**U.S.
      SECURITIES AND EXCHANGE COMMISSION**
 WASHINGTON,
      D.C. 20549
  **FORM
      10-KSB**
  **ANNUAL
      REPORT FILED PURSUANT TO SECTION 13 OR 15(d)
OF**
 **THE
      SECURITIES EXCHANGE ACT OF 1934**
  **FOR
      THE FISCAL YEAR ENDED DECEMBER 31, 2004**
  **Commission
      file number 0-29711**
  **Subjex
      Corporation**
 *(Exact
      name of issuer as specified in
charter)*
  **Minnesota**
    
    **41-1596056***(State
      or other jurisdiction of incorporation)*
    
    *(IRS
      Employer ID Number)*
  **5720
      Smetana Dr. Suite 325, Minnetonka, MN
55343**
 *(address
      of principal executive offices)*
  Issuer's
      telephone number
      is**(952)
      931-0501**
  Securities
      registered pursuant to Section 12(b) of the Act:**NONE**
  Securities
      registered pursuant to Section 12(g) of the
Act:
  **Common
      Stock, No par value**
    
    **Over-the-Counter
      Bulletin Board***(Title
      of Class)*
    
    *(Name
      of Exchange on which registered)*
  Check
      whether the issuer (1) filed all reports required to be filed by Section
      13 or 15(d) of the Securities and Exchange Act of 1934 during the past 12
      months, and (2) has been subject to such filing requirements for the past
      90 days.
  Yes**x**
    No ̈
  Check
      if disclosure of delinquent filers in response to Item 405 of Regulation
      S-B is not contained in this form, and no disclosure will be contained, to
      the best of Issuer’s knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or
      any amendment to this Form 10-KSB.
  Transitional
      Small Business Disclosure Format   Yes ̈No**x**
  1
  SUBJEX
      CORPORATIONFORM
      10-KSBYEAR
      ENDED DECEMBER 31, 2004INDEXITEM
    
    PAGEPART
      I1.
    Description
      of Business
    32.
    Description
      of Property
    43.
    Legal
      Proceedings
    44.
    Submission
      of Matters to a Vote of Security Holders
    4PART
      II5.
    Market
      for Common Equity and Related Stockholder Matters
    46.
    Management's
      Discussion & Analysis of Financial Condition and Results of
      Operations
    47.
    Financial
      Statements
    58.
    Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure.
    5PART
      III9.
    Directors,
      Executive Officers, Promoters and Control Persons, Compliance with Section
      16(a) of the Exchange Act
    510.
    Executive
      Compensation
    611.
    Security
      Ownership of Certain Beneficial Owners and
Management
    612.
    Certain
      Relationships and Related Transactions
    2013.
    Exhibits
      and Reports on Form 8-K
    20Signatures
    22Financial
      Statements
    F-1Articles
      of Incorporation
    F-2
  2
  **CAUTIONARY
      STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
      SECURITIES LITIGATION REFORM ACT OF
1995**
  Statements
      in this discussion which are not historical facts may be considered
      "forward looking statements" within the meaning of Section 21E of the
      Securities Act of 1934, as amended. The words "believe", "expect",
      "anticipate", "estimate", and similar expressions identify forward looking
      statements. Any forward looking statement involves risks and uncertainties
      that could cause actual events or results to differ, perhaps materially,
      from the events described in the forward looking statements. Readers are
      cautioned not to place undue reliance on these forward looking statements.
      The Company undertakes no obligation to publicly update or revise any
      forward looking statement, whether as a result of new information, future
      events or otherwise. The risks associated with the Company's forward
      looking statements include, but are not limited to, risks associated with
      the Company's history of losses and uncertain profitability, sales and
      marketing strategies, competition, general economic conditions, reliance
      on key management and production people, current and future capital needs,
      dilution, effects of outstanding notes and convertible debentures, limited
      public market for the Company’s capital Stock, low stock price, and lack
      of liquidity.
  The
      following discussion and analysis should be read in conjunction with the
      Financial Statements, related notes and other information included in this
      annual report on Form 10-KSB.
  **ITEM
      1.  Description of Business**
  **Overview**
  Subjex
      Corporation is an innovative provider of intelligent customer service
      solutions. Subjex Corporation has developed an Artificial Intelligence
      Software platform that is used to create virtual personalities developed
      on an open software distribution platform. The software chats with web
      site visitors, answers questions, and sells products for its clients.
      Making complex web site processes simple for web site visitors has become
      the key to rapid sales and customer retention. Subjex Corporation is
      setting a new standard in customer service technology that is both easily
      deployable and astoundingly inexpensive. The Subjex Corporation mission is
      to give massive value to our client base while providing Clear-continuous
      revenue and profit growth for our investor base. We are committed to
      fostering a community of developers from which our customers draw virtual
      personality’s expert in all areas of business.
  3
  **Principal
      Products and Services**
  SubjexCSR
      (Customer Service Representative) is Subjex Corporation’s flagship
      Artificial Intelligence product. SubjexCSR is used in conjunction with
      SubjexOPS (Operator Training System) which allows clients to train their
      implementation to sell their products and communicate with their users on
      their web site. This technology is used on the Subjex.com web site to sell
      itself by conducting dialogue with business owners (through text) to
      dynamically converse with a normal, human-like conversation chat.
      SubjexCSR can lower costs dramatically for companies who have web sites,
      and inbound calls from users of their web site. The system can converse
      eloquently with hundreds of simultaneous users for far less than the cost
      of one live operator, and can drastically increase sales (closing ratios)
      by recommending ideal products for that specific individual. The key to
      this product is its iterative "back and forth" methodology which actually
      conducts an interview conversation. The system is able to learn users’
      needs in a way user s are already familiar with - by
      "talking".
  **Trademarks
      and Patents**
  The
      Company holds trademarks and patent protection for most of its business
      that management feels are relevant to protect the company interests. The
      Company continues to maintain a patent on business functions of its some
      of its products.
  **Environmental
      Compliance**
  The
      Company believes it is in compliance with all current federal and state
      environmental laws.
  **Employees**
  The
      Company currently has 10 full-time employees. The Company's employees are
      not represented by any labor unions.  The Company considers its
      relations with its employees to be
outstanding.
  **Competition**
  The
      Company is aware of other companies selling solutions that appear to be
      similar to Subjex; however management is not aware of any companies that
      are selling the same solution as we have designed. In addition management
      has made the decision to focus all of our marketing efforts directly to
      small businesses, which our pricing model reflects. Our competitions
      solutions are less effective, extremely complex for the small business
      owner, and vastly more expensive. Our demographic target - to our
      knowledge - has never been exposed to this type of technology, because no
      one has priced an appealing product within the budget of small business.
      Management believes that while some companies my have greater resources
      than Subjex, we have superior products, at a lower price, and the
      experience to take a huge part of the market before our competitors
      realize it.
  **Recent
      Developments**
  In
      2004 and early 2005, Subjex Corporation has made sales increases and is
      quickly increasing new registered users of the technology. Now averaging
      25-35 new clients per day, the company is reducing its reliance on selling
      stock to survive. In 2004 the Company raised only as much money as it
      needed to execute its plan. With many cost saving measures in place since
      2002, and our percentage growth in 2004, managements feels that the
      Company will become profitable on an ongoing basis in 2005.  In 2004
      the Company has been able to raise additional monies through private
      issuances of its stock.  Receipt of these monies allowed the Company
      to significantly increase and refine its marketing efforts with out
      increasing expenditures.
  4
  **ITEM
      2.  Description of Property**
  The
      Company's principal office is located at 5720 Smetana Dr. Suite 325,
      Minnetonka, MN 55343, occupying approximately 1100 square feet and
      utilized entirely for office space. The lease is month to month. The space
      is rented under a written lease, which provides for a monthly payment of
      rent and a pro-rata share of annual operating expenses. Management
      believes that comparable office space is readily available if the Company
      were to lose its lease.
  **ITEM
      3:  Legal Proceedings**
  There
      were no legal proceedings pending or, to the Company's knowledge, that
      would be material to the financial position of the
  Company.
  **ITEM
      4:  Submission of Matters to a Vote of Security
      Holders**
  No
      sale or substantial restructuring of the Company happened in 2004. No
      matters were submitted to the vote of the Company’s stockholders in
      2004.
  **PART
      II**
  **ITEM
      5:   Market for Common Equity and Related Stockholder
      Matters**
  **(a)
      Market Information**
  The
      Company’s Common Stock is traded on the Over the Counter Bulletin Board
      since January 2000 under the symbol “PGBN”. Since the commencement of
      trading, the Company has changed it ticker symbol in 2003 to “SBJX”. Its
      high and low sales prices of common stock in 2004 were $0.30 and $0.02,
      respectively.  Since the Company is not NASDAQ qualified, these
      prices are inter-dealer prices and may not reflect actual value or
      transactions.
      The
      estimated aggregate market value on March 22, 2005, of the voting common
      stock held by non-affiliates was $6,496,304 based upon an average bid and
      asked price of $.15 of such common stock at that date on the
      Over-The-Counter Bulletin Board (OTCBB: SBJX). The number of shares
      outstanding of each of the issuer's common stock as of March 22, 2005 was
      43,308,692 shares.
  Price
      per Share - Calendar Year 2004
  Quarter
    
