10QSB 1 lexon_10qsb-033107.htm LEXON TECHNOLOGIES, INC. Unassociated Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-QSB

(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended: March 31, 2007

r TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________
 
Commission File Number: 0-24721
LEXON TECHNOLOGIES, INC.
(Exact name of registrant as specified in charter)
 
  
 
Delaware
  
87-0502701
(State or other jurisdiction of incorporation or organization)
  
(I.R.S. Employer I.D. No.)
 
  
 
 
  
 
8 Corporate Park, Suite 300, Irvine, California
  
92606
(Address of principal executive offices)
  
(Zip Code)

Issuer's telephone number, including area code: (949)752-7700

Securities registered pursuant to section 12(b) of the Act:
 
 
Title of each class
Name of each exchange on which registered
None
N/A
 
Securities registered pursuant to section 12(g) of the Act:

Common Stock, par value $0.001 per share
(Title of class)

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

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of May 18, 2007, Lexon had 34,183,778 shares of its common stock, par value $.001 outstanding.

Transitional Small Business Disclosure Format (Check one): Yes r No x

 
TABLE OF CONTENTS
 
PART I- FINANCIAL INFORMATION   
   
ITEM 1. FINANCIAL STATEMENTS 
3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 
17
ITEM 3. CONTROLS AND PROCEDURES 
18
   
PART II- OTHER INFORMATION   
   
ITEM 1. LEGAL PROCEEDINGS 
19
ITEM 2. CHANGES IN SECURITIES 
19
ITEM 3. DEFAULT BY THE COMPANY ON ITS SENIOR SECURITIES 
19
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS 
19
ITEM 5. OTHER INFORMATION 
19
ITEM 6. EXHIBITS 
20
   
SIGNATURES 
20
   
EX-31.1 (07MAR PRIN EXEC 302 CERT)   
   
EX-31.2 (07MAR PRIN FIN 302 CERT) 
  
   
EX-32 (07MAR PRIN EXEC AND FIN 906 CERT)   


 
PART I- FINANCIAL INFORMATION
 
ITEM 1. FINANCIAL STATEMENTS 

 
LEXON TECHNOLOGIES, INC. AND SUBSIDIARIES
 
CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 
MARCH 31, 2007

 
LEXON TECHNOLOGIES, INC. AND SUBSIDIARIES
 
CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 
MARCH 31, 2007
 
CONTENTS 
PAGE
   
   
FINANCIAL STATEMENTS   
   
Consolidated Balance Sheet
3
   
Consolidated Statements of Operations
5
   
Consolidated Statements of Stockholders’ Deficit
6
   
Consolidated Statements of Cash Flows
8
 
  
Notes to Consolidated Financial Statements
9 - 16
           
 
LEXON TECHNOLOGIES, INC. AND SUBSIDIARIES
  
(A Development Stage Company)
  
Consolidated Balance Sheets
  
   
 
  
 
  
 
  
ASSETS
  
 
  
 
  
 
  
 
  
March 31,
2007
  
December 31,
2006
  
 
  
(Unaudited)
  
 
  
 
  
 
  
 
  
CURRENT ASSETS
  
 
  
 
  
Cash and cash equivalents (Note 2)
  
$
288,300
  
$
227
  
 
          
PROPERTY AND EQUIPMENT, net (Notes 1and 3)
    
-
   
-
 
 
          
OTHER ASSETS
          
Investments (Note 4)
    
103,603
   
104,839
 
Deposits and other assets
    
6,262
   
6,568
 
Total Other Assets
    
109,865
   
111,407
 
 
          
TOTAL ASSETS
  
$
398,165
  
$
111,634
  
 
          

3
 
LEXON TECHNOLOGIES, INC. AND SUBSIDIARIES
  
(A Development Stage Company)
  
Consolidated Balance Sheets
  
   
   
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
  
 
  
 
  
 
  
 
  
March 31,
2007
  
December 31,
2006
  
 
  
(Unaudited)
  
 
  
 
  
 
  
 
  
CURRENT LIABILITIES
  
 
  
 
  
Accounts payable
  
$
40,492
  
$
546,764
  
Due to related parties (Note 5)
    
404,277
   
421,753
 
Accrued expenses (Note 6)
    
1,741,316
   
1,658,316
 
Convertible notes payable (Note 11)
    
