---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549

FORM 10-QSB

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended February 28,
2007

[   ]TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGEACT OF 1934

For the transition period from ______________________ To
______________________

Commission file number **333-134175**

LEXINGTON ENERGY SERVICES
INC.(Exact name of registrant as specified in its charter)

|Nevada                                           | N/A                                 
|------------------------------------------------ | ------------------------------------
|(State or other jurisdiction of incorporation or | (I.R.S. Employer Identification No.)
|organization)                                    |                                     
|                                                 |                                     
|207 West Hastings Street, Suite 1209, Vancouver, |                                     
|British Columbia, Canada                         | **V6B 1H7**                         
|(Address of principal executive offices)         | (Zip Code)                          

604-899-4550(Registrants telephone number,
including area code)

______________________________________________________(Former
name, former address and former fiscal year, if changed since last report)

Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the registrant was require to file such
reports), and (2) has been subject to such filing requirements for the past
90 days. [X] Yes [   ] No

Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). [   ] Yes [X]
No

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Check whether the registrant has filed all documents and reports
required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange
Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. [   ] Yes [   ] No

APPLICABLE ONLY TO CORPORATE ISSUERS

As of April 13, 2007, the registrants outstanding common stock
consisted of 22,591,823shares.

i

---

PART I  FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

The unaudited interim consolidated financial statements of Lexington
  Energy Services Inc. (the Company, Lexington, we,
  our, us) follow. All currency references in this report
  are in US dollars unless otherwise noted.

1

---

Lexington Energy Services Inc.February 28, 2007
(unaudited)

Index

|Interim
      Consolidated Balance Sheets                    | F1
|------------------------------------------------------------ | ---
|                                                             |    
|Interim
      Consolidated Statements of Operations          | F2
|                                                             |    
|Interim
      Consolidated Statements of Cash Flows          | F3
|                                                             |    
|Interim
      Consolidated Statement of Stockholders' Equity | F5
|                                                             |    
|Notes
      to the Interim Consolidated Financial Statements | F9

F-i

---

LEXINGTON ENERGY SERVICES INC.

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

February 28, 2007

(Stated in US Dollars)

(Unaudited)

F-ii

---

LEXINGTON ENERGY SERVICES INC.INTERIM CONSOLIDATED BALANCE SHEETS 
  February 28, 2007 and November 30, 2006 
  (Stated in US Dollars) 
  (Unaudited)

|                                                              |   | February 28 |   |   | November 30 |  
|------------------------------------------------------------- | - | ----------- | - | - | ----------- | -
|ASSETS                                                        |   | 2007        |   |   | 2006        |  
|Current                                                       |   |             |   |   |             |  
|Cash and cash equivalents                                     | $ | 315,574     |   | $ | 639,499     |  
|GST receivable                                                |   | 122,630     |   |   | 241,764     |  
|Accounts receivable                                           |   | 436,499     |   |   | -           |  
|Prepaid expenses and refundable
      deposits                |   | 51,489      |   |   | 36,193      |  
|                                                              |   |             |   |   |             |  
|                                                              |   | 926,192     |   |   | 917,456     |  
|Due from related parties  Note 5                             |   | 33,781      |   |   | 38,218      |  
|Equipment  Note 4                                            |   | 5,292,412   |   |   | 3,249,779   |  
|Deposits on equipment                                         |   | -           |   |   | 1,360,459   |  
|Deposit on land  Note 9                                      |   | 170,940     |   |   | 175,438     |  
|                                                              |   |             |   |   |             |  
|                                                              | $ | 6,423,325   |   | $ | 5,741,350   |  
|                                                              |   |             |   |   |             |  
|LIABILITIES                                                   |  
|                                                              |   |             |   |   |             |  
|Current                                                       |   |             |   |   |             |  
|Accounts payable and accrued liabilities
       Note 5       | $ | 1,167,118   |   | $ | 1,246,921   |  
|                                                              |   |             |   |   |             |  
|STOCKHOLDERS EQUITY                                          |  
|                                                              |   |             |   |   |             |  
|Capital stock  Notes 6, 7, 9 and 11                          |   |             |   |   |             |  
|Authorized:                                                   |   |             |   |   |             |  
|20,000,000
      preferred shares with a par value of $0.0001 |   |             |   |   |             |  
|100,000,000
      common shares with a par value of $0.0001   |   |             |   |   |             |  
|Issued:                                                       |   |             |   |   |             |  
|22,289,178
      common shares (November 30, 2006: 20,802,230 |   |             |   |   |             |  
|common
      shares)                                          |   | 2,229       |   |   | 2,080       |  
|Additional paid-in capital                                    |   | 7,630,977   |   |   | 6,294,047   |  
|Stock subscriptions received  Note 9                         |   | 255,000     |   |   | 279,317     |  
|Accumulated other comprehensive loss                          |   | (94,515     | ) |   | (32,455     | )
|Deficit accumulated                                           |   | (2,537,484  | ) |   | (2,048,560  | )
|                                                              |   |             |   |   |             |  
|                                                              |   | 5,256,207   |   |   | 4,494,429   |  
|                                                              |   |             |   |   |             |  
|                                                              | $ | 6,423,325   |   | $ | 5,741,350   |  

SEE ACCOMPANYING NOTES

F-1

---

LEXINGTON ENERGY SERVICES INC.INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS 
  for the three months ended February 28, 2007 and 2006 
  (Stated in US Dollars) 
  (Unaudited)

|                                              |   |                    |   |   |            |  
|--------------------------------------------- | - | ------------------ | - | - | ---------- | -
|                                              |   |                    |   |   |            |  
|                                              |   | Three months ended |  
|                                              |   | February 28,       |  
|                                              |   | 2007               |   |   | 2006       |  
|Revenues                                      |   |                    |   |   |            |  
|Revenue                                       | $ | 1,152,254          |   | $ | -          |  
|Direct costs                                  |   | (513,535           | ) |   | -          |  
|                                              |   |                    |   |   |            |  
|                                              |   | 638,719            |   |   | -          |  
|                                              |   |                    |   |   |            |  
|Expenses                                      |   |                    |   |   |            |  
|Consulting fees                               |   | 78,926             |   |   | -          |  
|Depreciation                                  |   | 109,416            |   |   | 600        |  
|General and administrative                    |   | 490,787            |   |   | 12,461     |  
|Management fees  Note 5                      |   | 166,158            |   |   | 25,500     |  
|Professional fees 
      Note 8              |   | 73,298             |   |   | 27,031     |  
|Promo and marketing                           |   | 152,913            |   |   | 11,015     |  
|Travel                                        |   | 57,230             |   |   | 8,643      |  
|                                              |   |                    |   |   |            |  
|                                              |   | 1,128,728          |   |   | 85,250     |  
|                                              |   |                    |   |   |            |  
|Loss before other items                       |   | (490,009           | ) |   | (85,250    | )
|                                              |   |                    |   |   |            |  
|Other items:                                  |   |                    |   |   |            |  
|Interest income                               |   | 1,085              |   |   | -          |  
|Gain on sale of equipment                     |   | -                  |   |   | -          |  
|                                              |   |                    |   |   |            |  
|Net loss for the period                       |   | (488,924           | ) |   | (85,250    | )
|                                              |   |                    |   |   |            |  
|Foreign currency translation adjustment       |   | (62,060            | ) |   | -          |  
|                                              |   |                    |   |   |            |  
|Comprehensive loss for the period             | $ | (550,984           | ) | $ | (85,250    | )
|                                              |   |                    |   |   |            |  
|Basic and diluted loss per share              | $ | (0.02              | ) | $ | (0.01      | )
|                                              |   |                    |   |   |            |  
|Weighted average number of shares outstanding |   | 21,681,000         |   |   | 12,730,000 |  

SEE ACCOMPANYING NOTES

F-2

---

LEXINGTON ENERGY SERVICES INC.INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS 
  for the three months ended February 28, 2007 and 2006 
  (Stated in US Dollars) 
  (Unaudited)

