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, 2009
  o 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
  Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. o
 
 Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or section 15(d) of the Act.
 Yes  oNo  o
  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 registrantwas required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes
x  No
o
  
  Indicate
by checkmark whether the registrant has submitted electronically and posted on
its corporate Website, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).
 Yes  oNo  o
  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
anyamendment to this Form 10-K.  o
  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).
 o Yes xNo
  State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of the
last business day of the registrant’s most recently completed second fiscal
quarter.
  State the
number of shares outstanding of each of the issuer's classes of common equity,
as of the latest practicable date: 8,828,134 shares of
common stock par value $0.001 as of May 15, 2010.
  2
  TABLE OF
CONTENTS
  PART IITEM
      1.
                
                BUSINESS
                
                4ITEM
      1A.
                
                RISK
      FACTORS
                
                9ITEM
      1B.
                
                UNRESOLVED
      STAFF COMMENTS
                
                15ITEM
      2.
                
                PROPERTIES
                
                15ITEM
      3.
                
                LEGAL
      PROCEEDINGS
                
                15ITEM
      4.
                
                SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS
                
                16PART
      IIITEM
      5.
                
                MARKET
      FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
      MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
                
                16ITEM
      6.
                
                SELECTED
      FINANCIAL DATA
                
                17ITEM
      7.
                
                MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
      AND RESULTS OF OPERATION
                
                17ITEM
      7A.
                
                QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
                
                26ITEM
      8.
                
                FINANCIAL
      STATEMENTS AND SUPPLEMENTARY DATA
                
                26ITEM
      9.
                
                CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
      AND FINANCIAL DISCLOSURE
                
                28ITEM
      9A(T).
                
                CONTROLS
      AND PROCEDURES
                
                28ITEM
      9B.
                
                OTHER
      INFORMATION
                
                28PART
      IIIITEM
      10.
                
                DIRECTORS,
      EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
                
                28ITEM
      11.
                
                EXECUTIVE
      COMPENSATION
                
                31ITEM
      12.
                
                SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
      AND RELATED STOCKHOLDER MATTERS
                
                31ITEM
      13.
                .
                CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
      INDEPENDENCE
                
                32ITEM
      14
                
                PRINCIPAL
      ACCOUNTANT FEES AND SERVICES
                
                33PART
      IVITEM
      15.
                
                EXHIBITS,
      FINANCIAL STATEMENT SCHEDULES
                
                34SIGNATURES
                
                
                
                35
  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. Upon the consummation of such share exchange,
the two stockholders of ATN became holders of approximately 23.72% 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.
 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.
  4
 
 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.
 
 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.
  6
 
 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.
 
 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.
 
 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.
  7
 
 Major
Customers
 
 We
receive the majority of our revenues and income from less than ten major
clients.  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.
 
 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, 2009, 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.
 
 8
 
 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
$136,308in 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, 2009, we had approximately $136,308 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.
 
 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 $73,996 in 2009 and $760,747 in 2008 and an accumulated
deficit of $2,958,232 and have a negative working capital of $2,112,263 at
December 31, 2009. 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.
 
 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;
  9
  ·
              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.
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.
 
 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.
  10
 
 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.
 
 We derive
virtually all of our revenues 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.
 
 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.
  11
 
 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 a small number of 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
receive the majority of our revenues and income from less than ten major
clients.  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.
 
 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:
  12
 
 ●
              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.
  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.
  13
 
 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.
 
 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 May 15, 2010, we had outstanding 8,828,134 shares of
common stock. Accordingly, we have 31,171,866 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.
  14
  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.
  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. On
December 30, 2009, the Brazilian shareholders contributed the ninth floor office
space to the Company which was currently leased to the Brazilian
subsidiary.  The office space was contributed at fair value net of any
indebtedness on the office space.  As a result, fixed assets increased
$551,133, shareholder loans increased $166,481 and total stockholders’ deficit
decreased $384,652.
  ITEM
3.  LEGAL PROCEEDINGS
  As of
December 31, 2009, 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.
  15
  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,
2009, 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
                
                
                Low2008First
      Quarter
                
                $
                4.25
                
                
                $
                2.50Second
      Quarter
                
                $
                5.50
                
                
                $
                2.95Third
      Quarter
                
                $
                5.00
                
                
                $
                3.00Fourth
      Quarter
                
                $
                4.00
                
                
                $
                0.702009First
      Quarter
                
                $
                3.00
                
                
                $
                2.00Second
      Quarter
                
                $
                3.00
                
                
                $
                2.10Third
      Quarter
                
                $
                2.00
                
                
                $
                0.55Fourth
      Quarter
                
                $
                2.00
                
                
                $
                1.00
 
 Options
and Warrants
  None of
the shares of our common stock are subject to outstanding options or
warrants.
  Status
of Outstanding Common Stock
  As of
December 31, 2009, we had a total of 8,828,134 shares of our common stock
outstanding.  Of these shares, 8,300,634 are 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.
  Holders
  We have
issued an aggregate of 8,828,134 shares of our common stock to approximately 100
record holders.
  16
  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
 
 On March
23, 2010, the Company issued 120,000 shares of its common stock to Wakabayashi
Fund, Ltd. As consideration for investor relations services.
 
 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
              
              12/31/2009
              
              
              12/31/2008
              
              
              12/31/2007Revenues
              
              
              4,268,938
              
              
              
              4,331,355
              
              
              
              2,825,927Net
      Loss
              
              
              (73,996
              )
              
              
              (760,747
              )
              
              
              (307,422
              )Net
      loss per share
              
              
              (0.01
              )
              
              
              (0.09
              )
              
              
              (0.04
              )Weighted
      average no shares
              
              
              8,707,444
              
              
              
              8,597,205
              
              
              
              8,597,205Lexicon
      Stockholders' deficit
              
              
              (259,480
              )
              
              
              (322,610
              )
              
              
              (924,179
              )Total
      assets
              
              
              3,303,867
              
              
              
              3,062,146
              
              
              
              2,984,733Total
      liabilites
              
              
              3,351,560
              
              
              
              3,384,756
              
              
              
              3,908,912
  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:
  ·
              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;
  17
  ·
              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.
  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.
  18
 
 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.
 
 Revenue
from the collection of distressed debt owned by the Company is recognized based
on FASB ASC Subtopic 310-30 “Loans and Debt Securities Acquired with
Deteriorated Credit Quality”  using the cost recovery method
commencing July 1, 2009 and the interest method prior to July 1,
2009.  Under the cost recovery method, revenues are only recognized
after the initial investment has been recovered.
  Goodwill
and Intangible Impairment
 
 The
company accounts for goodwill in accordance with FASB ASC Topic 350
“Intangibles-Goodwill and Other”.  As required, 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 FASB ASC Topic 350. 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,
2009.
 
 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.
 
 Uncertainties
that Affect our Financial Condition
 
 We
receive the majority of our revenues and income from less than ten major
clients.  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
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;
  19
  ·
              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 2009, 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.
  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 financed the purchase of the portfolio with cash
and the execution of two notes aggregating R$626,200 from two principal
shareholders, one of which is the President of the Company.  The notes
bear interest at the rate of 2% per month and are due on December 31,
2009.  The notes at December 31, 2008 were included under the caption
loan from an officer and loan from an individual.  The loans from an
individual are deemed to  be a related party because of his
affiliation with the Company.  At December 31, 2008, the balance of
the including accrued interest from the officer was $58,982 and the loan from an
individual was $249,434.
 
 The
Company has adopted FASB ASC Subtopic 310-30 (“Subtopic 310-30”) “Loans and Debt
Securities Acquired with Deteriorated Credit Quality” (prior authoritative
literature: AICPA Statement of Position 03-3 (“SOP 03-3”), “Accounting for Loans
or Certain Securities Acquired in a Transfer”).  In accordance with
Subtopic 310-30, The Company can account for its investments in receivable
portfolios using either the interest method or the cost recovery method. The
interest method applies an effective interest rate to the cost basis of the
pool.  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. The Company used the interest
method through June 30, 2009 and has determined that the amount and timing of
future cash collections on the receivable portfolios are not reasonably
predictable, and therefore, beginning July 1, 2009, commenced using the cost
recovery method.  Under the cost recovery method of accounting, no
income is recognized until the purchase price of the portfolio has been fully
recognized.
 