    
    
    High
    
    LowFirst
    
    
    
    
    $
    0.10
    
    $
    0.05Second
    
    
    
    
    $
    0.30
    
    $
    0.021Third
    
    
    
    
    $
    0.25
    
    $
    0.05Fourth
    
    
    
    
    $
    0.21
    
    $
    0.06
  
 5
 Price
      per Share - Calendar Year 2003
 
 Quarter
    
    
    
    High
    
    LowFirst
    
    
    
    
    $
    0.11
    
    $
    0.04Second
    
    
    
    
    $
    0.10
    
    $
    0.04Third
    
    
    
    
    $
    0.15
    
    $
    0.04Fourth
    
    
    
    
    $
    0.11
    
    $
    0.035
  On
      December 31, 2004 there were 284 holders of the Company’s outstanding
      42,558,096 shares of common stock.
  **(a)
      Dividends**
  The Company has not paid dividends on its common stock and may not do so
      in 2005. Although it is the company intention to pay dividends, there is
      no assurance that any dividends will be paid in the future.  Any
      earnings in 2005 may be utilized to invest in projects intended to build
      the Company’s sales base, to buy back its own stock or for paying
      dividends.
 
 **(b)
      Recent Sales of Unregistered Securities**
      ****
      The
      following discussion describes all securities sold by us during the past
      year without registration.
      
      In
      2004 the Company sold common stock in the amount of 8,427,193 to fund
      basic operations. The Company did not use underwriters, and all securities
      were sold by the Company. The Company did not make any public offerings of
      any securities; all sales were private, to accredited individuals only.
      The securities were sold for cash at .03 to .09 cents per share with a no
      par value. There were no underwriting discounts or commissions paid on
      these securities. The Company issued warrants to purchase 1,675,000 shares
      of the Company’s common stock for finders fees related to the sale of the
      Company’s common stock in 2004.
      
      The
      Company has relied on section 4(2) of the section of the Securities Act of
      1933 under which the Company claimed exemption from registration. The
      Company did not solicit for funds publicly, and had acquired signed
      subscription agreements from the accredited participants of the securities
      sold. The securities sold by the Company are not convertible warrants or
      options and therefore there are no terms of conversion or exercise of the
      securities sold.
      
      The
      net offering proceeds to the Company was $447,094 which the Company used
      for the payment of employee salary, office rent; purchase of equipment;
      repayment of indebtedness; working capital. There were no indirect
      payments to directors, officers, or their associates; to persons owning
      ten (10) percent or more of any class of equity securities of the issuer;
      and to affiliates of the issuer; or direct or indirect payments to others
      for monies raised.
 
 **ITEM
      6:  Management's Discussion & Analysis of Financial Condition and
      Results of Operations**
  The
      Company increased its operating expenses to $369,458 in 2004 compared to
      $351,366 in 2003. The Company increased its spending in 2004 slightly to
      accommodate its new marketing approach.
  The
      Company generated revenues of $37,562 in 2004, $47,276 in 2003 compared to
      revenues of $23,812 in 2002.  Most of the revenue in 2004 was
      generated from recurring SubjexCSR revenue - whereas the revenue from 2003
      was due to revenue generated from the Subjex technology, held over on the
      books as deferred revenue. Our revenue levels by themselves were not
      sufficient to sustain the Company’s operations in 2004; therefore funds
      were raised from the sale of common stock to the Company’s investor base
      to meet its financial needs.  The Company has adopted a
      “just-in-time” funding method, in an effort to hold off dilution of its
      stock, by not raising more funds than necessary while its stock price is
      low.
  The
      uncertain nature of the market has historically made revenue prediction of
      future sales results difficult for the Company. The Company, however, has
      refined its marketing efforts significantly, and is seeing increasing
      numbers of new clients using and paying for the SubjexCSR
      technology.  The Company has recently seen growth rates as large as
      35 new clients per day. This revenue growth is being analyzed in an effort
      to devise a predictable future revenue projections
  model.
  Company
      expects to continue to raise additional capital from the issuance of
      common stock from its current investor base. This funding is expected to
      bring the Company into an ongoing positive cash flow situation as a result
      of operations and revenues. The Company does not expect to experience
      significant negative fluctuations in its future operating results. Due to
      the incremental growth of its current revenues designed into the business
      model, management expects a predictable revenue growth track to emerge in
      2005. Factors that may affect the Company's operating results include the
      continued success of marketing efforts and potential mergers or
      acquisitions.
  6
  **Liquidity
      and Capital Resources**
  The
      accumulated deficit from inception to December 31, 2004 was
      $4,464,356. To date, most of the operations of the Company has
      depended on monies raised through the issuance of common stock.  The
      Company is continuing to raise monies through private sales of its common
      stock as necessary. The Company feels that these issuances will provide it
      sufficient monies to sustain operations until operating revenues are
      sufficient to cover operating expenses.
      