|                                                    |   |                    |   |   |          |  
|--------------------------------------------------- | - | ------------------ | - | - | -------- | -
|                                                    |   |                    |   |   |          |  
|                                                    |   | Three months ended |  
|                                                    |   | February 28,       |  
|                                                    |   | 2007               |   |   | 2006     |  
|                                                    |   |                    |   |   |          |  
|Operating Activities                                |   |                    |   |   |          |  
|Net loss for the period                             | $ | (488,924           | ) | $ | (85,250  | )
|Adjustments to reconcile loss to cash used
      by |   |                    |   |   |          |  
|operating activities:                               |   |                    |   |   |          |  
|Depreciation                                        |   | 109,416            |   |   | 600      |  
|Professional
      fees                             |   | 43,745             |   |   | -        |  
|Stock based
      compensation                      |   | 3,800              |   |   | 1,500    |  
|Interest                                            |   | -                  |   |   | -        |  
|Gain on sale
      of equipment                     |   | -                  |   |   | -        |  
|Changes in non-cash working
      capital items:    |   |                    |   |   |          |  
|GST receivable                                      |   | 113,697            |   |   | -        |  
|Accounts
      receivable                           |   | (437,572           | ) |   | -        |  
|Prepaid expenses
      and refundable deposits      |   | (16,191            | ) |   | 257      |  
|Accounts
      payable and accrued liabilities      |   | (50,445            | ) |   | 938      |  
|Due to/from
      related parties                   |   | 3,542              |   |   | (2,500   | )
|                                                    |   |                    |   |   |          |  
|Cash flows used in operating activities             |   | (718,932           | ) |   | (84,455  | )
|                                                    |   |                    |   |   |          |  
|Investing Activities                                |   |                    |   |   |          |  
|Purchase of equipment                               |   | (791,590           | ) |   | (2,237   | )
|Proceeds from sale of equipment                     |   | -                  |   |   | -        |  
|Deposits on equipment                               |   | -                  |   |   | (260,942 | )
|Deposit on land                                     |   | 4,498              |   |   | (43,479  | )
|                                                    |   |                    |   |   |          |  
|Cash flows used in investing activities             |   | (787,092           | ) |   | (306,658 | )
|                                                    |   |                    |   |   |          |  
|Financing Activities                                |   |                    |   |   |          |  
|Common stock issued for
      cash                  |   | 1,020,217          |   |   | 370,000  |  
|Common stock subscription received                  |   | 255,000            |   |   | (25,000  | )
|Share subscription cancelled                        |   | (10,000            | ) |   | (10,000  | )
|                                                    |   |                    |   |   |          |  
|Cash flows provided by financing activities         |   | 1,265,217          |   |   | 335,000  |  

/contd

SEE ACCOMPANYING NOTES

F-3

---

| | LEXINGTON ENERGY SERVICES INC.                              | Continued
| | ----------------------------------------------------------- | ---------
| | INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS               |          
| | for the three months ended February 28, 2007
      and 2006 |          
| | (Stated in US Dollars)                                      |          
| | (Unaudited)                                                 |          

|                                                   |   |                    |   |   |         |  
|-------------------------------------------------- | - | ------------------ | - | - | ------- | -
|                                                   |   |                    |   |   |         |  
|                                                   |   | Three months ended |  
|                                                   |   | February 28,       |  
|                                                   |   | 2007               |   |   | 2006    |  
|                                                   |   |                    |   |   |         |  
|Effect of exchange rate changes on cash            |   | (83,118            | ) |   | -       |  
|                                                   |   |                    |   |   |         |  
|Decrease in cash and cash equivalents              |   |                    |   |   |         |  
|during the period                                  |   | (323,925           | ) |   | (56,113 | )
|                                                   |   |                    |   |   |         |  
|Cash and cash equivalents, beginning of the period |   | 639,499            |   |   | 71,850  |  
|                                                   |   |                    |   |   |         |  
|Cash and cash equivalents, end of the period       | $ | 315,574            |   | $ | 15,737  |  
|                                                   |   |                    |   |   |         |  
|Cash and cash equivalents consist of:              |   |                    |   |   |         |  
|Cash                                               | $ | 237,796            |   | $ | 10,780  |  
|Term deposits                                      |   | 77,778             |   |   | 4,957   |  
|                                                   |   |                    |   |   |         |  
|                                                   | $ | 315,574            |   | $ | 15,737  |  
|                                                   |   |                    |   |   |         |  
|Non-cash Transaction  Note 8                      |   |                    |   |   |         |  

SEE ACCOMPANYING NOTES

F-4

---

LEXINGTONENERGYSERVICESINC.INTERIM CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY 
  for the period March 30, 2005 (Date of Inception) to February 28, 2007 
  (Stated in US Dollars) 
  (Unaudited )

|                                          |                    |  |   |        |  |   |               |   |   |            |  |   |               |  |   |             |   |   |         |  
|----------------------------------------- | ------------------ |  | - | ------ |  | - | ------------- | - | - | ---------- |  | - | ------------- |  | - | ----------- | - | - | ------- | -
|                                          | Common
      Stock |  |   |        |  |   | Accumulated   |   |   |            |  |   |               | 
|                                          |                    |  |   |        |  |   | Stock         |   |   | Additional |  |   | Other         |  |   |             |   |   |         |  
|                                          | Number of          |  |   |        |  |   | Subscriptions |   |   | Paid in    |  |   | Comprehensive |  |   | Deficit     |   |   |         |  
|                                          | Shares             |  |   | Amount |  |   | Received      |   |   | Capital    |  |   | Loss          |  |   | Accumulated |   |   | Total   |  
|                                          |                    |  |   |        |  |   |               |   |   |            |  |   |               |  |   |             |   |   |         |  
|Issuance of common shares for cash        |                    |  |   |        |  |   |               |   |   |            |  |   |               |  |   |             |   |   |         |  
|- at $0.0001 per share at June 1, 2005    | 10,000,000         |  | $ | 1,000  |  | $ | -             |   | $ | -          |  | $ | -             |  | $ | -           |   | $ | 1,000   |  
|Issuance of common shares for cash        |                    |  |   |        |  |   |               |   |   |            |  |   |               |  |   |             |   |   |         |  
|- at $0.03 per share at November 2, 2005  | 1,150,000          |  |   | 115    |  |   | -             |   |   | 34,385     |  |   | -             |  |   | -           |   |   | 34,500  |  
|Issuance of commons shares for cash       |                    |  |   |        |  |   |               |   |   |            |  |   |               |  |   |             |   |   |         |  
|- at $0.10 per share at November 16, 2005 | 1,215,000          |  |   | 122    |  |   | (10,000       | ) |   | 121,378    |  |   | -             |  |   | -           |   |   | 111,500 |  
|Net loss for the period                   | -                  |  |   | -      |  |   | -             |   |   | -          |  |   | -             |  |   | (77,114     | ) |   | (77,114 | )
|                                          |                    |  |   |        |  |   |               |   |   |            |  |   |               |  |   |             |   |   |         |  
|Balance, November 30, 2005                | 12,365,000         |  |   | 1,237  |  |   | (10,000       | ) |   | 155,763    |  |   | -             |  |   | (77,114     | ) |   | 69,886  |  

/contd

SEE ACCOMPANYING NOTES

F-5

---

| | LEXINGTON ENERGY SERVICES INC.                                               | Continued
| | ---------------------------------------------------------------------------- | ---------
| | INTERIM CONSOLIDATED STATEMENT OF STOCKHOLDERS
      EQUITY                 |          
| | for the period March 30, 2005 (Date of Inception)
      to February 28, 2007 |          
| | (Stated in US Dollars)                                                       |          
| | (Unaudited)                                                                  |          

|                                          |                    |   |  |        |   |  |               |   |   |            |   |  |               |  |  |             |   |  |           |  
|----------------------------------------- | ------------------ | - |  | ------ | - |  | ------------- | - | - | ---------- | - |  | ------------- |  |  | ----------- | - |  | --------- | -
|                                          | Common
      Stock |   |  |        |   |  | Accumulated   |   |   |            |   |  |               | 
|                                          |                    |   |  |        |   |  | Stock         |   |   | Additional |   |  | Other         |  |  |             |   |  |           |  
|                                          | Number of          |   |  |        |   |  | Subscriptions |   |   | Paid in    |   |  | Comprehensive |  |  | Deficit     |   |  |           |  
|                                          | Shares             |   |  | Amount |   |  | Received      |   |   | Capital    |   |  | Loss          |  |  | Accumulated |   |  | Total     |  
|                                          |                    |   |  |        |   |  |               |   |   |            |   |  |               |  |  |             |   |  |           |  
|Balance, November 30, 2005                | 12,365,000         |   |  | 1,237  |   |  | (10,000       | ) |   | 155,763    |   |  | -             |  |  | (77,114     | ) |  | 69,886    |  
|Common shares cancelled                   | (100,000           | ) |  | (10    | ) |  | -             |   |   | (9,990     | ) |  | -             |  |  | -           |   |  | (10,000   | )
|Share subscriptions received              | -                  |   |  | -      |   |  | 10,000        |   |   | -          |   |  | -             |  |  | -           |   |  | 10,000    |  
|Issuance of common shares for cash        |                    |   |  |        |   |  |               |   |   |            |   |  |               |  |  |             |   |  |           |  
|- at $0.20 per share at December 12, 2005 | 260,000            |   |  | 26     |   |  | -             |   |   | 51,974     |   |  | -             |  |  | -           |   |  | 52,000    |  
|Issuance of common shares for cash        |                    |   |  |        |   |  |               |   |   |            |   |  |               |  |  |             |   |  |           |  
|- at $0.20 per share at December 21, 2005 | 200,000            |   |  | 20     |   |  | -             |   |   | 39,980     |   |  | -             |  |  | -           |   |  | 40,000    |  
|Issuance of common shares for cash        |                    |   |  |        |   |  |               |   |   |            |   |  |               |  |  |             |   |  |           |  
|- at $0.50 per share at February 17, 2006 | 516,000            |   |  | 51     |   |  | -             |   |   | 257,949    |   |  | -             |  |  | -           |   |  | 258,000   |  
|Issuance of common shares for cash        |                    |   |  |        |   |  |               |   |   |            |   |  |               |  |  |             |   |  |           |  
|- at $0.50 per share at March 8, 2006     | 225,000            |   |  | 22     |   |  | -             |   |   | 112,478    |   |  | -             |  |  | -           |   |  | 112,500   |  
|Issuance of common shares for cash        |                    |   |  |        |   |  |               |   |   |            |   |  |               |  |  |             |   |  |           |  
|- at $0.50 per share at March 24, 2006    | 930,930            |   |  | 93     |   |  | -             |   |   | 465,372    |   |  | -             |  |  | -           |   |  | 465,465   |  
|Issuance of common shares for cash        |                    |   |  |        |   |  |               |   |   |            |   |  |               |  |  |             |   |  |           |  
|- at $0.50 per share at April 18, 2006    | 866,696            |   |  | 87     |   |  | -             |   |   | 433,261    |   |  | -             |  |  | -           |   |  | 433,348   |  
|Issuance of common shares for cash        |                    |   |  |        |   |  |               |   |   |            |   |  |               |  |  |             |   |  |           |  
|- at $0.50 per share at April 25, 2006    | 4,000              |   |  | 1      |   |  | -             |   |   | 1,999      |   |  | -             |  |  | -           |   |  | 2,000     |  
|Issuance of common shares for cash        |                    |   |  |        |   |  |               |   |   |            |   |  |               |  |  |             |   |  |           |  
|- at $ 0.85 per share at August 1, 2006   | 431,618            |   |  | 43     |   |  | -             |   |   | 366,832    |   |  | -             |  |  | -           |   |  | 366,875   |  
|Issuance of common shares for cash        |                    |   |  |        |   |  |               |   |   |            |   |  |               |  |  |             |   |  |           |  
|- at $ 0.85 per share at August 28, 2006  | 2,136,334          |   |  | 213    |   |  | -             |   |   | 1,815,671  |   |  | -             |  |  | -           |   |  | 1,815,884 |  
|                                          |                    |   |  |        |   |  |               |   |   |            |   |  |               |  |  |             |   |  |           |  
|Subtotal                                  | 17,835,578         |   |  | 1,783  |   |  | -             |   | $ | 3,691,289  |   |  | -             |  |  | (77,114     | ) |  | 3,615,958 |  