86,960
   
128,575
 
Notes payable (Note 7)
    
374,982
   
25,000
 
Total Current Liabilities
    
3,148,027
   
2,780,408
 
 
          
CONTINGENT LIABILITIES (Note 6)
    
274,610
   
274,610
 
 
          
STOCKHOLDERS' DEFICIENCY
          
Common stock, par value $0.001 per share;
          
100,000,000 shares authorized;
          
34,183,778 shares issued and outstanding
    
34,184
   
34,184
 
Additional paid-in capital
    
3,066,839
   
3,066,839
 
Accumulated other comprehensive loss (Note 10)
    
(111,124
)
  
(119,837
)
Deficit accumulated during the development stage
    
(6,014,371
)
  
(5,924,570
)
Total Stockholders' Deficiency
    
(3,024,472
)
  
(2,943,384
)
 
          
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY
  
$
398,165
  
$
111,634
  
 
          
 
4
 
LEXON TECHNOLOGIES, INC. AND SUBSIDIARIES
  
(A Development Stage Company)
  
Consolidated Statements of Operations
  
For the Three Months Ended March 31, 2007 and 2006 and
  
the Period from Inception on July 18, 2001 through March 31, 2007
  
(Unaudited)
  
   
 
  
 
  
 
  
 
  
 
  
 
  
 
  
From Inception
  
 
  
 
  
 
  
on July 18, 2001
  
 
  
For the Three Months Ended
  
Through
  
 
  
March 31,
  
March 31,
  
 
  
2007
  
2006
  
2007
  
 
  
 
  
 
  
 
  
REVENUES
  
$
-
  
$
-
  
$
22,031
  
 
              
EXPENSES
              
Research and development
    
-
   
12,794
   
495,688
 
Selling, general and administrative
    
87,574
   
277,093
   
3,913,915
 
Bad debt expense
    
-
   
-
   
52,784
 
Depreciation and amortization
    
229
   
12,653
   
100,318
 
Total Expenses
    
87,803
   
302,540
   
4,562,705
 
 
              
LOSS FROM OPERATIONS
    
(87,803
)
  
(302,540
)
  
(4,540,674
)
 
              
OTHER INCOME (EXPENSES)
              
Interest income
    
-
   
19
   
40,543
 
Other income
    
-
   
-
   
6,000
 
Gain (loss) on sale or foreclosure of assets
    
-
   
(10,079
)
  
1,296,367
 
Gain on forgiveness of debt
    
-
   
-
   
19,872
 
Interest expense
    
(1,998
)
  
(2,840
)
  
(770,356
)
Impairment of goodwill
   
-
   
-
   
(1,851,692
)
Loss from investment
    
-
   
-
   
(11,667
)
Loss from discontinued operation
    
-
   
-
   
(202,764
)
Total Other Income (Expenses)
    
(1,998
)
  
(12,900
)
  
(1,473,697
)
 
              
NET LOSS
  
$
(89,801
)
$
(315,440
)
$
(6,014,371
)
 
              
BASIC LOSS PER SHARE
  
$
(0.003
)
$
(0.01
)
    
 
              
WEIGHTED AVERAGE NUMBER OF
              
COMMON STOCKS OUTSTANDING
    
34,183,778
   
34,183,778
     
 
              
 
5

LEXON TECHNOLOGIES, INC. AND SUBSIDIARIES
  
(A Development Stage Company)
  
Consolidated Statements of Stockholders' Equity and Other Comprehensive Income
  
Period from Inception on July 18, 2001 through March 31, 2007
  
(Unaudited)
  
   
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
Deficit
  
 
  
 
  
 
  
 
  
 
  
Accumulated
 
Accumulated
  
 
  
 
  
 
  
Additional
  
 
  
Other
 
During the
  
 
  
Common Stock
  
Paid-in
  
Subscription
  
Comprehensive
  
Development
  
 
  
Shares
  
Amount
  
Capital
  
Receivable
  
Income (loss)
  
State
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
Balance, July 18, 2001
    
-
 
$
-
  
$
-
  
$
-
  
$
-
  
$
-
  
 
                          
July 2001 - stock issued for
                          
services at $0.001 per share
    
13,720,000
   
13,720
   
-
   
-
   
-
   
-
 
 
                          
August 2001 - stock issued for
                          
cash at $0.25 per share
    
2,280,000
   
2,280
   
567,720
   
(220,000
)
  