      The
      Company has and will continue using its capital resources to bring the
      Company profitable. Once this is accomplished the Company will focus its
      use of capital resources on the continued enhancement of sales growth.
      After profitability is reached, management expects an increasing growth
      curve in the Company’s profit margin with decreasing necessary external
      resources. The Company will use this profit to further grow its market
      share, start its dividend program, and additionally start a stock support
      and buy back program. This stock buy back program is intended to support
      the stock price and build a stock reserve for future use in possible
      acquisitions.
  **ITEM
      7: Financial Statements**
  The financial statements of the Company are included herein following the
      signatures.
  **ITEM
      8:  Changes in and Disagreements with Accountants on Accounting and
      Financial Disclosure**
  None.
  7
 **PART
      III**
 
 
 
 **ITEM
      9.  Directors, Executive Officers, Promoters and Control Persons,
      Compliance with Section 16(a) of the Exchange
  Act**
  MANAGEMENT
  The executive officers and Directors of the Company are as
      follows:
  Name
    
    Age
    
    PositionAndrew
      D. Hyder
    
    38
    
    Chief
      Executive OfficerPresidentChairman
      of the Board
 Andrew D. Hyder has been the President and Chief Executive Officer and a
      Director since October 1999. He is the founder of the Company and has
      served as President and Chief Executive Officer since its inception in
      1998. He brings extensive marketing, software development, and artificial
      intelligence skills to the Company. Andrew served as President of
      Interactive Host, a successful web development, hosting and search engine
      positioning company. Andrew developed a search engine ranking and
      positioning expert system that was later sold and netted over one-half
      million dollars.
  Andrew has founded and managed several technology and advertising
      companies. He has expertise in general areas of business, including
      several specialized areas such as, finance, direct mail marketing, and
      corporate branding. Andrew knows seven different computer programming
      languages such as C++, Java, Cobol, the Visual languages (Basic, C, Java),
      JavaScript, HTML and Perl; his technical experiences span just about every
      type of PC platform in use today, from Unix/Linux, Mac to Win/NT. He began
      computer programming flight simulators in 1978 at age
  12.
  Andrew has a firm grasp of modern technologies as applied to corporate
      infrastructure and what it takes to build a successful public technology
      organization. At Subjex, he is responsible for the vision and direction of
      the corporation and supervision and leadership of the Company’s Artificial
      Intelligence research and development.
  Name
    
    Age
    
    PositionScott
      Bjerstedt
    
    25
    
    Chief
      Technology OfficerBoard
      Member
  Scott
      Bjerstedt is the Chief Technology Officer at Subjex, responsible for
      managing technical operations. Scott spearheaded the engineering and
      development of the Subjex Platform and continues research and development
      of the next generation Subjex Platform. Scott has years of experience in
      IP security and encryption. Scott periodically serves as an expert witness
      on security cases for the US federal government, manages Subjex's
      Minneapolis Data Center, and is organizing the expansion of additional
      Data centers in Europe and Asia. Scott has expertise in all modern
      computer languages and on all computing
platforms.
  8
  Section (a) Beneficial Ownership Reporting Compliance
  Section 16(a) of the Securities Exchange Act of 1934 requires executive
      officers and directors and persons who beneficially own more than 10% of
      the Company’s Common Stock to file initial reports of ownership and
      reports of changes in ownership with the Securities and Exchange
      Commission (“SEC”).  Executive officers, directors, and greater than
      10% beneficial owners are required by SEC regulations to furnish the
      Company with copies of all Section 16(a) forms they
  file.
  Based solely on a review of the copies of such forms furnished to the
      Company and written representations from the executive officers, directors
      and holders of 10% or more of the Company’s Common Stock, the Company
      believes that its executive officers, directors and 10% shareholders
      complied with all Section 16(a) filing requirements applicable to
      them.
  **ITEM
      10:  Executive Compensation**
  **Summary
      Compensation Table**
  The following table sets forth the compensation earned in certain fiscal
      years by the Company’s Chief Executive Officer including the year ended
      December 31, 2004.
  Annual
      CompensationName
      and Principal Position
    
    Year
    
    Salary
    
    Bonus
    
    Other
      Annual CompensationAndrew
      D. Hyder (1)
    
    
    2004
    
    $
    0.00
    
    
    -
    
    $
    38,292Director,
      President and
    
    
    2003
    
    
    17,083
    
    
    -
    
    
    -Chief
      Executive Officer
    
    
    2002
    
    
    48,333
    
    
    -
    
    
    -
 
 (1) During
2003 the Company sold 765,834 shares of common stock to the Company's CEO with a
fair market value of $38,292.  The CEO agreed to pay for these shares in
2004.  In 2004, the CEO and the Company agreed that note receivable would
be exchanged for payment of the CEO's salary during 2004.  No amounts
remain outstanding on the note receivable at 2004.
 
 
 As
      authorized by the board of directors, in 2003 Andrew Hyder converted
      $62,500 of his note with the Company to a restricted stock grant by the
      Company for 1,250,000 shares of common stock. This was a conversion of
      debt to equity.
  **ITEM
      11. Security Ownership of Certain Beneficial Owners and
      Management**
  PRINCIPAL
      SHAREHOLDERS
  The
      following table sets forth certain information with respect to beneficial
      ownership of the Company’s Common Stock as of March 31, 2005 by: (i) each
      Director of the Company, (ii) each Named Executive Officer
      (iii) all Directors and executive officers of the Company as a group
      and (iv) each person or entity known by the Company to own
      beneficially more than five percent of the Company’s Common Stock. The
      address of each of the following shareholders is the same as the
      Company.
  Name
      and address of Beneficial owner
    
    Amount
      and Nature of Beneficial Owner
    
    Percent
      of Class (1)Andrew
      D. Hyder (2)
    
    
    5,664,643
    
    
    17.1
    %Scott
      Bjerstedt
    
    
    950,000
    
    
    2.8
    %All
      Directors and Officers
    
    
    6,614,643
    
    
    20
    %
  9
 (1)
      Beneficial ownership is determined in accordance with rules of the
      Securities and Exchange Commission and includes generally voting power
      and/or investment power with respect to securities.  Shares of Common
      Stock subject to options or warrants currently exercisable or exercisable
      within 60 days of March 31,2004 (“Currently Exercisable Options”) are
      deemed outstanding for computing the beneficial ownership percentage of
      the person holding such options but are not deemed outstanding for
      computing the beneficial ownership percentage of any other person. 
      Except as indicated by footnote, the persons named in the table above have
      the sole voting and investment power with respect to all shares of Common
      Stock shown as beneficially owned by them.
  (2)Includes
      25,000 shares held by Mr. Hyder’s daughter, and includes 398,600 shares
      issuable pursuant to Currently Exercisable
Options.
 