/contd

SEE ACCOMPANYING NOTES

F-6

---

| | LEXINGTON ENERGY SERVICES INC.                                               | Continued
| | ---------------------------------------------------------------------------- | ---------
| | INTERIM CONSOLIDATED STATEMENT OF STOCKHOLDERS
      EQUITY                 |          
| | for the period March 30, 2005 (Date of Inception)
      to February 28, 2007 |          
| | (Stated in US Dollars)                                                       |          
| | (Unaudited)                                                                  |          

|                                                |                    |  |  |        |  |  |               |  |  |            |  |  |               |   |  |             |   |  |            |  
|----------------------------------------------- | ------------------ |  |  | ------ |  |  | ------------- |  |  | ---------- |  |  | ------------- | - |  | ----------- | - |  | ---------- | -
|                                                | Common
      Stock |  |  |        |  |  | Accumulated   |  |  |            |  |  |               |  
|                                                |                    |  |  |        |  |  | Stock         |  |  | Additional |  |  | Other         |   |  |             |   |  |            |  
|                                                | Number of          |  |  |        |  |  | Subscriptions |  |  | Paid in    |  |  | Comprehensive |   |  | Deficit     |   |  |            |  
|                                                | Shares             |  |  | Amount |  |  | Received      |  |  | Capital    |  |  | Loss          |   |  | Accumulated |   |  | Total      |  
|                                                |                    |  |  |        |  |  |               |  |  |            |  |  |               |   |  |             |   |  |            |  
|                                                |                    |  |  |        |  |  |               |  |  |            |  |  |               |   |  |             |   |  |            |  
|Subtotal                                        | 17,835,578         |  |  | 1,783  |  |  | -             |  |  | 3,691,289  |  |  | -             |   |  | (77,114     | ) |  | 3,615,958  |  
|Issuance of common stock for cash               |                    |  |  |        |  |  |               |  |  |            |  |  |               |   |  |             |   |  |            |  
|- at $0.85 per share at
      October 16, 2006  | 800,612            |  |  | 80     |  |  | -             |  |  | 680,440    |  |  | -             |   |  | -           |   |  | 680,520    |  
|Issuance of common stock for cash               |                    |  |  |        |  |  |               |  |  |            |  |  |               |   |  |             |   |  |            |  
|- at $0.85 per share at
      October 24, 2006  | 989,570            |  |  | 99     |  |  | -             |  |  | 841,036    |  |  | -             |   |  | -           |   |  | 841,135    |  
|Fair value of detachable warrants issued with   |                    |  |  |        |  |  |               |  |  |            |  |  |               |   |  |             |   |  |            |  
|convertible debentures  Note 6                 | -                  |  |  | -      |  |  | -             |  |  | 25,000     |  |  | -             |   |  | -           |   |  | 25,000     |  
|Issuance of common stock pursuant to conversion |                    |  |  |        |  |  |               |  |  |            |  |  |               |   |  |             |   |  |            |  
|of convertible debentures                       |                    |  |  |        |  |  |               |  |  |            |  |  |               |   |  |             |   |  |            |  
|- at $0.85 per share at November 23, 2006       | 1,176,470          |  |  | 118    |  |  | -             |  |  | 999,882    |  |  | -             |   |  | -           |   |  | 1,000,000  |  
|Stock based compensation                        | -                  |  |  | -      |  |  | -             |  |  | 56,400     |  |  | -             |   |  | -           |   |  | 56,400     |  
|Stock subscriptions received                    | -                  |  |  | -      |  |  | 279,317       |  |  | -          |  |  | -             |   |  | -           |   |  | 279,317    |  
|Foreign currency translation adjustment         | -                  |  |  | -      |  |  | -             |  |  | -          |  |  | (32,455       | ) |  |             |   |  | (32,455    | )
|Net loss for the period                         | -                  |  |  | -      |  |  | -             |  |  | -          |  |  | -             |   |  | (1,971,446  | ) |  | (1,971,446 | )
|                                                |                    |  |  |        |  |  |               |  |  |            |  |  |               |   |  |             |   |  |            |  
|Balance, November 30, 2006                      | 20,802,230         |  |  | 2,080  |  |  | 279,317       |  |  | 6,294,047  |  |  | (32,455       | ) |  | (2,048,560  | ) |  | 4,494,429  |  

/contd

SEE ACCOMPANYING NOTES

F-7

---

| | LEXINGTON ENERGY SERVICES INC.                                               | Continued
| | ---------------------------------------------------------------------------- | ---------
| | INTERIM CONSOLIDATED STATEMENT OF STOCKHOLDERS
      EQUITY                 |          
| | for the period March 30, 2005 (Date of Inception)
      to February 28, 2007 |          
| | (Stated in US Dollars)                                                       |          
| | (Unaudited)                                                                  |          