-
   
-
 
 
                          
October 2001 - stock issued for
                          
technology at $0.25 pr share
    
1,500,000
   
1,500
   
373,500
   
-
   
-
   
-
 
 
                          
Net loss for the period ended
                          
December 31, 2001
    
-
   
-
   
-
   
-
   
-
   
(522,180
)
Balance, December 31, 2001
    
17,500,000
   
17,500
   
941,220
   
(220,000
)
  
-
   
(522,180
)
 
                          
Receipt of subscription receivable
    
-
   
-
   
-
   
220,000
   
-
   
-
 
 
                          
April 2002 - stock issued to acquire
                    
Phacon Corporation (Note 1)
    
1,648,778
   
1,649
   
(641,346
)
  
-
   
-
   
-
 
 
                          
September 2002 - stock issued for
                          
cash at $0.25 per share
    
280,000
   
280
   
69,720
   
-
   
-
   
-
 
 
                          
December 2002 - stock issued for
                          
cash at $0.83 per share
    
120,000
   
120
   
99,880
   
-
   
-
   
-
 
 
                          
Net loss for the period ended
                          
December 31, 2002
    
-
   
-
   
-
   
-
   
-
   
(473,510
)
Balance, December 31, 2002
    
19,548,778
   
19,549
   
469,474
   
-
   
-
   
(995,690
)
 
6
 
                                   
Deficit
  
                             
Accumulated 
    
Accumulated
  
                 
Additional
          
Other 
    
During the
  
     
Common Stock
    
Paid-in
    
Subscription
    
Comprehensive
    
Development
  
     
Shares
    
Amount
    
Capital
    
Receivable
    
Income (loss)
    
State
  
 
                          
January 2003 - stock issued for
                          
cash at $0.83 per share
    
240,000
   
240
   
199,760
   
-
   
-
   
-
 
 
                          
March 2003 - stock issued for
                          
cash at $0.25 per share
    
840,000
   
840
   
209,160
   
-
   
-
   
-
 
 
                          
December 2003 - stock issued for
                          
cash at $0.25 per share
    
60,000
   
60
   
14,940
   
-
   
-
   
-
 
 
                          
Foreign currency translation
    
-
   
-
   
-
   
-
   
4,729
   
-
 
 
                          
Net loss for the period ended
                          
December 31, 2003
    
-
   
-
   
-
   
-
   
-
   
(611,808
)
Balance, December 31, 2003
    
20,688,778
 
$
20,689
  
$
893,334
  
$
-
  
$
4,729
  
$
(1,607,498
)
 
                          
October 2004 - stock issued for
                          
cash at $0.25 per share
    
4,000,000
   
4,000
   
996,000
   
-
   
-
   
-
 
 
                          
December 2004 - stock issued for
                          
cash at $0.11 per share
    
6,125,000
   
6,125
   
693,875
   
-
   
-
   
-
 
 
                          
December 2004 - stock issued for
                          
services at $0.25 pr share
    
1,000,000
   
1,000
   
249,000
   
-
   
-
   
-
 
 
                          
December 2004 - stock issued
                          
in lieu of outstanding debt
                          
at $0.10 per share
    
2,370,000
   
2,370
   
234,630
   
-
   
-
   
-
 
 
                          
Foreign currency translation
    
-
   
-
   
-
   
-
   
1,589
   
-
 
 
                          
Net loss for the period ended
                          
December 31, 2004
    
-
   
-
   
-
   
-
   
-
   
(907,200
)
Balance, December 31, 2004
    
34,183,778
   
34,184
   
3,066,839
   
-
   
6,318
   
(2,514,698
)
 
                          
Foreign currency translation
    
-
   
-
   
-
   
-
   
(82,678
)
  
-
 
 
                          
Net loss for the period ended
                          
December 31, 2005
    
-
   
-
   
-
   
-
   
-
   
(448,271
)
 
                          
Balance, December 31, 2005
    
34,183,778
   
34,184
   
3,066,839
   
-
   
(76,360
)
  
(2,962,969
)
 
                          
Foreign currency translation
    
-
   
-
   
-
   
-
   
(20,773
)
  
-
 
 
                          
Investment loss
    
-
   
-
   
-
   
-
   
(22,704
)
  
-
 
 
                          