 Securities
      Authorized Under Equity Compensation Plans
      
      The
      following table lists the securities authorized for issuance under any
      equity compensation plans approved by our shareholders and any equity
      compensation plans not approved by our shareholders. This chart also
      includes individual compensation arrangements. Descriptions of these plans
      are provided below.
  Equity
      Compensation Plan InformationNumber
      of securities to be issued upon exercise of outstanding options, warrants
      and rights
    
    Weighted-average
      exercise price of outstanding options, warrants and rights
    
    Number
      of securities remaining available for future issuance under equity
      compensation plans (excluding securities reflected in column
      (a)Plan
      category
    
    (a)
    
    (b)
    
    (c)Equity
      compensation plans approved by security holders
    
    
    -
    
    $
    N/A
    
    
    -Equity
      compensation plans not approved by security holders (1)
    
    
    3,042,600
    
    
    0.30
    
    
    2,092,400Total
    
    
    3,042,600
    
    $
    0.30
    
    
    2,092,400
 (1) 
Represents options to buy 407,600 shares and warrants to buy 2,635,000
shares
 During
1999, the Company adopted the Pagelab Network, Inc. Stock Option and Stock Award
Plan (the Plan).  The Plan permits the granting of incentive stock options
meeting the requirements of Section 422 of the Internal Revenue Code of 1986, as
amended, and nonqualified options, which do not meet the requirements of Section
422.  A total of 2,500,000 shares have been reserved under the Plan through
the period ending December 31, 2004.  All options will be granted at an
exercise price not less than the fair market value of the common stock on the
grant date according to the plan provisions.  The options granted to
participants owning more than 10 percent of the Company’s outstanding voting
stock must be granted at an exercise price not less than 110 percent of fair
market value of the common stock on that date.  The options shall expire on
the date determined by the Board of Directors, but not greater than 10 years
from the grant date.
 **ITEM
      12. Certain Relationships and Related Transactions**
  In October 1999, the Company amended its Articles of Incorporation to
      increase the authorized shares of the Company from 25,000,000 to
      50,000,000 shares, of which 45,000,000 shares have been designated as
      Common Stock and 5,000,000 are Undesignated.
  Mr.
      Hyder advanced in the form of 6% notes, approximately $230,000 to the
      Company since its inception. A portion of these loans ($150,000) was used
      to purchase intellectual property from Commission Junction, Inc., located
      in Santa Barbara, CA.  At December 31, 2004, indebtedness owed to Mr.
      Hyder, after repayments or other reductions during the course of 2004, was
      $0.
  **ITEM
      13. Exhibits and Reports on Form
8-K**
  (A)
    EXHIBITS.
  None.
  (B)
    REPORTS
      ON FORM 8-K . None.
  10
  ( C
      )
    Exhibits
  Copies of the following documents are included as exhibits to this report
      pursuant to Item 601 of Regulation S-B.
  SEC
      Ref. No.
    
    Title
      of Document
    
    Location9E-411
    
    Amended
      Articles of Incorporation
    
    F-2
   Copies of the following documents are included as
exhibits to this report pursuant to Item 601 of Regulation S-B.
 
 SEC
      Ref. No.
    
    Title
      of Document
    
    Location9E-411
    
    Amended
      Articles of Incorporation
    
    F-2

**ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**

The Board
of Directors of the Company selected Carver Moquist & O’Connor, LLC
(formerly known as Carver Moquist & Associates, LLC), certified public
accountants with offices in Minneapolis, Minnesota, to audit the Company’s
financial statements for the years ended December 31, 2004 and 2003. The
following table details the fees billed by Carver Moquist & O’Connor, LLC in
the years ended December 31, 2004 and 2003.

**2004**
    
    **2003**Audit
      Fees
    
    $
    15,800
    
    $****
    **-
      -**Audit-Related
      Fees
    
    
    **-
      -**
    
    
    **-
      -**Tax
      Fees
    
    
    **-
      -**
    
    
    **-
      -**All
      Other Fees
    
    
    -
      -
    
    
    - -Total
    
    $
    15,800
    
    $
    -
      -

No
services in connection with appraisal or valuation services, fairness opinions
or contribution-in-kind reports were rendered by Carver Moquist & O’Connor,
LLC. Furthermore, no work of Carver Moquist & O’Connor, LLC with respect to
its services rendered to the Company was performed by anyone other than Carver
Moquist & O’Connor, LLC.

We do not
have an audit committee and as a result our entire board of directors performs
the duties of an audit committee. Our board of directors evaluates the scope and
cost of the engagement of an auditor before the auditor renders audit and
non-audit services. As a result, we do not rely on established pre-approval
policies and procedures.
 
 **SIGNATURES**
  Pursuant to the requirements of Section 13 or 15(d) of the Securities and
      Exchange Act of 1934, the Issuer has duly caused this report to be signed
      on its behalf by the undersigned officers and/or Directors, there unto
      duly authorized.
  **Subjex
      Corporation**
  Date: 
      March 22, 2005
  **NAME**
    
    
    **TITLE**/s/ Andrew
      D. Hyder
    
    
    President
      and Chief Executive Officer,Andrew
      D. Hyder
    
    
    Chief
      Financial Officer (and Principal Financial Officer) and
      Director
  11
  Exhibit
      Index
  Exhibit
      31.1                  
      Certificate pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002Exhibit
      32.1                  
      Certificare pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002
  12
  **ITEM
      7.  Financial Statements**
  **SUBJEX
      CORPORATION**
  **FINANCIAL
      STATEMENTS**
 
 **YEARS ENDED DECEMBER 31, 2004 AND
    2003**
  
 **SUBJEX
      CORPORATION**FINANCIAL
      STATEMENTSYEARS
      ENDED DECEMBER 31, 2004 AND 2003TABLE
      OF CONTENTSPageReport
      of Independent Registered Public Accounting Firm
    1Financial
      Statements:Balance
      Sheets
    2Statements
      of Operations
    3Statements
      of Shareholders' Equity (Deficit)
    4Statements
      of Cash Flows
    5Notes
      to Financial Statements
    8
  
 
 
 ******Carver
      Moquist & O’Connor,
      LLC******
      ***Certified
      Public Accountants and
Consultants***
 
  REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 To the
Board of Directors and
 Shareholders
of Subjex Corporation
 
 We have
audited the accompanying balance sheets of Subjex Corporation as of December 31,
2004 and  2003, and
the related statements of operations, shareholders’ deficit, and cash flows for
each of the years in the two-year period ended December 31, 2004. These
financial statements are the responsibility of the company’s management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
 
 We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
 
 In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Subjex Corporation as of December
31, 2004 and 2003, and the results of its operations and its cash flows for each
of the years in the two-year period ended December 31, 2004 in conformity with
accounting principles generally accepted in the United States of
America.
 