|                                                |                    |   |   |        |   |   |               |   |   |            |   |   |               |   |   |             |   |   |           |  
|----------------------------------------------- | ------------------ | - | - | ------ | - | - | ------------- | - | - | ---------- | - | - | ------------- | - | - | ----------- | - | - | --------- | -
|                                                | Common
      Stock |   |   |        |   |   | Accumulated   |   |   |            |   |   |               |  
|                                                |                    |   |   |        |   |   | Stock         |   |   | Additional |   |   | Other         |   |   |             |   |   |           |  
|                                                | Number of          |   |   |        |   |   | Subscriptions |   |   | Paid in    |   |   | Comprehensive |   |   | Deficit     |   |   |           |  
|                                                | Shares             |   |   | Amount |   |   | Received      |   |   | Capital    |   |   | Loss          |   |   | Accumulated |   |   | Total     |  
|                                                |                    |   |   |        |   |   |               |   |   |            |   |   |               |   |   |             |   |   |           |  
|Balance, November 30, 2006                      | 20,802,230         |   |   | 2,080  |   |   | 279,317       |   |   | 6,294,047  |   |   | (32,455       | ) |   | (2,048,560  | ) |   | 4,494,429 |  
|Issuance of common stock for cash               |                    |   |   |        |   |   |               |   |   |            |   |   |               |   |   |             |   |   |           |  
|- at $1.00 per share at
      December 1, 2006  | 494,642            |   |   | 50     |   |   | (279,317      | ) |   | 494,595    |   |   | -             |   |   | -           |   |   | 215,328   |  
|Share subscription cancelled                    | (10,000            | ) |   | (1     | ) |   | -             |   |   | (9,999     | ) |   | -             |   |   | -           |   |   | (10,000   | )
|Issuance of common stock pursuant to stock      |                    |   |   |        |   |   |               |   |   |            |   |   |               |   |   |             |   |   |           |  
|options                                         |                    |   |   |        |   |   |               |   |   |            |   |   |               |   |   |             |   |   |           |  
|- at $0.50 per share at
      December 7, 2006  | 43,860             |   |   | 4      |   |   | -             |   |   | 21,926     |   |   | -             |   |   | -           |   |   | 21,930    |  
|Issuance of common stock pursuant to warrants   |                    |   |   |        |   |   |               |   |   |            |   |   |               |   |   |             |   |   |           |  
|- at $0.85 per share at
      December 29, 2006 | 255,755            |   |   | 26     |   |   | -             |   |   | 217,367    |   |   | -             |   |   | -           |   |   | 217,393   |  
|Issuance of common stock pursuant to warrants   |                    |   |   |        |   |   |               |   |   |            |   |   |               |   |   |             |   |   |           |  
|- at $0.85 per share at
      January 16, 2007  | 244,245            |   |   | 24     |   |   | -             |   |   | 207,585    |   |   | -             |   |   | -           |   |   | 207,609   |  
|Issuance of common stock pursuant to stock      |                    |   |   |        |   |   |               |   |   |            |   |   |               |   |   |             |   |   |           |  
|options                                         |                    |   |   |        |   |   |               |   |   |            |   |   |               |   |   |             |   |   |           |  
|- at $0.85 per share at February 1, 2007        | 20,000             |   |   | 2      |   |   | -             |   |   | 16,998     |   |   | -             |   |   | -           |   |   | 17,000    |  
|Issuance of common stock pursuant to stock      |                    |   |   |        |   |   |               |   |   |            |   |   |               |   |   |             |   |   |           |  
|options                                         |                    |   |   |        |   |   |               |   |   |            |   |   |               |   |   |             |   |   |           |  
|- at$0.50 per share at
      February 14, 2007  | 107,489            |   |   | 11     |   |   | -             |   |   | 53,734     |   |   | -             |   |   | -           |   |   | 53,745    |  
|Issuance of common stock for cash               |                    |   |   |        |   |   |               |   |   |            |   |   |               |   |   |             |   |   |           |  
|- at $1.00 per share February
      15, 2007    | 330,957            |   |   | 33     |   |   | -             |   |   | 330,924    |   |   | -             |   |   | -           |   |   | 330,957   |  
|Stock based compensation                        | -                  |   |   | -      |   |   | -             |   |   | 3,800      |   |   | -             |   |   | -           |   |   | 3,800     |  
|Stock subscriptions received                    | -                  |   |   | -      |   |   | 255,000       |   |   | -          |   |   | -             |   |   | -           |   |   | 255,000   |  
|Foreign currency translation adjustment         | -                  |   |   | -      |   |   | -             |   |   | -          |   |   | (62,060       | ) |   | -           |   |   | (62,060   | )
|Net loss for the period                         | -                  |   |   | -      |   |   | -             |   |   | -          |   |   | -             |   |   | (488,924    | ) |   | (488,924  | )
|                                                |                    |   |   |        |   |   |               |   |   |            |   |   |               |   |   |             |   |   |           |  
|Balance, February 28, 2007                      | 22,289,178         |   | $ | 2,229  |   | $ | 255,000       |   | $ | 7,630,977  |   | $ | (94,515       | ) | $ | (2,537,484  | ) | $ | 5,256,207 |  

SEE ACCOMPANYING NOTES

F-8

---

LEXINGTON ENERGY SERVICES INC.NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS 
  February 28, 2007 
  (Stated in US Dollars) 
  (Unaudited)

|Note 1 | Interim Reporting                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|       | While the information presented
        in the accompanying interim three months financial statements is unaudited,
        it includes all adjustments, which are, in the opinion of management,
        necessary to present fairly the financial position, results of operations
        and cash flows for the interim periods presented in accordance with accounting
        principles generally accepted in the United States of America. These interim
        financial statements follow the same accounting policies and methods of
        their application as the Companys November 30, 2006 annual financial
        statements. All adjustments are of a normal recurring nature. It is suggested
        that these interim financial statements be read in conjunction with the
        Companys November 30, 2006 annual financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|       | Operating results for the three months ended February 28,
      2006 are not necessarily indicative of the results that can be expected
      for the year ended November 30, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|       | During the three months ended
        February 28, 2007, the Company generated revenue totaling $1,152,254.
        The Company was in the development stage prior to the three months ended
        February 28, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Note 2 | Continuance of Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|       | These interim financial statements
        have been prepared in accordance with generally accepted accounting principles
        applicable to a going concern, which assumes that the Company will be
        able to meet its obligations and continue its operations for its next
        twelve months. Realization values may be substantially different from
        carrying values as shown and these financial statements do not give effect
        to adjustments that would be necessary to the carrying values and classification
        of assets and liabilities should the Company be unable to continue as
        a going concern. At February 28, 2007, the Company had not yet achieved
        profitable operations, has accumulated losses of $2,537,484 since its
        inception, has a working capital deficiency of $240,926 and expects to
        incur further losses in the development of its business, all of which
        casts substantial doubt about the Companys ability to continue as
        a going concern. The Companys ability to continue as a going concern
        is dependent upon its ability to generate future profitable operations
        and/or to obtain the necessary financing to meet its obligations and repay
        its liabilities arising from normal business operations when they come
        due. Management has no formal plan in place to address this concern but
        considers that the Company will be able to obtain additional funds by
        equity financing and/or related party advances, however there is no assurance
        of additional funding being available.

F-9

---

Lexington Energy Services Inc. 
  Notes to the Interim Consolidated Financial Statements 
  February 28, 2007 
  (Stated in US Dollars) 
  (Unaudited)  Page 2

|Note 3 | Significant Accounting Policy                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | Revenue Recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | The Company recognizes revenue
        when it is realized and earned. Revenue and costs on drilling contracts
        are recognized as work progresses. Progress is measured and revenues are
        recognized based upon agreed day-rate charges and/or other additional
        charges. For certain contracts, the Company may receive additional lump-sum
        payments for the mobilization of rigs and other drilling equipment. Consistent
        with the drilling contract day-rate revenues and charges, revenues and
        related direct costs incurred for the mobilization are recognized when
        earned. Costs incurred to relocate rigs and other drilling equipment to
        areas in which a contract has not been secured are expensed as incurred.
        The Company recognizes revenue under service contracts as services are
        performed and collection is reasonably assured.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Note 4 | Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

| |                              |   | February
      28, 2007 | 
| | ---------------------------- | - | ----------------------- | 
| |                              |   |                         | 
| |                              |   | Cost                    | 
| |                              |   |                         | 
| | Computer and equipment       | $ | 37,267                  | 
| | Office equipment             |   | 13,246                  | 
| | Furniture                    |   | 39,821                  | 
| | Software                     |   | 20,149                  | 
| | Tools and equipment          |   | 7,029                   | 
| | Leasehold improvements       |   | 34,042                  | 
| | Equipment/Machinery          |   | 3,833,993               | 
| | Vehicle equipment            |   | 6,869                   | 
| | Machinery under construction |   | 1,424,798               | 
| |                              |   |                         | 
| |                              | $ | 5,417,214               | 

| |                              |   | November
      30, 2006 | 
| | ---------------------------- | - | ----------------------- | 
| |                              |   |                         | 
| |                              |   | Cost                    | 
| |                              |   |                         | 
| | Computer and equipment       | $ | 27,450                  | 
| | Office equipment             |   | 6,279                   | 
| | Furniture                    |   | 26,966                  | 
| | Software                     |   | 10,352                  | 
| | Tools and equipment          |   | 6,025                   | 
| | Leasehold improvements       |   | 28,220                  | 
| | Machinery under construction |   | 3,159,874               | 
| |                              |   |                         | 
| |                              | $ | 3,265,166               | 

F-10

---

Lexington  Energy Services Inc. 
  Notes to the Interim Consolidated Financial Statements 
  February 28, 2007 
  (Stated in US Dollars) 
  (Unaudited)  Page 3

|Note 4 | Equipment (contd)                                                                                                                                                                                                                                                        
|------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                            
|       | Machinery under construction
        has not been depreciated as it is not yet available for use.                                                                                                                                                                          
|       |                                                                                                                                                                                                                                                                            
|Note 5 | Related Party Transactions Note 9                                                                                                                                                                                                                                         
|       |                                                                                                                                                                                                                                                                            
|       | During the three months ended
        February 28, 2007:                                                                                                                                                                                                                   
|       |                                                                                                                                                                                                                                                                            
|       | The Company incurred $20,513
        (2006: $15,000) for management fees to the President and CEO of the Company.
        At February 28, 2007, $29,694 was due from the President and CEO.                                                                                
|       |                                                                                                                                                                                                                                                                            
|       | The Company incurred $15,385
        (2005: $NIL) for management fees to the Chief Operations Officer. At February
        28, 2007, $4,087 was due from the Chief Operations Officer.                                                                                     
|       |                                                                                                                                                                                                                                                                            
|       | The Company incurred $78,977
        for management fees to the Vice President of Operations of the Companys
        subsidiary. The Company incurred $51,285 for management fees to the Senior
        Vice President of Integrated Services of the Companys subsidiary.
|       |                                                                                                                                                                                                                                                                            
|       | These charges were measured
        by the exchange amount which is the amount agreed upon by the transacting
        parties.                                                                                                                                             
|       |                                                                                                                                                                                                                                                                            
|Note 6 | Stock Options
        Note 11                                                                                                                                                                                                                                             
|       |                                                                                                                                                                                                                                                                            
|       | The following table summarizes
        the continuity of the Companys stock options:                                                                                                                                                                                      

| |                        |  | Three months ended |   |   | Three months ended | 
| | ---------------------- |  | ------------------ | - | - | ------------------ | 
| |                        |  | February 28, 2007  |   |   | February 28, 2006  | 
| |                        |  | Number             |   |   | Weighted           | 
| |                        |  | of                 |   |   | Average            | 
| |                        |  | Common             |   |   | Exercise           | 
| |                        |  | Shares             |   |   | Price              | 
| |                        |  |                    |   |   |                    | 
| | Outstanding, beginning |  | 3,470,000          |   | $ | 0.44               | 
| | Granted                |  | 20,000             |   | $ | 0.85               | 
| | Exercised              |  | (171,349           | ) | $ | 0.54               | 
| | Cancelled              |  | (6,140             | ) | $ | 0.50               | 
| |                        |  |                    |   |   |                    | 
| | Outstanding, ending    |  | 3,312,511          |   |   |                    | 