Net loss for the period ended
                          
December 31, 2006
    
-
   
-
   
-
   
-
   
-
   
(2,961,601
)
Balance, December 31, 2006
    
34,183,778
   
34,184
   
3,066,839
   
-
   
(119,837
)
  
(5,924,570
)
 
                          
Foreign currency translation
    
-
   
-
   
-
   
-
   
8,713
   
-
 
 
                          
Net loss for the period ended
                          
March 31, 2007
    
-
   
-
   
-
   
-
   
-
   
(89,801
)
Balance, March 31, 2007
    
34,183,778
 
$
34,184
  
$
3,066,839
  
$
-
  
$
(111,124
)
$
(6,014,371
)
 
7
 
LEXON TECHNOLOGIES, INC. AND SUBSIDIARIES
  
(A Development Stage Company)
  
Consolidated Statements of Cash Flows
  
For the Three Months Ended March 31, 2007 and 2006 and
  
the Period from Inception on July 18, 2001 through March 31, 2007
  
(Unaudited)
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
From Inception
  
 
  
 
  
 
  
on July 18, 2001
  
 
  
For the Three Months Ended
  
Through
  
 
  
March 31,
  
March 31,
  
 
  
2007
  
2006
  
2007
  
CASH FLOWS FROM OPERATIONG ACTIVITIES:
  
 
  
 
  
 
  
Net loss
  
$
(89,801
)
$
(315,440
)
$
(6,014,371
)
Adjustments to reconcile net loss to net cash
              
used in operating activities
              
Depreciation and amortization
   
229
   
12,653
   
100,318
 
Stock for services
    
-
   
-
   
263,720
 
Stock for technology
    
-
   
-
   
375,000
 
Bad debt expense
    
-
   
-
   
52,784
 
Impairment of goodwill
    
-
   
-
   
1,845,124
 
Gain on forgiveness of debt
    
-
   
-
   
(19,872
)
Gain (loss) on sale of assets
    
-
   
10,079
   
(1,297,501
)
Change in assets and liabilities (net of acquisition):
              
Increase in other assets
    
-
   
(106,612
)
  
(18,219
)
(Increase) decrease in other receivable
    
-
   
(3,884
)
  
359,992
 
(Increase) decrease in prepaid expenses
    
-
   
(9,817
)
  
4,684
 
Increase in accrued interest
    
-
   
-
   
(76,360
)
Decrease in inventory
    
-
   
-
   
5,255
 
Increase in accounts payable
    
59,252
   
-
   
382,388
 
Increase in accrued expenses
    
-
   
6,384
   
2,466,111
 
Net Cash Used in Operating Activities
    
(30,320
)
  
(406,637
)
  
(1,570,947
)
 
              
CASH FLOWS FROM INVESTING ACTIVITIES:
              
Acquisition of property and equipment
    
-
   
-
   
(3,116
)
Proceeds received on sale of fixed assets
    
-
   
-
   
119,223
 
Payments made on related party notes
   
-
   
-
   
(235,554
)
Proceeds received on related party notes
   
-
   
167,000
   
477,407
 
Acquisition of investments
    
-
   
-
   
(1,869,371
)
Proceeds from return of investments
    
-
   
250,000
   
271,939
 
Net Cash Provided by (Used in) Investing Activities
    
-
   
417,000
   
(1,239,472
)
 
              
CASH FLOWS FROM FINANCING ACTIVITIES:
              
Receipt of subscription receivable
    
-
   
-
   
220,000
 
Proceeds from related party notes
    
-
   
-
   
239,731
 
Proceeds from notes payable
    
349,982
   
-
   
498,557
 
Payments made on notes payable
    
(41,615
)
  
(222
)
  
(493,822
)
Proceeds from issuance of common stock
    
-
   
-
   
2,645,000
 
Net Cash Provided by (Used in) Financing Activities
    
308,367
   
(222
)
  
3,109,466
 
 
              
NET INCREASE IN CASH AND CASH EQUIVALENT
    
278,047
   
10,141
   
299,047
 
 
              
EFFECT OF CURRENCY EXCHANGE RATE CHANGES
                
ON CASH AND CASH EQUIVALENTS
    
10,026
   
(18,693
)
  
(10,747
)
 
              
CASH AND CASH EQUIVALENT AT BEGINNING OF PERIOD
    
227
   
22,623
   
-
 
 
              
