies consist of:





·
            Call Centers.
      We maintain an inbound and outbound collection call center at ATN’s
      executive offices in Rio De Janeiro in Brazil. Our collections department
      is divided into two client teams, each team consisting of a collection
      manager and six or seven collection supervisors, each assigned to an
      individual client. Each collection supervisor is in charge of anywhere
      from 4 to 15 collectors. Collectors are trained to use a friendly but firm
      approach to assess the willingness of the customer to pay. They attempt to
      work with customers to evaluate sources and means of repayment to achieve
      a full or negotiated lump sum settlement or develop payment programs
      customized to the individual's ability to pay. In cases where a payment
      plan is developed, collectors encourage debtors to pay through automatic
      payment arrangements, if available.





·
            Legal Action.
      We generally outsource those accounts where it appears the debtor is able
      but unwilling to pay. We utilize lawyers that are independent from us, but
      who are located on our premises. These lawyers specialize in collection
      matters and we pay them a contingency fee on amounts collected. The name
      of the firm that we use is Andrada & Negreiros Associates. Prior to
      sending accounts to the law firm, our collectors communicate to the debtor
      our intention to have a lawyer evaluate the suitability of the account for
      litigation if payment arrangements cannot be
  established.





·
            Direct Mail. We
      have an in-house marketing team that develops mail campaigns. The mail
      campaigns generally offer debtors targeted discounts on their balance owed
      to encourage settlement of their accounts and provide us with a low cost
      recovery method.





·
            Removal from
      Restricted Lists. There are two restrictions imposed upon debtors
      in Brazil that fail to pay their debts when they come due. The first is
      called “Serasa”, which is a restriction imposed by every Brazilian bank.
      Such debtor’s names are put on the Serasa restricted list and no Brazilian
      Bank will provide them credit. The second restricted list is called “SPC”,
      which is a restriction imposed by Brazilian merchants. Once a debtor’s
      name is put on the SPC list, merchants will no longer provide the debtor
      with credit. Once we agree with the debtor on a payment program and the
      debtor makes the first installment towards such program, we notify our
      client that a payment has been made. The client then causes such debtor’s
      name to be removed from such lists. The removal of a debtor’s name from
      such lists is very beneficial to the debtor, who may then be able to
      obtain limited credit and who no longer has to suffer the other negative
      social effects of being on such
lists.





Call
Center





We
provide our services through the operation of our main call center, located in
Rio de Janeiro, Brazil, which utilizes approximately 300persons.





We
maintain disaster recovery contingency plans and have implemented procedures to
protect against the loss of data resulting from power outages, fire and other
casualties. We believe fast recovery and continuous operation are
ensured.





7




Quality
Assurance and Client Service





In the
accounts receivable management industry, a company’s reputation for quality
service is of the utmost importance. We regularly measure the quality of our
services by capturing and reviewing such information as the amount of time spent
talking with clients’ customers, level of customer complaints and operating
performance. In order to provide ongoing improvement to our telephone
representatives’ performance and to ensure compliance with our policies and
standards, quality assurance personnel supervise each telephone representative
on a frequent basis and provide ongoing training to the representative based on
this review.





We
maintain a client service department to promptly address client issues and
questions and alert senior executives of potential problems that require their
attention. In addition to addressing specific issues, a team of client service
representatives contacts clients on a regular basis in order to establish a
close rapport, determine clients’ overall level of satisfaction, and identify
practical methods of improving their satisfaction.





Major
Customers





We have
approximately 18 clients.  However, we rely on four major clients for
approximately 68.09% of our income.  During fiscal year 2008 revenues
from our clients Ativos, Banco do Brasil, Banco HSBC, Unibanco, Banco IBI, and
Leader constituted approximately 10.75%, 12.26%, 11.5%, 8.9%,15.08%, and 9.31%
of our total revenues, respectively.  None of these major clients are
contractually obligated to continue use of our services at historic levels or at
all, subject only to notice periods for termination.  If any of these
customers were to significantly reduce their amount of service, fail to pay, or
terminate their relationships with us altogether, our business could be
harmed.




Personnel
and Training





All of
our call center personnel receive comprehensive training that instructs in each
of the following topics:





·
            how
      to use the system;


·
            how
      to communicate with the client;


·
            scripts;
      and


·
            role
      playing.





These
programs are conducted through a combination of classroom and role-playing
sessions. New employees receive training on how to use our operating systems and
on how to approach clients. Special orientations are also given out to employees
on the respect of customer’s codes and how to respect creditors’ rights. Various
upgrades and incentives are closely monitored by our human resource supervisor,
including an upscale gradual commission that is awarded to each employee reaches
at least 70% of the targeted performance.





Sales
and Marketing





Our sales
force is comprised of ATN’s senior management team, which markets our accounts
receivable services to potential clients.





Competition





The
accounts receivable management and collection industry in Brazil is highly
competitive. We compete with a large number account receivable management
providers, including Sincred, Mastercob and Easycob. Some of our competitors may
offer more diversified services and/or operate in broader geographic areas than
we do. In addition, many companies perform accounts receivable management
services through their own in-house staff. Moreover, many larger clients retain
multiple outsourcing providers, which exposes us to continuous competition in
order to remain a preferred vendor. We believe that the primary competitive
factors in obtaining and retaining clients are the ability to provide customized
solutions to a client’s requirements, personalized quality service,
sophisticated call and information systems, and price.


8


Regulation





The
accounts receivable management industry in Brazil is regulated by Brazil
Consumer Defense Code (Law 8078 of September 11, 1990). The Consumer Defense
Code is a regulatory entity designed to maintain a standard procedure to protect
the privacy and rights of the debtors. It is intended to limit and outline the
collection procedure so that such procedure remains within acceptable commercial
practice. No pressure or harassment is permitted. We believe that we are in
compliance in all material respects with all applicable
regulations.





Employees




As of
December 31, 2008, we had a total of approximately 300 full-time employees. Our
employees are not represented by a labor union. We believe that our relations
with our employees are satisfactory.





ITEM 1A.  RISK
FACTORS




Investing
in our common stock involves a high degree of risk. You should carefully
consider the risks and uncertainties described below before you purchase any of
our common stock. If any of these risks or uncertainties actually occurs, our
business, financial condition or results of operations could be materially
adversely affected. In this event you could lose all or part of your
investment.





Financial
Risks





We only have approximately
$291,453in cash and if we are
unable to raise more money we will be required to delay, scale back or eliminate
our marketing and development programs.





As of
December 31, 2008, we had approximately $291,453 in cash available to fund our
operations, which includes cash held by both Lexicon and ATN on a consolidated
basis. The amounts and timing of our expenditures will depend primarily on our
ability to raise additional capital. We may seek to satisfy our future funding
requirements through new offerings of securities or from other sources,
including loans from our controlling stockholders. Additional financing may not
be available when needed or on terms acceptable to us. We have no current
commitment for additional financing. Unavailability of financing may require us
to delay, scale back or eliminate some or all of our marketing and development
programs. To the extent we raise additional capital by issuing equity
securities, your ownership interest would be diluted.





In February 2008,
Keyano Invest Inc., a related party, loaned the Company $1,000,000 for working
capital purposes on terms and conditions to be determined on an arms-length
basis between the parties.  During the quarter ended June 3, 2008, the
Company repaid Keyano Invest Inc $200,000 and converted the remaining balance of
$800,000 to a 2% convertible debenture.  On June 4, 2008, the
debenture was converted to 231,884 shares of common stock at a conversion price
of $3.45 per share.





Risks Relating To Our
Business




The
company has a history of losses and may need additional financing to continue
its operations, and such financing may not be available upon favorable terms, if
at all.


We have
incurred net losses of $760,747 in 2008 and $307,422 in 2007 and an accumulated
deficit of $2,958,232 and has a negative working capital of $2,371,604 at
December 31, 2008. There can be no assurances that we will be able to operate
profitably in the future. In the event that we are not successful in
implementing its business plan, we will require additional financing in order to
succeed. There can be no assurance that additional financing will be available
now or in the future on terms that are acceptable to us. If adequate funds are
not available or are not available on acceptable terms, we may be unable to
develop or enhance our services, take advantage of future opportunities or
respond to competitive pressures, all of which could have a material adverse
effect on our business, financial condition or operating results.





9




There
is substantial doubt about our ability to continue as a going concern due to
significant recurring losses from our operations and our accumulated
deficit.





There is
substantial doubt about our ability to continue as a going concern due to
significant recurring losses from our operations and our accumulated deficit,
all of which means that we may not be able to continue operations unless we
obtain additional funding. Management’s plans include raising capital
through the equity markets to fund future operations and generating of revenue
through its business. Failure to raise adequate capital and generate adequate
sales revenues could result in our having to curtail or cease operations.
Additionally, even if we do raise sufficient capital to support its operating
expenses and generate adequate revenues, there can be no assurances that the
revenue will be sufficient to enable us to develop business to a level where we
will generate profits and cash flows from operations.





Our
business is dependent on our ability to grow internally and if we cannot achieve
internal growth our business, results of operations and financial results will
suffer.





Our
business is dependent on our ability to grow internally, which is dependent
upon:





·
            Our
      ability to retain existing clients and expand our existing client
      relationships; and


·
            Our
      ability to attract new clients.





Our
ability to retain existing clients and expand those relationships is subject to
a number of risks, including the risk that:





·
            We
      fail to maintain the quality of services we provide to our
      clients;


·
            We
      fail to maintain the level of attention expected by our
      clients;


·
            We
      fail to successfully leverage our existing client relationships to sell
      additional services; and


·
            We
      fail to provide competitively priced services to our
    clients.





Our
ability to attract new clients is subject to a number of risks,
including:





·
            The
      market acceptance of our service
offerings;


·
            The
      quality and effectiveness of our sales personnel;
  and


·
            The
      competitive factors within the accounts receivable management industry in
      Brazil.





If our
efforts to retain and expand our client relationships and to attract new clients
do not prove effective, it could have a materially adverse effect on our
business, results of operations and financial condition.





If
we are not able to respond to technological changes in telecommunications and
computer systems in a timely manner, we may not be able to remain
competitive.


Our
success depends in large part on our sophisticated telecommunications and
computer systems. We use these systems to identify and contact large numbers of
debtors and record the results of our collection efforts. If we are not able to
respond to technological changes in telecommunications and computer systems in a
timely manner, we may not be able to remain competitive. We anticipate that it
will be necessary to invest in technology in the future to remain competitive.
During the fiscal years ended December 31, 2008 and 2007, we invested
approximately $26,000 and $182,000 in technology, respectively. We expect that
in future years we will have to invest similar amounts in technology.
Telecommunications and computer technologies are changing rapidly and are
characterized by short product life cycles, so we must anticipate technological
developments. If we are not successful in anticipating, managing, or adopting
technological changes on a timely basis or if we do not have the capital
resources available to invest in new technologies, our business could be
materially adversely affected.




10




We
are highly dependent on our telecommunications and computer
systems.





As noted
above, our business is highly dependent on our telecommunications and computer
systems. These systems could be interrupted by terrorist acts, natural
disasters, power losses, or similar events. Our business is also materially
dependent on services provided by various local telephone companies. If our
equipment or systems cease to work or become unavailable, or if there is any
significant interruption in telephone services, we may be prevented from
providing services. Because we generally recognize revenue only as accounts
receivables are collected, any failure or interruption of services would mean
that we would continue to incur payroll and other expenses without any
corresponding income.





An
increase in communication rates or a significant interruption in communication
service could harm our business.





Our
ability to offer services at competitive rates is highly dependent upon the cost
of communication services provided by various local telephone companies. Any
change in the telecommunications market that would affect our ability to obtain
favorable rates on communication services could harm our business. Moreover, any
significant interruption in communication service or developments that could
limit the ability of telephone companies to provide us with increased capacity
in the future could harm existing operations and prospects for future
growth.





We
compete with a large number of providers in the accounts receivable and
collection industry in Brazil. We may be forced to lower our rates to compete
effectively, which will result in lower profit margins.





In the
accounts receivable management and service industry in Brazil, we compete with
sizable corporations, as well as many regional and local firms. We may lose
business to competitors that offer more diversified services and/or operate in
broader geographic areas than we do. We may also lose business to regional or
local firms who are able to use their proximity to or contacts with local
clients as a marketing advantage. In addition, many companies perform the
accounts receivable management services offered by us in-house. Many larger
clients retain multiple accounts receivable service providers, which exposes us
to continuous competition in order to remain a preferred provider. Because of
this competition, in the future we may have to reduce our fees to remain
competitive and this competition could have a materially adverse effect on our
future financial results.





All
of our clients are concentrated in the financial services sector. If this sector
performs poorly or if there are any adverse trends in this sector, we will have
fewer customers, which will result in lower revenues.





For the
years ended December 31, 2008 and 2007, we derived approximately 95.8 and 100
percent of our revenue, respectively, from clients in the financial services
sector. If this sector performs poorly, clients in this sector may do less
business with us, or they may elect to perform the services provided by us
in-house. If there are any trends in this sector to reduce or eliminate the use
of third-party accounts receivable service providers, it could harm our
business.





Our
success depends on our senior management team and the senior management team of
our operating subsidiary, ATN, and if we are not able to retain them, we will
have significant operating problems.





We are
highly dependent upon the continued services and experience of our senior
management team. We depend on the services of our senior management team to,
among other things, continue the development and implementation of our growth
strategies, and maintain and develop our client relationships.


11





We
are dependent on our employees and a higher turnover rate would result in higher
costs to train new personnel and could lead to poor service, which would
negatively affect our financial condition and operations.





We are
dependent on our ability to attract, hire and retain qualified employees. The
Brazilian accounts receivable service and management industry, by its nature, is
labor intensive and experiences a high employee turnover rate. Many of our
employees receive modest hourly wages and some of these employees are employed
on a part-time basis. A higher turnover rate among our employees would increase
our recruiting and training costs and could materially adversely impact the
quality of services we provide to our clients. If we were unable to recruit and
retain a sufficient number of employees, we would be forced to limit our growth
or possibly curtail our operations. Growth in our business will require us to
recruit and train qualified personnel at an accelerated rate from time to time.
We cannot assure you that we will be able to continue to hire, train and retain
a sufficient number of qualified employees to meet the needs of our business or
to support our growth. If we are unable to do so, our results of operations
could be harmed. Any increase in hourly wages, costs of employee benefits or
employment taxes in Brazil could also have a materially adverse
affect.





We
may experience variations from quarter to quarter in operating results and net
income that could adversely affect the price of our common stock.





Factors
that could cause quarterly fluctuations include, among other things, the
following:





·
            The
      timing of our clients’ accounts receivable collection programs and the
      commencement of new contracts and termination of existing
      contracts;


·
            Customer
      contracts that require us to incur costs in periods prior to recognizing
      revenue under those contracts;


·
            The
      effects of a change of business mix on profit
  margins;


·
            The
      timing of additional selling, general and administrative expenses to
      support new business;


·
            Fluctuations
      in foreign currency exchange rates;


·
            The
      amount and timing of new business;
and


·
            That
      our business tends to be slower during summer and holiday
      seasons.





Most
of our accounts receivable management contracts do not require clients to place
accounts with us, may be terminated on 30 or 60 days notice and are on a
contingent fee basis. We cannot guarantee that existing clients will continue to
use our services at historical levels, if at all.





Under the
terms of most of our accounts receivable management contracts, clients are not
required to give accounts to us for collection and usually have the right to
terminate our services on 30 or 60 days notice. Accordingly, we cannot guarantee
that existing clients will continue to use our services at historical levels, if
at all. In addition, most of these contracts provide that we are entitled to be
paid only when we collect accounts. Therefore, under applicable accounting
principles, we can recognize revenues only upon the collection of funds on
behalf of clients.





We
rely on six major clients for a significant portion of our revenues. The loss of
these customers as our clients or their failure to pay us could reduce revenues
and adversely affect the results of our operations.


We have
approximately 18 clients.  However, in the fiscal year ended December
31, 2008 we relied on six major clients for approximately 68.09% or our
income.  Revenues from our clients Ativos, Banco do Brasil, HSBC,
Unibanco, Banco IBI, and Leader constituted approximately 10.75%, 12.26%, 11.5%,
8.8%, 15.08%, and 9.31% of our total revenues, respectively.  None of
these major clients are contractually obligated to continue use of our services
at historic levels or at all, subject only to notice periods for
termination.  If any of these customers were to significantly reduce
their amount of service, fail to pay, or terminate their relationships with us
altogether, our business could be harmed.  The number of major clients
on whom we rely has remained unchanged from fiscal year 2007 to
2008.  During fiscal year 2008, no one customer was responsible for
more than 20% of our revenues during this period.




12




We
have engaged in transactions with members of our Board of Directors, significant
stockholders, and entities affiliated with them; future transactions with
related parties could pose conflicts of interest.