F-11

---

Lexington Energy Services Inc. 
  Notes to the Interim Consolidated Financial Statements 
  February 28, 2007 
  (Stated in US Dollars) 
  (Unaudited)  Page 4

|Note 6 | Stock Options Note 11  (contd)                                                                                                                                                                          
|------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                            
|       | The fair value of the stock options
        granted during the periods ended February 28, 2007 and 2006 was determined
        using the Black-Scholes option pricing model with the following assumptions:

| |                                 | 2007       | 2006   
| | ------------------------------- | ---------- | -------
| |                                 |            |        
| | Expected dividend yield         | 0.0%       | 0.0%   
| | Risk-free interest rate         | 4.16%      | 2.18%  
| | Expected volatility             | 131.1%     | 0.0%   
| | Expected option life (in years) | 0.08 years | 2 years

The compensation charge associated with
  consultants stock options in the amount of $3,800 (2006: $1,500) is included
  in the statement of operations for the three months ended February 28, 2007.

Additional information regarding stock
  options outstanding as at February 28, 2007 is as follows:

Number ofCommon Shares
      Exercise Prices
      Expiry Date500,000
      $0.10
      October 1, 2007250,000
      $0.10
      October 20, 2007150,000
      $0.20
      December 30, 2007320,000
      $0.50
      March 13, 2008840,000
      $0.50
      April 5, 2008532,511
      $0.50
      May 17, 2008200,000
      $0.85
      May 17, 2008400,000
      $0.85
      August 1, 200810,000
      $0.85
      October 3, 200865,000
      $0.85
      October 13, 200820,000
      $0.85
      October 16, 200825,000
      $0.85
      November 15, 20083,312,511


|Note 7 | Convertible Debentures                                                                                                                                                                                                                                                                                              
|------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                     
|       | The Company entered into two
        Secured Convertible Debenture Purchase Agreements dated November 6, 2006
        and November 7, 2006, totalling $1,000,000. Both convertible debentures
        were converted on November 23, 2006 at $0.85 per share and the Company
        issued 1,176,470 common shares.

F-12

---

Lexington Energy Services Inc. 
  Notes to the Interim Consolidated Financial Statements 
  February 28, 2007 
  (Stated in US Dollars) 
  (Unaudited)  Page 5

|Note 7 | Convertible Debentures (contd)                                                                                                                                                                                                                                                                                                                                                                                                                             
|------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       | Attached to each Secured Convertible
        Debenture was a Warrant Agreement. Each Warrant Agreement entitles the
        holder the right to purchase 250,000 common shares of the Company at $0.85
        per share. At February 28, 2007, all 500,000 warrants were exercised.                                                                                                                                                                         
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       | In accordance with Accounting
        Principles Board Opinion No. 14, Accounting for Convertible debt
        and Debt Issued with Stock Purchase Warrants, the proceeds received
        from the issuance of the convertible debentures were allocated between
        the convertible debentures and warrants on a basis of their relative fair
        values. At the date of issuance, $25,000 of the proceeds was allocated
        to the warrants.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|Note 8 | Non-Cash Transaction                                                                                                                                                                                                                                                                                                                                                                                                                                         
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       | Investing and financing activities
        that do not have a direct impact on current cash flows are excluded from
        the statements of cash flows. During the three months ended February 28,
        2007, the Company issued 87,489 common shares pursuant to exercise of
        stock options at $0.50 per share for payment of legal fees of $43,745.
        This transaction has been excluded from the statements of cash flows.              
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|Note 9 | Commitments Note
        6                                                                                                                                                                                                                                                                                                                                                                                                                                  

| | a) | The Company entered into an employment agreement dated
        June 1, 2006 with the President and CEO of the Company for $7,200 per
        month and the option to buy 250,000 common shares of the Company at $0.50
        per share. The Company entered into a new employment agreement dated March
        6, 2007, which replaced the agreement dated June 1, 2006, for $18,900
        per month and the option to buy 500,000 common shares of the Company at
        $0.85 per share. The Company also entered into an employment agreement
        dated June 1, 2006 with the Senior Vice President of Operations of the
        Company for $5,400 per month and the option to buy 250,000 common shares
        of the Company at $0.50 per share. Either party can terminate the agreement
        at any time with 14 days notice.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | b) | The Company paid $170,940 in respect to a refundable
        deposit on a purchase of land with a total cost of $208,547.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | c) | The Company entered into an office lease agreement effective
        July 1, 2006 to July 31, 2010 for basic rent of $13,600 per month.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | d) | During the three months ended February 28, 2007, the
        Company received cash proceeds totalling $255,000 in respect to a private
        placement of 255,000 common shares at $1.00 per share. Subsequent to February
        28, 2007, the Company issued these shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

F-13

---

Lexington Energy Services Inc. 
  Notes to the Interim Consolidated Financial Statements 
  February 28, 2007 
  (Stated in US Dollars) 
  (Unaudited)  Page 6

|Note 10 | Contingencies
|------- | -------------

| | a) | An officer of a subsidiary of the Company has claimed
        that he has been constructively dismissed at the end of December 2006
        and seeks one years salary as compensation, which amounts to $192,330
        (CDN$225,000). The Company contends that the Vice- President voluntarily
        resigned. There has been no liability recorded in the financial statements
        related to this contingency and any unfavourable settlement of this matter
        will be recorded in the period in which the contingency is resolved. Subsequent
        to February 28, 2007, the Companys subsidiary received a Garnishee
        Order and paid $194,127 into court pending resolution of the claim.                    
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | b) | The Company received a notice that a third party had
        obtained an injunction against a supplier of certain equipment for the
        Company that prohibits the supplier from retaining, using or disclosing
        any trade secrets or other confidential information. It has been alleged
        that some of its proprietary technology may have been used by the supplier
        in building certain equipment for the Company and that the Company is,
        therefore, prohibited in using the equipment. Based on preliminary review
        of these allegations, management of the Company does not believe that
        the injunction limits or curtails the Companys ability to use or
        lease the equipment.

|Note 11 | Subsequent Events Notes 9 and 10
|------- | ---------------------------------
|        |                                  
|        | Subsequent to February 28, 2007: 

| | a) | the Company issued 12,512 common shares pursuant to
        exercise of stock options at $0.50 per share for legal fees;       
| | -- | -------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                
| | b) | the Company issued 14,585 common shares at $0.75 per
        share for legal fees.                                             
| |    |                                                                                                                                
| | c) | the Company entered into an agreement to appoint a new
        director and issue 325,000 common shares for directors service.

F-14

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ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION/ PLAN OF OPERATIONS

Forward Looking Statements

This report on Form 10-QSB contains certain forward-looking
statements. All statements other than statements of historical fact are
forward-looking statements for purposes of these provisions, including any
projections of earnings, revenues, or other financial items; any statements of
the plans, strategies, and objectives of management for future operation; any
statements concerning proposed new products, services, or developments; any
statements regarding future economic conditions or performance; statements of
belief; and any statement of assumptions underlying any of the foregoing. Such
forward-looking statements are subject to inherent risks and uncertainties, and
actual results could differ materially from those anticipated by the
forward-looking statements.

Overview

We were incorporated as a Nevada company on March 30, 2005. We
have three wholly-owned subsidiaries, including Lexcore Services Inc.
(Lexcore), which was incorporated as a Nevada company on April 28, 2006 and
Lexcoil Inc. (Lexcoil), which was incorporated as a Nevada company on October
3, 2006. Lexcore operates our activities relating to leasing coring units.
Lexcoil is currently inactive. We also own LXN2 LLC, which was set up as a
Michigan LLC on February 14, 2007. We plan to use LXN2 LLC for the future
addition of a manufacturing facility in Michigan, US for our nitrogen generation
system.

We are an oil field service company providing manufacturing and
leasing of oilfield service equipment to oil and gas and other oil field service
companies.

Description of Property

Our properties are as follows:

Vancouver, British Columbia

Lexington’s principal executive offices are located at
  207 West Hastings Street, Suite 1209, Vancouver, British Columbia, V6B 1H7,
  Canada. Our office is approximately 2,000 square feet in size. We are currently
  negotiating a two year lease agreement which, if we conclude, will cost us a
  monthly rent of approximately $2,500.