 During
the six months ended December 31, 2008, the Company collected $169,936 which was
$79,914 in excess of the amount provided in its original
projections.  During the six months ended June 30, 2009, the Company
collected $78,215 which was $35,245 less than the amount provided in its
original projections on a quarterly basis.  The excess cash
collections from 2008 combined with the decreased cash collections for the six
months ended June 30, 2009 and the changes in exchange rates provided a $14,729
reduction in the carrying value of the portfolio as at June 30,
2009.  The carrying value at June 30, 2009 was $604,856.
  20
 
 An
analysis of the portfolio activity under the cost recovery method at December
31, 2009 is as follows:
 
 Portfolio
      carrying value at June 30, 2009
                
                $
                604,856Portfolio
      collections for the period July 1, 2009 to December 31,
      2009
                
                
                (96,343
                )Transfer
      of portion of portfolio to two principal shareholders in
      consideration for shareholder debt
                
                
                (513,650
                )Change
      in currency rates for the period
                
                
                97,009Balance,
      December 31, 2009
                
                $
                91,872
  On
December 30, 2009, the Company entered into agreements with two principal
shareholders’ one of which is the President of the Company, the other an
individual who is a major shareholder and deemed an affiliate.  On
December 30, 2009, the Company had loans outstanding with these individuals
relating to the original purchase of the portfolio on June, 2008.  It
was agreed that they would purchase a portion of the portfolio in consideration
for the liquidation of their indebtedness.  The fair value of this
portfolio transferred approximated the liquidation of indebtedness which was (R$
894,367) $513,650.
  Results
of Operations
 
 Year  Ended
December 31, 2009 Compared to Year Ended December 31, 2008.
  The
following table summarizes the results of our operations during the year ended
December 31, 2009, and 2008 and provides information regarding the dollar and
percentage increase or (decrease) from the year ended December 31, 2009 to the
same period of 2008.
  12/31/09
              
              
              12/31/08
              
              
              Increase
                (Decrease)
              
              
              Percentage
                Increase
                (Decrease)Revenues
              
              
              4,268,938
              
              
              
              4,331,355
              
              
              
              (62,417
              )
              
              
              (1.45
              )Cost
      of Services
              
              
              2,364,253
              
              
              
              2,558,467
              
              
              
              (194,214
              )
              
              
              (7.6
              )Selling,
      General and Administrative Expense
              
              
              1,081,598
              
              
              
              1,669,749
              
              
              
              (588,151
              )
              
              
              (35.23
              )Interest
      expense
              
              
              726,802
              
              
              
              594,547
              
              
              
              132,255
              
              
              
              22.25Depreciation
      & amortization
              
              
              167,545
              
              
              
              208,298
              
              
              
              (40,753
              )
              
              
              (19.57
              )Foreign
      Exchange & other
              
              
              59,472
              
              
              
              (61,041
              )
              
              
              120,513
              
              
              
              197.43Net
      income (loss) –Lexicon United
              
              
              (73,996
              )
              
              
              (760,747
              )
              
              
              686,751
              
              
              
              90.28Earnings
      (Loss) per common share
              
              
              (.01
              )
              
              
              (.09
              )
              
              
              .08
              
              
              
              88.89
  We had
revenues of $4,268,938 for the year ended December 31, 2009, compared to
revenues of $4,331,355 during the same period in 2008.  Our revenues
decreased 1.45% in the year ended December 31, 2009 primarily due to inactivity
of Engepet Energy Enterprises and an increase in collections of receivables
offset by the effect of changes in the foreign exchange rate.
 
 Our cost
of services for the year ended December 31, 2009 was $2,364,253 as compared to
$2,558,467 during the same period in 2008.  This decrease of $194,214 is
primarily the result of increased postal and mail services, increase in employee
related expenses offset by a decrease in internship program expenses, inactivity
of Engepet Energy Enterprises and the effect of changes in the foreign exchange
rate.
  21
 
 Selling,
general and administrative expenses decreased by $588,151 or 35.23 %, to
$1,081,598 in the year ended December 31, 2009 compared to $1,669,749 in the
same period in 2008.  The change is the result of the reversal of
$712,958 of municipal service  and related taxes and decreases in
consultant, and bank fees, offset by increases in telephone expenses and
agreement losses and the effect of changes in the foreign exchange
rate.
 
 Interest
expense for the year ended December 31, 2009 was $726,802 and interest expense
in the same period of 2008 was $594,547.  Interest expense increased 22.25%
in the year ended December 31, 2009  due to an increase of new
borrowings over the past year and was offset by the changes in the foreign
exchange rate.
  During
the year ended December 31, 2009 we incurred a net loss of $(73,996) compared
with $(760,747) for the same period in the prior year.  The decrease in our
loss is primarily due to the changes in expenses and revenues as described
above, the effect of the change in the foreign exchange rate in addition to the
adoption of FASB ASC Topic 810, which allocated $62,208 gain to the
non-controlling interest.
 
 Loss per
common share for the year ended December 31, 2009 was $(.01) as compared to a
loss of $(.09) during the same period of 2008.
 
 Cash
Flow Items
  The
following table provides the statements of net cash flows for the year ended
December 31, 2009.
 
 Year
      Ended December 31,2009
              
              
              2008Net
      Cash Provided By (Used in) Operating Activities
              
              
              (316,147
              )
              
              
              (660,213
              )Net
      Cash Provided By (Used in) Investing Activities
              
              
              46,367
              
              
              
              (302,481
              )Net
      Cash Provided By (Used In) Financing Activities
              
              
              (372,633
              )
              
              
              871,100Net
      Decrease  in Cash and Cash Equivalents
              
              
              (155,145
              )
              
              
              (175,751
              )Cash
      and Cash Equivalents - Beginning of Period
              
              
              291,453
              
              
              
              467,195Cash
      and Cash Equivalents - End of Period
              
              
              136,308
              
              
              
              291,453
 
 We used
$316,147 of cash from our operating activities during the year ended December
31, 2009 as compared to $660,213 cash used during the year ended December 31,
2008.  The difference of $344,066 is mainly attributable to the reversal of
$712,958 of municipal service and payroll taxes and to changes in other
receivables of $249,491.
 
 We
provided $46,367 in cash from our investing activities during the year ended
December 31, 2009, as compared to $302,481 used in the prior year ending
December 31, 2008.  These funds were used for the purchase of fixed assets
offset by the collection of the receivable portfolio.
  We used a
net of $372,633 from financing activities during the year ended December 31,
2009 as compared to providing funds of $871,100 during the year ended December
31, 2008.  The change is primarily due to an increase in the repayment of
loans.
 
 Balance Sheet
Items
  As of
December 31, 2009, we had total current assets of $812,975, as compared to
$845,280 as of December 31, 2008.  Our total assets as of December 31, 2009
were $3,303,867 as compared to $3,062,146 as of December 31, 2008.  We had
total current liabilities of $2,925,238 as of December 31, 2009 as compared to
$3,216,884 as of December 31, 2008, and we had total liabilities of
$3,351,560  as of December 31, 2009 as compared to $3,384,756 as of
December 31, 2008.
  The
decrease in total assets is primarily due to a decrease in cash of $155,145, a
decrease in the investment in receivable portfolio of $437,870, a decrease in
customer lists and tradenames of $73,389 and an increase in fixed assets of
$785,284. The decrease in total liabilities is due to an increase in borrowings,
accounts payable, and accrued expenses offset by a decrease in accrued municipal
service and payroll taxes and by the effects of the change of the foreign
exchange rates.
  22
  As of
December 31, 2009, our total Stockholders’ Equity (deficit) was $(47,693) as
compared to $(322,610) at December 31, 2008.  This change was due to an
increase in capital stock and paid in capital of $408,652 for the acquisition of
the 9th floor
and share-based compensation offset by operating losses and losses 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 and payroll tax
liabilities 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 $136,308 as of December 31, 2009 and we had short-term liabilities
in the amount of $2,925,238, as well as long-term liabilities in the amount of
$426,322 as of December 31, 2009.  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 2009, the Company evaluated their payroll tax and related
accruals and reduced amounts previously recorded by approximately $712,958. The
reduction in 2009 is the result of recalculating the employee withholding taxes
under Brazilian guidelines.
 
 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, 2009, we had cash assets of $136,308 and total assets of $3,303,867
as compared to cash assets of $291,453 and total assets of $3,062,146 as of
December 31, 2008. The decrease in total assets is primarily due to a decrease
in cash of $155,145, a decrease in the investment in receivable portfolio of
$437,870, a decrease in customer lists and tradenames of $73,389 and an increase
in fixed assets of $785,284. We have a $(2,112,263) negative working capital at
December 31, 2009, of which $510,335 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, 2009 was $82.319.
 