 The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 1 to the consolidated
financial statements, the Company had net losses for the years ended December
31, 2004 and 2003 and had an accumulated deficit at December 31, 2004. These
conditions raise substantial doubt about its ability to continue as a going
concern. Management’s plans regarding those matters are also described in Note
1. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
 
 /s/
Carver Moquist & O’Connor, LLC
 
 Minneapolis,
Minnesota
 February
23, 2005
 
  *1550
      American Blvd. E, Suite 680, Minneapolis, MN
55423*
 
 *Telephone:
      (952)854-5700        Fax:
      (952)854-1163*
  1
 **SUBJEX
      CORPORATION**
 
 
 
 BALANCE
      SHEETS
 
 
 
 December
      31,2004
    
    2003ASSETSCurrent
      Assets:Cash
    
    $
    62,952
    
    $
    3,753Accounts
      receivable, net
    
    
    -
      -
    
    
    300Prepaid
      expenses
    
    
    2,000
    
    
    2,000Total
      current assets
    
    
    64,952
    
    
    6,053Fixed
      assets, net
    
    
    17,585
    
    
    5,937-
      -
    
    
    -
      --
      -
    
    
    -
      -Total
      assets
    
    $
    82,537
    
    $
    11,990LIABILITIES
      AND SHAREHOLDERS' DEFICITCurrent
      Liabilities:Subordinated
      convertible notes payable
    
    $
    22,800
    
    $
    23,000Demand
      notes payable
    
    
    -
      -
    
    
    20,000Current
      maturities of notes payable - related party
    
    
    -
      -
    
    
    - -Accounts
      payable
    
    
    72,120
    
    
    91,637Accrued
      expenses:Payroll
      and payroll taxes
    
    
    116,503
    
    
    208,303Other
    
    
    26,654
    
    
    27,517Subscribed
      stock
    
    
    -
      -
    
    
    -
      -Total
      current liabilities
    
    
    238,077
    
    
    370,457Long-term
      debt:Notes
      payable
    
    
    3,474
    
    
    5,274Total
      liabilities
    
    
    241,551
    
    
    375,731Shareholders'
      deficit:Common
      stock, no par or stated value;45,000,000
      and 40,000,000 shares authorized: 42,558,096 and33,694,236
      shares issued and outstanding in 2004 and 2003,
    respectively
    
    
    4,305,342
    
    
    (38,292
    )Notes
      Receivable - Officer
    
    
    -
    
    
    -Accumulated
      deficit
    
    
    (4,464,356
    )
    
    (4,129,647
    )Shareholders'
      deficit
    
    
    (159,014)
    
    
    (363,741
    )Total
      liabilities andShareholders’
      deficit
    
    $
    82,537
    
    $
    11,990
 
 
 
 The
      accompanying notes are an integral part of these financial
      statements.
  
 **SUBJEX
      CORPORATION**
  STATEMENTS
      OF OPERATIONS
  Years
      Ended December 31,2004
    
    2003Revenues
    
    $
    37,562
    
    $
    47,276Expenses:Selling,
      general and administrative
    
    
    369,458
    
    
    351,366Total
      operating expense
    
    
    369,458
    
    
    351,366Operating
      loss
    
    
    (331,896
    )
    
    (304,090
    )Other
      income (expense)Interest
      expense
    
    
    (2,813
    )
    
    (5,084
    )Other
    
    
    -
    
    
    250Net
      loss
    
    $
    (334,709
    )
    $
    (308,924
    )Net
      loss per basic and diluted common share
    
    $
    (0.01
    )
    $
    (0.01
    )Weighted
      average common sharesoutstanding
      - basic and diluted
    
    
    37,662,386
    
    
    29,168,062
 The
      accompanying notes are an integral part of these financial
      statements.
  
 **SUBJEX
      CORPORATION**
  STATEMENTS
      OF SHAREHOLDERS’ EQUITY (DEFICIT)
  YEARS
      ENDED DECEMBER 31, 2004 AND 2003
  Common
      Stock
    
    
    
    Shareholders’Note
      Receivable -
    
    
    
    EquityShares
    
    Amount
    
    officer
      Accumulated
    
    Deficit
    
    (Deficit)BALANCE,
      December 31, 2002
    
    
    24,641,888
    
    
    3,243,760
    
    
    
    
    
    (3,820,723
    )
    
    (576,963
    )Stock
      Subscription at $.10 per share
    
    
    1,331,000
    
    
    133,100
    
    
    
    
    
    
    
    
    133,100Non
      cash stock compensation expense
    
    
    960,000
    
    
    77,900
    
    
    
    
    
    -
      -
    
    
    77,900Stock
      issued for conversion of note at $.05 per share
    
    
    1,125,000
    
    
    56,250
    
    
    
    
    
    -
      -
    
    
    56,250Common
      stock issuance at $.05 per share
    
    
    4,454,957
    
    
    221,810
    
    
    
    
    
    -
      -
    
    
    221,810Subordinated
      convertible note at $.10 per share
    
    
    100,000
    
    
    10,000
    
    
    
    
    
    -
      -
    
    
    10,000Stock
      issued to settle liability at $.03 to $.10 per share
    
    
    315,557
    
    
    23,086
    
    
    
    
    
    -
      -
    
    
    23,086Shares
      issued to officer
    
    
    765,834
    
    
    38,292
    
    
    (38,292
    )Net
      loss
    
    
    -
      -
    
    
    -
      -
    
    
    
    
    
    (308,924
    )
    
    (308,924
    )BALANCE,
      December 31, 2003
    
    
    33,694,236
    
    $
    3,804,198
    
    $
    (38,292
    )
    
    (4,129,647
    )
    $
    (363,741
    )Common
      Stock issuance at .03 to .09 cents per share
    
    
    8,427,193
    
    
    465,094
    
    
    -
    
    
    
    
    
    467,094Exchange of note receivable - officer for officer’s 2004
      salary
    
    
    
    
    
    
    
    
    38,292Non cash stock compensation expense
    
    
    436,667
    
    
    34,050
    
    
    
    
    
    
    
    
    34,050Net loss
    
    
    
    
    
    
    
    
    
    
    
    (334,709
    )
    
    (334,709
    )Balance , December 31,2004
    
    
    42,558,096
    
    
    4,305,342
    
    $
    -
    
    
    (4,464,356
    )
    
    (159,014
    )
 The
      accompanying notes are an integral part of these financial
      statements.
 