In the
past, we have engaged in transactions with members of our Board of Directors,
significant stockholders, and entities affiliated with them, which inherently
give rise to conflicts of interest. For example, certain of these parties have
previously provided debt financing to us and have received additional equity
interests, such as shares of our stock upon the conversion of such debt
financing. Transactions with related parties such as these pose a risk that such
transactions are on terms that are not as beneficial to us as those that may be
arranged with third parties.





Risks of Doing Business in
Brazil





The
executive offices of our subsidiary and all of our operations are based in
Brazil. Accordingly, we are subject to all of the risks inherent in doing
business in a foreign jurisdiction.





The
executive offices of our subsidiary and all of our material operations are in
Brazil and we expect to make further investments in Brazil in the future.
Therefore, our business, financial condition and results of operations are to a
significant degree subject to economic, political and social events in Brazil,
including the material risks outlined below.





Political
or economic instability in Brazil could have an adverse impact on our results of
operations due to diminished revenues.





All of
our revenues are derived from Brazil. Political or economic instability in
Brazil could have an adverse impact on our results of operations due to
diminished revenues. Our future revenue, costs of operations and profit results
could also be affected by a number of other factors related to our Brazilian
operations, including changes in economic conditions in Brazil, changes in a
country’s political condition, trade protection measures, licensing and other
legal requirements, and local tax issues.





Fluctuations in currency exchange
rates could negatively affect our performance





Unanticipated
currency fluctuations in the Brazilian Real could lead to lower reported
consolidated results of operations due to the translation of these currencies
into U.S. dollars when we consolidate our financial results. We provide accounts
receivable collection and management services to our Brazilian clients utilizing
Brazilian labor sources. A decrease in the value of the U.S. dollar in relation
to the Brazilian Real could increase our cost of doing business in
Brazil.





Governmental
policies in Brazil could impact our business.





Changes
in Brazil’s governmental policies which could have a substantial impact on our
business include:





●
            new
      laws and regulations or new interpretations of those laws and
      regulations;





●
            the
      introduction of measures to control inflation or stimulate
      growth;





●
            changes
      in the rate or method of taxation;





●
            the
      imposition of additional restrictions on currency conversion and
      remittances abroad; and





●
            any
      actions which limit our ability to finance and operate our business in
      Brazil.


13


Fluctuations
in exchange controls could negatively affect our performance.





Exchange
transactions are generally controlled by the Central Bank of Brazil which
authorizes a series of banks to act in the foreign exchange market, selling and
buying currencies. There is a commercial rate of exchange published daily by the
Central Bank based upon market results on said day. A free market, and quotation
system exists, mainly dealing with tourist activities. Both rates have been
extremely close since the inception of the stabilization plan ("Plano Real")
several years ago. Subject to certain registration requirements with the Central
Bank of Brazil and compliance with certain regulations, we may repatriate U.S.
Dollars earned from our Brazilian operations through the repayment of loans and
the payment of dividends. On occasions in the past, Brazil has imposed temporary
restrictions on the conversion and remittance of foreign capital, for example
when there was a serious imbalance in Brazil's balance of payments. In such
circumstances, we could be adversely affected, if the exchange control rules
were changed to delay or deny remittances abroad from us.





Your ability to bring an action
against us, ATN and those of our officers and directors that are based in
Brazil, or to enforce a judgment against us and such officers and directors or
to recover assets in the possession of us, ATN or such officers and directors,
will be difficult since any such action or recovery of assets would be an
international matter, involving Brazilian laws and geographic and temporal
disparities.





We
conduct all of our operations in Brazil through our subsidiary, ATN. All but one
of our management personnel reside in Brazil and all of the assets of ATN and
those Brazilian residents are located outside of the United States. As a result,
it may be difficult or impossible for you to bring an action against us, ATN or
these individuals in the United States in the event that you believe that your
rights have been violated under applicable law or otherwise. Even if an action
of this type is successfully brought, the laws of the United States and of
Brazil may render a judgment unenforceable.





Concentrated Control
Risk





The
management team collectively has the power to make all major decisions regarding
the company without the need to get consent from any stockholder or other
person. This discretion could lead to decisions that are not necessarily in the
best interests of minority shareholders.





Our
management team, including the management of our subsidiary, ATN, collectively
owns approximately 95% of the outstanding common stock. Management, therefore,
has the power to make all major decisions regarding our affairs, including
decisions regarding whether or not to issue stock and for what consideration,
whether or not to sell all or substantially all of our assets and for what
consideration and whether or not to authorize more stock for issuance or
otherwise amend our charter or bylaws. The management team is in a position to
elect all of our directors and to dictate all of our policies.





Market
Risks





There
has been no established public trading market for our common stock. If a market
in our stock is ever developed, our stock price may become highly
volatile.





Since we
are relatively thinly capitalized and our stock is a penny stock, if a market in
our stock is ever developed, our stock price may become highly volatile. There
has been no established public trading market for our common stock and, none of
our shares are currently eligible for sale in a public trading market. The
likely market for our stock would be the Over-the-Counter Bulletin Board or the
Pink Sheets. As a result, investors may find it difficult to dispose of our
securities, or to obtain accurate quotations of the price of our securities This
lack of information limits the liquidity of our common stock, and likely will
have an adverse effect on the market price of our common stock and on our
ability to raise additional capital.


If an
active trading market does develop, the market price of our common stock is
likely to be highly volatile due to, among other things, the relatively low
revenue nature of our business and because we are a thinly capitalized company.
Further, even if a public market develops, the volume of trading in our common
stock will presumably be limited and likely be dominated by a few individual
stockholders. The limited volume, if any, will make the price of our common
stock subject to manipulation by one or more stockholders and will significantly
limit the number of shares that one can purchase or sell in a short period of
time.




14




The
equity markets have, on occasion, experienced significant price and volume
fluctuations that have affected the market prices for many companies’ securities
that have often been unrelated to the operating performance of these companies.
Any such fluctuations may adversely affect the market price of our common stock,
regardless of our actual operating performance. As a result, stockholders may be
unable to sell their shares, or may be forced to sell them at a
loss.





We
do not intend to pay dividends to our stockholders, so you will not receive any
return on your investment in our company prior to selling your interest in
us.





We have
never paid any dividends to our stockholders. We currently intend to retain any
future earnings for funding growth and, therefore, do not expect to pay any
dividends in the foreseeable future. If we determine that we will pay dividends
to the holders of our common stock, we cannot assure that such dividends will be
paid on a timely basis. As a result, you will not receive any return on your
investment prior to selling your shares in our company and, for the other
reasons discussed in this “Risk Factors” section, you may not receive any return
on your investment even when you sell your shares in our company and your shares
may become worthless.





A
significant number of our shares will be eligible for sale and their sale or
potential sale may depress the market price of our common
stock.





Sales of
a significant number of shares of our common stock in the public market could
harm the market price of our common stock. We have authorized 40,000,000 shares
of common stock. As of February 27, 2009, we had outstanding 8,696,134 shares of
common stock. Accordingly, we have 31,303,866 shares of common stock available
for future sale.





Because
our stock is considered a penny stock, any investment in our stock is considered
to be a high-risk investment and is subject to restrictions on
marketability.





Our
common stock is a "penny stock" within the meaning of Rule 15g-9 to the
Securities Exchange Act of 1934, which is generally an equity security with a
price of less than $5.00. Our common stock is subject to rules that impose sales
practice and disclosure requirements on certain broker-dealers who engage in
certain transactions involving a penny stock. Under the penny stock regulations,
a broker-dealer selling penny stock to anyone other than an established customer
or "accredited investor" must make a special suitability determination for the
purchaser and must receive the purchaser's written consent to the transaction
prior to the sale, unless the broker-dealer is otherwise exempt. Generally, an
individual with a net worth in excess of $1,000,000 or annual income exceeding
$200,000 individually or $300,000 together with his or her spouse is considered
an accredited investor.





In
addition, the penny stock regulations require the broker-dealer to:





·
            deliver,
      prior to any transaction involving a penny stock, a disclosure schedule
      prepared by the Securities and Exchange Commission relating to the penny
      stock market, unless the broker-dealer or the transaction is otherwise
      exempt;


·
            disclose
      commissions payable to the broker-dealer and the Registered Representative
      and current bid and offer quotations for the securities;
    and


·
            send
      monthly statements disclosing recent price information with respect to the
      penny stock held in a customer's account, the account's value and
      information regarding the limited market in penny
  stocks.


Because
of these regulations, broker-dealers may encounter difficulties in their attempt
to sell shares of our common stock, which may affect the ability of holders of
our capital stock to sell their shares in the secondary market and have the
effect of reducing the level of trading activity in the secondary market. These
additional sales practice and disclosure requirements could impede the sale of
our securities. In addition, the liquidity of our securities may be decreased,
with a corresponding decrease in the price of our securities. Our common stock
in all probability will be subject to such penny stock rules and our
stockholders will, in all likelihood, find it difficult to sell their
securities.




15




Certain
provisions of our Certificate of Incorporation and Delaware law may make it more
difficult for a third party to effect a change- in-control.





Our
Certificate of Incorporation authorizes the Board of Directors to issue up to
10,000,000 shares of preferred stock. The preferred stock may be issued in one
or more series, the terms of which may be determined at the time of issuance by
the Board of Directors without further action by the stockholders. These terms
may include voting rights including the right to vote as a series on particular
matters, preferences as to dividends and liquidation, conversion rights,
redemption rights and sinking fund provisions. The issuance of any preferred
stock could diminish the rights of holders of our common stock, and therefore
could reduce the value of such common stock. In addition, specific rights
granted to future holders of preferred stock could be used to restrict our
ability to merge with, or sell assets to, a third party. The ability of the
Board of Directors to issue preferred stock could make it more difficult, delay,
discourage, prevent or make it more costly to acquire or effect a
change-in-control.In addition, we are also subject to Section 203 of the
Delaware General Corporation Law that, subject to certain exceptions, prohibits
a Delaware corporation from engaging in any business combination with any
interested stockholder for a period of three years following the date that the
stockholder became an interested stockholder. The preceding provisions of our
Certificate of Incorporation, as well as Section 203 of the Delaware
General Corporation Law, could discourage potential acquisition proposals, delay
or prevent a change-in-control and prevent changes in our management, even if
such things would be in the best interests of our stockholders




ITEM
1B.  UNRESOLVED STAFF COMMENTS




None.




ITEM
2. PROPERTIES.




Our
executive offices in the U.S.A. are located at 4500 Steiner Ranch Boulevard,
Suite 1708, Austin, Texas 78732. This space is the residence of our Secretary
and we utilize the space on a rent-free basis pursuant to a verbal understanding
with our Secretary.




ATN’s
executive offices are located on the 8th Floor
of a modern 11-storey executive office building located at Largo de São
Francisco de Paula 42, Centro Historico Rio de Janeiro, CEP 20.051-070. ATN’s
office space consists of 500 square meters: of which 300 square meters is used
as a call center; 50 square meters is used for administrative offices; 20 square
meters is used for our conference room; and 60 square meters is used for a
training room with a 30-person capacity. The Company also owns 16 parking spaces
in the building which is an added benefit to conducting business in the middle
of Rio de Janeiro’s downtown historical center. ATN’s President, Omar Malheiro
Silva Araújo, has purchased the 9th floor
of the same building and has leased it to the Company for annual rent of
$27,500.





ITEM
3.    LEGAL PROCEEDINGS




As ofDecember31, 2008, the Company was not a party
to any pending or threatened legal proceedings.ATN is a party to several
employment-based lawsuits which the Company does not consider
material.  The Company has accrued approximately $57,000 as a reserve
for liability in connection with these matters.




16




ITEM
4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS




No
matters were submitted to a vote or for the written consent of security
shareholders, through the solicitation of proxies or otherwise, during the
fiscal year ended December 31, 2008, and no meeting of shareholders was
held.





PART II.




ITEM
5.     MARKET FOR REGISTRANT’S COMMON EQUITY; RELATED
STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY
SECURITIES




Market Price




Our
common stock is quoted on OTC Bulletin Board, under the trading symbol
“LXUN.OB”. The market for our stock is highly volatile. We cannot assure you
that there will be a market in the future for our common stock. The OTC Bulletin
Board securities are not listed and traded on the floor of an organized national
or regional stock exchange. Instead, OTC Bulletin Board securities transactions
are conducted through a telephone and computer network connecting dealers in
stocks. OTC Bulletin Board stocks are traditionally smaller companies that do
not meet the financial and other listing requirements of a regional or national
stock exchange.




The
following table shows the high and low prices of our common shares on the OTC
Bulletin Board for each quarter since our common stock began to trade on the OTC
Bulletin Board. The following quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commission and may not necessarily represent actual
transactions:




Common Stock
                                          
                                          High
                                          
                                          
                                          Low2007Third
      Quarter
                                          
                                          $
                                          2.50
                                          
                                          
                                          $
                                          2.50Fourth
      Quarter
                                          
                                          $
                                          2.50
                                          
                                          
                                          $
                                          2.352008First
      Quarter
                                          
                                          $
                                          4.25
                                          
                                          
                                          $
                                          2.50Second
      Quarter
                                          
                                          $
                                          5.50
                                          
                                          
                                          $
                                          2.95Third
      Quarter
                                          
                                          $
                                          5.00
                                          
                                          
                                          $
                                          3.00Fourth
      Quarter
                                          
                                          $
                                          4.00
                                          
                                          
                                          $
                                          0.70





Options and Warrants




None of the shares of our common stock
are subject to outstanding options or warrants.


Status
of Outstanding Common Stock




As ofDecember31, 2008, we had a total of8,696,134shares of our common stock
outstanding.  Of these shares,8,300,634are held by “affiliates” of the Company
and the remaining shares are either registered or  may be transferred
subject to the requirements of Rule 144.  We have not agreed to
register any additional outstanding shares of our common stock under the
Securities Act.




17




Holders




We have issued an aggregate of8,696,134shares of our common stock to
approximately100record holders.




Dividends




We have not paid any dividends to date,
and have no plans to do so in the immediate future.




Recent Sales of Unregistered
Securities





During
the quarter ended March 31, 2008, Keyano Invest Inc., a related party, loaned
the Company $1,000,000 for working capital purposes. During the quarter ended
June 30, 2008, the Company repaid Keyano Invest Inc $200,000 and converted the
remaining balance of $800,000 to a 2.5% convertible debenture. On June 5, 2008,
the Company issued 231,884 shares of its commons shares in conversion of an
$800,000 debenture from Keyano Invest, Inc, a related party. The shares were
converted at $3.45 per share.





On May
13, 2008 the Company issued 3,000 shares of its common shares for $10,500, or
$3.50 per share.





Purchases of Equity
Securities




The Company has never purchased nor does
it own any equity securities of any other issuer.




ITEM
6.     SELECTED FINANCIAL
DATA





Year Ended
                    
                    12/31/2008
                    
                    
                    12/31/2007
                    
                    
                    12/31/2006Revenues
                    
                    
                    4,331,355
                    
                    
                    
                    2,825,927
                    
                    
                    
                    2,512,205Net Loss
                    
                    
                    (760,747
                    )
                    
                    
                    (307,422
                    )
                    
                    
                    (1,264,576
                    )Net loss per
      share
                    
                    
                    (0.09
                    )
                    
                    
                    (0.04
                    )
                    
                    
                    (16.00
                    )Weighted average no
      shares
                    
                    
                    8,597,205
                    
                    
                    
                    8,456,250
                    
                    
                    
                    8,143,921Stockholders'
      deficit
                    
                    
                    (322,610
                    )
                    
                    
                    (924,179
                    )
                    
                    
                    (117,372
                    )Total
assets
                    
                    
                    3,062,146
                    
                    
                    
                    2,984,733
                    
                    
                    
                    3,288,172Total
      liabilites
                    
                    
                    3,384,756
                    
                    
                    
                    3,908,912
                    
                    
                    
                    3,405,544




ITEM 7.
              MANAGEMENT’S DISCUSSION AND
      ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATION




The
following discussion should be read in conjunction with our financial statements
and the notes thereto.





SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS AND USE OF TERMS




This
annual report contains forward-looking statements, which reflect our views with
respect to future events and financial performance.  These forward-looking
statements are subject to certain uncertainties and other factors that could
cause actual results to differ materially from such statements.  These
forward-looking statements are identified by, among other things, the words
“anticipates”, “believes”, “estimates”, to expects”, “plans”, “projects”,
“targets” and similar expressions.  Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the
date the statement was made.  We undertake no obligation to publicly update
or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.  Important factors that may cause
actual results to differ from those projected include the following
factors:




18




·
            our
      potential inability to raise additional
capital;





·
            our
      potential inability to obtain the right to develop our target markets or
      to exploit the rights currently held by
us;





·
            our
      potential inability to compete with other finance companies that may be
      more experienced and better capitalized than
us;





·
            changes
      in domestic and foreign laws, regulations and
  taxes;





·
            changes
      in economic conditions;





·
            lack
      of resources compared to our
competitors;





·
            uncertainties
      and risks related to the legal systems and economics in our target
      markets, including Brazil’s legal system and economic, political and
      social events in Brazil and other target
  markets;





·
            fluctuations
      in currency exchange rates;





·
            the
      effects of any applicable currency restrictions, including any
      restrictions on the repatriation of funds back to the United
      States;





·
            a
      general economic downturn or a downturn in the securities
      markets;





·
            Regulations
      of the Commission which affect trading in the securities of “penny
      stocks;” and





·
            other
      risks and uncertainties.





Except as
required by law, we assume no obligation to update any forward-looking
statements publicly, or to update the reasons actual results could differ
materially from those anticipated in any forward-looking statements, even if new
information becomes available in the future. Except as otherwise indicated by
the context, references in this report to:




·
            “Lexicon,”
      “we,” “us,” “our,” or the “Company,” are references to Lexicon United
      Incorporated, and its consolidated subsidiary, including, after February
      27, 2006, ATN;





·
            “ATN”
      are to ATN Capital E Participações
Ltda.





·
            “Brazil”
      are to the Federative Republic of
Brazil;





·
            “U.S.
      dollar,” “$” and “US$” are to the legal currency of the United
      States;





·
            “Real,”
      “R$,” and “Reais” are to the legal currency of
  Brazil;





·
            the
      “SEC” or the “Commission” are to the United States Securities and Exchange
      Commission;





·
            the
      “Securities Act” are to Securities Act of 1933, as amended;
      and





·
            the
      “Exchange Act” are to the Securities Exchange Act of 1934, as
      amended.


19


Overview





Our
Background and History





Our
corporate name is Lexicon United Incorporated. We were incorporated on July 17,
2001 in the state of Delaware. We were a “blank check” company and had no
operations other than organizational matters and conducting a search for an
appropriate acquisition target until February 27, 2006 when we completed an
acquisition transaction with ATN, a Brazilian limited company that had commenced
business in April 1997. ATN is engaged in the business of managing and servicing
accounts receivables for large financial institutions in Brazil.





Critical
Accounting Policies





The
preparation of financial statements and related disclosures in conformity with
US generally accepted accounting principles and our discussion and analysis of
our financial condition and results of operations require our management to make
judgments, assumptions, and estimates that affect the amounts reported in our
consolidated financial statements and accompanying notes. We base our estimates
on historical experience and on various other assumptions we believe to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities. Actual
results may differ from these estimates and such differences may be
material.





Management
believes our critical accounting policies and estimates are those related to
revenue recognition and the valuation of goodwill and intangible assets.
Management believes these policies to be critical because they are both
important to the portrayal of our financial condition and results, and they
require management to make judgments and estimates about matters that are
inherently uncertain.





Revenue
Recognition





We derive
our revenues primarily from collection of distressed debt by entering into non
binding agreements with financial institutions to collect their debt. Once an
agreement is reached with the debtor of the financial institution based upon
established parameters, an installment agreement is established. We are then
entitled to a commission on the agreed settlement. We earn and record the pro
rata commission for each installment, when the installment payments are received
from the debtors. Our average fee was approximately 15% during the fiscal
years ended December 31, 2008 and 2007.





Revenue
from the collection of distressed debt owned by the Company is recognized based
on the AICPA Statement of Position 03-3 using the interest
method.  The interest method applies an effective interest rate to the
cost basis of each pool, which remains unchanged throughout the life of the pool
unless there is an increase or decrease in subsequent cash
glows.  Revenue from receivable portfolios is accrued based on each
pool’s effective interest rate applied to each pool’s adjusted
cost.  The cost basis of each pool is increased by revenue earned and
decreased by gross collections and impairments.





Goodwill
and Intangible Impairment


The
company accounts for goodwill in accordance with Statement of Financial
Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible
Assets.  As required by SFAS No. 142, the Company tests for impairment
of goodwill annually (at year-end) or whenever events occur or circumstances
change that would more likely than not reduce the fair value of a reporting unit
below its carrying amount.  The required two-step approach uses
accounting judgments and estimates of future operating
results.  Changes in estimates or the application of alternative
assumptions could produce significantly different results.  Impairment
testing is done at a reporting unit level.  The company performs this
testing for its Brazilian operating segment which is considered a reporting unit
under SFAS No. 142. An impairment loss generally is recognized when the carrying
amount of the reporting unit’s net assets exceeds the estimated fair value of
the reporting unit.  The fair value of the company’s reporting unit
was estimated using the expected present value of future cash flows using
estimates, judgments, and  assumptions that management believes were
appropriate in the circumstances.  The estimates and judgments that
most significantly affect the fair value calculation are assumptions related to
revenue growth, collection processes, and the discount rate.





20





Industry
Wide Factors that are Relevant to Our Business





We are in
the business of managing the recovery of credit accounts receivable in Brazil
for our third-party clients who are either credit card issuers or transferees of
credit accounts receivable. Our business, therefore, depends on the growth of
the credit card sector in Brazil.





The
credit card sector in Brazil became the third largest issuer worldwide after the
United States and China, and according to the projections of major sources such
as the Brazilian Association of Credit Cards Issuers (ABECS), the Brazilian
Institute of Statistics (IBGE), the Brazilian Banks Federation (FERBABAN) and
Citibank, this sector is poised to continue its double-digit
growth.





During
the last decade the volume of transactions has soared from 1.36 billion in 2004
to over 2 billion in 2006, with the number of plastic credit and debit cards
dramatically increasing from 17 million in 1996 to 80 million in 2006. This
trend reflects the inclusion of low-income consumers where at 32% of the GDP in
Brazil, it is still well below the Chileans who are at 63% and the Bolivians who
are at 42%.





This
economic growth of the commercial credit sector is following the same pattern
with the same projections. New bank accounts increased from 31.4 million in the
year 2000 to 95.1 million in 2005 where consumers view the credit card as a
financial instrument to be used in lieu of the check. The number of checks used
dropped 27% from 1999 to 2005 while credit card payments increased by 240%.
According to data from the Brazilian Central Bank, in 2005, payments by credit
cards surpassed payments made by check.





Uncertainties
that Affect our Financial Condition





We have
approximately eighteen clients, but we currently rely on six major clients for a
significant portion of our revenue.  None of these major clients are
contractually obligated to continue use of our services at historic levels or at
all, subject only to notice periods for termination.  If any of these
clients were to significantly reduce their amount of service, fail to pay, or
terminate their relationships with us altogether, our business could be harmed.
 The number of major clients on whom we rely has increased for fiscal years
2007 to 2008.  During fiscal year 2008, no one customer has been
responsible for more than 20% of our revenues.





The
portfolios of consumer receivables that we service consist of one or more of the
following types of consumer receivables:





·
            charged-off
      receivables - accounts that have been written-off by the originators and
      may have been previously serviced by collection
  agencies;





·
            semi-performing
      receivables - accounts where the debtor is making partial or irregular
      monthly payments, but the accounts may have been written-off by the
      originators; and performing receivables - accounts where the debtor is
      making regular monthly payments that may or may not have been delinquent
      in the past.





Charged-off
receivables accounted for more approximately 99% of our business in 2008, while
semi-performing and performing receivables each accounted for less than 1% of
our business in the period.





ATN’s
long period of operations and its demonstrated capacity to process millions of
receivables, large and small, have made ATN an attractive resource for customers
desiring to secure their receivables.  Our success rate is measured by how
long an outstanding debt is past due as well as whether such debt has been
categorized as a performing, semi-performing or charged-off item.  On
average we recover between 2.5% and 8% of face value of our debt. Due to our
level of professionalism and our successful performance we believe that we are
in the top 5% of businesses in this field in Brazil.




21




In order
to further increase our revenue base and eliminate the uncertainty of our
ability to continue as a going concern, with adequate capitalization, we plan to
start using ATN’s consumer database and its vast experience in collections to
start buying defaulted outstanding consumer loans and other assets, which are
usually discounted to their legal principal balance or appraised value. We
believe that the impact on our liquidity would be highly improved and we would
have the opportunity to build our own short and long-term portfolio of
restructured receivables.  Purchased debts for our own account would also
suppress the efforts and costs of collection monitoring and reporting back to
original holders to the benefit of our bottom line.




Investment
in Receivable Portfolio





The
Company’s subsidiary ATN Capital e Participacoes Limitada ( “ATN”) has extensive
experience in the field of distressed credit card and consumer loan receivable
collections.  It had previously only collected distressed debt for
large credit card companies and financial institutions in Brazil, on a
commission basis.  In 2008, in addition to working for the large
institutions, it decided to purchase its own portfolio of distressed
debt.  The portfolio was purchased for R$1,299,458 (approximately
US$816,294) on June 2, 2008.  The portfolio includes past due and
unpaid debt from more than 41,000 Brazilian consumers and has a face value of
approximately R$500,000,000 (or US$305 million as of the purchase
date).





The
Company has adopted AICPA Statement of Position 03-3 (“SOP 03-3”), “Accounting
for Loans or Certain Securities Acquired in a Transfer”.  In
accordance with SOP 03-3, the company has divided the portfolio into three
pools, with each pool recorded at cost.  SOP 3-03 addresses accounting
for differences between contractual cash flows expected to be collected from an
investor’s initial investment in loans or debt securities acquired in a transfer
if those differences are attributable, at least in part, to credit
quality.  SOP 03-3, limits accretable yield to the excess of the
investor’s estimate of undiscounted cash flows over the investor’s initial
investment in the loan and prohibits the recognition of the non-accretable
difference.  Under SOP 3-03, subsequent increases in cash flows
expected to be collected generally should be recognized prospectively through
adjustment of the loan’s yield over its remaining life while any decreases in
cash flows expected to be collected should be recognized as
impairments.





During
the six months ended December 31, 2008, the Company actually collected $169,936
which was $79,914 in excess of the amount provided in its original
projections.  The Company believes that its original projections are
still accurate and attributes the excess collections to the sale of a batch of
accounts spread amongst the three pools.  The excess cash collections
provided a reduction to the projected ended carrying amount in
$12,301.





The
following table reflects the initial carrying value and cash flows expected to
be collected for the period of inception June 2, 2008 to December 31, 2008 and
for the years ending December 31, 2009 through 2013:








Cash FlowsYear Ended
                          
                          Beginning
                            Carrying
                          
                          
                          Expected
                            to be
                          
                          
                          Interest
                          
                          
                          Reduction
                            of Carrying
                          
                          
                          Ending
                            Carrying31-Dec
                          
                          Amount
                          
                          
                          Collected
                          
                          
                          Income
                          
                          
                          Amount
                          
                          
                          Amount2008
                          
                          
                          556,037
                          
                          
                          
                          90,022
                          
                          
                          
                          76,028
                          
                          
                          
                          13,994
                          
                          
                          
                          542,0432008
                          
                          
                          542,043
                          
                          
                          
                          196,043
                          
                          
                          
                          128,208
                          
                          
                          
                          67,835
                          
                          
                          
                          474,2082010
                          
                          
                          474,208
                          
                          
                          
                          196,043
                          
                          
                          
                          112,164
                          
                          
                          
                          83,879
                          
                          
                          
                          390,3292011
                          
                          
                          390,329
                          
                          
                          
                          196,043
                          
                          
                          
                          92,323
                          
                          
                          
                          103,720
                          
                          
                          
                          286,6092012
                          
                          
                          286,609
                          
                          
                          
                          196,043
                          
                          
                          
                          67,977
                          
                          
                          
                          128,066
                          
                          
                          
                          158,5432013
                          
                          
                          158,543
                          
                          
                          
                          196,043
                          
                          
                          
                          37,500
                          
                          
                          
                          158,543
                          
                          
                          
                          0Totals
                          
                          
                          
                          
                          
                          $
                          1,070,237
                          
                          
                          $
                          514,200
                          
                          
                          $
                          556,037


22





Initial
accretable yield has been calculated as follows:





Cash
      flows expected to be collected as of 12/31/08
                  
                  $
                  1,070,236Less:
      Initial Investment
                  
                  
                  556,037Yield
      accreted to date
                  
                  
                  90,022Accretable
      Yield as of 12/31/08
                  
                  $
                  424,177





The
Company financed the purchase with two Notes Payable totaling
R$626,200.  The notes are due December 2009 and bear interest at the
rate of 2.0% per month.  The notes are included in the caption loans
from officer and loan from an individual on the balance sheet.  The
loan from an individual is deemed to be a related party because of his
affiliation with the Company. At December 31, 2008, the balance of the loan
including accrued interest,  from officer is $58,982 and the loan from
an individual is $245,761.





Due to
the strengthening US dollar, there has been a change in the value of the
purchase price of the receivable portfolio from $816,294 at June, 2, 2008 to
$556,037 at December 31, 2008.  The difference of $260,257 is included
as accumulated other comprehensive loss.





Results
of Operations




Year  Ended
December 31, 2008 Compared to Year Ended December 31, 2007.




The
following table summarizes the results of our operations during the year ended
December 31, 2008, and 2007 and provides information regarding the dollar and
percentage increase or (decrease) from the year ended December
31,  2008 to the same period of 2007.




12/31/08
                
                
                12/31/07
                
                
                Increase
                  (Decrease)
                
                
                Percentage
                  Increase
                  (Decrease)Revenues
                
                
                4,331,355
                
                
                
                2,825,927
                
                
                
                1,505,428
                
                
                
                53.27Cost
      of Services
                
                
                2,558,467
                
                
                
                1,945,827
                
                
                
                612,640
                
                
                
                31.48Selling,
      General and
      Administrative Expense
                
                
                1,669,749
                
                
                
                663,276
                
                
                
                1,006,473
                
                
                
                151.74Interest
      expense
                
                
                594,547
                
                
                
                360,263
                
                
                
                234,284
                
                
                
                65.03Depreciation
      & amortization
                
                
                208,298
                
                
                
                203,096
                
                
                
                5,202
                
                
                
                2.56Interest
      income & other
                
                
                (61,041
                )
                
                
                39,133
                
                
                
                (100,174
                )
                
                
                (255.98
                )Net
      income (loss)
                
                
                (760,747
                )
                
                
                (307,422
                )
                
                
                (453,325
                )
                
                
                (147.46
                )Earnings
      (Loss) per common share
                
                
                (.09
                )
                
                
                (.04
                )
                
                
                (.05
                )
                
                
                (125.00
                )




We had
revenues of $4,331,355 for the year ended December 31, 2008, compared to
revenues of $2,825,927 during the same period in 2007.  Our revenues
increased $1,505,428 or 53.27% in the year ended December 31, 2008 primarily due
to an increase in collections of receivables in ATN and revenue from Engepet
Energy Enterprises and United Oil Services, Inc.


23


Our cost
of services for the year ended December 31, 2008 was $2,558,467 as compared to
$1,945,827 during the same period in 2007.  This increase of $612,640 or
31.48% is primarily the result of increased salaries and related expenses ,
transportation expenses ,and  internship program expenses from ATN and
expenses related to Engepet Energy Enterprises and United Oil Services,
Inc.





Selling,
general and administrative expenses increased by $1,006,473 or 151.74%, to
$1,669,749 in the year ended December 31, 2008 compared to $663,276 in the same
period in 2007. The change is primarily due to the successful
negotiations  in 2007with the Brazilian authorities to favorably
settle previously recorded taxes approximating $934,001.  The change
is also the result of an increase in officer compensation, software rent,
communication expenses and professional fees and other administrative
expenses.





Interest
expense for the year ended December 31, 2008 was $594,547 and interest expense
in the same period of 2007 was $360,263.  Interest expense increased
$234,284 or 65.03% in the year ended December 31, 2008 mainly due to the
increase of new borrowings over the past year.




During
the year ended December 31, 2008 we incurred a net loss of $(760,747) compared
with $(307,422) for the same period in the prior year.  The decrease in our
loss is primarily due to an increase in expenses as described above offset by
increased revenues.





Loss per
common share for the year ended December 31, 2008 was $(.09) as compared to a
loss of $(.04) during the same period of 2007.  This increase in the loss
per share is due to the increased loss for the year ended December 31,
2008.