 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%.  The loan is secured by the company’s
facility.  At December 31, 2009 and 2008, the balance of the loan is
$143,205 and $123,676 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, 2009 and 2008, the balance of the
loan is $-0- and $10,678 respectively.
  23
  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, 2009 and 2008, the balance of the loan is
$60,253 and $70,544 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, 2009 and
2008, the balance is $-0- and $26,255 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, 2009 and 2008, the balance is
$-0- and $18,043, 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, 2009 and 2008,  the balance is $-0- and $11,302,
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, 2009 and 2008 is $3,392 and $19,642, 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, 2009 and 2008 is $9,694 and $14,445, respectively.
  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, 2009 and 2008, the balance is $ 6,927 and $58,743,
respectively.
  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, 2009 and 2008, the balance is $1,012 and
$1,231, respectively.
  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, 2009 and 2008, the balance is $-0- and  $54,278
respectively.
 
 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, 2009 and 2008, the balance is $-0- and $39,224,
respectively.
 
 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, 2009 and 2008, the balance is $-0- and $48,584,
respectively.
 
 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, 2009 and 2008, the balance is $-0- and $29,952,
respectively.
  24
 
 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, 2009 and 2008 is $ 2,145 and $7,087, respectively.
 
 In June,
2009, the Company borrowed approximately $25,000 from Banco Mercantile do
Brasil.  The loan is payable in 12 monthly installments plus interest
of 3.2% per month, commencing July, 2009.  The loan is personally
guaranteed by ATN’s directors.  The balance of the loan at December
31, 2009 is $11,006.
 
 In July,
2009, the Company borrowed approximately $42,500 from Banco
Santander.  The loan is payable in 18 monthly installments plus
interest of 2.53% per month, commencing August, 2009. The loan is personally
guaranteed by ATN’s directors. The balance of the loan at December 31, 2009 is
$26,426.
 
 In
October, 2009, the Company borrowed approximately $432,000 from BNP Banco
Brasil.  The loan is payable in 46 monthly installments plus interest
of 2.00% per month, commencing December, 2009.  The loan is personally
guaranteed by ATN’s directors.  The balance of the loan at December
31, 2009 is $307,926.
 
 In
October, 2009, the Company borrowed approximately $81,000 from Banco
Bradesco.  The loan is payable in 12 monthly installments plus
interest of 2.30% per month, commencing December, 2009.  The loan is
personally guaranteed by ATN’s directors.  The balance of the loan at
December 31, 2009 is $64,048.
 
 In
December, 2009, the Company borrowed approximately $87,450 from Banco
Real.  The loan is payable in 24 monthly installments plus interest of
2.00% per month, commencing January, 2010.  The loan is personally
guaranteed by ATN’s directors.  The balance of the loan at December
31, 2009 is $68,918.
 
 In
December, 2009, the Company borrowed approximately $33,000 from HSBC
Capital.  The loan is payable in 12 monthly installments plus interest
of 2.00% per month, commencing January, 2010.  The loan is personally
guaranteed by ATN’s directors.  The balance of the loan at December
31, 2009 is $26,426.
 
 In
December, 2009 the Company assumed the note payable related to the contribution
of the 9th floor
office space by the minority shareholders. The loan is payable at $4,129 per
month which includes interest which is adjustable annually.  The
balance of the loan at December 31, 2009 is   $
166,481.
 
 An
analysis of the current and long-term portion at December 31, is as
follows:
 
 2009
              
              
              2008Total
      loans outstanding
              
              $
              900,150
              
              
              $
              533,654Less:
      current portion
              
              
              473,828
              
              
              
              365,782Long-term
      portion
              
              $
              426,322
              
              
              $
              167,872
  25
  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.
 
 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, 2009 and 2008 and the reports thereon of Meyler
& Company, LLC.
  26


CONTENTS
 
 PageReport of Independent Registered Public Accounting
      Firm
                        
                        
                        F-1Consolidated
      Balance Sheets
                        
                        
                        F-2Consolidated
      Statements of Operations
                        
                        
                        F-3Consolidated
      Statement of Stockholders’ Deficit
                        
                        
                        F-4Consolidated
      Statements of Cash Flows
                        
                        
                        F-5Notes
      to Consolidated Financial Statements
                        
                        
                        F-6
 
 27




MEYLER
& COMPANY, LLC












Report of
Independent Registered Public Accounting Firm
  To the
Board of Directors
 Stockholders
of Lexicon United Incorporated and Subsidiaries
 Austin,
Texas
 
 We have
audited the accompanying consolidated balance sheets of Lexicon United
Incorporated and Subsidiaries as of December 31, 2009 and 2008, and the related
consolidated statements of operations, stockholders’ deficit, and cash flows for
each of the years in the two-year period ended December 31, 2009 and
2008.  These consolidated financial statements are the responsibility
of the Company’s management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our
audit.
 
 We
conducted our audit 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 audit provides 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 Incorporated
and Subsidiaries as of December 31, 2009 and 2008, and the results of its
operations and its cash flows for each of the years in the two-year period ended
December 31, 2009 and 2008, 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 A to the consolidated financial statements, the Company continues to
have negative cash flows from operations, recurring losses from operations, and
has a stockholders’ deficit. These conditions raise substantial doubt about its
ability to continue as a going concern.  Management’s plans regarding
these matters are also described in Note A.  The consolidated
financial statements do not include any adjustments that may result from the
outcome of this uncertainty.
 
 
 /s/
Meyler & Company, LLC
 
 Middletown,
NJ
 May 17,
2010
  F-1




LEXICON
      UNITED INCORPORATED AND SUBSIDIARIESCONSOLIDATED
      BALANCE SHEETS
  December
      31
                
                
                December
      31,2009
                
                
                2008CURRENT
      ASSETSCash
      and cash equivalents
                
                $
                136,308
                
                
                $
                291,453Accounts
      receivable
                
                
                387,392
                
                
                
                342,144Other  receivables
                
                
                209,728
                
                
                
                211,520Prepaid
      expenses
                
                
                79,547
                
                
                
                163Total
      current assets
                
                
                812,975
                
                
                
                845,280FIXED
      ASSETSBuilding,
      equipment, and leasehold improvements, net of accumulated depreciation of
      $343,648 and $237,570 at December 31, 2009 and December 31, 2008,
      respectively
                
                
                1,264,180
                
                
                
                478,896OTHER
      ASSETSInvestment
      in receivable portfolios
                
                
                91,872
                
                
                
                529,742Customer
      Lists,  net of amortization of $205,488 and $154,116 at December
      31, 2009 and December 31, 2008, respectively
                
                
                308,245
                
                
                
                359,617Tradenames,
      net of amortization of $88,067 and $66,050 at December 31, 2009 and
      December 31, 2008, respectively
                
                
                132,104
                
                
                
                154,120Goodwill
                
                
                693,141
                
                
                
                693,141Security
      deposit
                
                
                1,350
                
                
                
                1,350Total
      other assets
                
                
                1,226,712
                
                
                
                1,737,970TOTAL
      ASSETS
                
                $
                3,303,867
                
                
                $
                3,062,146CURRENT
      LIABILITIESBank
      Overdrafts
                
                $
                321,594
                
                
                $
                301,282Loans
      payable to banks
                
                
                82,319
                
                
                
                267,039Current
      portion of long-term debt
                
                
                473,828
                
                
                
                365,782Note
      payable to an individual
                
                
                38,378
                
                
                
                292,262Accounts
      Payable
                
                
                269,894
                
                
                
                102,049Loans
      payable to officer
                
                
                249,863
                
                
                
                187,605Accrued
      Expenses
                
                
                979,027
                
                
                
                477,571Accrued
      Municipal Service Taxes
                
                
                46,791
                
                
                
                125,017Accrued
      Payroll and related taxes
                
                
                405,726
                
                
                
                984,358Accrued
      Employee Benefits
                
                
                57,818
                
                
                
                113,919Total
      Current Liabilities
                
                
                2,925,238
                
                
                
                3,216,884LONG
      TERM LIABILITIESLong
      term debt
                
                
                426,322
                
                
                
                167,872Total
      Long Term Liabilities
                
                
                426,322
                
                
                
                167,872TOTAL
      LIABILITIES
                
                
                3,351,560
                
                
                
                3,384,756STOCKHOLDERS'
      DEFICITPreferred
      stock $0.001 par value, 10,000,000 shares authorized, none issued and
      outstanding
                
                
                -
                
                
                
                -Common
      stock $0.001 par value, 40,000,000 shares authorized, 8,708,134 and
      8,696,134 shares issued and outstanding at December 31, 2009 and December
      31, 2008 respectively
                
                
                8,708
                
                
                
                8,696Paid
      in capital
                
                
                3,057,664
                
                
                
                2,725,954Accumulated
      other comprehensive loss
                
                
                (293,624
                )
                
                
                (99,028
                )Accumulated
      deficit
                
                
                (3,032,228
                )
                
                
                (2,958,232
                )Total
      Lexicon Stockholders' Deficit
                
                
                (259,480
                )
                
                
                (322,610
                )Non-Controlling
      Interest
                
                
                211,787
                
                
                
                -Total
      Deficit
                
                
                (47,693
                )
                
                
                (322,610
                )TOTAL
      LIABILITIES AND STOCKHOLDERS' DEFICIT
                
                $
                3,303,867
                
                
                $
                3,062,146
 See
      accompanying notes to financial
statements.