CASH AND CASH EQUIVALENT AT END OF PERIOD
  
$
288,300
  
$
14,071
  
$
288,300
  
 
              
SUPPLEMENTAL CASH FLOW INFORMATION
              
 
              
Cash Payments For:
              
Interest
  
$
-
  
$
2,840
  
$
717,548
  
 
              
Non-Cash Investing and Financing Activities
              
Stock issued for thechnology
  
$
-
  
$
-
  
$
375,000
  
Stock issued for services
  
$
-
  
$
-
  
$
263,720
  
Stock issued for in lieu of debt
  
$
-
  
$
-
  
$
237,000
  
 
8
 
LEXON TECHNOLOGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Unaudited)
March 31, 2007
 
Note 1 - Nature of Business and Going Concern
    (a)  
Description of Business
 
Lexon Technologies, Inc. ("the Company" or "Lexon") was incorporated in April 1989 under the laws of state of Delaware, and owns 90.16% of Lexon Semiconductor Corporation ("Lexon Semi" or formerly known as Techone Co., Ltd ("Techone")) which develops and manufactures Low Temperature Cofired Ceramic (LTCC) components, including LTCC wafer probe cards, LTCC circuit boards, LTCC Light Emitting Diode (LED) displays and related products for the semiconductor testing and measurement, custom Printed Circuit Board (PCB), and cellular phone industries. The Company currently has no other business activities.
 
Initially registered as California Cola Distributing Company, Inc, the Company has had a number of name changes: it changed the name to Rexford, Inc. in October 1992 and to the current name in July 1999.
 
In July 1999, Lexon acquired 100% of the outstanding common stock of Chicago Map Corporation (CMC) in exchange for 10,500,000 shares of the Company's common stock through a reverse acquisition accompanied by a recapitalization.  The surviving entity reflected the assets and liabilities of Lexon and CMC at their historical book values and the historical operations of the Company were originally those of CMC. CMC was dissolved during 2002 by leaving Lexon as the surviving entity.
 
In April 2002, Lexon acquired 100% of the outstanding common stock of Phacon Corporation (Phacon) in exchange for 17,500,000 (post-split) shares of Company's common stock through a reverse acquisition accompanied by a recapitalization.  As part of the agreement, the Company elected a 1 for 10 reverse stock split and the acquired shares of Phacon were entirely canceled leaving the Company as the surviving entity.
 
In March 2003, the Company incorporated Lexon Korea Corporation (“Lexon Korea”) as a wholly-owned subsidiary in the Republic of Korea for the purpose of entering into potential business combinations with Korean operating entities. During August 2005, the Company completed a reorganization of Lexon Korea, such that the Company became a 10% equity holder in the reorganized company.  This 10% equity holding in Lexon Korea has been reduced to a zero valuation as of December 31, 2005.
 
In December 2004, the Company acquired a majority control (90.16%) of Techone Company, Ltd, a Korean corporation, through an investment of $1,585,000 in cash and recorded goodwill of $1,851,692 from the acquisition.  The Company acquired Techone as its core operating business in Korea for manufacturing and selling LTCC related products. However, the Company failed to successfully develop the LTCC related products as planned and became highly leveraged financially. In August 2005, certain creditors filed an involuntary foreclosure and sold Techone’s assets through public auction to satisfy certain secured debts.  This disposal of assets resulted in a gain $1,315,469 for the year ended December 31, 2005. In February 2006, Techone changed its name to Lexon Semiconductor Corporation and all of its operation has been suspended due to lack of operating working capital.    
 
9
LEXON TECHNOLOGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Unaudited)
March 31, 2007
 

    (b)  
Going Concern
 
The Company’s consolidated financial statements are presented on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.  The Company has experienced recurring losses which have resulted in an accumulated deficit of $6,014,371 and a working capital deficit of approximately $2,860,000 as of March 31, 2007.   These factors raise substantial doubt about the Company's ability to continue as a going concern.   The Company’s ability to continue as a going concern is contingent upon its ability to secure additional financing, initiate sale of its products and attain profitable operations.

As discussed earlier within this Note and Note 3, the development of planned products of Lexon Semi, the Company’s core business operation, was unsuccessful and most of assets of Lexon Semi were foreclosed and sold by creditors in August 2005. Since then, the operations of Lexon Semi have been suspended.