  **SUBJEX
      CORPORATION**
  STATEMENTS
      OF CASH FLOW
  Years
      Ended December 31,2004
    
    2003Cash
      flow from operating activities:Net
      loss
    
    $
    (334,709
    )
    $
    (308,924
    )Adjustments
      to reconcile net loss tonet
      cash used in operating activities:Depreciation
    
    
    6,386
    
    
    4,872Non
      cash stock compensation expense
    
    
    34,050
    
    
    77,900Noncash
      officer compensation expense
    
    
    38,292
    
    
    - --
      -
    
    
    -
      --
      -Changes
      in operating assets and liabilities:Accounts
      receivable
    
    
    300
    
    
    (300
    )Prepaid
      expenses
    
    
    - -
    
    
    2,630Accrued
      payroll and payroll taxes payable
    
    
    (91,800
    )
    
    41,222Accounts
      payable
    
    
    (19,517
    )
    
    (20,746
    )Other
      accrued expenses
    
    
    (864
    )
    
    (47,067
    )Net
      cash flows used in operating activities
    
    
    (367,862
    )
    
    (250,413
    )Cash
      flow from investing activities:Purchase
      of property and equipment
    
    
    (18,034
    )
    
    -Net
      cash flows used in investing activities
    
    
    (18,034
    )
    
    -Cash
      flow from financing activities:Proceeds
      from issuance of capital stock
    
    
    447,095
    
    
    221,810- -
    
    
    
    
    
    -
      -(Payments)
      Proceeds from subordinated note payable
    
    
    (200
    )
    
    10,000Principal
      payments on long-term debt
    
    
    (1,800
    )
    
    (205
    )Principal
      payments on note payable - related party
    
    
    -
    
    
    (6,281
    )Net
      cash flows provided by financing activities
    
    
    445,095
    
    
    225,324Net
      Increase (decrease) in cash
    
    
    59,199
    
    
    (25,089
    )Cash
      at beginning of year
    
    
    3,753
    
    
    28,842Cash
      at end of year
    
    $
    62,952
    
    $
    3,753
 The
      accompanying notes are an integral part of these financial
      statements.
  
 **SUBJEX
      CORPORATION**
  NOTES
      TO THE FINANCIAL STATEMENTS
  YEARS
      ENDED DECEMBER 31, 2004 AND 2003
  NOTE
      1 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
  Nature
      of Business
  Subjex
      Corporation provides a software service, Subject CSR, through an ASP
      (application service provider) model. Customers can use the software
      online or by downloading it, and do not need to install it on their
      server. This software service is wrapped in a subscription model, and is
      billed monthly until customer cancellation.
  Revenue
      Recognition
  Revenue
      from the sale of software and other products is recognized when an
      agreement is made, delivery is complete, no significant obligations remain
      unfulfilled, and collection of the resulting receivable is probable. In
      instances where a significant obligation exists, revenue recognition is
      delayed until the obligation has been satisfied. Revenue from services,
      including training and consulting are recognized as the services are
      performed.
  (Continued)
   
  **SUBJEX
      CORPORATION**NOTES
      TO THE FINANCIAL STATEMENTSYEARS
      ENDED DECEMBER 31, 2004 AND 2003
 
 NOTE
      1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  (Continued)
  Fixed
      Assets
  Fixed
      assets are stated at cost.  Depreciation is computed using the
      straight-line method over the estimated useful lives of the related
      assets.  When assets are retired or otherwise disposed of, the cost
      and related accumulated depreciation are removed from the accounts and the
      resulting gain or loss is recognized in income for the period.  The
      cost of maintenance and repairs is expensed as incurred; significant
      renewals and betterments are capitalized.  Deduction is made for
      retirements resulting from renewals and
betterments.
  Useful
      LivesComputers
      and equipment
    
    
    3
      to 5 yearsFurniture
    
    
    5
      to 7 yearsOperations
      equipment
    
    
    5
      years
  (Continued)
  
  **SUBJEX
      CORPORATION**NOTES
      TO THE FINANCIAL STATEMENTSYEARS
      ENDED DECEMBER 31, 2004 AND 2003
 
 NOTE
      1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  (Continued)
  Impairment
      of Long-Lived Assets
  The
      Company evaluates the carrying value of its long-lived assets periodically
      to determine potential impairment by comparing the carrying value of the
      long-lived assets with the estimated future cash flows expected to result
      from the use of the assets, including cash flows from disposition. 
      Should the sum of the expected future cash flows be less than the carrying
      value, the Company would recognize an impairment loss.  An impairment
      loss would be measured by comparing the amount by which the carrying value
      exceeds the fair value of the long-lived assets and intangibles.
  Financial
      Instruments
  Short-Term
      Assets and Liabilities:  The fair value of cash and cash equivalents,
      accounts receivable, accounts payable, accrued expenses, stock
      subscriptions and short-term debt approximate their carrying values due to
      the short-term nature of these financial
instruments.
  Research
      and Development
  Research
      and development costs, whether performed by the Company or by outside
      parties under contract, are charged to operations as
    incurred.
  Software
      Development Costs
  The
      Company capitalizes certain software development and production costs once
      technological feasibility has been achieved.  Software development
      costs incurred prior to achieving technological feasibility are expensed
      as incurred.
  (Continued)
  
  **SUBJEX
      CORPORATION**NOTES
      TO THE FINANCIAL STATEMENTSYEARS
      ENDED DECEMBER 31, 2004 AND 2003
 
 NOTE
      1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  (Continued)
  Software
      Development Costs(Continued)
  In
      accordance with SFAS No. 86, costs of software maintenance and customer
      support since the software became available for general release have been
      charged to expense as incurred.  Amounts expensed for ongoing
      software maintenance in the accompanying financial statements are as
      follows:
  2004
    
    $
    None2003
    
    $
    10,000
  Basic
      and Diluted Net Loss Per Share
  Basic
      per-share amounts are computed, generally, by dividing net income or loss
      by the weighted-average number of common shares outstanding.  Diluted
      per-share amounts assume the conversion, exercise, or issuance of all
      potential common stock instruments, unless their effect is antidilutive,
      thereby reducing the loss or increasing the income per common
      share.
  The
      Company has granted options and warrants to purchase shares of common
      stock at various amounts per share (see Note 5).  Those options and
      warrants were not included in the computation of diluted earnings per
      share because the Company incurred losses in both years.  The
      inclusion of potential common shares in the calculation of diluted loss
      per share would have an antidilutive effect.  Therefore, basic and
      diluted loss per share amounts are the same in each year
      presented.
  Stock-Based
      Consideration
  The
      Company has applied the fair value-based method of accounting for employee
      and nonemployee stock-based compensation or consideration in accordance
      with FASB Statement 123.
 
 
 
 (Continued)
  
  **SUBJEX
      CORPORATION**NOTES
      TO THE FINANCIAL STATEMENTSYEARS
      ENDED DECEMBER 31, 2004 AND 2003
 
 NOTE
      1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  (Continued)
  Concentrations,
      Risks and Uncertainties
  Use
      of Estimates
  The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make estimates and
      assumptions that affect the reported amounts of assets and liabilities and
      disclosure of contingent assets and liabilities at the date of the
      financial statements and reported amounts of revenues and expenses during
      the reporting period.  Actual results could differ from those
      estimates.
  Accounts
      Receivable
 The
      Company sells to companies worldwide.  The Company grants
      uncollateralized credit to customers, but requires deposits on unique
      orders.   While the ultimate collectibility may differ,
      management does not feel any variance would materially effect its
      financial statements.
 