F-2




LEXICON
      UNITED INCORPORATED AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF OPERATIONS
 
 Year
      EndedDecember
      31,2009
              
              
              2008REVENUESService
      revenue
              
              $
              4,190,723
              
              
              $
              4,162,043Revenue
      from receivable portfolios
              
              
              78,215
              
              
              
              169,312Total
      revenues
              
              
              4,268,938
              
              
              
              4,331,355COST
      OF SERVICES
              
              
              2,364,253
              
              
              
              2,558,467GROSS
      PROFIT
              
              
              1,904,685
              
              
              
              1,772,888COSTS
      AND EXPENSESSelling,
      general and administrative (including reversal of $712,958 of accrued
      payroll withholding and related taxes in 2009)
              
              
              1,081,598
              
              
              
              1,669,749Depreciation
              
              
              94,156
              
              
              
              134,909Amortization
              
              
              73,389
              
              
              
              73,389Total
      costs and expenses
              
              
              1,249,143
              
              
              
              1,878,047OPERATING
      INCOME (LOSS)
              
              
              655,542
              
              
              
              (105,159
              )OTHER
      INCOME (EXPENSE)Interest
      expense
              
              
              (726,802
              )
              
              
              (594,547
              )Foreign
      exchange and other
              
              
              59,472
              
              
              
              (61,041
              )Total
      Other Income(expense)
              
              
              (667,330
              )
              
              
              (655,588
              )NET
      LOSS BEFORE INCOME TAXES
              
              
              (11,788
              )
              
              
              (760,747
              )Provision
      for income taxes
              
              
              -
              
              
              
              -NET  LOSS
              
              
              (11,788
              )
              
              
              (760,747
              )Less:
      Net income attributable to noncontrolling interest
              
              
              62,208
              
              
              
              -NET
      LOSS ATTRIBUTABLE TO LEXICON UNITED INCORPORATED
              
              $
              (73,996
              )
              
              
              (760,747
              )NET
      LOSS  PER COMMON SHARE (Basic and Diluted)
              
              $
              (0.01
              )
              
              $
              (0.09
              )WEIGHTED AVERAGE COMMON
      SHARES OUTSTANDING
      (Basic and Diluted)
              
              
              8,707,444
              
              
              
              8,597,205
 
 See
      accompanying notes to financial
statements.
 
 F-3




LEXICON
UNITED INCORPORATED AND SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ DEFICIT
 For the
Years Ended December 31, 2009 and 2008
 
 Common
      Stock
                                                            
                                                            
                                                            Paid
      in
                                                              Capital
                                                            
                                                            
                                                            Accumulated
                                                              Deficit
                                                            
                                                            
                                                            ComprehensiveLoss
                                                            
                                                            
                                                            Stockholders’Equity
      (Deficit)
                                                            
                                                            
                                                            Non-Controlling
                                                              Interest
                                                            
                                                            
                                                            TotalShares
                                                            
                                                            
                                                            AmountBalance,
      December 31, 2007
                                                            
                                                            
                                                            8,456,250
                                                            
                                                            
                                                            $
                                                            8,456
                                                            
                                                            
                                                            $
                                                            1,903,194
                                                            
                                                            
                                                            $
                                                            (2,197,485
                                                            )
                                                            
                                                            $
                                                            (638,344
                                                            )
                                                            
                                                            $
                                                            (924,179
                                                            )
                                                            
                                                            $
                                                            -
                                                            
                                                            
                                                            $
                                                            (924,179
                                                            )Fair
      value of common stock issued in connection withconsulting
      services at $3.50 per share
                                                            
                                                            
                                                            3,000
                                                            
                                                            
                                                            
                                                            3
                                                            
                                                            
                                                            
                                                            10,497
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            10,500
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            10,500Issuance
      of common stock in conversation of an $800,000debenture
      from Keyano Invest, Inc. a related party$3.45
      per share
                                                            
                                                            
                                                            231,884
                                                            
                                                            
                                                            
                                                            232
                                                            
                                                            
                                                            
                                                            799,768
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            800,000
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            800,000Fair
      value of common stock issued in connection withconsulting
      services at $2.50 per share
                                                            
                                                            
                                                            5,000
                                                            
                                                            
                                                            
                                                            5
                                                            
                                                            
                                                            
                                                            12,495
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            12,500
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            12,500Net
      loss for the year ended December 31, 2008
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            (760,747
                                                            )
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            (760,747
                                                            )
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            (760,747
                                                            )Other
      comprehensive gain
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            539,316
                                                            
                                                            
                                                            
                                                            539,316
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            539,316Balance,
      December 31, 2008
                                                            
                                                            
                                                            8,696,134
                                                            
                                                            
                                                            
                                                            8,696
                                                            
                                                            
                                                            
                                                            2,725,954
                                                            
                                                            
                                                            
                                                            (2,958,232
                                                            )
                                                            
                                                            
                                                            (99,028
                                                            )
                                                            
                                                            
                                                            (322,610
                                                            )
                                                            
                                                            
                                                            -
                                                            
                                                            
                                                            
                                                            (322,610
                                                            )Components
      of Comprehensive Loss:Net
      income (loss) for year ended December 31, 2009
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            (73,996
                                                            )
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            (73,996
                                                            )
                                                            
                                                            
                                                            62,208
                                                            
                                                            
                                                            
                                                            (11,788
                                                            )Other
      comprehensive gain (loss)-foreign exchange
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            (194,596
                                                            )
                                                            
                                                            
                                                            (194,596
                                                            )
                                                            
                                                            
                                                            72,649
                                                            
                                                            
                                                            
                                                            (121,947
                                                            )Total
      Comprehensive Loss
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            (73,996
                                                            )
                                                            
                                                            
                                                            (194,596
                                                            )
                                                            
                                                            
                                                            (268,592
                                                            )
                                                            
                                                            
                                                            134,857
                                                            
                                                            
                                                            
                                                            (133,735
                                                            )Fair
      value of common stock issued in connection withconsulting
      services at $2.00 per share
                                                            
                                                            
                                                            12,000
                                                            
                                                            
                                                            
                                                            12
                                                            
                                                            
                                                            
                                                            23,988
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            24,000
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            24,000Transfer
      of office facility at fair market value bynon-controlling
      shareholders
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            307,722
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            307,722
                                                            
                                                            
                                                            
                                                            76,930
                                                            
                                                            
                                                            
                                                            384,652Balance,
      December 31, 2009
                                                            
                                                            
                                                            8,708,134
                                                            
                                                            
                                                            $
                                                            8,708
                                                            
                                                            
                                                            $
                                                            3,057,664
                                                            
                                                            
                                                            $
                                                            (3,032,228
                                                            )
                                                            
                                                            $
                                                            (293,624
                                                            )
                                                            
                                                            $
                                                            (259,480
                                                            )
                                                            
                                                            $
                                                            211,787
                                                            
                                                            
                                                            $
                                                            (47,693
                                                            )
 
 See
accompanying notes to financial statements.