Cash
Flow Items


The
following table provides the statements of net cash flows for the year ended
December 31, 2008:





Year
      Ended December
                    31,2008
                  
                  
                  2007Net
      Cash Provided By (used in) Operating Activities
                  
                  
                  (660,213
                  )
                  
                  
                  (581,067
                  )Net
      Cash Used in Investing Activities
                  
                  
                  (302,481
                  )
                  
                  
                  (52,936
                  )Net
      Cash Provided by Financing Activities
                  
                  
                  871,100
                  
                  
                  
                  179,097Net
      Increase (decrease)  in Cash and Cash
Equivalents
                  
                  
                  (175,751
                  )
                  
                  
                  (429,336
                  )Cash
      and Cash Equivalents - Beginning of Period
                  
                  
                  467,195
                  
                  
                  
                  896,531Cash
      and Cash Equivalents - End of Period
                  
                  
                  291,453
                  
                  
                  
                  467,195





We used
$660,213 of cash from our operating activities during the year ended December
31, 2008 as compared to $581,067 cash used during the year ended December 31,
2007.  The difference of $79,146 is mainly attributable to an increase in
net loss of $453,325 offset by the settlement of tax provisions of $792,978 and
decreases in accrued taxes of $239,085.





We used
$302,481 in cash from our investing activities during the year ended December
31, 2008, as compared to $52,936 used in the prior year ending December 31,
2007.  These funds were used for the purchase of a receivable portfolio in
the amount of $282,126 and fixed assets for $20,355.




We
provided a net $871,100 from financing activities during the year ended December
31, 2008 as compared to $179,097 during the year ended December 31, 2007.
 The change is primarily due to a increase in new borrowings from a related
party $1,000,000 offset by payments on notes payable.  In June 2008,
the balance of  the related party borrowing ($800,000) was converted
to 231,884 shares of common stock.


24


Balance Sheet
Items




As of
December 31, 2008, we had total current assets of $845,280, as compared to
$963,941 as of December 31, 2007.  Our total assets as of December 31, 2008
were $3,062,146 as compared to $2,984,733 as of December 31, 2007.  We had
total current liabilities of $3,216,884 as of December 31, 2008 as compared to
$3,555,914 as of December 31, 2007, and we had total liabilities of
$3,384,756  as of December 31, 2008 as compared to $3,908,912 as of
December 31, 2007.




The
increase in total assets is primarily due to the purchase of a debt receivable
portfolio with a balance at December 31, 2008 of $529,742 offset by a decrease
in cash of $175,742. The decrease in total liabilities is primarily due to a
decrease in accrued taxes and benefits of 496,544.




As of
December 31, 2008, our total Stockholders’ Equity (deficit) was $(322,610) as
compared to $(924,179) at December 31, 2007.  This change was due to an
increase in capital stock and paid in capital of $823,000 offset by operating
losses and gains due to foreign exchange rates.




Liquidity
and Capital Resources




We
believe that we will be able to pay our normal and operating expenditures during
the next twelve months with our cash reserves and additional cash generated from
operations, and by reducing our accrued municipal services tax liability by
restructuring such debt.  We do not have any material capital commitments
during the next twelve months, other than repayment of debt as it comes due, and
we do not anticipate the issuance of additional debt (other than to refinance
existing debt).  We also do not anticipate any material changes in our
operations during the next twelve months.  As such, we believe that our
current cash position is sufficient to retire our current short-term debt as it
comes due and, if we are successful in adequately restructuring our municipal
services tax liability, we believe that cash generated from operations will be
sufficient to pay our operating expenses during the next twelve months.  We
had cash and cash equivalents of approximately $291,453 as of December 31, 2008
and we had short-term liabilities in the amount of $3,216,884, as well as
long-term liabilities in the amount of $167,872 as of December 31, 2008. 
The Company intends to use its cash to retire current debt as it comes due as
well as to pay operating expenses as necessary. During 2007, the Company
successfully negotiated with Brazilian authorities to favorably settle
previously recorded municipal service taxes of $730,000.  In addition,
the company further evaluated related payroll tax provisions and reduced same by
approximately $200,000.





If we are
required to make any material and unplanned expenditures during the next twelve
months, the company believes that it can raise additional capital in the equity
markets through private placements in order to meet its short-term cash
requirements.  The company believes that such equity funding could
also be used to liquidate all or a portion of the Company’s current bank loans
or pay other operating expenses.  However, we can provide no
assurances that we will be able to raise additional capital in the equity
markets on favorable terms, if at all or on a timely basis.





As of
December 31, 2008, we had cash assets of $291,453 and total assets of $3,062,146
as compared to cash assets of $467,195 and total assets of $2,984,733 as of
December 31, 2007. This increase is primarily due to the purchase of a debt
receivable portfolio with a balance at December 31, 2008 of $529,742.   We
have a $(2,371,604) negative working capital at December 31, 2008, of which
$1,223,294 relates to municipal taxes and payroll expenses in connection with
ATN’s prior and ongoing operations.





Loans
Payable to Banks




The
Company has several loans with various Brazilian banks and financial
institutions.  The loans are secured by personal guarantees of the
Company’s principal shareholders.  The loans mature at various months
throughout the year and are generally renewed at maturity.  The interest
rates are fixed and bear interest at rates ranging from 26% to 42% per year.
 The balance of the loans at December 31, 2008 was $267,039.


25


Long-Term
Debt





On April
17, 2006, the Company closed on a Real Estate transaction to purchase the 8th floor
of an executive office building for ATN Capital E Participacoes, Ltda.’s
executive offices. The purchase price of approximately $176,489 was funded with
a 20% down payment payable over four months and an 8 year adjustable rate
mortgage currently at 13.29%.  At December 31, 2008, the balance of
the loan is $123,676.





In August
2006, the Company purchased new computer equipment from DELL Brazio. The
equipment valued at approximately $38,395 is financed over a three year period
at 14.4% per year.  At December 31, 2008, the balance of the loan is
$10,678..





In
September 2006, the Company purchased new furniture.  The furniture
valued at approximately $112,161 is financed over a five year period at 5.69%
per year plus the inflation index.  The loan is payable in 48 monthly
installments commencing October 8, 2007.  The loan is secured by the
furniture.  At December 31, 2008, the balance of the loan is
$70,544.





In June,
2007, the Company borrowed two working capital loans from Caixa Economica
Federal. The loans are valued at approximately $113,000 and are payable in 24
monthly installments plus interest of 2.73% per month, commencing July, 2007.
The loans are personally guaranteed by ATN’s directors. At December 31, 2008 the
balance is $26,225.





In June,
2007, the Company borrowed a working capital loan from Banco Bradesco. The loan
is valued at approximately $207,400 and is payable in 24 monthly installments
plus interest of 2.60% per month, commencing July, 2007. The loan is personally
guaranteed by ATN’s directors. At December 31, 2008, the balance is
$18,043.





In
September, 2007, the Company borrowed $51,000 from Santander. The loan is
payable in 16 monthly installments plus interest of 3.9% per month, commencing
October, 2007. The loan is personally guaranteed by ATN’s directors. At December
31, 2008, the balance is $11,302.





During
the year ended December 31, 2007, the Company purchased new computer equipment
from DELL Brazio. The equipment valued at approximately $189,500 is financed
over a three year period plus interest at rates ranging from 12% to 12.84% per
year. The loan is secured by the computer equipment. The balance of the loan at
December 31, 2008 is $19,642.





In
January 2008, the Company purchased new air conditioning
equipment.  The equipment valued at approximately $28,000 is being
financed over a three year period at 12% per year. The balance of the loan at
December 31, 2008 is 14,445.





In July,
2008, the Company borrowed approximately $77,000 from Banco ITAU. The loan is
payable in 18 monthly installments plus interest of 2.28% per month, commencing
August, 2008. The loan is personally guaranteed by ATN’s directors. At December
31, 2008, the balance is $58,743.





In July,
2008, the Company borrowed approximately $3,500 from Officer Distrib. The loan
is payable in 36 monthly installments plus interest of 1.15% per month,
commencing August, 2008. The loan is personally guaranteed by ATN’s directors.
At December 31, 2008, the balance is $1,231.





In
October, 2008, the Company borrowed approximately $60,000 from Banco ITAU. The
loan is payable in 9 monthly installments plus interest of 2.88% per month,
commencing August, 2009. The loan is personally guaranteed by ATN’s directors.
At December 31, 2008, the balance is $54,278.




26




In
November, 2008, the Company borrowed approximately $43,000 from Banco Bradesco.
The loan is payable in 12 monthly installments plus interest of 3.3% per month,
commencing November, 2008. The loan is personally guaranteed by ATN’s directors.
At December 31, 2008, the balance is $39,224





In
November, 2008, the Company borrowed approximately $52,000 from Unibanco-Capital
De Giro. The loan is payable in 12 monthly installments plus interest of 3.3%
per month, commencing November, 2008. The loan is personally guaranteed by ATN’s
directors. At December 31, 2008, the balance is $48,584.





During
the year ended December 31, 2008, the Company purchased new computer equipment
from DELL Brazio. The equipment valued at approximately $15,500 is financed over
a three year period plus interest at rates ranging from 11.4% to 13.8% per year.
The loan is secured by the computer equipment. The balance of the loan at
December 31, 2008 is $7,087.





In
December, 2008, the Company borrowed approximately $30,000 from Banco Real. The
loan is payable in 12 monthly installments plus interest of 3.2% per month,
commencing December, 2008. The loan is personally guaranteed by ATN’s directors.
At December 31, 2008, the balance is $29,952.





An
analysis of the current and long-term portion of the debt at December 31, 2008
is as follows:




Total
      loans outstanding
                  
                  $
                  533,654Less:  current
      portion
                  
                  $
                  365,782Long-term
      portion
                  
                  $
                  167,872




Our
financial statements have been prepared on the basis that we will continue as a
going concern, which contemplates the realization and satisfaction of our
liabilities and commitments in the normal course of business.




We
believe that our increased revenues and our cash on hand will be sufficient to
sustain our operations at our current levels for the next twelve
months.





Off-Balance
Sheet Arrangements




We do not
have any off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that is material to investors.





Seasonality




Our operating results are not affected
by seasonality.




Inflation




Our business and operating results are
not affected in any material way by inflation.




ITEM
7A.       QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK




As a
“smaller reporting company” as defined by Item 10 of Regulation S-K, the Company
is not required to provide information required by this Item.


27


ITEM
8.          FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA




Set forth
below are the audited financial statements for the Company as of and for the
fiscal years ended December 31, 2008 and 2007 (restated) and the reports thereon
of Meyler & Company, LLC.


28





LEXICON
UNITED INC. AND SUBSIDIARIES





AUDITED
FINANCIAL STATEMENTS





FOR THE
YEARS ENDED DECEMBER 31, 2008 AND 2007 (RESTATED)


29





CONTENTSReport
      of Independent Registered Public Accounting Firm
                      Page
                      F
      1Consolidated
      Balance Sheets
                      
                      F
      2Consolidated
      Statements of Operations
                      
                      F
      3Consolidated
      Statements of Cash Flows
                      
                      F
      4Consolidated
      Statement of Stockholders’ Deficit
                      
                      F
      6Notes
      to Consolidated Financial Statements
                      
                      F
      7


30





MEYLER
& COMPANY, LLC


CERTIFIED
PUBLIC ACCOUNTANTS


ONE ARIN
PARK


1715
HIGHWAY 35


MIDDLETOWN,
NJ 07748





Report of
Independent Registered Public Accounting Firm





To the
Board of Directors


Lexicon
United Incorporated


Austin,
TX





We have
audited the accompanying consolidated balance sheets of Lexicon United Inc. and
Subsidiaries as of December 31, 2008 and 2007 (Restated)  and the
related consolidated statements of operations, stockholders’ equity, and cash
flows for each of the years in the two-year period ended December 31, 2008 and
2007 (Restated). These consolidated financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on
these financial statements based on our audits.





We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting.  Our audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances but not for the purpose of
expressing an opinion on the effectiveness of the company’s internal control
over financial reporting.  Accordingly, we express no such opinion. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation.  We believe that our audits
provide a reasonable basis for our opinion.





In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Lexicon United Inc. and
Subsidiaries as of December 31, 2008 and 2007 (Restated), and the results of its
operations and its cash flows for each of the years in the two-year period ended
December 31, 2008 and 2007 (Restated), in conformity with accounting principles
generally accepted in the United States of America.





The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern.  As discussed in
Note B to the consolidated financial statements, the Company incurred net
losses of $760,747 and $307,422 in 2008 and 2007, respectively, and had an
accumulated deficit of $2,958,232 at December 31, 2008. There are existing
uncertain conditions the Company faces relative to its ability to obtain capital
and operate successfully. These conditions raise substantial doubt about its
ability to continue as a going concern.  Management’s plans regarding
these matters are described in Note B.  The Financial Statements do
not include any adjustments that might result from the outcome of this
uncertainty.





/s/ Meyler & Company,
LLC





Middletown,
NJ


April 15,
2009


F-1


LEXICON
UNITED INCORPORATED AND SUBSIDIARIES


CONSOLIDATED
BALANCE SHEETS





December 31,2008
                                          
                                          
                                          2007(Restated)CURRENT
      ASSETSCash
      and equivalents
                                          
                                          $
                                          291,453
                                          
                                          
                                          $
                                          467,195Accounts
      receivable
                                          
                                          
                                          342,144
                                          
                                          
                                          
                                          288,588Other
      receivables
                                          
                                          
                                          211,520
                                          
                                          
                                          
                                          205,013Prepaid
      expenses
                                          
                                          
                                          163
                                          
                                          
                                          
                                          3,145Total
      Current Assets
                                          
                                          
                                          845,280
                                          
                                          
                                          
                                          963,941FIXED
      ASSETSBuilding,
      equipment, and leasehold improvements,net
      of accumulated depreciation of $237,570 and$471,766
      at December 31, 2008 and 2007, respectively
                                          
                                          
                                          478,896
                                          
                                          
                                          
                                          740,525OTHER
      ASSETSInvestment
      in receivable portfolio
                                          
                                          
                                          529,742Customer
      lists, net of amortization of $154,116 and $102,744 atDecember
      31, 2008 and 2007, respectively
                                          
                                          
                                          359,617
                                          
                                          
                                          
                                          410,989Trade
      names, net of amortization of $66,050 and $44,034 atDecember
      31, 2008 and 2007, respectively
                                          
                                          
                                          154,120
                                          
                                          
                                          
                                          176,137Goodwill
                                          
                                          
                                          693,141
                                          
                                          
                                          
                                          693,141Security
      deposit
                                          
                                          
                                          1,350Total
      Other Assets
                                          
                                          
                                          1,737,970
                                          
                                          
                                          
                                          1,280,267TOTAL
      ASSETS
                                          
                                          $
                                          3,062,146
                                          
                                          
                                          $
                                          2,984,733CURRENT
      LIABILITIESLoans
      payable to banks
                                          
                                          $
                                          267,039
                                          
                                          
                                          $
                                          491,474Current
      portion of long term debt
                                          
                                          
                                          365,782
                                          
                                          
                                          
                                          270,603Bank
      Overdrafts
                                          
                                          
                                          301,282
                                          
                                          
                                          
                                          378,514Note
      payable to an individual
                                          
                                          
                                          292,262Accounts
      Payable
                                          
                                          
                                          102,049
                                          
                                          
                                          
                                          176,022Loans
      payable to officer
                                          
                                          
                                          187,605
                                          
                                          
                                          
                                          52,504Accrued
      Expenses
                                          
                                          
                                          477,571
                                          
                                          
                                          
                                          466,959Accrued
      Municipal Service Taxes
                                          
                                          
                                          125,017
                                          
                                          
                                          
                                          159,841Accrued
      Payroll and related taxes
                                          
                                          
                                          984,358
                                          
                                          
                                          
                                          1,379,178Accrued
      Employee Benefits
                                          
                                          
                                          113,919
                                          
                                          
                                          
                                          180,819Total
      Current Liabilities
                                          
                                          
                                          3,216,884
                                          
                                          
                                          
                                          3,555,914LONG
      TERM LIABILITIESLong
      term debt
                                          
                                          
                                          167,872
                                          
                                          
                                          
                                          352,998Total
      Long Term Liabilities
                                          
                                          
                                          167,872
                                          
                                          
                                          
                                          352,998TOTAL
      LIABILITIES
                                          
                                          
                                          3,384,756
                                          
                                          
                                          
                                          3,908,912STOCKHOLDERS'
      DEFICITPreferred
      stock $0.001 par value, 10,000,000shares
      authorized, none issued and outstandingCommon
      stock $0.001 par value, 40,000,000shares
      authorized, 8,696,134 and 8,456,250 sharesissued
      and outstanding at December 31, 2008 and 2007,respectively
                                          
                                          
                                          8,696
                                          
                                          
                                          
                                          8,456Paid
      in capital
                                          
                                          
                                          2,725,954
                                          
                                          
                                          
                                          1,903,194Accumulated
      other comprehensive loss
                                          
                                          
                                          (99,028
                                          )
                                          
                                          
                                          (638,344
                                          )Accumulated
      deficit
                                          
                                          
                                          (2,958,232
                                          )
                                          