Calgary, Alberta

Lexcores head office is located at 34125 Wrangler Road
  SE, RR #5, Calgary, Alberta T2P 2G6. The facility in Calgary is approximately
  9,500 square feet in size. The lease is for a term of four years and ends on
  July 31, 2010 and we pay an annual rent of approximately $165,000, for monthly
  installments of approximately $13,600, plus taxes and utilities.

2

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Brooks, Alberta

On February 23, 2006 we entered into an agreement to purchase a property in Brooks, Alberta for a purchase price of $221,528. The property is comprised of raw land and is approximately 8.2 acres. We have paid a deposit of approximately
$183,000 and we expect to pay the remaining $39,000 after the seller of the property has successfully obtained titles for subdivided parcels of land which will allow us to close the transaction. The seller has indicated that it will grant us
possession of the land with no further payment due until the seller is ready to close the transaction.

Results of Operations for the Three Months ended February 28, 2007 compared to February 28, 2006

During three months ended February 28, 2007, we realized total revenue of $1,152,254 compared to no revenues for the three months ended February 28, 2006. These revenues we generated during the fiscal quarter ended February 28, 2007 are our
first revenues. We have also received interest income of $1,085 for the three months ended February 28, 2007. We incurred a net loss for the three months ended February 28, 2007 of ($488,924), compared to a net loss of ($85,250) for the
same period in 2006. The increase in revenues and increase in net loss for 2006 was as a result of increased operational activities during the three months ended February 28, 2007. The increased revenues were mainly pursuant to the Lexcores
provision of coring units and crew to Laricina Energy Ltd. Gross profit for the three months ended February 28, 2007 was $638,719 compared to none for the same period in 2006. From March 30, 2005 (date of inception) to February 28, 2007, we
realized total revenues of $1,152,254 and gross profit of $638,719. Since our inception to February 28, 2007, we also reported interest income of $9,873 and a capital gain on the sale of our equipment of $75,459. From March 30, 2005
(date of inception) to February 28, 2007, we incurred a net loss of ($2,537,484). Our net loss per share was ($0.02) for the three months ended February 28, 2007 compared to ($0.01) for the same period in 2006.

Our total expenses were $1,128,728 for the three months ended February 28, 2007, including $73,298 in professional fees, $166,158 in management fees, $78,926 in consulting fees, $490,787 in general and administrative fees,
$152,913 in promo and marketing, $57,230 in travel expenses and $109,416 in depreciation. Our administrative expenses consist of salaries, tradeshow costs, meals and entertainment, rent, office maintenance, communication expenses
(cellular, internet, fax, telephone), office supplies, courier and postage costs and office supplies. Our expenses for the three months ended February 28, 2006 were $85,250. The increase in expenses is due to an increase in our operations.

Our professional fees of $73,298 for the three months ended February 28, 2007 consisted primarily of legal, accounting and auditing fees. During the three months ended February 28, 2006, our professional fees totaled $27,031.

Our management fees of $166,158 for the three months ended
  February 28, 2007 consisted mainly of amounts paid to our current officers.
  During the three months ended February 28, 2006, our management expenses were
  $25,500.

3

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Our consulting fees for the three months ended February 28, 2007 were $78,926 compared to none for the same period in 2006.

Plan of Operation

We plan to grow our business to offer a complete range of products and services for the entire lifecycle of oil and gas wells including exploration and development, production, operation, maintenance, refining and abandonment. We generated
$1,152,254 in revenue during the three months ended February 28, 2007, although we incurred a net loss of ($488,924) for the same period.

Our corporate strategy for the next 12 months (beginning March 1, 2007) includes the following:

- build a manufacturing, warehouse and office facility in Brooks, Alberta;
- build four more coring units for Lexcore;
- acquire Southern Well Testing Ltd. and Southern Well Testing (2005) Ltd.
    and add two p-tanks to their fleet;
- add nine nitrogen generation units;
- identify acquisitions which will benefit from having in-house construction
    capabilities and develop personnel and equipment in-house to meet market demands;
    and
- create additional service lines to complement current operations.

Mobile Well Production Testing Units

We completed the construction on two mobile well production testing units. We sold one unit after August 31, 2006 for approximately $255,000 and second unit in November 2006 for approximately $373,000. We made a capital gain on the sale of
$75,459.

We had entered into two agreements to lease out our p-tanks, but both agreements were terminated by mutual agreement.

We plan to build more p-tanks on order from customers. We
  currently do not have any orders to build any units. We also plan to build out
  p-tank business through acquisition. On February 7, 2007, we entered into a
  non binding letter of intent to acquire the assets of both of Southern Well
  Testing Ltd. and Southern Well Testing (2005) Ltd. Both companies are majority
  owned and managed by Brent Nimeck, who is also our Chief Operating Officer and
  a director on our Board. We believe that these companies would be a good asset
  for us to acquire since the companies have both a fleet of p-tank units, and
  established relationships with customers who lease the units. Together, the
  Southern Well Testing companies own eight mobile p-tank test units (which have
  similar features to the p-tanks we recently built and sold) and one high stage
  combination test vessel. At this time we are negotiating to purchase the Southern
  Well companies through the issuance of our restricted common stock. There is
  no guarantee that we will be successful in negotiating a legally binding agreement
  to acquire the Southern Well companies, or that we will be successful in completing
  the acquisition of the Southern Well companies. If we do acquire these companies,
  we will likely add two more p-tank units to the Southern Well fleet, at a cost
  to us of approximately $600,000 in total.

4

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As of April 16, 2007 we did not have any p-tanks available for lease or in production.

Nitrogen Generation Unit

Over the next 12 months beginning March 1, 2007, if we are successful in raising sufficient capital, we intend to build nine nitrogen generation units at an estimated cost of $1,730,000 per unit for total costs of approximately
$15,570,000.

We are currently negotiating the lease of our nitrogen generation unit to a company partly owned by our Chief Operating Officer, Brent Nimeck. If we are successful in leasing the unit, we will apply the revenues to our general operating expenses.

Coring Units

If we are successful in raising additional financing, through Lexcore, we plan to build four more coring units at a cost of approximately $2,875,000 each in the fall of 2007.

During our most recent quarter ended February 28, 2007, we received revenues of approximately $1,152,254 pursuant to the provision of our coring rigs and crew through our subsidiary Lexcore to Laricina Energy Inc. In March 2007 we also provided
one coring rig with crew to Japan Canada Oil Sands Limited (JACOS) for a drilling program in Alberta, Canada. The project was completed at the end of March 2007. As of April 16, 2007, both of our coring rigs are in our Calgary facility
undergoing routine spring maintenance.

New Facility

Lexington intends to move its headquarters to Brooks, Alberta by March, 2008. Brooks is a small town located one and a half hours south of Calgary, Alberta, Canada. Brooks is located in the centre of Southern Alberta and accesses the largest areas
of Alberta which extends into Saskatchewan and to the US border. We intend to build a 10,000 square foot manufacturing and repair facility with a connected 2,000 square foot office space for our use and for possible lease to other companies,
depending on how much space we need ourselves. We intend to design the facility to be used for in-house engineering and design staff, human resources, accounting and an in-house employee office and development centre. This combination of
manufacturing space, warehouse, repair, in-house design facility and office may enable us to have direct feedback from clients, employees and engineers to facilitate a fast reaction to the changing needs of clients and the market.

On February 23, 2006 we entered into an agreement to purchase
  a property in Brooks, Alberta for a purchase price of $221,528. The property
  is comprised of raw land and is approximately 8.2 acres. We have paid a deposit
  of approximately $183,000 and we expect to pay the remaining $39,000
  after the seller of the land has successfully obtained titles for subdivided
  parcels of land which will allow us to close the transaction. The seller has
  indicated that it will grant us possession of the land with no further payment
  due until the seller is ready to close the transaction.

5

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We intend to complete the construction of the facility, which we estimate will cost approximately $1,061,000, including design. Our intention is to complete design of this facility and obtain building permits in May 2007, and to begin
construction at that time. We anticipate that the construction will take approximately five months. Once it is complete, we intend to hire a customer service representative and a manager to oversee the offices. We anticipate the management costs
would be $8,000 per month. We intend to contract with other companies for maintenance and cleaning services once the facility is built.

On July 1, 2006, Lexcore entered into a lease agreement with First Truck Centre. The agreement is a sublease granting us lease of premises at 234125 Wrangler Road, RR #5, Calgary, Alberta T2P 2G6 for a term of four years from July 1, 2006 to July 1,
2010, for an annual rent of approximately $165,000, payable in monthly installments of approximately $13,750, plus taxes and utilities.

Limited operating history; need for additional capital

There is limited historical financial information about us upon which to base an evaluation of our performance. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a
new business enterprise, including limited capital resources and possible cost overruns due to price and cost increases in services and products.

We have no assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations. Equity financing could result in additional
dilution to existing shareholders.