F-4




LEXICON
      UNITED INCORPORATED AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF CASH FLOWS
 
 For
      the years endedDecember
      31,2009
              
              
              2008CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      loss
              
              $
              (11,788
              )
              
              $
              (760,747
              )Noncash
      items included in net loss:Depreciation
              
              
              94,156
              
              
              
              134,909Amortization
      of intangibles
              
              
              73,389
              
              
              
              73,389Net
      assets disposition
              
              
              -
              
              
              
              30,849Accumulated
      depreciation adjustment
              
              
              (82,065
              )Accrued
      interest on loans to individual
              
              
              189,034
              
              
              
              -Stock
      based compensation
              
              
              24,000
              
              
              
              12,500Provision
      for contingencies
              
              
              (712,958
              )
              
              
              (141,023
              )Decrease
      (increase) in assets:Accounts
      receivable
              
              
              (103,495
              )
              
              
              7,212Other
      receivables
              
              
              249,491
              
              
              
              (185,267
              )Prepaid
      expenses
              
              
              (79,329
              )
              
              
              730Security
      deposit
              
              
              -
              
              
              
              (1,350
              )Increase
      (decrease) in liabilities:Accounts
      payable
              
              
              108,126
              
              
              
              (11,029
              )Accrued
      expenses
              
              
              351,596
              
              
              
              120,368Accrued
      payroll and related taxes
              
              
              (319,315
              )
              
              
              60,193Accrued
      employee benefits
              
              
              (96,989
              )
              
              
              (947
              )NET
      CASH PROVIDED BY (USED IN)  OPERATING ACTIVITIES
              
              
              (316,147
              )
              
              
              (660,213
              )CASH
      FLOWS FROM INVESTING ACTIVITIESPurchase
      of fixed assets
              
              
              (94,702
              )
              
              
              (20,355
              )Investment
      in receivable portfolio
              
              
              141,069
              
              
              
              (282,126
              )NET
      CASH PROVIDED BY (USED IN)  INVESTING ACTIVITIES
              
              
              46,367
              
              
              
              (302,481
              )CASH
      FLOWS FROM FINANCING ACTIVITIESLoan
      from Keyano Invest, Inc
              
              
              -
              
              
              
              1,000,000Loan
      from related party
              
              
              393,364
              
              
              
              78,329Loan
      from an individual
              
              
              28,716
              
              
              
              65,000Net
      change in bank loans
              
              
              -
              
              
              
              (99,680
              )Proceeds
      of new loans
              
              
              616,643
              
              
              
              599,915Repayment
      of loans
              
              
              (1,411,356
              )
              
              
              (782,964
              )Issuance
      of common stock
              
              
              -
              
              
              
              10,500NET
      CASH PROVIDED BY (USED IN)   FINANCING
      ACTIVITIES
              
              
              (372,633
              )
              
              
              871,100EFFECT
      OF EXCHANGE RATE OF CASH
              
              
              487,268
              
              
              
              (84,148
              )NET
      DECREASE IN CASH
              
              
              (155,145
              )
              
              
              (175,742
              )CASH,
      BEGINNING OF PERIOD
              
              
              291,453
              
              
              
              467,195CASH,
      END OF PERIOD
              
              $
              136,308
              
              
              $
              291,453SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATIONInterest
      paid
              
              $
              726,802
              
              
              $
              594,547Non
      cash itemsPurchase
      of furniture and equipment
              
              $
              289,875
              
              
              $
              43,095Transfer
      of office facility at fair market value by minority shareholders-
      additional paid in capital
              
              $
              384,652Transfer
      of portion of receivable portfolio in settlement of loans
              
              $
              513,650Conversion
      of loan from Keyano  Investment, Inc to common
    stock
              
              
              
              
              
              $
              800,000Loans
      and accounts payable incurred for acquisition of receivable
      portfolio
              
              
              
              
              
              $
              267,950Issuance
      of common stock for consulting services
              
              $
              24,000
 
 See
      accompanying notes to financial
statements.
 
 F-5


LEXICON
UNITED INCORPORATED AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008
  NOTE A –
NATURE OF BUSINESS AND GOING CONCERN
 
 Organization
 
 Lexicon
United Incorporated (“the Company”) 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, currently inactive, Engepet Energy Enterprises, Inc. and
United Oil Services, Inc, to work with companies in Trinidad and Tobago to
recover additional oil from oil wells whose production had
diminished.
 
 Going
Concern
 
 As
indicated in the accompanying financial statements, the Company has an
accumulated deficit of $3,032,228 and negative working capital of $2,112,263 at
December 31, 2009. Management’s plans include raising adequate capital through
the equity markets to fund future operations and generating 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.
 
 NOTE B –
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
affect 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 $4,725 and $53,781
in 2009 and 2008, 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.
 
 F-6




LEXICON
UNITED INCORPORATED AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008
  NOTE B –
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
 Revenue
Recognition
 
 The
Company derives its revenue primarily 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 the pro rata commission for
each installment, when the installment payments are received from the
debtors.  Revenue from the collection of distressed debt owned by the
Company is recognized based on FASB ASC Subtopic 310-30 “Loans and Debt
Securities Acquired with Deteriorated Credit Quality” using the cost recovery
method commencing July 1, 2009 and the interest method prior to July 1,
2009.
  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 in 2008 were not deemed to be
significant.  In 2009, Engepet and United were inactive.  At
December 30, 2009, the minority shareholders transferred the second floor office
facilities to the Company at current fair market value in the amount of $
531,133.  This amount is reflected on the balance sheet at December
31, 2009.  The Company was also to infuse additional working capital
to keep the ownership ratio intact.  As of the date of this report,
such infusion has not occurred.  Accordingly, the Company’s ownership
percentage has been reduced to 74% commencing January 1, 2010.
  Intangible
Assets
 
 Intangible
assets of customer lists and trade names are amortized over a ten year life. The
amortization recorded is $293,555 and $220,166 at December 31, 2009 and 2008
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 FASB ASC Topic 740, “Income
Taxes”  which 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.
 
 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
  F-7
  LEXICON
UNITED INCORPORATED AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008
  NOTE B –
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
 Income Taxes
(Continued)
 
 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.
 
 Net Loss Per Common
Share
 
 The
Company computes per share amounts in accordance with FASB ASC Topic 260,
“Earnings Per Share” which  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.
 
 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 FASB ASC Topic 350,
“Intangibles-Goodwill and Other”.As required, 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. 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,
2009.
 
 Equity-Based
Compensation
 
 The
Company accounts for equity- based compensation transactions with employees
under the provisions of FASB ASC Topic 718, “Compensation, Stock
Compensation”.  Topic 718 requires the recognition of the fair value
of equity-based compensation in net income.  The fair value of the
Company’s equity instruments are estimated using a Black-Scholes option
valuation model.  This model requires the input of highly subjective
assumptions and elections including expected stock price volatility and the
estimated life of each award.  In addition, the calculation of
equity-based compensation costs requires that the Company estimate the number of
awards that will be forfeited during the vesting period.  The fair
value of equity-based awards granted to employees is amortized over the vesting
period of the award and the Company elected to use the straight-line method for
awards granted after the adoption of Topic 718.
  F-8




LEXICON
UNITED INCORPORATED AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008
  NOTE B –
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
 Equity-Based
Compensation (Continued)
 
 The
Company accounts for equity- based transactions with non-employees under the
provisions of ASC Topic 505-50, “Equity-Based Payments to
Non-Employees”.  Topic 505-50 establishes that equity-based payment
transactions with non-employees shall be measured at the fair value of the
consideration received or the fair value of the equity instruments issued,
whichever is more reliably measurable.  When the equity instrument is
utilized for measurement the fair value of the equity instrument is estimated
using the Black-Scholes option valuation model.  In general, the
Company recognizes an asset or expense in the same manner as if it was to
receive cash for the goods or services instead of paying with or using the
equity instrument.
 
 Fair Value
Measurements
  On
January 1, 2008, The Company adopted the provisions of ASC Topic 820 “Fair Value
Measurements and Disclosures” for financial assets and
liabilities.  On January 1, 2009, the Company adopted the provisions
of Topic 820 for non-financial assets and non-financial liabilities that are
recognized and disclosed at fair value on a nonrecurring basis.  Topic
820 defines fair-value, provides guidance for measuring fair value and requires
certain disclosures.  It does not require any new fair value
measurements, but rather applies to all other accounting pronouncements that
require or permit fair value measurements.
  Topic 820
utilizes a fair value hierarchy that prioritizes the inputs to valuation
techniques used to measure fair value into three broad levels.  The
following is a brief description of those three levels:
  Level
      1:
              Observable
      inputs such as quoted prices (unadjusted) in active markets for identical
      assets or liabilities.
  Level
      2:
              Inputs
      other than quoted prices that are observable for the asset or
      liability,  either directly or indirectly.  These
      include quoted prices for similar assets or liabilities in active markets
      and quoted prices for identical or similar assets or liabilities in
      markets that are not active.Level
      3:
              Unobservable
      inputs that reflect the reporting entity’s own
  assumptions.
  The
Company’s financial instruments measured at fair value on a recurring basis are
summarized below:
  Financial
      Instruments
                
                Fair Value Hierarchy
                
                Fair
      Value at
                  December
      31,
                  2009
                
                
                Fair
      Value at
                  December
      31,
                  2008Cash
      and cash equivalents
                
                Level
      1
                
                $
                136,308
                
                
                $
                291,453
 The
Company does not have any non-financial assets or liabilities that are measured
at fair value on a non-recurring basis.
 F-9
 LEXICON
UNITED INCORPORATED AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008
  NOTE C –
RECENT ACCOUNTING PRONOUNCEMENTS
  Effective
July 1, 2009, the Accounting Standards Codification became FASB’s officially
recognized source of authoritative U.S. generally accepted accounting principles
applicable to all public and non-public non-governmental agencies, superseding
existing FASB, AICPA, EITF and related literature.  Rules and
interpretive releases of the SEC under the authority of federal securities laws
are also sources of authoritative GAAP for SEC registrants.  All other
accounting literature is considered non-authoritative.  Amendments to
the codification are made by issuing “Accounting Standards
Updates”  Accordingly, the Company has removed references to legacy
GAAP in these financial statements and has incorporated the current codification
in its December 31, 2009 Annual Report on Form 10-K.
 