The Company’s management is currently pursuing various sources of equity or debt financing, although there can be no assurance that the Company will be able to secure financing when needed or obtain on such terms that are satisfactory to the Company.

The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty.  It is the intent of management to continue to raise additional funds to sustain operations and to pursue acquisitions of operating companies in order to generate future profits for the Company.
 
Note 2 - Significant Accounting Policies

The following summary of significant accounting polices of the Company is presented to assist in understanding the Company’s financial statements. These accounting policies conform to the accounting principles generally accepted in the United States of America, and have been consistently applied in the preparation of the financial statements.

    (a)  
Basis of Financial Statement Presentation

These financial statements have been prepared with the assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business.

    (b)  
Basis of Consolidation 

The consolidated financial statements include the accounts of Lexon Technologies, Inc., and its majority-owned subsidiary, Lexon Semiconductor Co., Ltd. All material intercompany accounts and transactions have been eliminated in the consolidation.

Minority interests are recorded to the extent of their equity. Losses in excess of minority interest equity capital are charged against the majority interest and will be reversed when the losses reverse.

10
LEXON TECHNOLOGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Unaudited)
March 31, 2007
 
    (c)  
Unit of Estimates

Preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and related notes to financial statements. These estimates are based on management's best knowledge of current events and actions the Company may undertake in the future. Actual results may ultimately differ from estimates, although management does not believe such changes will materially affect the financial statements in any individual year.

    (d)  
Revenue Recognition
 
Revenue is recognized, in accordance with Staff Accounting Bulletin No. 101 "Revenue Recognition in Financial Statements" ("SAB No. 101"), when delivery has occurred provided there is persuasive evidence of an agreement, the fee is fixed or determinable and collection of the related receivable is probable. As such, the Company recognizes revenue for its products generally when the product is shipped and title passes to the buyer. There are no multi-deliverables or product warranties requiring accounting recognition.

    (e)  
Currency Translation

For the Company's foreign subsidiaries, the functional currency has been determined to be the local currency, Korean Won.  In accordance with the Statement of Financial Accounting Standard No. 52, “Foreign Currency Translation”, the assets and liabilities are translated at year-end exchange rates, and operating statement items are translated at average exchange rates prevailing during the year.  The resultant cumulative translation adjustments to the assets and liabilities are recorded as other comprehensive income (loss) as a separate component of stockholders’ equity.  Exchange adjustments resulting from foreign currency transactions are included in the determination of net income (loss).  Such amounts are immaterial for all years presented.

In accordance with Statement of Financial Accounting Standards No. 95, "Statement of Cash Flows," cash flows from the Company's foreign subsidiaries are calculated based upon the local currencies.  As a result, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets.

Since the subsidiary's financial statements must be translated into U.S. Dollars, major changes in the currency exchange rate between the foreign denominations and U.S. Dollars may have a significant impact on the operations of the Company.  Although the Company does not anticipate the currency exchange rate to be significantly different over the next twelve months, no such assurances can be given.

    (f)   
Cash and Cash Equivalents

Highly liquid investments with maturities of three months or less when purchased are considered cash equivalents and recorded at cost, which approximates fair value.

11
 
LEXON TECHNOLOGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Unaudited)
March 31, 2007
 
 
    (g)  
Properties and Equipment

Properties and equipment are stated at cost. Major renewals and betterments are capitalized and expenditures for repairs and maintenance are charges to expense as incurred. Depreciation is computed using the straight-line method over the following periods:

Buildings and improvements
    
20-40 years
  
Machinery and equipment
    
10 years
  
Computer equipment
    
3 years
  
Automobiles
    
5 years
  
Office and other equipment
    
5 years
  

In accordance with Statement of Financial Accounting Standards No. 144, the Company records impairment of long-lived assets to be held and used or to be disposed of when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amount.  

    (h)  
Investments

Investments in available-for-sale securities are being recorded in accordance with Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities". Equity securities that are not held principally for the purpose of selling in the near term are reported at fair market value with unrealized holding gains and losses excluded from earnings and reported as a separate component of stockholders' equity. Investments in equities where the Company has the ability to exercise influence over the operations are accounted for using the equity method.
 
    (i)  
Intangible Assets

Intangible assets such as cost of obtaining industrial rights and patents are stated at cost, net of depreciation computed using the straight-line method over five to ten years.