                                          
                                          (2,197,485
                                          )Total
      Stockholders' Deficit
                                          
                                          
                                          (322,610
                                          )
                                          
                                          
                                          (924,179
                                          )TOTAL LIABILITIES AND
      STOCKHOLDERS' DEFICIT
                                          
                                          $
                                          3,062,146
                                          
                                          
                                          $
                                          2,984,733





See
accompanying notes to financials


F-2





LEXICON
UNITED INCORPORATED AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF OPERATIONS





For the year ended December 31,2008
                      
                      
                      2007(Restated)REVENUESService
      revenues
                      
                      $
                      4,331,355
                      
                      
                      $
                      2,825,927COST
      OF SERVICES
                      
                      
                      2,558,467
                      
                      
                      
                      1,945,827GROSS
      PROFIT
                      
                      
                      1,772,888
                      
                      
                      
                      880,100COSTS
      AND EXPENSESSelling,
      general and administrative (including reversal of $141,023
    and$934,001
      for Municipal Service taxes and payroll related taxesand
      benefits in 2008 and 2007, respectively)
                      
                      
                      1,669,749
                      
                      
                      
                      663,276Depreciation
                      
                      
                      134,909
                      
                      
                      
                      129,707Amortization
                      
                      
                      73,389
                      
                      
                      
                      73,389Total
      Costs and Expenses
                      
                      
                      1,878,047
                      
                      
                      
                      866,372OPERATING
      INCOME (LOSS)
                      
                      
                      (105,159
                      )
                      
                      
                      13,728OTHER
      INCOME (LOSS)Interest
      expense
                      
                      
                      (594,547
                      )
                      
                      
                      (360,263
                      )Interest
      income and other
                      
                      
                      (61,041
                      )
                      
                      
                      39,113Total
      Other Income (Expenses)
                      
                      
                      (655,588
                      )
                      
                      
                      (321,150
                      )NET
      LOSS
                      
                      $
                      (760,747
                      )
                      
                      $
                      (307,422
                      )NET
      LOSS PER COMMON SHARE
                      
                      $
                      (0.09
                      )
                      
                      $
                      (0.04
                      )WEIGHTED
      AVERAGE COMMON SHARESOUTSTANDING
                      
                      
                      8,597,205
                      
                      
                      
                      8,456,250




See
accompanying notes to financials


F-3





LEXICON
UNITED INCORPORATED


AND
SUBSIDIARIES


CONSOLIDATED
STATEMENT OF


STOCKHOLDERS'
EQUITY





AccumulatedOtherCommon Stock
                
                
                Paid
      in
                
                
                Accumulated
                
                
                ComprehensiveShares
                
                
                Amount
                
                
                Capital
                
                
                Deficit
                
                
                Loss
                
                
                TotalBalance,
      December 31, 2006
                
                
                8,456,250
                
                
                $
                8,456
                
                
                $
                1,903,194
                
                
                $
                1,890,063
                )
                
                $
                (138,959
                )
                
                $
                (117,372
                )2006
      acquisition share adjustment
                
                
                (800,000
                )
                
                
                
                
                
                
                (160,000
                )
                
                
                
                
                
                
                
                
                
                
                (160,000
                )Issuance
      of common stock to officers for compensation at $0.20 per
      share
                
                
                560,000
                
                
                
                
                
                
                
                112,000
                
                
                
                
                
                
                
                
                
                
                
                112,000Issuance
      of common stock to consultants for compensation at $0.20 per
      share
                
                
                240,000
                
                
                
                
                
                
                
                48,000
                
                
                
                
                
                
                
                
                
                
                
                48,000Net
      loss for the year ended December 31, 2007
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (307,422
                )
                
                
                
                
                
                
                (307,422
                )Other
      comprehensive loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (499,385
                )
                
                
                (499,385
                )Balance,
      December 31, 2007
                
                
                8,456,250
                
                
                
                8,456
                
                
                
                1,903,194
                
                
                
                (2,197,485
                )
                
                
                (638,344
                )
                
                
                (924,179
                )Issuance
      of common stock at $3.50 per share
                
                
                3,000
                
                
                
                3
                
                
                
                10,497
                
                
                
                
                
                
                
                
                
                
                
                10,500Issuance
      of common stock in conversion of an $800,000 debenture from Keyano Invest,
      Inc. a related party $3.45 per share
                
                
                231,884
                
                
                
                232
                
                
                
                799,768
                
                
                
                
                
                
                
                
                
                
                
                800,000Fair
      value of common stock issued in connection with consulting services at
      $2.50 per share
                
                
                5,000
                
                
                
                5
                
                
                
                12,495
                
                
                
                
                
                
                
                
                
                
                
                12,500Net
      loss for the year ended December 31, 2008
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (760,747
                )
                
                
                
                
                
                
                (760,747
                )Other
      comprehensive gain
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                539,316
                
                
                
                539,316Balance,
      December 31, 2008
                
                
                8,696,134
                
                
                $
                8,696
                
                
                $
                2,725,954
                
                
                $
                (2,958,232
                )
                
                $
                (99,028
                )
                
                $
                (322,610
                )





See
accompanying notes to financials


F-4


LEXICON
UNITED INCORPORATED AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS





For
      the year ended December 31,2008
                  
                  
                  2007(Restated)CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      loss
                  
                  $
                  (760,747
                  )
                  
                  $
                  (307,422
                  )Adjustments
      to reconcile net loss to net cashprovided
      by (used in) operating activitiesDepreciation
      and amortization
                  
                  
                  134,909
                  
                  
                  
                  129,707Amortization
      of intangibles
                  
                  
                  73,389
                  
                  
                  
                  73,389Net
      assets disposition
                  
                  
                  30,849Stock
      based compensation
                  
                  
                  12,500
                  
                  
                  
                  160,000Provision
      for contingencies
                  
                  
                  (141,023
                  )
                  
                  
                  (934,001
                  )Decrease
      (increase) in assets:Accounts
      receivable
                  
                  
                  7,212
                  
                  
                  
                  (49,315
                  )Other
      receivables
                  
                  
                  (185,267
                  )
                  
                  
                  (91,192
                  )Prepaid
      expenses
                  
                  
                  730
                  
                  
                  
                  1,461Security
      deposit
                  
                  
                  (1,350
                  )Decrease
      (increase) in liabilities:Accounts
      payable
                  
                  
                  (11,029
                  )
                  
                  
                  (54,639
                  )Accrued
      expenses
                  
                  
                  120,368
                  
                  
                  
                  192,614Accrued
      municipal service taxes
                  
                  
                  
                  
                  
                  
                  134,408Accrued
      payroll and related taxes
                  
                  
                  60,193
                  
                  
                  
                  144,057Accrued
      employee benefits
                  
                  
                  (947
                  )
                  
                  
                  19,866NET CASH USED IN OPERATING
      ACTIVITIES
                  
                  
                  (660,213
                  )
                  
                  
                  (581,067
                  )CASH
      FLOWS FROM INVESTING ACTIVITIESInvestment
      in receivable portfolio
                  
                  
                  (282,126
                  )Purchase
      of fixed assets
                  
                  
                  (20,355
                  )
                  
                  
                  (52,936
                  )NET CASH USED IN INVESTING
      ACTIVITIES
                  
                  
                  (302,481
                  )
                  
                  
                  (52,936
                  )CASH
      FLOWS FROM FINANCING ACTIVITIESLoan
      from Keyano Invest, Inc
                  
                  
                  1,000,000Loan
      from related party
                  
                  
                  78,329
                  
                  
                  
                  52,504Loan
      from an individual
                  
                  
                  65,000Net
      change in bank loans
                  
                  
                  (99,680
                  )
                  
                  
                  165,764Proceeds
      from new loans
                  
                  
                  599,915
                  
                  
                  
                  415,246Repayment
      of loans
                  
                  
                  (782,964
                  )
                  
                  
                  (454,417
                  )Issuance
      of common stock
                  
                  
                  10,500NET CASH PROVIDED BY FINANCING
      ACTIVITIES
                  
                  
                  871,100
                  
                  
                  
                  179,097EFFECT
      OF EXCHANGE RATE OF CASH
                  
                  
                  (84,148
                  )
                  
                  
                  25,570NET
      DECREASE IN CASH
                  
                  
                  (175,742
                  )
                  
                  
                  (429,336
                  )CASH, beginning of
      period
                  
                  
                  467,195
                  
                  
                  
                  896,531CASH, end of
      period
                  
                  $
                  291,453
                  
                  
                  $
                  67,195





See
accompanying notes to financials


F-5





LEXICON
UNITED INCORPORATED AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS (Continued)





For
      the year ended December 31,2008
                  
                  
                  2007(Restated)SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATIONInterest
      paid
                  
                  $
                  594,547
                  
                  
                  $
                  360,263Non
      cash itemsPurchase
      of furniture and equipment
                  
                  $
                  43,095
                  
                  
                  $
                  255,595Conversation
      of loan from Keyano Invest, Inc. to common stock
                  
                  $
                  800,000Loans
      and accounts payable incurred for acquisition of receivable
      portfolio
                  
                  $
                  267,950Goodwill
      acquisition adjustment
                  
                  
                  
                  
                  
                  $
                  (160,000
                  )Effect
      on paid-in capital for goodwill acquisition adjustment
                  
                  
                  
                  
                  
                  $
                  160,000





See
accompanying notes to financials


F-6


LEXICON
UNITED INCORPORATED AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


December
31, 2008 and 2007 (Restated)





NOTE
A - RESTATEMENT





The
Company’s financial statements for the year ended December 31, 2007 have been
restated as follows:





PreviouslyReported
                  
                  
                  As RestatedGoodwill
      (1)
                  
                  $
                  853,141
                  
                  
                  $
                  693,141Accrued
      payroll and related taxes (2)
                  
                  
                  1,366,938
                  
                  
                  
                  1,379,178Selling,
      general and administrative expenses (1)
                  
                  
                  491,036
                  
                  
                  
                  651,036Accumulated
      deficit
                  
                  
                  (2,085,245
                  )
                  
                  
                  (2,197,485
                  )





Notes:





(1) To
adjust goodwill for a subsequent reduction of 800,000 shares originally issued
in connection with the purchase of ATN Capital E Participacoes,
Ltda.   The equivalent reduction in shares were then distributed
to officers, employees, and consultants as stock based
compensation.  Such shares were valued at $0.20 per
share.





(2)  To
accrue employer portion of payroll taxes.





NOTE
B – NATURE OF BUSINESS AND GOING CONCERN





Organization





Lexicon
United Incorporated was incorporated on July 17, 2001 under the laws of the
State of Delaware and had been a blank check company until February 27, 2006,
when it acquired ATN Capital E Participacoes, Ltda., a Brazilian Company
(“ATN”). ATN was incorporated in April 1997 and its focus is on the recovery of
delinquent accounts (generally, accounts that are 60 days or more past due) for
large Brazilian financial institutions. The Company is paid a commission on the
settlement of delinquent accounts. The Company formed two new subsidiaries in
2008, Engepet Energy Enterprises, Inc. and United Oil Services, Inc, to work
with companies to recover additional oil from oil wells whose production had
diminished.  See Note F.





Going
Concern





As
indicated in the accompanying financial statements, the Company has an
accumulated deficit of $2,958,232 and negative working capital of $2,371,604 at
December 31, 2008. Management’s plans include raising adequate capital through
the equity markets to fund future operations and generating of revenue through
its businesses. Failure to raise adequate capital and generate adequate sales
revenues could result in the Company having to curtail or cease operations.
Additionally, even if the Company does raise sufficient capital to support its
operating expenses and generate adequate revenues, there can be no assurances
that the revenue will be sufficient to enable it to develop business to a level
where it will generate profits and cash flows from operations. These matters
raise substantial doubt about the Company’s ability to continue as a going
concern. However, the accompanying financial statements have been prepared on a
going concern basis, which contemplates the realization of assets and
satisfaction of liabilities in the normal course of business. These financial
statements do not include any adjustments relating to the recovery of the
recorded assets or the classification of the liabilities that might be necessary
should the Company be unable to continue as a going
concern.


F-7


LEXICON
UNITED INCORPORATED AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


December
31, 2008 and 2007 (Restated)





NOTE
C – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Use of
Estimates





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





Cash and Cash
Equivalents





The
Company considers all highly-liquid investments with a maturity of three months
or less as cash equivalents. There were cash equivalents of $53,781 and $64,260
in 2008 and 2007, respectively.





Equipment and
Depreciation





Equipment
is stated at cost and is depreciated using the straight line method over the
estimated useful lives of the respective assets. Routine maintenance, repairs
and replacement costs are expensed as incurred and improvements that extend the
useful life of the assets are capitalized.




When
equipment is sold or otherwise disposed of, the cost and related accumulated
depreciation are eliminated from the accounts and any resulting gain or loss is
recognized in operations.  During the year ended December 31, 2008,
approximately $188,000 of fully depreciated assets and $30,000 of undepreciated
assets were written off.





Revenue
Recognition





The
Company derives its revenue primarily from collection of distressed debt by
entering into non binding agreements with financial institutions to collect
their delinquent debt.  Once an agreement is reached with the debtor
of the financial institution based upon established parameters, an installment
agreement is established.  The Company is then entitled to a
commission on the agreed settlement.  The Company earns and records a
pro rata commission for each installment, when the installment payments are
received from the debtors.  Revenue from the collection of distressed
debt, included in a portfolio, by the Company is recognized based on AICPA
Statement of Position 03-3 (“SOP-03-3”) using the interest
method.  The interest method applies an effective interest rate to the
cost basis of each pool in which the distressed debt has been categorized and
remains unchanged throughout the life of the pool unless there is an increase or
decrease in subsequent expected cash flows.  Revenue from the
receivable portfolios is accrued based on each pool’s effective interest rate
applied to each pool’s adjusted cost.  See Note E to Financial
Statements.





Consolidated Financial
Statements





The
consolidated financial statements include the accounts of Lexicon United
Incorporated, its 80% owned subsidiary, ATN Capital E Participacoes Ltda and its
100% owned subsidiaries Engepet Energy Enterprises, Inc. (“Engepet”) and United
Oil Services, Inc. (“United”).  All material intercompany transactions
have been eliminated in consolidation.  Engepet and United were newly
formed in 2008 and their transactions were not deemed to be
significant.


F-8





LEXICON
UNITED INCORPORATED AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


December
31, 2008 and 2007 (Restated)





NOTE
C – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





Intangible
Assets





Intangible
assets of customer lists and trade names are amortized over a ten year life. The
amortization recorded is $220,166 and $146,778 at December 31, 2008 and 2007
respectively.





Fair Values of Financial
Instruments





The
Company uses financial instruments in the normal course of business. The
carrying values of cash equivalents, accounts receivable, accounts payable,
accrued expenses and other current liabilities approximate their fair value due
to the short-term maturities of these assets and liabilities.





Income
Taxes





The
Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109, “Accounting for Income Taxes” (“SFAS
109”).  SFAS 109 requires the determination of deferred tax assets and
liabilities based on the differences between the financial statement and income
tax bases of assets and liabilities, and using estimated tax rates in effect for
the year in which the differences are expected to reverse.  The
measurement of a deferred tax asset is adjusted by a valuation allowance, if
necessary, to recognize tax benefits only to the extent that, based on available
evidence, it is more likely than not that they will be realized.  In
determining the valuation allowance, the Company considers factors such as the
reversal of deferred income tax liabilities, projected taxable income and the
character of income tax assets and tax planning strategies.  A change
to these factors could impact the estimated valuation allowance and income tax
expense.





Effective
January 1, 2007, the Company adopted the provisions of FIN 48, which clarifies
the accounting for income tax positions by prescribing a minimum recognition
threshold that a tax position is required to meet before being recognized in the
financial statements.  FIN 48 also provides guidance on the
derecognition of previously recognized


deferred
tax items, measurement, classification, interest and penalties, accounting in
interim periods, disclosure and transition.  Under FIN 48, the Company
recognizes the tax benefit from an uncertain tax position only if it is
more  likely than not that the tax position will be sustained upon
examination by the taxing authorities, based on the technical merits of the tax
position.  The tax benefits recognized in the consolidated financial
statements from such a position are measured based on the largest benefit that
has a greater than 50% likelihood of being realized upon ultimate
resolution.  Adoption of FIN 48 did not have a material impact on the
Company’s operations or financial condition.





Net Loss Per Common
Share





The
Company computes per share amounts in accordance with Statement of Financial
Accounting standards (“SFAS”) No. 128, “Earnings per Share.” SFAS per share
(“EPS”) requires presentation of basic and diluted EPS. Basic EPS is computed by
dividing the income (loss) available to Common Stockholders by the
weighted-average number of common shares outstanding for the period. Diluted EPS
is based on the weighted-average number of shares of common stock and common
stock equivalents outstanding during the periods, however, no potential common
shares are included in the computation of any diluted per share amounts when a
loss from continuing operations exists.