 2004
    
    2003Accounts
      receivable
    
    $
    -
      -
    
    $
    2,300Allowance
      for doubtful accounts
    
    
    -
      -
    
    
    (2,000
    )Accounts
      receivable, net
    
    $
    -
      -
    
    $
    300
 
 
 
 Disputed
      Liabilities
  The
      Company had no disputed liabilities in 2004; however the Company had
      disputed liabilities as disclosed in previous filings for 2003. The
      Company reversed $48,052 of disputed liabilities as the Company determined
      that the likelihood of payment was remote. As of December 31, 2003 there
      are no amounts reflected in the accompanying financial statements for
      disputed liabilities.  Management feels that no amounts will ever
      have to be paid for known disputed liabilities.  Due to
      uncertainties, however, it is at least reasonably possible that
      management’s estimate will change during the next year.  That amount
      can not be estimated.
  (Continued)
  
  **SUBJEX
      CORPORATION**NOTES
      TO THE FINANCIAL STATEMENTSYEARS
      ENDED DECEMBER 31, 2004 AND 2003
 
 NOTE
      1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  (Continued)
  Comprehensive
      Income
  SFAS
      No. 130 establishes standards for the reporting and disclosure of
      comprehensive income and its components which will be presented in
      association with the Company’s financial statements.  Comprehensive
      income is defined as the change in a business enterprise’s equity during a
      period arising from transactions, events or circumstances relating to
      nonowner sources, such as foreign currency translation adjustments and
      unrealized gains or losses on available-for-sale securities.  It
      includes all changes in equity during a period except those resulting from
      investments by or distributions to owners.  For the years ended
      December 31, 2004 and 2003, net income and comprehensive income were
      equivalent.
  Income
      Taxes
  The
      Company accounts for income taxes in accordance with Statement of
      Financial Accounting Standards No. 109, Accounting for Income Taxes
      which require the use of the liability method of accounting for
      income taxes.  The Company’s net operating loss carry forwards are
      fully allowed for due to questions regarding the Company’s ability to
      utilize these losses before they expire.
  Reclassifications
  Certain
      reclassifications have been made to the 2004 financial statements to
      conform to the 2003 presentation.  These reclassifications had no net
      income effect.
  NOTE
      2 - BASIS OF PRESENTATION
  The
      financial statements have been prepared on a going-concern basis, which
      contemplates the realization of assets and the satisfaction of liabilities
      and commitments in the normal course of business.  The Company has
      incurred a net loss of $334,709 in the year ended December 31, 2004 and
      has incurred net losses of $4,464,356 inception to date.  In
      addition, as of December 31, 2004, the Company had a stockholders’ deficit
      of $159,014.
  (Continued)
   
  **SUBJEX
      CORPORATION**NOTES
      TO THE FINANCIAL STATEMENTSYEARS
      ENDED DECEMBER 31, 2004 AND 2003
 
 NOTE
      2 - BASIS OF PRESENTATION (Continued)
  These
      factors, among others, indicate that the Company may not be able to
      continue as a going concern for a reasonable period of time.  In 2004
      and 2003 respectively, the Company raised working capital through the
      issuance of common stock, exercise of warrants and receipt of proceeds for
      subscribed stock totaling $447,095 and $224,900.  At present the
      Company is dependent upon equity financing as cash flows from operating
      activities are not sufficient to cover operating
  expenses.
  The
      Company continues to seek debt and equity financing to fund its working
      capital needs.  Failure of the Company raise additional debt and
      equity financing in the near future and achieve profitable operations in
      the long-term could result in the Company being unable to continue as a
      going concern.  No estimate can be made of the range of loss that is
      reasonably possible should the Company be
unsuccessful.
  NOTE
      3 - PROPERTY AND EQUIPMENT
  Property
      and equipment consisted of the following at December
31:
  2004
    
    2003Office
      and computer equipment
    
    $
    43,255
    
    $
    25,220Accumulated
      depreciation
    
    
    (25,670
    )
    
    (19,283
    )Property
      and Equipment, net
    
    $
    17,585
    
    $
    5,937
  Depreciation
      expense was $6,386 in 2004 and $4,872 in
2003.
  
 
 (Continued)
  
  **SUBJEX
      CORPORATION**NOTES
      TO THE FINANCIAL STATEMENTS
  NOTE
      4 - DEBT
  Long-term
      debt consisted of the following at December
31:
  Notes
      Payable - Due on Demand
  The
      notes payable - due on demand, represent short-term operating loans
      granted the Company in 2001 and 2000.  These notes are unsecured, due
      on demand and bear interest at 12%.  Due to cash flow difficulties
      the Company has been unable to repay these amounts.  A summary of
      activity is as follows:
  2004
    
    2003Beginning
      of year
    
    $
    20,000
    
    $
    20,000Stock
      issued in repayment
    
    $
    (20,000
    )
    
    -
      -End
      of year
    
    $
    -
      -
    
    $
    20,000
  Convertible
      Notes Payable
  The
      convertible notes payable are unsecured, bear interest at 10% and were due
      at various dates, with all currently being due.  Due to cash flow
      difficulties the Company has been unable to repay these amounts.  A
      summary of activity is as follows:
  2004
    
    2003Beginning
      of year
    
    $
    23,000
    
    $
    23,000Repayments:Proceeds
      from issuance of new note payable
    
    
    - -
    
    
    10,000Stock
      and/or money issued in repayment
    
    
    (200
    )
    
    (10,000
    )End
      of year
    
    $
    22,800
    
    $
    23,000
 (Continued)
  
  **SUBJEX
      CORPORATION**NOTES
      TO THE FINANCIAL STATEMENTSYEARS
      ENDED DECEMBER 31, 2004 AND 2003
 
 
 
 (Continued)
 
 
 
 **SUBJEX
      CORPORATION**NOTES
      TO THE FINANCIAL STATEMENTSYEARS
      ENDED DECEMBER 31, 2004 AND 2003
 
 NOTE
      5 - SHAREHOLDERS, EQUITY
  Stock
      Options:
 
 During
      1999, the Company adopted the Pagelab Network, Inc. Stock Option and Stock
      Award Plan (the Plan).  The Plan permits the granting of incentive
      stock options meeting the requirements of Section 422 of the Internal
      Revenue Code of 1986, as amended, and nonqualified options, which do not
      meet the requirements of Section 422.  A total of 2,500,000 shares
      have been reserved under the Plan.  All options will be granted at an
      exercise price not less than the fair market value of the common stock on
      the grant date according to the Plan provisions.  The options granted
      to participants owning more than 10 percent of the Company’s outstanding
      voting stock must be granted at an exercise price not less than 110
      percent of fair market value of the common stock on that date.  The
      options shall expire on the date determined by the Board of Directors, but
      not greater than 10 years from the grant date. No options were granted
      under the Plan during the years ended December 31, 2004 and
      2003.
  (Continued)
 