    (j)  
Basic (Loss) Per Share
The computations of basic loss per share of common stock are based on the weighted average number of common shares outstanding during the each period of the consolidated financial statements.  Common stock equivalents, consisting of stock options and warrants, have not been included in the calculation as their effect is anti-dilutive for the periods presented.
 
   
March 31,
  
   
2007
  
2006
  
           
Numerator - loss for the year
  
$
(89,801
)
$
(315,440
)
               
Denominator - weighted average number of shares outstanding
    
34,183,778
    
34,183,778
  
               
Loss per share
  
$
(0.003
)
$
(0.01
)

12
 
LEXON TECHNOLOGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Unaudited)
March 31, 2007
 
 
    (k)  
Financial Instruments

 
Fair values of cash equivalents, short-term and long-term investments and short-term debt approximate their costs. The estimated fair values of other financial instruments, including debt, equity and risk management instruments, have been determined using market information and valuation methodologies, primarily discounted cash flow analysis. These estimates require considerable judgment in interpreting market data, and changes in assumptions or estimation methods could significantly affect the fair value estimates.


On December 16, 2004, the FASB issued SFAS No. 123(R), Share-Based Payment, which is an amendment to SFAS No. 123, Accounting for Stock-Based Compensation. This new standard eliminates the ability to account for share-based compensation transactions using Accounting Principles Board (“APB”) Opinion No. 25, Accounting for Stock Issued to Employees, and generally requires such transactions to be accounted for using a fair-value-based method and the resulting cost recognized in our financial statements. This new standard is effective for awards that are granted, modified or settled in cash in interim and annual periods beginning after December 15, 2005. In addition, this new standard applies to unvested options granted prior to the effective date. The Company adopted this new standard during the fourth fiscal quarter of 2005, but had no share-based employee compensation during the year ended December 31, 2005.
 
In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections" ("SFAS 154"), which replaces Accounting Principles Board ("APB") Opinion No. 20, "Accounting Changes", and SFAS No. 3, "Reporting Accounting Changes in Interim Financial Statements An Amendment of APB Opinion No. 28". SFAS No. 154 provides guidance on the accounting for and reporting of changes in accounting principles and error corrections. SFAS No. 154 requires retrospective application to prior period financial statements of voluntary changes in accounting principle and changes required by new accounting standards when the standard does not include specific transition provisions, unless it is impracticable to do so. SFAS No. 154 also requires certain disclosures for restatements due to correction of an error. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The Company adopted this pronouncement as of January 1, 2006. The implementation of the provisions of this pronouncement had no significant effect on the Company’s consolidated financial statement presentation.

Property and equipment consists of the following at March 31, 2007:

Computer and equipment
  
$
8,990
  
Furniture and fixture
    
4,287
  
     
13,277
  
Less: accumulated depreciation
    
(13,277
)
         
Net property and equipment
  
$
--
  

Depreciation expenses for the three months ended March 31, 2007 and 2006 were $229 and $12,653, respectively.

13
 
LEXON TECHNOLOGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Unaudited)
March 31, 2007
 
 
Note 4 - Investments

In 2003, Techone invested $125,967 in a 10% voting stock of Mirae Sojae Company, a Korean entity. The investment is recorded under the equity method. The fair value of this investment as of March 31, 2007 was $103,603.
 
Note 5 - Related Party Transactions

As of March 31, 2007, the Company has loans payable totaling $404,277 to officers, directors and shareholders of the Company and other related individuals. These amounts are non-interest bearing and payable on demand.
 
 
Note 6 - Commitments and Contingencies


The Company has contingent liabilities of $274,610 to various creditors of a predecessor company. Management determined that it is reasonably certain that the amounts will be paid in future.


Note 7 - Notes Payable

Notes payable consisted of the following at March 31, 2007:

Note payable to a related party with interest at 7.5% per annum, unsecured. Note is in default and due on demand
  
$
20,000
  
       
Note payable to an individual with interest at 7.5% per annum, unsecured. Note is in default and due on demand
    
5,000
  
         
Note payable to an unrelated party with interest at 7.5% per annum, unsecured. Note is due on demand
    
349,982
  
         
Total notes due
  
$
374,982
  
 
14
 
LEXON TECHNOLOGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Unaudited)
March 31, 2007
 
 
 
Deferred income tax assets amounted to approximately $2,045,000 as of the March 31, 2007, resulting primarily from net operating loss carryforwards. The Company established valuation allowance for these deferred taxes and did not recognize them as assets, as it is more likely than not that these assets will not be realized in the near future.