 FASB ASC
Topic 260, “Earnings Per Share.”On January 1,
2009, the Company adopted new authoritative accounting guidance under FASB ASC
Topic 260, “Earnings Per Share,” which provides that unvested share-based
payment awards that contain nonforfeitable rights to dividends or dividend
equivalents (whether paid or unpaid) are participating securities and shall be
included in the computation of earnings per share pursuant to the two-class
method.
 
 FASB ASC
Topic 320, “Investments - Debt and Equity Securities.” New authoritative
accounting guidance under ASC Topic 320, “Investments - Debt and Equity
Securities,” (i) changes existing guidance for determining whether an
impairment is other than temporary to debt securities and (ii) replaces the
existing requirement that the entity’s management assert it has both the intent
and ability to hold an impaired security until recovery with a requirement that
management assert: (a) it does not have the intent to sell the security;
and (b) it is more likely than not it will not have to sell the security
before recovery of its cost basis. Under ASC Topic 320, declines in the fair
value of held-to-maturity and available-for-sale securities below their cost
that are deemed to be other than temporary are reflected in earnings as realized
losses to the extent the impairment is related to credit losses. The amount of
the impairment related to other factors is recognized in other comprehensive
income. The Company adopted the provisions of the new authoritative accounting
guidance under ASC Topic 320 during the first quarter of 2009. Adoption of the
new guidance did not significantly impact the Company’s financial
statements.
 
 FASB ASC
Topic 805, “Business Combinations.” On January 1, 2009, new authoritative
accounting guidance under ASC Topic 805, “Business Combinations,” became
applicable to the Company’s accounting for business combinations closing on or
after January 1, 2009. ASC Topic 805 applies to all transactions and other
events in which one entity obtains control over one or more other businesses.
ASC Topic 805 requires an acquirer, upon initially obtaining control of another
entity, to recognize the assets, liabilities and any non-controlling interest in
the acquiree at fair value as of the acquisition date. Contingent consideration
is required to be recognized and measured at fair value on the date of
acquisition rather than at a later date when the amount of that consideration
may be determinable beyond a reasonable doubt. This fair value approach replaces
the cost-allocation process required under previous accounting guidance whereby
the cost of an acquisition was allocated to the individual assets acquired and
liabilities assumed based on their estimated fair value. ASC Topic 805 requires
acquirers to expense acquisition-related costs as incurred rather than
allocating such costs to the assets acquired and liabilities assumed, as was
previously the case under prior accounting guidance. Assets acquired and
liabilities assumed in a business combination that arise from contingencies are
to be recognized at fair value if fair value can be reasonably estimated. If
fair value of such an asset or liability cannot be reasonably estimated, the
asset or liability would generally be recognized in accordance with ASC Topic
450, “Contingencies.” Under ASC Topic 805, the requirements of ASC Topic 420,
“Exit or Disposal Cost Obligations,” would have to be met in order to accrue for
a restructuring plan in purchase accounting. Pre-acquisition contingencies are
to be recognized at fair value, unless it is a non-contractual contingency that
is not likely to materialize, in which case, nothing should be recognized in
purchase accounting and, instead, that contingency would be subject to the
probable and estimable recognition criteria of ASC Topic 450,
“Contingencies.”
  F-10
  LEXICON
UNITED INCORPORATED AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008
  NOTE C –
RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)
 
 FASB ASC
Topic 810, “Consolidation”, New authoritative accounting guidance under ASC
Topic 810, “Consolidation” amended prior guidance to establish accounting and
reporting standards for the non-controlling interest in a subsidiary and for the
deconsolidation of a subsidiary.  Under ASC topic 810, a
non-controlling interest in a subsidiary, which is sometimes referred to as
minority interest, is an ownership interest in the consolidated entity that
should be reported as a component of equity in the consolidated financial
statements.  Among other requirements, ASC Topic 810 requires
consolidated net income to be reported at amounts that include the amounts
attributable to both the parent and the non-controlling interest.  It
also requires disclosure, on the face of the consolidated income statement, of
the amounts of consolidated net income attributable to the parent and to the
non-controlling interest.  The new authoritative accounting guidance
under ASC Topic 810 became effective on January 1, 2009 and the Company adopted
it as of that date.
  Further
new authoritative accounting guidance under ASC Topic 810 amends prior guidance
to  change how a company determines when an entity that is
insufficiently capitalized or is not controlled through voting (or similar
rights) should be consolidated.  The determination of whether a
company is required to consolidate an entity is based on, among other things, an
entity’s purpose and design and a company’s ability to direct the activities of
the entity that most significantly impact the entity’s economic
performance.  The new authoritative accounting guidance requires
additional disclosures about the reporting entity’s involvement with
variable-interest entities and any significant changes in risk exposure due to
that involvement as well as its effect on the entity’s financial
statements.  This new authoritative accounting guidance under ASC
Topic 810 will be effective January 1, 2010 and is not expected to have a
significant impact on the Company’s financial statements.
  FASB ASC
Topic 820, “Fair Value Measurements and Disclosures.”  New
authoritative accounting guidance under ASC Topic 820, “Fair Value Measurements
and Disclosures,” affirms that the objective of fair value when the market for
an asset is not active is the price that would be received to sell the asset in
an orderly transaction, and clarifies and includes additional factors for
determining whether there has been a significant decrease in market activity for
an asset when the market for that asset is not active.  ASC Topic 820
requires an entity to base its conclusion about whether a transaction was not
orderly on the weight of the evidence.  The new accounting guidance
amended prior guidance to expand certain disclosure requirements.  The
new authoritative accounting guidance under ASC Topic 810 became effective on
January 1, 2009 and did not have a material effect on the Company’s consolidated
financial statements.
  Further
new authoritative accounting guidance (Accounting Standards Update No. 2009-5)
under ASC Topic 820 provides guidance for measuring the fair value of a
liability in circumstances in which a quoted price in an active market for the
identical liability is not available.  In such instances, a reporting
entity is required to measure fair value utilizing a valuation technique that
uses (i) the quoted price of the identical liability when traded as an asset,
(ii) quoted prices for similar liabilities or similar liabilities when traded as
assets, or (iii) another valuation technique that is consistent with the
existing principles of ASC Topic 820, such as an income approach or market
approach.  The new authoritative accounting guidance also clarifies
that when estimating the fair value of a liability, a reporting entity is not
required to include a separate input or adjustment to other inputs relating to
the existence of a restriction that prevents the transfer of the
liability.  The forgoing new authoritative accounting guidance under
ASC Topic 820 will be effective for the Company’s statements beginning October
1, 2009 and is not expected to have a significant impact on the Company’s
financial statements.
  The
Company adopted the provisions of ASC Topic No. 855, “Subsequent Events” (“ASC
855”), on a prospective basis.  The provisions of ASC 855 provide
guidance related to the accounting for the disclosure of events that occur after
the balance sheet date but before the consolidated financial statements are
issued or are available to be issued.  Effective February 24, 2010,
the FASB issued Accounting Standards Update (“ASU”) No. 2010-09, “Subsequent
Events (Topic 855): Amendments to Certain Recognition and Disclosure
Requirements” which revised
  F-11
 LEXICON
UNITED INCORPORATED AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008
 
 
 NOTE C –
RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)
  certain
disclosure requirements. ASU No. 2010-09 did not have a significant impact on
the Company’s consolidated financial statements. The Company evaluated
subsequent events, which are events or transactions that occurred after December
31, 2009 through the issuance of the accompanying consolidated financial
statements
  NOTE
D  - 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 (“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 financed the purchase of the portfolio with cash and the execution of
two notes aggregating R$626,200 from two principal shareholders, one of which is
the President of the Company.  The notes bear interest at the rate of
2% per month and are due on December 31, 2009.  The notes at December
31, 2008 were included under the caption loan from an officer and loan from an
individual.  The loans from an individual are deemed to  be
a related party because of his affiliation with the Company.  At
December 31, 2008, the balance of the loans including accrued interest from the
officer was $58,982 and the loan from the individual was $249,434.
 