At February 28, 2007, we had not yet achieved profitable operations,
  had accumulated losses of ($2,537,484) since our inception, had a working
  capital deficiency of $240,926 and although we had generated revenues of
  $1,152,254 by February 28, 2007, we anticipate that we will incur further
  losses in the development of our business. These factors cast substantial doubt
  about our ability to continue as a going concern. Our ability to continue as
  a going concern is dependent upon our ability to generate future profitable
  operations and/or to obtain the necessary financing to meet our obligations
  and repay our liabilities arising from normal business operations when they
  come due. We plan to obtain additional funds through equity financing and/or
  related party advances, however there is no assurance of additional funding
  being available.

6

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Liquidity and Capital Resources

Lexcore, our wholly owned subsidiary, received revenues of $1,152,254 for the three months ended February 28, 2007 pursuant to Lexcore's provision of equipment and Laricina Energy for a drill program.

As of February 28, 2007, we had a working capital deficiency
  of $240,926. Our accumulated deficit was $2,537,484 at February 28, 2007. Our
  net loss of $2,537,484 from March 31, 2005 (inception) to February 28, 2007
  was mostly funded by our equity financing. During the three months ended February
  28, 2007, we raised $1,265,217 in equity finance. The decrease in cash during
  the three months ended February 28, 2007 was $323,925. The decrease was due
  to increased general and administrative expenses.

Net cash used in operations for the three months ended February 28, 2007 was $718,932 and net cash used in investing activities was $787,092. Investing activities during the three months ended February 28, 2007 included $791,590 for
purchase of equipment. During the three months ended February 28, 2007 our monthly cash requirement was approximately $502,000, including $240,000 monthly in operating activities and $262,000 in equipment purchases. At the end of the
period as at February 28, 2007, we had cash and cash equivalents of $315,574, and Canadian Goods and Services tax receivable of $122,630 as well as $436,499 due to us for accounts receivable.

By a registration statement on Form SB-2 declared effective on January 10, 2007, we registered 6,753,064 shares to be sold by selling shareholders. Of those shares registered, 500,000 were shares underlying warrants and 910,000 were shares
underlying options. From the effective date of the SB-2 to February 28, 2007, 351,732 of those options or warrants had been exercised.

During the period from December 1, 2005 to February 28, 2007
  we raised capital pursuant to the following share issuances:

7

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Period of Issuance
    Number of Common Shares
      Sold
    Price per Share
    Total ProceedsDecember 2005
    460,000
    $0.20
    $92,000February 2006
    516,000
    $0.50
    $258,000March 2006
    1,155,930
    $0.50
    $577,965April 2006
    870,696
    $0.50
    $435,348August 2006
    2,567,952
    $0.85
    $2,182,759October 2006
    1,790,182
    $0.85
    $1,521,655November 2006
    1,176,470
    $0.851
    $1,000,000December 2006
    484,642
    $1.00
    $484,642December 2006
    43,860
    $0.502
    $21,930December 2006
    255,755
    $0.852
    $217,392January 2007
    244,245
    $0.852
    $207,608February 2007
    107,489
    $0.502
    $53,745February 2007
    330,957
    $1.00
    $330,957February 2007
    20,000
    $0.852
    $17,000Total:
    
    
      $7,401,001


|1 | Issued pursuant to the exercise of a convertible
      debenture.
|- | -----------------------------------------------------------------
|2 | Issued pursuant to the exercise of options or
      warrants.    

If we are successful in raising significant capital, over the
  next twelve months beginning March 1, 2007 we intend to build four additional
  coring units and nine more nitrogen generation units, acquire Southern Well
  Testing and build two more p-tank units, build a new manufacturing facility
  in Brooks, Alberta. Total cash requirements to complete those steps will be
  approximately $31,700,000 set out as follows:

Expense
    Amount ($)New Manufacturing Facility in Brooks, Alberta
    1,100,000Build two Portable Well Testing Packages (p-tanks)
      600,000Build nine Truck Mounted Nitrogen Generation Units
    15,600,000Build four Coring/Drilling Rigs
    11,500,000Research and Development
    900,000Costs associated with Acquisitions
    500,000Professional Fees
    500,000General and Administrative Expenses
      1,000,000Total
      31,700,000 8


---

The administrative expenses will consist of marketing and promotion, tradeshow costs, salaries, leases, travel, meals and entertainment, office maintenance, communication expenses (cellular, internet, fax, telephone), office supplies, courier and
postage costs and office equipment. The professional fees will consist of consulting fees, accounting and audit fees, legal fees. We had $315,574 in cash or cash equivalents and a working capital deficiency of $240,926 as of February 28,
2007. Our working capital deficiency decreased by $88,539 since November 30, 2006 as a result of our revenues and equity investment we received.

Our money currently in our bank accounts as well as revenues
  we receive pursuant to accounts receivable as at February 28, 2007 will likely
  to applied to our accounts payable. Any future revenues we receive we plan to
  use towards covering our administrative and operating expenses. We require an
  additional $31,700,000 to carry out our planned business operations and expansion
  over the next 12 months. We intend to try to obtain this financing through a
  combination of bank financing and equity investment through the sale of our
  common shares. Currently none of our assets are encumbered by any loans and
  we are in the process of contacting banks to determine what type of bank financing
  is available and on what terms. We are active in contacting broker/dealers in
  the US and elsewhere regarding possible financing arrangements.

We have no assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations. Equity financing could result in additional
dilution to existing shareholders.

Limited operating history; need for additional capital

There is limited historical financial information about us
  upon which to base an evaluation of our performance. We cannot guarantee we
  will be successful in our business operations. Our business is subject to risks
  inherent in the establishment of a new business enterprise, including limited
  capital resources and possible cost overruns due to price and cost increases
  in services and products.

We have no assurance that future financing will be available
  to us on acceptable terms. Obtaining additional financing will be subject to
  a number of factors including market conditions, investor acceptance of our
  business plan and investor sentiment. These factors may make the timing, amount,
  terms and conditions of additional financing unattractive or unavailable to
  us. If financing is not available on satisfactory terms, we may be unable to
  continue, develop or expand our operations. If we are unable to raise additional
  financing, we will have to significantly reduce our spending, delay or cancel
  planned activities or substantially change our current corporate structure.
  In such an event, we intend to implement expense reduction plans in a timely
  manner. However, these actions would have material adverse effects on our business,
  revenues, operating results, and prospects, resulting in a possible failure
  of our business. If we raise funds through equity or convertible securities,
  our existing stockholders may experience dilution and our stock price may decline.

9

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We have incurred operating losses from our inception and we are dependent upon our ability to raise capital from stockholders or other sources to sustain operations. These factors raise substantial doubt about our ability to continue as a going
concern.

Audit Committee

The functions of the audit committee are currently carried out by our Board of Directors. Our Board of Directors has determined that we do not have an audit committee financial expert on our Board of Directors carrying out the duties of the audit
committee. Our Board of Directors has determined that the cost of hiring a financial expert to act as a director of Lexington and to be a member of the audit committee or otherwise perform audit committee functions outweighs the benefits of having a
financial expert on the audit committee.

Certain Relationships and Related Party Transactions

On February 7, 2007, we entered into a non binding letter of intent to acquire the assets of both of Southern Well Testing Ltd. and Southern Well Testing (2005) Ltd. Both companies are partly owned and managed by Brent Nimeck, who is also our Chief
Operating Officer and a director on our Board of Directors. We intend to continue to negotiate to acquire the assets of these companies.

In addition, we are currently negotiating to lease our nitrogen generation unit to NitroGen Technologies Group Inc., a company partly owned and run by Brent Nimeck, our Chief Operating Officer and a director on our Board.

Alliance World

As of February 27, 2007, Alliance World Limited ("Alliance") owned 1,893,861 of our common stock, which amounts to approximately 8% of our outstanding common shares.

Secured Convertible Debenture - November 6, 2006

On November 6, 2006we entered into a secured convertible debenture purchase agreement (Debenture Purchase Agreement) with Alliance whereby Alliance loaned $500,000 to us. Alliance had the option to have the $500,000 loan repaid
in our common stock. At any time, at Alliances option, Alliance was entitled to choose to have all or any part of the outstanding principal and accrued interest repaid in shares of our common stock at a conversion rate equal to:

(1) ten percent below the fair market value of our common stock at the time of conversion, as calculated according to the average closing market price of the five business days preceding the conversion date, or if there has been no sales of our
stock for five days, the price shall be determined according to the price of the last trade of our stock or,

(2) at $0.85 per share.

10

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We also entered into a secured convertible debenture and a warrant certificate with Alliance pursuant to the Debenture Purchase Agreement. Interest was to accrue on the debenture at the rate of 10% per annum.

In consideration of Alliances investment in the debenture, we also issued a warrant certificate to Alliance for 250,000 warrants to purchase shares of our common stock at an exercise price of $0.85 per share. The warrant certificate
represents the 250,000 warrants issued pursuant to the Debenture Purchase Agreement.