F-9





LEXICON
UNITED INCORPORATED AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


December
31, 2008 and 2007 (Restated)





NOTE
C – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





Foreign Currency
Translation





The
Company considers the Brazilian currency (Reais) to be the functional currency
of ATN. Assets and liabilities were translated into U.S. dollars at the period
end exchange rates. The equity accounts were translated at historical rates.
Statement of Operations amounts were translated using the average rate during
the year. Gains and losses resulting from translating foreign currency financial
statements are accumulated in other comprehensive income (loss), a separate
component of stockholder’s deficit.





Goodwill and Intangible
Impairment





The
company accounts for goodwill in accordance with Statement of Financial
Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible
Assets.As required by SFAS No. 142, the Company tests for
impairment of goodwill annually (at year-end) or whenever events occur or
circumstances change that would more likely than not reduce the fair value of a
reporting unit below its carrying amount.  The required two-step
approach uses accounting judgments and estimates of future operating
results.  Changes in estimates or the application of alternative
assumptions could produce significantly different results.  Impairment
testing is done at a reporting unit level.  The company performs this
testing for its Brazilian operating segment which is considered a reporting unit
under SFAS No. 142. An impairment loss generally is recognized when the carrying
amount of the reporting unit’s net assets exceeds the estimated fair value of
the reporting unit.  The fair value of the company’s reporting unit
was estimated using the expected present value of future cash flows using
estimates, judgments, and  assumptions that management believes were
appropriate in the circumstances.  The estimates and judgments that
most significantly affect the fair value calculation are assumptions related to
revenue growth, collection processes, and the discount rate.  There
was no impairment of assets at December 31, 2008,





Stock-Based
Compensation





The
Company accounts for stock-based compensation using the fair value
method.





The
Company accounts for employee stock-based compensation and stock issued for
services using the fair value method.  In accordance with Emerging
Issues Task Force (“EITF”) 96-18, the measurement date of shares used for
services is the date at which the counterparty’s performance is
complete.





For
services for which the Company issues its common stock, the Company utilizes the
fair value of its common stock at month-end and accrues the value of shares to
be issued in Stockholders’ Equity, even if the shares have not yet been
issued.  Accordingly, earnings per share computations are
adjusted.





Effective
January 1, 2006, the Company adopted the provisions of (1) FAS 123 R, which
requires the Company to recognize stock-based compensation in the financial
statements for all share-based payment awards made to employees and directors
based upon the grant date fair value of those awards, and (2) SAB 107, which
provides guidance to public companies relating to adoption of FAS 123
R.





Fair Value
Measurements





In
September 2006, the FASB No. 157, “Fair Value Measurements,” which defines fair
value, establishes a framework for measuring fair value under other accounting
pronouncements that


F-10


LEXICON
UNITED INCORPORATED AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


December
31, 2008 and 2007 (Restated)





NOTE
C – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





Fair Value Measurements
(Continued)





permit or
require fair value measurements, changes the methods used to measure fair value
and expands disclosures about fair value measurements.  In particular,
disclosures are required to provide information on the extent to which fair
value is used to measure assets and liabilities; the inputs used to develop
measurements; and the effect of certain of the measurements on earnings (or
changes in net assets).  In February 2008, the FASB approved a FASB
Staff Position ("FSP") that permits companies to partially defer the effective
date of SFAS No. 157 for one year for nonfinancial assets and nonfinancial
liabilities that are recognized or disclosed at fair value in the financial
statements on a nonrecurring basis. The FSP did not permit companies to defer
recognition and disclosure requirements for financial assets and financial
liabilities or for nonfinancial assets and nonfinancial liabilities that are
remeasured at least annually.  SFAS No. 157 is effective for fiscal
years beginning after November 15, 2007 and interim periods within those fiscal
years.  Early adoption, as of the beginning of an entity’s fiscal
year, is also permitted, provided interim financial statements have not yet been
issued.  The Company intends to defer adoption of SFAS No. 157 for one
year for nonfinancial assets and nonfinancial liabilities that are recognized or
disclosed at fair value in the financial statements on a nonrecurring
basis.  The Company adopted SFAS 157 on January 1,
2008.  Adoption of SFAS 157 did not have a material impact on the
consolidated results of operations, cash flows or financial
position.





In
February, 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities (“SFAS 159”).  SFAS 159 allows
entities to measure at fair value many financial instruments and certain other
assets and liabilities that are not otherwise required to be measured at fair
value.  SFAS 159 is effective for fiscal years beginning after
November 15, 2007.  The Company adopted SFAS 159 on January 1,
2008.  Adoption of SFAS 157 did not have a material impact on the
Company results of operations, cash flows or financial position.





NOTE
D – RECENT ACCOUNTING PRONOUNCEMENTS





In
December 2007, the FASB issued SFAS No. 141R, Business
Combinations.  This standard establishes principles and
requirements for how an acquirer recognizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed, and
non-controlling interest in the acquiree and the goodwill
acquired.  This statement also establishes disclosure requirements
which will enable users to evaluate the nature and financial effects of the
business combination.  SFAS No. 141R is effective for acquisitions
made after November 30, 2009.





The
Company is currently evaluating the potential impact, if any, that the adoption
of SFAS No. 141R will have on its consolidated financial
statements.





In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements.  This standard outlines the
accounting and reporting for ownership interest in a subsidiary held by parties
other than the parent.  SFAS No. 160 is effective for the first
quarter of 2010.  The Company is currently evaluating the potential
impact, if any, the adoption of SFAS No. 160 will have on its consolidated
financial statements.





In May
2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted
Accounting Principles." SFAS No. 162 identifies the sources of accounting
principles and the framework for selecting the principles to be used in the
preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles. SFAS No.
162 became effective in November 2008. Its adoption is not expected to have a
material impact on the Company's consolidated financial
statements.


F-11





LEXICON
UNITED INCORPORATED AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


December
31, 2008 and 2007 (Restated)





NOTE
D – RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)





In May
2008, the FASB issued FSP No. APB 14-1, "Accounting for Convertible Debt
Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash
Settlement)." FSP No. APB 14-1 requires that issuers of convertible debt
instruments that may be settled in cash upon conversion separately account for
the liability and equity components in a manner that will reflect the entity's
nonconvertible debt borrowing rate when interest cost is recognized in
subsequent periods. FSP No. APB 14-1 is effective for fiscal years beginning
after December 15, 2008 and interim periods within those fiscal years, and is
required to be retrospectively applied. The Company is currently evaluating the
impact that the adoption of FSP No. APB 14-1 will have on its consolidated
financial statements.





In
December 2007, the FASB also issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements”. SFAS 160 requires all entities to report
noncontrolling (i.e., minority) interests in subsidiaries as equity in the
Consolidated Financial Statements and to account for transactions between an
entity and noncontrolling owners as equity transactions if the parent retains
its controlling financial interest in the subsidiary. SFAS 160 also requires
expanded disclosure that distinguishes between the interests of the controlling
owners and the interests of the noncontrolling owners of a subsidiary. SFAS is
effective for the Corporation’s financial statements for the year


beginning
on January 1, 2009 and earlier adoption is not permitted. The Company has not
yet determined the impact from adoption of this new pronouncement on our
financial statements.





In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities(“SFAS 159”). SFAS 159 allows
entities to measure at fair value many financial instruments and certain other
assets and liabilities that are not otherwise required to be measured at fair
value. SFAS 159 is effective for fiscal years beginning after
November 15, 2007. We have not determined what impact, if any, that
adoption will have on our results of operations, cash flows or financial
position.





In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” which
defines fair value, establishes a framework for measuring fair value under other
accounting pronouncements that permit or require fair value measurements,
changes the methods used to measure fair value and expands disclosures about
fair value measurements. In particular, disclosures are required to provide
information on the extent to which fair value is used to measure assets and
liabilities; the inputs used to develop measurements; and the effect of certain
of the measurements on earnings (or changes in net assets).





In
February 2008, the FASB approved a FASB Staff Position ("FSP") that permits
companies to partially defer the effective date of SFAS No. 157 for one year for
nonfinancial assets and nonfinancial liabilities that are recognized or
disclosed at fair value in the financial statements on a nonrecurring basis. The
FSP did not permit companies to defer recognition and disclosure requirements
for financial assets and financial liabilities or for nonfinancial assets and
nonfinancial liabilities that are remeasured at least annually.  SFAS
No. 157 is effective for fiscal years beginning after November 15, 2007 and
interim periods within those fiscal years. Early adoption, as of the beginning
of an entity’s fiscal year, is also permitted, provided interim financial
statements have not yet been issued. The Company intends to defer adoption of
SFAS No. 157 for one year for nonfinancial assets and nonfinancial liabilities
that are recognized or disclosed at fair value in the financial statements on a
nonrecurring basis.  The Company is currently evaluating the potential
impact, if any, that the adoption of SFAS No. 157 will have on its consolidated
financial statements.


F-12


LEXICON
UNITED INCORPORATED AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


December
31, 2008 and 2007 (Restated)





NOTE
E  -  INVESTMENT IN RECEIVABLE PORTFOLIO





The
Company’s subsidiary ATN Capital e Participacoes Limitada ( “ATN”) has extensive
experience in the field of distressed credit card and consumer loan receivable
collections.  It had previously only collected distressed debt for
large credit card companies and financial institutions in Brazil, on a
commission basis.  In 2008, in addition to working for the large
institutions, it decided to purchase its own portfolio of distressed
debt.  The portfolio was purchased for R$1,299,458 (approximately
US$816,294) on June 2, 2008.  The portfolio includes past due and
unpaid debt from more than 41,000 Brazilian consumers and has a face value of
approximately R$500,000,000 (or US$305 million as of the purchase
date).





The
Company has adopted AICPA Statement of Position 03-3 (“SOP 03-3”), “Accounting
for Loans or Certain Securities Acquired in a Transfer”.  In
accordance with SOP 03-3, the company is required to segregate the portfolio
into pools.  Accordingly, the Company has defined three distinct pools
and identified the related cost allocations by pool.   SOP 3-03
addresses accounting for differences between contractual cash flows expected to
be collected from an investor’s initial investment in loans or debt securities
acquired in a transfer if those differences are attributable, at least in part,
to credit quality.  SOP 03-3, limits accretable yield to the excess of
the investor’s estimate of undiscounted cash flows over the investor’s initial
investment in the loan and prohibits the recognition of the non-accretable
difference.  Under SOP 3-03, subsequent increases in cash flows
expected to be collected generally should be recognized prospectively through
adjustment of the loan’s yield over its remaining life while any decreases in
cash flows expected to be collected should be recognized as
impairments.


During
the six months ended December 31, 2008, the Company actually collected $169,936
which was $79,914 in excess of the amount provided in its original
projections.  The Company believes that its original projections are
still accurate and attributes the excess collections to the sale of a batch of
accounts spread amongst the three pools.  The excess cash collections
resulted in a reduction to the projected ended carrying amount in
$12,301.




During
the six months ended December 31, 2008, the Company actually collected $169,936
which was $79,914 in excess of the amount provided in its original
projections.  The Company believes that its original projections are
still accurate and attributes the excess collections to the sale of a batch of
accounts spread amongst the three pools.  The excess cash collections
resulted in a reduction to the projected ended carrying amount in
$12,301.




The
following table reflects the initial carrying value and cash flows expected to
be collected for the period of inception June 2, 2008 to December 31, 2008 and
for the years ending December 31, 2009 through 2013:





Beginning
                  
                  
                  Cash Flows
                    Expected
                  
                  
                  
                  
                  
                  Reduction
                  
                  
                  EndingYear Ended
                  
                  Carrying
                  
                  
                  to be
                  
                  
                  Interest
                  
                  
                  of Carrying
                  
                  
                  CarryingDecember
31,
                  
                  Amount
                  
                  
                  Collected
                  
                  
                  Income
                  
                  
                  Amount
                  
                  
                  Amount2008
                  
                  $
                  556,037
                  
                  
                  $
                  90,022
                  
                  
                  $
                  76,028
                  
                  
                  $
                  13,994
                  
                  
                  $
                  542,0432009
                  
                  
                  542,043
                  
                  
                  
                  196,043
                  
                  
                  
                  128,208
                  
                  
                  
                  67,835
                  
                  
                  
                  474,2082010
                  
                  
                  474,208
                  
                  
                  
                  196,043
                  
                  
                  
                  112,164
                  
                  
                  
                  83,879
                  
                  
                  
                  390,3292011
                  
                  
                  390,329
                  
                  
                  
                  196,043
                  
                  
                  
                  92,323
                  
                  
                  
                  103,720
                  
                  
                  
                  286,6092012
                  
                  
                  286,609
                  
                  
                  
                  196,043
                  
                  
                  
                  67,977
                  
                  
                  
                  128,066
                  
                  
                  
                  158,5432013
                  
                  
                  158,543
                  
                  
                  
                  196,043
                  
                  
                  
                  37,500
                  
                  
                  
                  158,543Totals
                  
                  
                  
                  
                  
                  $
                  1,070,237
                  
                  
                  $
                  514,200
                  
                  
                  $
                  556,037





Initial accretable yield has been
calculated as follows:





Cash flows expected to be
      collected as of 12/31/08
                      
                      $
                      1,070,236Less: Initial
      Investment
                      
                      
                      556,037Yield
      accreted to date
                      
                      
                      90,022Accretable
      Yield as of 12/31/08
                      
                      $
                      424,177


F-13


LEXICON
UNITED INCORPORATED AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


December
31, 2008 and 2007 (Restated)





NOTE
E  -  INVESTMENT IN RECEIVABLE PORTFOLIO
(CONTINUED)




The
Company financed the purchase of the portfolio with two Notes Payable totaling
R$626,200.  The notes are due December 2009 and bear interest at the
rate of 2.0% per month.  The notes are included in the captions loans
from officer and loan from an individual on the balance sheet.  The
loan from an individual is deemed to be a related party because of his
affiliation with the Company. At December 31, 2008, the balance of the loan
including accrued interest,  from officer is $58,982 and the loan from
an individual is $245,761.





Due to
the strengthening US dollar, there has been a change in the value of the
purchase price of the receivable portfolio from $816,294 at June, 2, 2008 to
$556,037 at December 31, 2008.  The difference of $260,257 is included
in accumulated other comprehensive loss.





NOTE
F – ENGEPET ENERGY ENTERPRISES, INC. AND UNITED OIL SERVICES, INC.





The
Company formed two new subsidiaries, Engepet Energy Enterprises, Inc. and United
Oil Services, Inc. to work with companies to recover additional oil production
from oil wells whose production had diminished.  During the year, the
Company engaged in pipe cleaning activities only.  In connection with
such activities, the Company collected revenues of approximately $180,000 and
advanced approximately $140,000 for costs which were not adequately
documented.





NOTE
G– FIXED ASSETS




Fixed
Assets are comprised of the following at December 31,




2008
                        
                        
                        2007Building
                        
                        $
                        202,396
                        
                        
                        $
                        255,140Office
      furniture and equipment
                        
                        
                        390,986
                        
                        
                        
                        794,758Vehicles
                        
                        
                        47,056
                        
                        
                        
                        62,084Leasehold
      improvements
                        
                        
                        76,028
                        
                        
                        
                        100,309716,466
                        
                        
                        
                        1,212,291Less
      accumulated depreciation
                        
                        
                        237,570
                        
                        
                        
                        471,766$
                        478,896
                        
                        
                        $
                        740,525




NOTE
H - LOANS PAYABLE TO BANKS





The
Company has several loans with various Brazilian banks and financial
institutions. The loans are secured by personal guarantees of the Company’s
principal shareholders and bear interest at rates ranging from 26% to 42%. Two
loans from Unibanco totaling $200,000 were borrowed in US dollars resulting in
foreign currency transaction losses.  Approximately $64,000 of
transaction losses were recorded for year ended December 31,
2008.  The balance of the loans at December 31, 2008 and 2007 was
$267,039 and $491,474, respectively.





NOTE
I– LONG TERM DEBT





On April
17, 2006, the Company closed on a Real Estate transaction to purchase the 8th floor
of an executive office building for ATN Capital E Participacoes, Ltda.’s
executive offices. The purchase price of


F-14


LEXICON
UNITED INCORPORATED AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


December
31, 2008 and 2007 (Restated)





NOTE
I– LONG TERM DEBT (CONTINUED)





approximately
$176,489 was funded with a 20% down payment payable over four months and an 8
year adjustable rate mortgage currently at 13.29%.  The loan is
secured by the company’s facility.  At December 31, 2008 and 2007, the
balance of the loan is $123,676 and $177,835 respectively.