 The
Company has adopted FASB ASC Subtopic 310-30 (“Subtopic 310-30”) “Loans and Debt
Securities Acquired with Deteriorated Credit Quality”.  In accordance
with Subtopic 310-30, The Company can account for its investments in Portfolios
using either the interest method (preferred) or the cost recovery method. The
interest method applies an effective interest rate to the cost basis of the
pool.  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. The Company used the interest
method through June 30, 2009 and then determined that the amount and timing of
future cash collections on the Portfolios are not reasonably predictable, and
therefore, beginning July 1, 2009, commenced using the cost recovery
method.  Under the cost recovery method of accounting, no income is
recognized until the purchase price of the portfolio has been fully
recognized.
 
 During
the six months ended December 31, 2008, the Company collected $169,936 which was
$79,914 in excess of the amount provided in its original
projections.  During the six months ended June 30, 2009, the Company
collected $78,215 which was $35,245 less than the amount provided in its
original projections on a quarterly basis.  The excess cash
collections from 2008 combined with the decreased cash collections for the six
months ended June 30, 2009 and the changes in exchange rates provided a $14,729
reduction in the carrying value of the portfolio as at June 30,
2009.  The carrying value at June 30, 2009 was $604,856.
 
 An
analysis of the portfolio activity under the cost recovery method at December
31, 2009 is as follows:
 Portfolio
      carrying value at June 30, 2009
                  
                  $
                  604,856Portfolio
      collections for the period July 1, 2009 to December 31,
    2009
                  
                  
                  (96,343
                  )Transfer
      of portion of portfolio to two principal shareholders in consideration for
      shareholder debt
                  
                  
                  (513,650
                  )Change
      in currency rates for the period
                  
                  
                  97,009Balance,
      December 31, 2009
                  
                  $
                  91,872




F-12


LEXICON
UNITED INCORPORATED AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008
 
 NOTE
D  - INVESTMENT IN RECEIVABLE PORTFOLIO (CONTINUED)
 
 On
December 30, 2009, the Company entered into agreements with two principal
shareholders’ one of whom is the President of the Company, the other an
individual who is a major shareholder and deemed an affiliate. On December 30,
2009, the Company had loans outstanding with these individuals relating to the
original purchase of the portfolio on June, 2008.  It was agreed that
they would purchase a portion of the portfolio in consideration for the
liquidation of their indebtedness.  The fair value of this portfolio
transfer approximated the liquidation of indebtedness plus accrued interest at
2% per month which was (R$ 894,367) $513,650.
 NOTE E–
FIXED ASSETS
  Fixed
Assets are comprised of the following at December 31,
  2009
                  
                  
                  2008Building
                  
                  $
                  825,060
                  
                  
                  $
                  202,396Office
      furniture and equipment
                  
                  
                  617,567
                  
                  
                  
                  390,986Vehicles
                  
                  
                  63,158
                  
                  
                  
                  47,056Leasehold
      improvements
                  
                  
                  102,043
                  
                  
                  
                  76,0281,607,828
                  
                  
                  
                  716,466Less:
      accumulated depreciation
                  
                  
                  343,648
                  
                  
                  
                  237,570$
                  1,264,180
                  
                  
                  $
                  478,896
  On
December 30, 2009, the minority shareholders contributed the 9th floor
of an executive office facility to the Company at appraised value which was
$551,133.
 
 See also
Notes B, Consolidated Financial Statements and Note O, Stockholders’ Deficit as
to the second floor office facilities transferred to the Company on December 30,
2009.
  NOTE F–
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.  These loans were
repaid in the fourth quarter of 2009. Approximately $69,374 of transaction gains
were recorded for year ended December 31, 2009.  The balance of the
loans at December 31, 2009 and 2008 was $82,319 and $267,039,
respectively.
 
 NOTE G–
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%.  The loan is secured by the company’s
facility.  At December 31, 2009 and 2008, the balance of the loan is
$143,205 and $123,676 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, 2009 and 2008, the balance of the
loan is $-0- and $10,648 respectively.
  F-13
  LEXICON
UNITED INCORPORATED AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008
 
 NOTE G –
LONG TERM DEBT (CONTINUED)
 
 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, 2009 and 2008, the balance of the loan is
$60,253 and $70,544 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, 2009 and
2008, the balance is $-0- and $26,255 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, 2009 and 2008, the balance is $0
and $18,043, 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, 2009 and 2008,  the balance is $-0- and $11,302,
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, 2009 and 2008 is $3,392 and $19,642, 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, 2009 and 2008 is $9,694 and $14,445, respectively.
  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, 2009 and 2008, the balance is $ 6,927 and $58,743,
respectively.
  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, 2009 and 2008, the balance is $1,012 and
$1,231, respectively.
  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, 2009 and 2008, the balance is $-0- and  $54,278
respectively.
 
 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, 2009 and 2008, the balance is $-0- and $39,224,
respectively.
  F-14
  LEXICON
UNITED INCORPORATED AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008
 
 NOTE G –
LONG TERM DEBT (CONTINUED)
 
 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, 2009 and 2008, the balance is $0 and $48,584,
respectively.
 
 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, 2009 and 2008, the balance is $-0- and $29,952,
respectively.
 
 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, 2009 and 2008 is $ 2,145 and $7,087, respectively.
 
 In June,
2009, the Company borrowed approximately $25,000 from Banco Mercantile do
Brasil.  The loan is payable in 12 monthly installments plus interest
of 3.2% per month, commencing July, 2009.  The loan is personally
guaranteed by ATN’s directors.  The balance of the loan at December
31, 2009 is $11,006.
 
 In July,
2009, the Company borrowed approximately $42,500 from Banco Santander. The loan
is payable in 18 monthly installments plus interest of 2.53% per month,
commencing August, 2009. The loan is personally guaranteed by ATN’s directors.
The balance of the loan at December 31, 2009 is $26,426.
 
 In
October, 2009, the Company borrowed approximately $432,000 from BNP Banco
Brasil.  The loan is payable in 46 monthly installments plus interest
of 2.00% per month, commencing December, 2009. The loan is personally guaranteed
by ATN’s directors.  The balance of the loan at December 31, 2009 is
$307,926.
 
 In
October, 2009, the Company borrowed approximately $81,000 from Banco Bradesco.
The loan is payable in 12 monthly installments plus interest of 2.30% per month,
commencing December, 2009. The loan is personally guaranteed by ATN’s
directors.  The balance of the loan at December 31, 2009 is
$64,048.
 
 In
December, 2009, the Company borrowed approximately $87,450 from Banco Real. The
loan is payable in 24 monthly installments plus interest of 2.00% per month,
commencing January, 2010. The loan is personally guaranteed by ATN’s
directors.  The balance of the loan at December 31, 2009 is
$68,918.
 
 In
December, 2009, the Company borrowed approximately $33,000 from HSBC Capital.
The loan is payable in 12 monthly installments plus interest of 2.00% per month,
commencing January, 2010. The loan is personally guaranteed by ATN’s
directors.  The balance of the loan at December 31, 2009 is
$28,717.
 
 In
December, 2009 the Company assumed the note payable related to the contribution
of the 9th floor
office space by the minority shareholders.  The loan is payable at
$4,129 per month which includes interest and is adjustable annually by the
official Brazilian INPC index.  The loan is secured by the building.
The balance of the loan at December 31, 2009 is $ 166,481.
 
 An
analysis of the current and long-term portion at December 31 is as
follows:
  2009
                  
                  
                  2008Total
      loans outstanding
                  
                  $
                  900,150
                  
                  
                  $
                  533,654Less:
      current portion
                  
                  
                  473,828
                  
                  
                  
                  365,782Long-term
      portion
                  
                  $
                  426,322
                  
                  
                  $
                  167,872
 F-15
  LEXICON
UNITED INCORPORATED AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008
 
 
 NOTE G –
LONG TERM DEBT (CONTINUED)
 
 At
December 31, 2009, maturities of long term debt are as follows:
  2011
                  
                  $
                  258,6552012
                  
                  
                  69,7622013
                  
                  
                  69,7622014
                  
                  
                  28,1422015
      and thereafter
                  
                  
                  -Total
                  
                  $
                  426,321
 NOTE H–
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. The Company has
evaluated their payroll tax and related accruals and reduced amounts previously
recorded by approximately $712,958 and $141,023 for years ended December 31,
2009 and 2008, respectively.  The reduction in 2009 is the result of
recalculating the employee withholding taxes under Brazilian guidelines. These
reductions are reflected in the 2009 and 2008 financial statements as a
reduction in selling, general and administrative expenses. Accruals for such
Municipal tax and related payroll tax accruals at December 31, 2009 and 2008 are
$510,335 and $1,211,054 respectively.
 