 
 
 **SUBJEX
      CORPORATION**NOTES
      TO THE FINANCIAL STATEMENTSYEARS
      ENDED DECEMBER 31, 2004 AND 2003
 
 NOTE
      5 - SHAREHOLDERS’ EQUITY - (Continued)
  A summary
of outstanding options under the Plan is as of December 31,
 
 2004
    
    2003Shares
    
    Weighted-
      Average
      Exercise
      Price
    
    Weighted-
      Average
      Exercise
      Shares
    
    PriceOutstanding
      atbeginning
      of period
    
    
    817,970
    
    $
    .20
      to 1.10
    
    
    817,970
    
    $
    .20
      to 1.10Granted
    
    
    -
      -
    
    
    -
      -
    
    
    -
      -
    
    
    -
      -Exercised
    
    
    -
      -
    
    
    -
      -
    
    
    -
      -
    
    
    -
      -Canceled/Expired
    
    
    (410,370
    )
    $
    .20
      to $1.00
    
    
    -
      -
    
    
    -
      -Outstanding
      atend
      of period
    
    
    407,600
    
    $
    .75
      to 1.10
    
    
    817,970
    
    $
    .20
      to .1.10
  All
options were fully vested and have a have weighted average remaining contractual
life of 2.02 years at December 31, 2004.
  Warrants:
  The
Company issued detachable warrants with the sale of common stock to purchase
654,800 shares of common stock in 2002. Warrants for 300,000 shares expire in
June 2004 and have an exercise price of $0.10 per share. Warrants for 354,800
shares of common stock expire from June 2005 to June 2017, become exercisable
when the Company’s share price reaches $1.00 per share and have an exercise
price of $0.25 per share.
 
 The
Company issued detachable warrants with the sale of common stock to purchase
60,000 shares of common stock in December 2003. The warrants have a three year
life and an exercise price of $0.25 per share.
 
 The
Company issued warrants related to the sale of common stock during 2004. The
warrants for 1,075,000 shares which expire in 2006 and have an exercise an
average exercise price of $0.10 per share.
 
 A summary
of outstanding options under the Plan is as of December 31,
 
 2004
    
    2003Shares
    
    Weighted-
      Average
      Exercise
      Price
    
    Weighted-
      Average
      Exercise
      Shares
    
    PriceOutstanding
      atbeginning
      of year
    
    
    1,714,800
    
    $
    .35
    
    
    1,154,800
    
    $
    .37Granted
    
    
    1,075,000
    
    
    .35
    
    
    660,000
    
    
    .29Exercised
    
    
    -
      -
    
    
    -
      -
    
    
    -
      -
    
    
    -
      -Canceled/Expired
    
    
    (154,600
    )
    
    .10
    
    
    (100,000
    )
    
    .10Outstanding
      atend
      of year
    
    
    2,635,000
    
    $
    .18
    
    
    1,714,800
    
    $
    .35
 
 All
warrants were fully vested and have a have weighted average remaining
contractual life of 1.13 years at December 31, 2004.
  Note
receivable - officer
 
 During
2003 the Company sold 765,834 shares of common stock to the Company's CEO with a
fair market value of $38,292.  The CEO agreed to pay for these shares in
2004.  In 2004, the CEO and the Company agreed that note receivable would
be exchanged for payment of the CEO's salary during 2004.  No amounts
remain outstanding on the note receivable at 2004 .
 (Continued)
  
  **SUBJEX
      CORPORATION**NOTES
      TO THE FINANCIAL STATEMENTSYEARS
      ENDED DECEMBER 31, 2004 AND 2003
 
 NOTE
      6 - INCOME TAXES
 
 The
      reconciliation between expected federal income tax rates is as
      follows:
  2004
    
    2003Amount
    
    %
    
    Amount
    
    %Expected
      federal tax benefit
    
    $
    (95,494
    )
    
    34
    %
    $
    (105,034
    )
    
    34
    %State
      income tax, net of federal tax benefit
    
    
    (11,122
    )
    
    4
    %
    
    (12,233
    )
    
    4
    %Valuation
      allowance
    
    
    106,616
    
    
    (38
    )%
    
    117,268
    
    
    (38
    )%Total
    
    $
    -
    
    
    -
    %
    $
    -
    
    
    -
    %
  The
      Company's net operating loss carryforwards are fully allowed for due to
      the Company's ability to utilize these losses before they expire. The
      following is a listing of the Company's net deferred tax assets as of
      December 31,
  **2004**
    
    **2003**Deferred
      tax asset relating to netoperating
      loss carryforwards
    
    $
    1,041,000
    
    $
    927,000Valuation
      allowance
    
    
    (1,041,000
    )
    
    (927,000
    )Net
      deferred tax asset
    
    $
    -
    
    $
    -
  At
      December 31, 2004, the Company has carryforwards as
    follows:
  **Federal**
    
    **State**2019
    
    $
    49,000
    
    $
    49,0002020
    
    
    1,010,000
    
    
    1,010,0002021
    
    
    1,051,000
    
    
    1,051,0002022
    
    
    778,000
    
    
    778,0002023
    
    
    300,000
    
    
    300,0002024
    
    
    280,000
    
    
    280,000$
    3,468,000
    
    $
    3,468,000
  NOTE
      7 - SUPPLEMENTAL INFORMATION
  2004
    
    2003Supplemental
      disclosure of cash
      flow information:Cash
      paid during the year for interest
    
    $
    895
    
    $
    17,320Supplemental
      disclosure of non-cash investing and
      activities:Stock
      repayments to stockholder for long-term debt
    
    $
    --
    
    $
    --Common
      stock issued for fixed assets
    
    $
    --
    
    $
    --Common
      stock issued and warrants and options exercised to settle:Liabilities
    
    $
    20,000
    
    $
    315,557Note
      payable - related party
    
    $
    --
    
    
    56,250
 (Continued)
 
 
 
 **SUBJEX
      CORPORATION**NOTES
      TO THE FINANCIAL STATEMENTSYEARS
      ENDED DECEMBER 31, 2004 AND 2003
 
 NOTE
      8 - LEASE
 
 The
      Company leases its offices under an operating lease which runs through
      January 2006.  Rent expense was $22,563 in 2004 and $14,733 in 2003.
      In February 2004, the Company signed a lease to rent its office space
      under a two-year lease agreement expiring February 2006. The lease
      requires monthly lease payments of $921 plus a proportionate share of real
      estate taxes, maintenance and insurance.
 
 Future
      minimum rental commitments for this lease are as
  follows:
 
 2005
      - $11,050 2006 - $921