In August
2006, the Company purchased new computer equipment from DELL Brazio. The
equipment valued at approximately $38,395 is financed over a three year period
at 14.4% per year. The loan is secured by the computer
equipment.   At December 31, 2008 and 2007, the balance of the
loan is $10,678 and $26,838 respectively.





In
September 2006, the Company purchased new furniture.  The furniture
valued at approximately $112,161 is financed over a five year period at 5.69%
per year plus the inflation index.  The loan is payable in 48 monthly
installments commencing October 8, 2007.  The loan is secured by the
furniture.  At December 31, 2008 and 2007, the balance of the loan is
$70,544 and $126,920 respectively.





In June,
2007, the Company borrowed two working capital loans from Caixa Economica
Federal. The loans are valued at approximately $113,000 and are payable in 24
monthly installments plus interest of 2.73% per month, commencing July, 2007.
The loans are personally guaranteed by ATN’s directors. At December 31, 2008 and
2007, the balance is $26,225 and $91,052 respectively.





In June,
2007, the Company borrowed a working capital loan from Banco Bradesco. The loan
is valued at approximately $207,400 and is payable in 24 monthly installments
plus interest of 2.60% per month, commencing July, 2007. The loan is personally
guaranteed by ATN’s directors. At December 31, 2008 and 2007, the balance is
$18,043 and $80,939, respectively.





In
September, 2007, the Company borrowed $51,000 from Santander. The loan is
payable in 16 monthly installments plus interest of 3.9% per month, commencing
October, 2007. The loan is personally guaranteed by ATN’s directors. At December
31, 2008 and 2007,  the balance is $11,302 and $41,182,
respectively.





During
the year ended December 31, 2007, the Company purchased new computer equipment
from DELL Brazio. The equipment valued at approximately $189,500 is financed
over a three year period plus interest at rates ranging from 12% to 12.84% per
year. The loan is secured by the computer equipment. The balance of the loan at
December 31, 2008 and 2007 is $19,642 and $78,835, respectively.





In
January 2008, the Company purchased new air conditioning
equipment.  The equipment valued at approximately $28,000 is being
financed over a three year period at 12% per year. The balance of the loan at
December 31, 2008 is $14,445.





In July,
2008, the Company borrowed approximately $77,000 from Banco ITAU. The loan is
payable in 18 monthly installments plus interest of 2.28% per month, commencing
August, 2008. The loan is personally guaranteed by ATN’s directors. At December
31, 2008, the balance is $58,743.





In July,
2008, the Company borrowed approximately $3,500 from Officer Distribution
Production. The loan is payable in 36 monthly installments plus interest of
1.15% per month, commencing August, 2008. The loan is personally guaranteed by
ATN’s directors. At December 31, 2008, the balance is $1,231.


F-15


LEXICON
UNITED INCORPORATED AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


December
31, 2008 and 2007 (Restated)





NOTE
I – LONG TERM DEBT (CONTINUED)





In
October, 2008, the Company borrowed approximately $60,000 from Banco ITAU. The
loan is payable in 9 monthly installments plus interest of 2.88% per month,
commencing August, 2009. The loan is personally guaranteed by ATN’s directors.
At December 31, 2008, the balance is $54,278.





In
November, 2008, the Company borrowed approximately $43,000 from Banco Bradesco.
The loan is payable in 12 monthly installments plus interest of 3.3% per month,
commencing November, 2008. The loan is personally guaranteed by ATN’s directors.
At December 31, 2008, the balance is $39,224





In
November, 2008, the Company borrowed approximately $52,000 from Unibanco-Capital
De Giro. The loan is payable in 12 monthly installments plus interest of 3.3%
per month, commencing November, 2008. The loan is personally guaranteed by ATN’s
directors. At December 31, 2008, the balance is $48,584.





In
December, 2008, the Company borrowed approximately $30,000 from Banco Real. The
loan is payable in 12 monthly installments plus interest of 3.2% per month,
commencing December, 2008. The loan is personally guaranteed by ATN’s directors.
At December 31, 2008, the balance is $29,952.





During
the year ended December 31, 2008, the Company purchased new computer equipment
from DELL Brazio. The equipment valued at approximately $15,500 is financed over
a three year period plus interest at rates ranging from 11.4% to 13.8% per year.
The loan is secured by the computer equipment. The balance of the loan at
December 31, 2008 is $7,087.





An
analysis of the current and long-term portion at December 31, is as
follows:





2008
                        
                        
                        2007Total
      loans outstanding
                        
                        $
                        533,654
                        
                        
                        $
                        623,601Less:
      current portion
                        
                        
                        365,782
                        
                        
                        
                        270,603Long-term
      portion
                        
                        $
                        167,872
                        
                        
                        $
                        352,998





At
December 31, 2008, maturities of long term debt are as follows:





2009
                  
                  $
                  63,4722010
                  
                  
                  41,3542011
                  
                  
                  21,0152012
                  
                  
                  21,0152013
      and thereafter
                  
                  
                  21,016Total
                  
                  $
                  167,872


F-16


LEXICON
UNITED INCORPORATED AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


December
31, 2008 and 2007 (Restated)





NOTE
J – ACCRUED MUNICIPAL SERVICE AND PAYROLL ACCRUALS





The
Company is responsible to the Brazilian taxing authorities for a municipal
service tax at the rate of 5% based upon salaries by location. During 2007, the
Company successfully negotiated with Brazilian authorities to favorably settle
previously recorded taxes approximating $730,000. In addition, the Company
further evaluated related payroll tax and related accruals and reduced amounts
previously recorded by approximately $200,000. These savings are reflected in
the 2007 financial statements as a reduction in selling, general and
administrative expenses. Accruals for such Municipal tax and related payroll tax
accruals at December 31, 2008 and 2007 are $1,211,054 and $1,707,598
respectively.





NOTE
K - INCOME TAXES





The
Company accounts for income taxes in accordance with SFAS No 109, Accounting for Income Taxes.
Under this method, the Company recognizes a deferred tax liability or asset for
temporary differences between the tax basis of an asset or liability and the
related amount reported on the financial statements.





The
principal types of differences, which are measured at current tax rates, are net
operating loss carryforwards. At December 31, 2008, these differences resulted
in a deferred tax asset of $1,075,300. SFAS No. 109 requires the establishment
of a valuation allowance to reflect the likelihood of realization of deferred
tax assets. Since realization is not assured, the Company has recorded a
valuation allowance for the entire deferred tax asset, and the accompanying
financial statements do not reflect any net asset for deferred taxes at December
31, 2008.





The
Company has a US net operating carry forward loss of approximately $797,000
which expires commencing in 2028 and a $2,689,000 carryforward loss in Brazil
with an unlimited carryforward period.





NOTE
L – RELATED PARTY





During
the quarter ended March 31, 2008, Keyano Invest Inc., a related party, loaned
the Company $1,000,000 for working capital purposes on terms and conditions to
be determined on an arms length basis between the parties.





During
the quarter ended June 30, 2008, the Company repaid Keyano Invest Inc $200,000
and converted the remaining balance of $800,000 to a convertible debenture which
was converted immediately.  On June 4, 2008, the debenture was
converted to 231,884 shares of common stock at a conversion price of $3.45 per
share.





During
the quarter ended September 30, 2008, the Company borrowed approximately
$352,000 from two related parties to finance the purchase a receivable
portfolio.  The notes are due December 2009 and bear interest at the
rate of 2.0% per month.  The notes are included in the caption loans
from officer and loan from an individual on the balance sheet.  The
loan from an individual is deemed to be a related party because of his
affiliation with the Company. At December 31, 2008, the balance of the loan from
officer is $58,982 and the loan from an individual is $245,761.





On a
periodic basis the Company borrows funds from shareholders for working
capital.  At December 31, 2008 these borrowings total
$128,773.





NOTE
M - LOAN FROM AN INDIVIDUAL





In July,
2008, the Company borrowed approximately $65,000 from an individual for working
capital.  The loan is due January 12, 2010 and bears interest at the
rate of 21.6% per year.  The balance of the loan at December 31, 2008
is $42,827.


F-17





LEXICON
UNITED INCORPORATED AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


December
31, 2008 and 2007 (Restated)





NOTE
N -  RENT EXPENSE





The
Company currently is leasing one floor of its office facilities from the
President of the Brazilian subsidiary. The lease commenced on May 26, 2006 and
is renewable annually. The annual rent is $27,500 per year. The Company
sub-leases space in New York City.  The lease commenced March 1, 2008
and is cancelable upon 90 days notice.  The annual rent is
$16,200.   Rent expense for the year ended December 31, 2008 was
$49,097.





NOTE
O - REVENUE CONCENTRATIONS





For the
year ended December 31, 2008, revenues from three major customers exceeded 10%
individually and represented 36.62% of total revenues. During 2007, four major
customers exceeded 10% individually and represented 58.23% of total
revenues.





NOTE
P - STOCKHOLDERS’ EQUITY





In
January 2007, in connection with the reduction of 800,000 shares of the
Company’s stock (See Note A - Restatement) issued for the 2006 acquisition of
ATN Capital E Participacoes, Ltda., such shares were then redistributed as stock
based compensation to officers and employees of the Company (560,000 shares) and
consultants (240,000 shares).  These shares were valued at $0.20 per
share.





As of
January 1, 2008, the Company has included 5,000 of its common shares as issued
and outstanding for professional fees incurred.  The shares were
valued at $2.50 per share.  Consulting expense charged to operations
as of December 31, 2008 was $12,500.  These shares are included as
outstanding but have not yet been issued.





On May
13, 2008 the Company issued 3,000 shares of its common stock for
$10,500.





On June
4, 2008 the Company issued 231,884 shares of common stock in conversion of an
$800,000 debenture from Keyano, Invest, Inc., a related party.  The
shares were valued at $3.45.


F-18


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




None.





ITEM 9A(T).
            CONTROLS AND
      PROCEDURES.




Disclosure
Controls and Procedures





Our
management, with the participation of our Chief Executive Officer (CEO) and
Chief Financial Officer, Elie Saltoun, (“CFO), and Secretary, Jeffrey Nunez have
evaluated the effectiveness of the Company’s disclosure controls and procedures
(as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the
period covered by this Report (December 31, 2008).  Based on such
evaluation, our CEO and Secretary have concluded that, as of the end of such
period, the Company’s disclosure controls and procedures are not effective in
recording, processing, summarizing and reporting, on a timely basis, information
required to be disclosed by the Company in the reports that it files or submits
under the Exchange Act and are not effective in ensuring that information
required to be disclosed by the Company in the reports that it files or submits
under the Exchange Act is accumulated and communicated to the Company’s
management, including the Company’s CEO and Secretary, as appropriate to allow
timely decisions regarding required disclosure.  A discussion of the
material weaknesses in our control and procedures is described
below.





Management’s
Report on Internal Control over Financial Reporting





Management
of Lexicon United Inc., which consists primarily of our CEO/CFO and Secretary
are responsible for establishing and maintaining adequate internal control over
financial reporting (as defined in Rule 13a-15(f) under the Exchange
Act).  The Company’s internal control over financial reporting has
been designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles generally
accepted in the United States of America.




The
Company’s internal control over financial reporting includes policies and
procedures that pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect transactions and dispositions of assets of
the Company; provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with
accounting principles generally accepted in the United States of America, and
that receipts and expenditures are being made only in accordance with
authorization of management and directors of the Company; and provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition,
use or disposition of the Company’s assets that could have a material effect on
the Company’s financial statements.





Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Therefore, even those systems determined to be
effective can provide only reasonable assurance with respect to financial
statement preparation and presentation. Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.





Management
assessed the effectiveness of the Company’s internal control over financial
reporting at December 31, 2008. In making this assessment, management used
the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission (“COSO”) in Internal Control—Integrated
Framework.  During our assessment of the effectiveness of
internal control over financial reporting as of December 31, 2008, management
identified significant deficiencies  related to (i) the absence of
U.S. GAAP expertise of management and the internal accounting staff, (ii)
internal audit functions and (iii) the absence of an Audit Committee and (iv)
lack of controls relating to the issuance, recording, and control of Company
stock and shareholder ledgers all of which contributed to an ineffective system
of internal control at December 31, 2008.


31





Management
also identified a material weakness in our internal control over financial
reporting in that significant expenditures were made without adequate support
documentation.





Based on
our evaluation under the frameworks described above, our management has
concluded that our internal control over financial reporting was not effective
as of December 31, 2008.





In order
to correct the above mentioned deficiencies, we plan on taking the following
remediation measures:





1) We intend to hire an individual in
the accounting area who is familiar with US GAAP and SEC Reporting
Requirements.





2) We intend to designate an
independent Audit Committee as soon as we can identify appropriate
members.





3) We intend to segregate duties and
implement appropriate review procedures throughout the accounting and
administration controls.





This
annual report does not include an attestation report of the Company's registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by the Company's registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit the Company to provide only management's report
in this annual report.





/S/    Elie
      SaltounElie
      SaltounChief
      Executive Officer





Changes
in Internal Control over Financial Reporting





There
were no changes in the Company’s internal controls over financial reporting
during the fiscal year ended December 31, 2008 that materially affected, or are
reasonably likely to materially affect, the Company’s internal control over
financial reporting.





ITEM
9B.   OTHER INFORMATION





None





PART III.





ITEM
10.        DIRECTORS, EXECUTIVE
OFFICERS AND CORPORATE GOVERNANCE





Directors,
Executive Officers and Significant Employees




Set forth
below are the names of our directors, officers and significant employees, their
ages, all positions and offices that they hold with us, the period during which
they have served as such, and their business experience during at least the last
five years.




Name
                  
                  Age
                  
                  Positions Held
                  
                  ExperienceElie
      Saltoun
                  
                  69
                  
                  ChiefExecutive
      Officer, President and Treasurer since November 2004
                  
                  Elie
      Saltoun has served as our Chief Executive Officer, President and
      Treasurer, and as the Chairman of our board of directors since November
      2004. Mr. Saltoun also served as our Secretary from July 2001 until he
      resigned to assume his current role with our Company. Since May 2005, Mr.
      Saltoun has also acted as a principal of Keyano Invest Inc., a corporate
      consulting firm based in Brazil. Mr. Saltoun is an expert at structuring
      complex foreign debt recoveries and debt to equity transactions. He has
      successfully coordinated the use and conversion of past due unpaid
      sovereign debt into equity in privatized Brazilian State-owned companies,
      and has supervised the purchase and swap of unpaid obligations from a
      State-owned reinsurance
organization.


32





Jeffrey
      Nunez
            
            49
            
            Secretary
      since November 2004
            
            During
      the period from our inception until November 4, 2004, Mr. Nunez was our
      director, Chief Executive Officer, President and Treasurer. He resigned
      from all of those positions (except he remained a director) on November 4,
      2004 and on such date he was appointed as our Secretary. From October 2003
      to present Mr. Nunez has been self employed acting as a consultant to
      public companies under the name Broad Street Capital.Omar
      Malheiro Silva Araújo
            
            54
            
            President,
      Chief Executive Officer and director of ATN since April
    1997
            
            Mr.
      Araújo has been the President, Chief Executive Officer and director of our
      subsidiary ATN since April 1997. Mr. Araújo is the co-founder of ATN. From
      1991 to 1997, Mr. Araújo served as the Chief Financial Officer and
      director of Cartao Unibanco Visa where he supervised the cash flow of the
      credit card division. Mr. Araújo has a MBA in Finance.Manuel
      da Costa Fraguas
            
            61
            
            General
      Manager and director of ATN since April 1997
            
            Mr.
      Fraguas has been the General Manager and director of our subsidiary ATN
      since its inception on April 1997. Mr. Fraguas is the co-founder of ATN.
      Mr. Fraguas has a master in Production
  Engineering.




There are
no agreements or understandings for any of our executive officers or directors
to resign at the request of another person and no officer or director is acting
on behalf of nor will any of them act at the direction of any other
person.





Mr.
Saltoun devotes approximately 80% of his business time to our affairs with the
remaining time being spent on the affairs of Keyano Invest Inc. Mr. Nunez
devotes approximately 70% of his time to our affairs with the remaining time
being spent on the affairs of Broad Street Capital. Each of Mr. Araújo and
Fraguas devotes 100% of his business time to the operation and business of our
subsidiary ATN.





Family
Relationships




There are
no family relationships among our directors or officers.





Involvement
in Certain Legal Proceedings




To the
best of our knowledge, except as set forth herein, none of our directors,
director nominees or executive officers has been involved in any transactions
with us or any of our directors, executive officers, affiliates or associates
which are required to be disclosed pursuant to the rules and regulations of the
SEC. Except as described below, none of the directors, director designees or
executive officers to our knowledge has been convicted in a criminal proceeding,
excluding traffic violations or similar misdemeanors, or has been a party to any
judicial or administrative proceeding during the past five years that resulted
in a judgment, decree or final order enjoining the person from future violations
of, or prohibiting activities subject to, federal or state securities laws, or a
finding of any violation of federal or state securities laws, except for matters
that were dismissed without sanction or settlement.