Secured Convertible Debenture - November 7, 2006

On November 7, 2006, we entered into a second Debenture Purchase Agreement, debenture, security agreement and warrant certificate with Lexcore and Alliance. The November 7, 2006 debenture and associated agreements contain exactly the same terms as
that for the November 6, 2006 debenture and associated agreements, the only difference being the description of the security interest pursuant to the security agreement and the date. Under this second convertible debenture, we issued a further
250,000 warrants to purchase common shares of Lexington at $0.85 per share until November 1, 2008.

At the end of November 2006, Alliance chose to have both $500,000 loans, for a total of $1,000,000 repaid in our common stock, so we issued 1,176,470 common shares to Alliance upon the conversion of two convertible debentures at a price of
$0.85 per share. At the time of the conversion, no interest had yet accrued.

By a Registration Statement declared effective on January 10, 2007, we registered the 500,000 shares underlying the warrants we granted to Alliance. On December 29, 2006, Alliance exercised warrants to purchase 255,755 common shares by paying us
$217,391.75, and on January 16, 2007, Alliance exercised warrants to purchase 244,245 common shares by paying us $207,608.25. As of February 27, 2006, Alliance had no outstanding derivative securities.

Other than these agreements described above, and the employment agreements described above, we have not entered into any transactions with our officers, directors, persons nominated for these positions, beneficial owners of 5% or more of our common
stock, or family members of these persons wherein the amount involved in the transaction or a series of similar transactions exceeded $120,000.

Known Material Trends and Uncertainties

As of February 28, 2007, we had no off balance sheet transactions that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources.

In view of the uncertainties concerning our continued existence
  as a going concern, our management plans to mitigate the effect of such conditions,
  management intends to take the following steps in the event that we are not
  able to raise sufficient funds to meet the needs of our business plans:

11

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- negotiate with suppliers to delay deposit due dates;
- lease some equipment as individual pieces, as opposed to entire units, if we are unable to build and purchase the entire units; and
- negotiate with our management and consultants to pay parts of salaries and fees with stock and stock options instead of cash.

We believe that the above discussion contains a number of forward-looking statements. Our actual results and our actual plan of operations may differ materially from what is stated above. Factors which may cause our actual results or our actual plan
of operations to vary include, among other things, decision of the Board of Directors not to pursue a specific course of action based on a re-assessment of the facts or new facts, or changes in general economic conditions.

Critical Accounting Policies

Our financial statements are impacted by the accounting policies
  used and the estimates and assumptions made by management during their preparation.
  A complete summary of these policies is included in note 2 of the notes to our
  historical financial statements for the year ended November 30, 2006.

ITEM 3. CONTROL AND PROCEDURES

(a) Evaluation of disclosure controls and procedures

Our Chief Executive Officer and Chief Financial Officer evaluated
  our disclosure controls and procedures (as defined in Rule 13a-14
  (c) of the Securities Exchange Act of 1934 (the Exchange Act) as
  of a date within 90 days before the filing date of this report and has concluded
  that as of the evaluation date, our disclosure controls and procedures are effective
  to ensure that information we are required to disclose in reports that we file
  or submit under the Exchange Act is recorded, processed, summarized and reported
  within the time periods specified in the Securities and Exchange Commissions
  rules and forms.

12

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(b) Changes in internal controls

Subsequent to the date of their evaluation, there were no
significant changes in our internal controls over financial reporting or in
other factors that could significantly affect these controls. There were no
significant deficiencies or material weaknesses in our internal controls so no
corrective actions were taken.

PART II  OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS:

On March 6, 2007, we received a letter from counsel for Pacific
Consolidated Industries, LLC ("PCI"), giving us notice that PCI had obtained an
Order of Preliminary Injunction issued by the U.S. District Court for the
Central District of California on February 7, 2007 an injunction in U.S. against
Innovative Nitrogen Systems, LLC (INS) and two of its executives, Bill Brigham
and Michael Schroeder, and all persons acting in convert with any of them, from
taking a number of actions, including: "approaching, for purposes of marketing,
selling or providing any type of services, including consultant, subcontractor
or advisory services.to those customers set forth at Exhibit A hereto." We are
listed as one of the customers that INS is prohibited from contacting. Further,
the court preliminarily enjoined INS from "retaining any of PCI's trade secrets
or other confidential information[or] using or disclosing, directly or
indirectly, any of PCI's trade secrets or other confidential or proprietary
information." In its letter dated March 6, 2007, PCI has alleged that some of
its proprietary technology may have been used by INS in building our nitrogen
generation unit, and that our proposed lease of the unit to Nitro-Gen would
constitute a transfer of PCI's technology in breach of the injunction. As of
today's date, we are not a party to the proceedings, nor has PCI threatened to
add us or any of our agents or directors as a party. The injunction obtained by
PCI was not made on the merits of its claim, but was awarded because INS has
failed to provide information regarding the claim in a timely manner.

Based on a preliminary review of PCI's allegations, our
management does not believe that PCI's injunction limits or curtails our ability
to use or lease our nitrogen generation equipment. Further, it is management's
belief that the technology related to how oxygen is used to create nitrogen in
our nitrogen generation unit is commonly used and widely known and has not been
patented and cannot be patented. Further, the key elements of the design which
make our unit more efficient than other systems we believe are due to
innovations designed by our management, and do not come from our supplier, INS,
and therefore do not originate with PCI and are not subject to any injunction.
To date we have been unsuccessful in obtaining copies of all of the relevant
court documents in the action. Counsel for PCI has refused to provide us with
any of the documents PCI used in obtaining the injunction or any other court
documents other than the injunction order, which has led us to believe that
PCIs claim that we are subject to the injunction is vexatious and
unfounded.

Management is not aware of any legal proceedings contemplated
  by any governmental authority against us. None of our directors, officers or
  affiliates are (i) a party adverse to us in any legal proceedings, or (ii) have
  an adverse interest to us in any legal proceedings.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES:

On December 1, 2006, we issued 484,642 shares of common stock
  at $1.00 per share to investors, for cash proceeds of approximately $484,642.

On December 7, 2006, we issued 43,860 common shares pursuant to the exercise of options by a former consultant. The shares were issued at $0.50 per share for cash proceeds of approximately $21,930.

On December 29, 2006, we issued 255,755 common shares pursuant to the exercise of warrants by an investor. The warrants were exercised pursuant to two warrant certificates and were exercised at a price of $0.85 per share, for cash proceeds of
approximately $217,392.

On February 15, 2007, we issued 330,957 shares of common stock
  at $1.00 per share to investors, for cash proceeds of approximately $330,957.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES:

None

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

None

ITEM 5. OTHER INFORMATION:

None.

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ITEM 6. EXHIBITS

|Exhibit | Exhibit Description                                                                                                                                                                                 
|------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  |                                                                                                                                                                                                     
|        |                                                                                                                                                                                                     
|10.1    | Real Estate Purchase Contract
      between Lexington and Jackson Cattle Co. Ltd. dated February 3, 2006 (1)                                                                                        
|        |                                                                                                                                                                                                     
|10.2    | Larry Kristof Employment Agreement
      (2)                                                                                                                                                        
|        |                                                                                                                                                                                                     
|10.3    | Brent Nimeck Employment Agreement
      (2)                                                                                                                                                         
|        |                                                                                                                                                                                                     
|10.4    | Addendum to Real Estate Purchase
      Agreement with Jackson Cattle Co. Ltd. (2)                                                                                                                   
|        |                                                                                                                                                                                                     
|10.5    | Amendment dated August 2, 2006
      to Real Estate Purchase Agreement with Jackson Cattle Co. Ltd. (3)                                                                                             
|        |                                                                                                                                                                                                     
|10.6    | Letter of Intent dated August
      2, 2006 with Laricina Energy Ltd. (4)                                                                                                                           
|        |                                                                                                                                                                                                     
|10.7    | Sub-lease Agreement with First
      Truck Centre (Edmonton) Inc. (3)                                                                                                                               
|        |                                                                                                                                                                                                     
|10.8    | Amendment to Real Estate Purchase
      Agreement with Jackson Cattle Co. dated February 28, 2007 (4)                                                                                               
|        |                                                                                                                                                                                                     
|31.1    | Certification of the Chief Executive Officer and Chief Financial
      Officer Pursuant to Rule 13a-14 or 15d-14 of the Exchange Act pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002
|        |                                                                                                                                                                                                     
|32.1    | Certification of the 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       

|(1) | Included as exhibits on our Form SB-2 filed May 16,
      2006.       
|--- | ----------------------------------------------------------------------
|    |                                                                       
|(2) | Included as exhibits on our Form SB-2/A filed July 7,
      2006.     
|    |                                                                       
|(3) | Included as exhibits on our Form SB-2/A filed August 9,
      2006.   
|    |                                                                       
|(4) | Included as exhibits on our Form SB-2/A filed September
      1, 2006.

SIGNATURES

In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

|                     | Lexington Energy Services Inc.                            
|-------------------- | ----------------------------------------------------------
|                     | (Registrant)                                              
|                     |                                                           
|                     | /s/ Larry Kristof                                         
|Date: April 16, 2007 | Larry Kristof                                             
|                     | Director , President, Chief Executive Officer,
      Chief
|                     | Financial Officer, (Principal Executive Officer
      and 
|                     | Principal Accounting and Financial Officer)               

15

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