 NOTE I-
INCOME TAXES
 
 The
Company accounts for income taxes in accordance with FASB ASC Topic 740, “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, 2009, these differences resulted
in a deferred tax asset of $552,000. FASB ASC Topic 740 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
accordingly, the accompanying financial statements do not reflect any net asset
for deferred taxes at December 31, 2009.
 
 The
Company has a US net operating carry forward loss of approximately $1,200,000
which expires commencing in 2029 and a $1,315,600 carryforward loss in Brazil
with an unlimited carryforward period.
 
 NOTE J–
RELATED PARTY
  At
various times during the year 2009, two shareholders have advanced funds to the
Company for working capital. The advances are unsecured and bear interest at the
rate of 2% per month.  The loans have no stated maturity date and
should either party terminate the loans, the loans are repayable within 30
days.  At December 31, 2009, the balance outstanding on the loans was
$249,963.  At December 31, 2008, the balance was $187,605, which
included an additional shareholder with a balance of $58, 982 which was repaid
during 2009.
  NOTE K -
LOAN FROM AN INDIVIDUAL
  In July,
2008, the Company borrowed $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
was $42,828.
  F-16
  LEXICON
UNITED INCORPORATED AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008
 
 NOTE K -
LOAN FROM AN INDIVIDUAL (CONTINUED)
 
 In
December 2009, the Company borrowed an additional $29,000.  The loan
is due on June 22, 2010 and bears interest at the rate of 18% per
year.  The balance of the loan at December 31, 2009 is
$42,828.
 
 In June,
2008, the Company borrowed to purchase the receivable portfolio.  The
loan bears interest at the rate of 2% per month and is unsecured.  The
balance of the loan at December 31, 2008 was $249,434.  The individual
making the loan is deemed to be an affiliate of the Company.  On
December 30, 2009, the balance was liquidated.  See Note D, Investment
In Receivable Portfolio.
 
 NOTE L
-  RENT EXPENSE
 
 The
Company during 2009 was leasing one floor of its office facilities from the
minority shareholders 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 during 2009 was also sub-leasing space in New York City.  The
lease commenced March 1, 2008 and cancelable upon 90 days notice.  The
annual rent is $16,200. The Company cancelled the lease in September,
2009.  On December 30, 2009, the minority shareholders contributed the
floor to the Company at appraised value net of outstanding indebtedness on the
facility.  Rent expense for the years ended December 31, 2009 and 2008
was $44,117 and $49,097, respectively.
 
 NOTE M-
REVENUE CONCENTRATIONS
 
 For the
year ended December 31, 2009, revenues from six major customers exceeded 10%
individually and represented 83.22% of total revenues. During 2008, three major
customers exceeded 10% individually and represented 36.62% of total
revenues.
 
 NOTE O -
STOCKHOLDERS’ DEFICIT
 
 As of
January 1, 2008, the Company included 5,000 of its common shares as issued and
outstanding for professional fees incurred.  The shares were valued at
$2.50 per share.  Share-based compensation for 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 its common stock in conversion of
an $800,000 debenture from Keyano, Invest, Inc., a related party.  The
shares were valued at $3.45.
 
 On
January 22, 2009, the Company has included 12,000 of its common shares as issued
and outstanding for consulting fees incurred. The shares were valued at $2.00
per share.  Share-based compensation for consulting expense charged to
operations as of December 31, 2009 was $24,000.  These shares are
included as outstanding but have not yet been issued.
 
 On
December 30, 2009, the Brazilian shareholders contributed the ninth floor office
space to the Company which was currently leased to the Brazilian
subsidiary.  The office space was contributed at fair value net of any
indebtedness on the office space.  As a result, fixed assets increased
$551,133, shareholder loans increased $166,481 and total stockholders’ deficit
decreased $384,652.
 NOTE P-
SUBSEQUENT EVENTS
  On March
11, 2010, the Company entered into an agreement with Wakabayashi Fund LLC to
provide institutional market awareness and public relation
services.  In consideration for the services, the Company issued
120,000 shares of its common stock which will be valued at $1.25 per
share.
  F-17
  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 (CFO), Elie Saltoun, and Vice President 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,
2009).  Based on such evaluation, our CEO, CFO and Vice
President 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, CFO and Vice President, as appropriate to
allow timely decisions regarding required disclosure.  The material
weakness identified by the Company is its inability to produce financial
statements in a timely manner in order to facilitate a timely filing of its
required reports to the U.S. Securities and Exchange
Commission. Additionally, the Company has only two directors; no outside
directors and no audit committee. The Company is undertaking to resolve
these issues in a manner which will permit timely disclosure and filing of
required reports iin the future.
 
 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, 2009 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.
  28
  Name
                  
                  Age
                  
                  Positions
      Held
                  
                  ExperienceElie
      Saltoun
                  
                  70
                  
                  Chief
      Executive 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.Jeffrey
      Nunez
                  
                  50
                  
                  Vice
      President  since 2009 and
                    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
                  
                  55
                  
                  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
                  
                  62
                  
                  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.
  29
 
 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, 2009, Elie
Saltoun and Jeffrey Nunez each failed to make the required filings under Section
16(a). These officers have indicated that they intend to promptly make the
required filings.
 
 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.
 
 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.
  30
 
 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, 2009, the reports required to be filed were not 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
                    2008
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    75,097
                    
                    
                    
                    75,097CEO
                    2009
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    0
                    
                    
                    0Jeffrey
      Nunez
                    2008
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    26,693
                    
                    
                    
                    26,693Secretary
                    2009
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    0
                    
                    
                    0
  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, 2009.
  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.
 
 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,
2010 (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:
  31
 
 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,
      7thFloor Rio de Janeiro, Brazil
      20040-007
                    
                    President,
      Chief Executive Officer and director of ATN
                    
                    
                    900,000
                    
                    
                    
                    10.33
                    %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
                    
                    
                    67.55
                    %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
                    
                    
                    67.55
                    %Common
      Stock $0.001 par value
                    
                    Jeffrey Nunez 4500 Steiner Ranch Blvd.
      Suite 1708 Austin, Texas
      78732
                    
                    Secretary
      and Director
                    
                    
                    412,047
                    
                    
                    
                    4.73
                    %Common
      Stock $0.001 par value
                    
                    All
      officers and directors as a group (2 persons named above)
                    
                    
                    
                    
                    6,294,081
                    
                    
                    
                    72.28
                    %
 
 (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 8,708,134 shares of our Common Stock outstanding as of January 1,
      2010.
  (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.
 
 ITEM
13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND
DIRECTOR    INDEPENDENCE
  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.
  32
  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, 2009 and
2008 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 $60,000 and $63,279,
respectively.
 
 Audit
Related Fees
 
 The
aggregate fees billed in the fiscal year ended December 31, 2009 and 2008 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 $29,920 and $25,000, respectively.
 
 Tax
Fees
 
 The
aggregate fees billed in the fiscal years ended December 31, 2009 and 2008 for
professional services rendered by the principal accountant for tax compliance,
tax advice and tax planning were $1,500 and $1,500, respectively.
  All
Other Fees
 
 The
aggregate fees billed in the fiscal years ended December 31, 2009 and 2008 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.
 
 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, 2009 and the quarterly reviews for the subsequent fiscal quarters
of 2010 through the review for the quarter ended September 30, 2010 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.
  33
 
 The
percentage of audit-related, tax and other services that were approved by the
board of directors is 100%.
 
 PART
IV
 
 ITEM
15. 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
      of Meyler & Company, LLC, Independent Registered Certified Public
      Accounting Firm
 
 ·
                  Balance
      Sheets as of December 31, 2009 and 2008
  (audited)
 
 ·
                  Statements
      of Operations for the years ended December 31, 2009 and 2008
      (audited)
 
 ·
                  Statements
      of Stockholders’ Deficit from 2006 through December 31, 2009
      (audited)
 
 ·
                  Statements
      of Cash Flows for the years ended December 31, 2009 and 2008
      (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.
 
 ExhibitNumber
                    
                    Description31.1.
                    
                    Certification
      of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-
      Oxley Act of 2002.31.2.
                    
                    Certification
      of the 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.
 
 34
 
 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: May
17, 2010
 
 LEXICON
      UNITED INCORPORATEDBy:
                  /s/ Elie
      SaltounElie
      SaltounChief
      Executive Officer, Chief Financial OfficerPresident
      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
    SaltounElie
      SaltounChief
      Execujtive Officer, Chief Financial Officer,
                      President,
      treasurer and Director
  Date May
      17, 2010By
                    /s/ Jeffrey
      NunezJeffrey
      NunezDirectorDate
      May
      17, 2010
  35
  EXHIBIT
LIST
 
 31.1.
                    Certification
      of the Chief Executive Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.
 
 31.2.
                    Certification
      of the 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.
 
 36