33


On July
28, 2005, the SEC issued an order in connection with the settlement of an
administrative proceeding against our Secretary, Jeffrey G. Nunez. The order
indicates that Mr. Nunez, who at the time was a registered representative
(broker) at the brokerage firm of Providential Securities, Inc., played an
active role in the distribution of hundreds of thousands of unregistered shares
of stock of Morgan Cooper, Inc. in violation of Section 5 of the Securities Act.
Morgan Cooper, Inc., formerly Gong Hei Investment Co., Ltd., is the successor
company in a reverse merger transaction that occurred on November 18, 1999 when
Morgan Cooper, Inc., then a private company engaged in the garment business,
effected a business combination with Gong Hei Investment Co., Ltd., then a
public reporting shell company. Mr. Nunez acted as a broker in connection with
the sale of the shares by James Caprio and James Morse, who were principals of
the shell company prior to the reverse merger, to the brokerage clients of
Providential Securities. The Commission permanently enjoined Nunez from future
violations of Section 5(a) and 5(c) of the Securities Act, ordered Nunez to pay
a $55,000 civil penalty, suspended Mr. Nunez from association with any
broker-dealer for a period of six months, and required Mr. Nunez to provide an
accounting and to disgorge any profits made as a result of the sales. To date,
Mr. Nunez has not paid the $55,000 civil penalty.




Code
of Ethics





Our board
of directors has adopted a code of ethics that our principal financial officer,
principal accounting officer or controller and any person who may perform
similar functions are subject to. Currently Elie Saltoun, our Chief Executive
Officer, President and Treasurer, Jeffrey G. Nunez, our Secretary,Omar Malheiro Silva
Araújo, the Chief Executive Officer and President of ATN, and Manuel da Costa
Fraguas, the General Manager of ATN, are our and ATN’s only officers and
directors, therefore, they are the only persons subject to the Code of Ethics.
If we retain additional officers in the future to act as our principal financial
officer, principal accounting officer, controller or persons serving similar
functions, they would become subject to the Code of Ethics. The Code of Ethics
does not indicate the consequences of a breach of the code. If there is a
breach, our board of directors would review the facts and circumstances
surrounding the breach and take action that it deems appropriate, which action
may include dismissal of the employee who breached the code. Currently, since
Messrs Saltoun and Nunez serve as directors and are also our officers, they are
largely responsible for reviewing their own conduct under the Code of Ethics and
determining what action to take in the event of their own breach of the Code of
Ethics.




Compliance
with Section 16(a) of the Securities Exchange Act





Section
16(a) of the Exchange Act required our executive officers and directors, and
person who beneficially own more than ten percent of our equity securities, to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission. Officers, directors and greater than ten percent
shareholders are required by SEC regulation to furnish us with copies of all
Section 16(a) forms they file. Based on our review of the copies of such forms
received by us, we believe that during the year ended December 31, 2007, Elie
Saltoun and Jeffrey Nunez each failed to make the required filings under Section
16(a). These officers have indicated that they intend to make the required
filings promptly after the filing of this Form 10-KSB.





Board
Composition and Committees




Our Board
of Directors is composed of 2 members, Mr. Saltoun and Mr. Nunez. Directors are
elected until their successors are duly elected and qualified.


34





Audit Committee and Audit Committee
Financial Expert




We do not currently have an audit
committee financial expert, nor do we have an audit committee.  Our
entire board of directors, which currently consists of Messrs.Saltoun and Nunez, handle the functions that would
otherwise be handled by an audit committee.  We do not currently have
the capital resources to pay director fees to a qualified independent expert who
would be willing to serve on our board and who would be willing to act as an
audit committee financial expert.  As our business expands and as we
appoint others to our board of directors we expect that we will seek a qualified
independent expert to become a member of our board of
directors.  Before retaining any such expert our board would make a
determination as to whether such person is independent.





Section
16(a) Beneficial Ownership Reporting Compliance.





Section
16(a) of the Securities Act of 1934 requires the Company's officers and
directors, and greater than 10% stockholders, to file reports of ownership and
changes in ownership of its securities with the Securities and Exchange
Commission. Copies of the reports are required by SEC regulation to be furnished
to the Company. Based on management's review of these reports during the fiscal
year ended December 31, 2008, all reports required to be filed were filed on a
timely basis.




ITEM 11.  EXECUTIVE
COMPENSATION.




The
following table sets forth information concerning all cash and non-cash
compensation awarded to, earned by or paid to our Chief Executive Officer, for
services during the last three fiscal years in all capacities to us, our
subsidiaries and predecessors. No executive officer received compensation of
$100,000 or more in any of the last three fiscal years.





Summary
Compensation Table





Name
                      and
                      Principal
                      Position
                    
                    Year
                    
                    
                    Salary
                      ($)
                    
                    
                    Bonus
                      ($)
                    
                    
                    Stock
                      Awards
                      ($)
                    
                    
                    Option
                      Awards
                      ($)
                    
                    
                    Non-
                      Equity
                      Incentive Plan
                      Compensation
                      Earnings ($)
                    
                    
                    Non-
                      qualified
                      Deferred
                      Compensation
                      Earnings ($)
                    
                    
                    All Other
                      Compensation
                      ($)
                    
                    
                    Total
                      ($)Elie
      Saltoun
                      CEO
                    
                    
                    2007
                      2008
                    
                    
                    
                    0
                      0
                    
                    
                    
                    0
                      0
                    
                    
                    
                    0
                      0
                    
                    
                    
                    0
                      0
                    
                    
                    
                    0
                      0
                    
                    
                    
                    0
                      0
                    
                    
                    
                    72,000
                      75,097
                    
                    
                    
                    72,000
                      75,097Jeffrey
      Nunez
                      Secretary
                    
                    
                    2007
                      2008
                    
                    
                    
                    0
                      0
                    
                    
                    
                    0
                      0
                    
                    
                    
                    0
                      0
                    
                    
                    
                    0
                      0
                    
                    
                    
                    0
                      0
                    
                    
                    
                    0
                      0
                    
                    
                    
                    40,000
                      26,693
                    
                    
                    
                    40,000
                      26,693





Outstanding
Equity Awards at Fiscal Year End




None of
our executive officers received any equity awards, including, options,
restricted stock or other equity incentives, during the fiscal year ended
December 31, 2008.




Additional
Narrative Disclosures




All of
our employees, including our executive officers, are employed at will and none
of our employees has entered into an employment agreement with us. We do not
have any bonus, deferred compensation or retirement plan.





Director
Compensation




We have
no standard arrangements in place to compensate our directors for their service
as directors or as members of any committee of directors. In the future, if we
retain non-employee directors, we may decide to compensate them for their
service to us as directors and members of committees.


35





ITEM 12.  SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS




The
following table sets forth information regarding beneficial ownership of our
common stock as of January 1, 2009 (i) by each person who is known by us to
beneficially own more than five percent of our common stock; (ii) by each of our
officers and directors; and (iii) by all of our officers and directors as a
group:





Title of Class
                                      
                                      Name & Address of
                                        Beneficial Owner
                                      
                                      Office, If Any
                                      
                                      Amount & Nature of
                                        Beneficial
                                        Ownership1
                                      
                                      
                                      Percent of
                                        Class2Common Stock
                                        $0.001 par value
                                      
                                      Omar Malheiro Silva
      Araújo
                                        177
      Av. Rio Branco, 7th
      Floor
                                        Rio
      de Janeiro, Brazil
                                        20040-007
                                      
                                      President,
      Chief Executive Officer and director of ATN
                                      
                                      
                                      900,000
                                      
                                      
                                      
                                      10.35
                                      %Common
      Stock
                                        $0.001
      par value
                                      
                                      Keyano
      Invest Inc.
                                        C/o
      VP Bank attention Mr. Diego Piccoli
                                        Bleicherweg
      50 CH 8039
                                        Zurich
      Switzerland
                                      
                                      
                                      
                                      
                                      5,882,034
                                      3
                                      
                                      
                                      67.63
                                      %Common
      Stock
                                        $0.001
      par value
                                      
                                      Elie
      Saltoun
                                        4500
      Steiner Ranch Blvd.
                                        Suite
      1708
                                        Austin,
      Texas 78732
                                      
                                      President,
      CEO, Treasurer and Director
                                      
                                      
                                      5,882,034
                                      3
                                      
                                      
                                      67.63
                                      %Common
      Stock
                                        $0.001
      par value
                                      
                                      Jeffrey
      Nunez
                                        4500
      Steiner Ranch Blvd.
                                        Suite
      1708
                                        Austin,
      Texas 78732
                                      
                                      Secretary
      and Director
                                      
                                      
                                      412,047
                                      
                                      
                                      
                                      4.74
                                      %Common
      Stock
                                        $0.001
      par value
                                      
                                      All
      officers and directors as a group (2 persons named above)
                                      
                                      
                                      
                                      
                                      6,294,081
                                      
                                      
                                      
                                      72.38
                                      %





(1)
            Beneficial
      Ownership is determined in accordance with Rule 13d-3 of the Securities
      and Exchange Commission and generally includes voting or investment power
      with respect to securities. Each of the beneficial owners listed above has
      direct ownership of and sole voting power and investment power with
      respect to the shares of our common stock.  For each Beneficial Owner
      above, any options exercisable within 60 days have been included in the
      denominator.




(2)
            Based
      on 8,696,134 shares of our Common Stock outstanding as of January 1,
      2009.




(3)
            Our
      president, CEO, Treasurer and director, Elie Saltoun, owns fifty percent
      of Keyano Invest Inc. Accordingly, Mr. Saltoun and Keyano are deemed to be
      affiliates. Mr. Saltoun is deemed to be the beneficial owner of any
      securities owned by Keyano, and vice versa. Therefore, the 5,882,034
      shares of our common stock owned by Keyano include the 500,000 shares of
      common stock held by Mr. Saltoun. Conversely, the 5,882,034 shares of our
      common stock owned by Mr. Saltoun include the 5,382,034 shares held by
      Keyano.




Changes
in Control




We do not
currently have any arrangements which if consummated may result in a change of
control of our Company.


36


ITEM 13.  CERTAIN
RELATIONSHIPS AND RELATED
TRANSACTIONS AND DIRECTORINDEPENDENCE




Certain
Relationships and Transactions with Related Persons





On
November 22, 2005, we entered into a Debt Conversion Agreement with Keyano, the
holder of our convertible promissory note having a principal amount plus accrued
interest of $1,063,750. Under the Debt Conversion Agreement, we converted
Keyano’s note and any accrued interest into our common stock at a rate of $0.20
per share. 5,318,750 shares of our common stock were delivered to Keyano and the
note was cancelled. Keyano is an affiliate of our director and current Chief
Executive Officer, President and Treasurer, Elie Saltoun, who is the owner of a
50% interest in Keyano.




On
February 27, 2006, we consummated the transactions contemplated by a share
exchange agreement among us, ATN, Omar Malheiro Silva Araújo and Manuel da Costa
Fraguas, both directors and officers of ATN. Pursuant to the share exchange
agreement, we acquired 80% of the outstanding capital stock of ATN in exchange
for 2,000,000 shares of our common stock, in the aggregate. The purchase price
was subsequently adjusted to an aggregate of 1,200,000 shares of our common
stock.  As a result of this transaction, Messrs. Araújo and Fraguas
became the owners of 13.8% of our outstanding capital stock.





During
the quarter ended March 31, 2008, Keyano Invest Inc., a related party, loaned
the Company $1,000,000 for working capital purposes. During the quarter ended
June 30, 2008, the Company repaid Keyano Invest Inc $200,000 and converted the
remaining balance of $800,000 to a 2.5% convertible debenture. On June 5, 2008,
the Company issued 231,884 shares of its commons shares in conversion of an
$800,000 debenture from Keyano Invest, Inc, a related party. The shares were
converted at $3.45 per share.




Director
Independence




The Board
of Directors is currently composed of 2 members, Mr. Saltoun and Mr. Nunez. None
of our directors are “independent” directors, as that term is defined under the
Nasdaq listing standards.


Elie Saltoun





ITEM 14.  PRINCIPAL ACCOUNTANT
FEES AND SERVICES.




Audit
Fees





The
aggregate fees billed for each of the fiscal year ended December 31, 2008 and
2007 for professional services rendered by the principal accountant for the
audit of the registrant’s annual financial statements and review of the
financial statements included in the registrant’s Form 10-K or services that are
normally provided by the accountant in connection with statutory and regulatory
filings or engagements for those fiscal years were $39,566 and $44,800,
respectively.





Audit
Related Fees





The
aggregate fees billed in the fiscal year ended December 31, 2008 and 2007 for
assurance and related services by the principal accountant that are reasonably
related to the performance of the audit or review of the registrant’s financial
statements and are not reported under the paragraph captioned “Audit Fees” above
are $21,000 and $26,400, respectively.





Tax
Fees





The
aggregate fees billed in the fiscal years ended December 31, 2008 and 2007 for
professional services rendered by the principal accountant for tax compliance,
tax advice and tax planning were $0 and $0, respectively.




All
Other Fees





The
aggregate fees billed in the fiscal years ended December 31, 2008 and 2007 for
products and services provided by the principal accountant, other than the
services reported above under other captions of this Item 14 are $0 and $0,
respectively.


37


Pre-Approval
Policies and Procedures





Our board
of directors adopted resolutions in accordance with the Sarbanes-Oxley Act of
2002 requiring pre-approval of all auditing services and all audit related, tax
or other services not prohibited under Section 10A(g) of the Securities Exchange
Act of 1934, as amended to be performed for us by our independent auditors,
subject to the de
minimus exception described in Section 10A(i)(1)(B) of the Exchange Act.
These resolutions authorized our independent auditor to perform audit services
required in connection with the annual audit relating to the fiscal year ended
December 31, 2008 and the quarterly reviews for the subsequent fiscal quarters
of 2009 through the review for the quarter ended September 30, 2009 at which
time additional pre-approvals for any additional services to be performed by our
auditor would be sought from the Board. Our board of directors also appointed
and authorized Elie Saltoun to grant pre-approvals of other audit,
audit-related, tax and other services requiring board approval to be performed
for us by our independent auditor, provided that the designee, following any
such pre-approvals, thereafter reports the pre-approvals of such services at the
next following regular meeting of the Board.





The
percentage of audit-related, tax and other services that were approved by the
board of directors is 100%.





PART IV





ITEM15.             EXHIBITS, FINANCIAL STATEMENT
SCHEDULES





The following documents are filed as
part of this 10-K:





1.  FINANCIAL
STATEMENTS





The following documents are filed in
Part II, Item 8 of this annual report on
Form 10-K:





·
            Report ofMeyler & Company,
      LLC, Independent
      Registered Certified Public Accounting
  Firm





·
            Balance Sheets as ofDecember31, 2008 and 2007(audited)





·
            Statements of Operations for the
      years endedDecember31, 2008 and 2007(audited)





·
            Statements of Stockholders’Deficitfrom2006 through December 31, 2008
      (audited)





·
            Statements of Cash Flows for the
      years endedDecember31, 2008 and2007
    (audited)





·
            Notes to Financial Statements(audited)





2.  FINANCIAL STATEMENT
SCHEDULES





All financial statement schedules have
been omitted as they are not required, not applicable, or the required
information is otherwise included.





3.  EXHIBITS





The exhibits listed below are filed as
part of or incorporated by reference in this report.


38




Exhibit
 Number           Description
  23.1.               
Consent of Meyler & Company, LLC regarding audited financial statements as
of and for the period ending December 31, 2008.
 
 31.1.               
Certification of the Chief Executive Officer and Chief Financial Officer
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
 32.1                 Certification
of Chief Executive Officer and Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.




39


SIGNATURES





In
accordance with section 13 or 15(d) of the Securities Exchange Act of 1934, the
Registrant caused this Report on Form 10-KSB to be signed on its behalf by the
undersigned, thereto duly authorized individual.





Date: April
15, 2009





LEXICON
      UNITED INCORPORATEDBy:
              /s/ Elie
      SaltounElie
      SaltounChief
      Executive Officer, Chief FinancialOfficerPresident
      and Treasurer





Pursuant to the requirements of the
Securities Exchange Act of 1934, this report has been signed below by the
following person on behalf of the registrant and in the capacity and on the date
indicated.





By/s/ Elie
      SaltounzElie
  SaltounDirectorDateApril 15,
    2009By/s/ Jeffrey
      NunezJeffrey
    NunezDirectorDateApril 15,
    2009


40