Note 9 - Stock Option Plan

The Company accounts for its stock options in accordance with SFAS 123(R) "Accounting for Stock - Based Compensation" and SFAS 148 "Accounting for Stock - Based compensation - Transition and Disclosure." Value of options granted has been estimated by the Black Scholes option pricing model. The assumptions are evaluated annually and revised as necessary to reflect market conditions and additional experience.

On September 14, 2000, the Company adopted a Non-Qualified Stock Option Plan (the "2000 Plan") under which options to acquire common stock of the Company may be granted to employees and consultants of the Company or its subsidiaries.  Under this Plan, a total of 250,000 (post-split) shares of options, subject to certain restrictions, are authorized to be granted. The exercise price of each option is determined by the Board of Directors on the date of grant.  The Board also determines the term, restrictions on vesting and exercise dates with expected life of the option term not exceeding 5 years.

While 147,000 options remain available for grant under the 2000 plan, there were no stock options granted during the period ended March 31, 2007.


Note 10 - Other Comprehensive Income (Loss)

The Company reports other comprehensive income in accordance with Statement of Financial Accounting Standards No. 130, “Reporting Comprehensive Income” (“SFAS No. 130").  SFAS No. 130 establishes standards for reporting in the financial statements all changes in equity during a period, except those resulting from investments by and distributions to owners.  The cumulative effect of foreign currency translation adjustments from South Korean Won to U.S. dollars, which is included in other comprehensive income in the stockholders’ equity section, consisted of the following:

Balance, December 31, 2006
  
$
(119,837
)
         
Effect of currency translation
    
8,713
  
         
Balance, March 31, 2007
  
$
(111,124
)

15
 
LEXON TECHNOLOGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Unaudited)
March 31, 2007
 

Note 11 - Convertible Notes Payable

The Company has the following convertible debenture notes outstanding as of March 31, 2007:

A note with 7.5% interest, convertible to 30,000 shares of the Company’s common stock, matured on September 9, 2004 with interest accrued at $7,891.
  
$
30,000
  
 
Two notes with 7.5% interest, convertible to 227,840 shares of common stock, matured on October 30, 2005 with interest accrued at $9,639.
   
56,960
 
         
Total notes due
  
$
86,960
  
 
Note 12 - Subsequent Events

In April 2007, the Company’s senior officer resigned and was replaced by a new officer. Management believes that this change in senior corporate officer will not significantly affect the operations of the Company.
 
16


The following discussion and analysis should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this Report.

Cautionary Statement Regarding Forward-looking Statements

This report may contain “forward-looking” statements. Examples of forward-looking statements include, but are not limited to: (a) projections of revenues, capital expenditures, growth, prospects, dividends, capital structure and other financial matters; (b) statements of plans and objectives of our management or Board of Directors; (c) statements of future economic performance; (d) statements of assumptions underlying other statements and statements about us and our business relating to the future; and (e) any statements using the words “anticipate,” “expect,” “may,” “project,” “intend” or similar expressions.

Overview

Effective December 8, 2004, we acquired a majority control (90.16%) of Techone Company, Ltd., a Republic of South Korea corporation (“Techone” ), through an investment of $1,585,000 financed through the sale of our restricted common stock to two accredited investors. During February 2006, the Company changed the name of Techone to Lexon Semiconductor Corporation (“Lexon Semi”). Lexon Semi is a corporation that manufactures and sells Low Temperature Cofired Ceramic (LTCC) components. The Company has operated Lexon Semi as a majority-owned subsidiary and the business of Lexon Semi has been the operating business of the Company.

To date, our source of liquidity has been proceeds from the sale of our common stock, and the issuance of convertible notes and promissory notes to finance operations and business activities. In each year we incurred significant losses which evidently resulted in the suspension of the business operations of Lexon Semi as of July 2006.

Due to our sole reliance on debt and equity financing to fund our operations to date, in conjunction with the increased competition in this area, we have incurred a loss and decided to shift our primary focus to seeking joint venture partners, business acquisitions and business alliances in an effort to commence business operations outside the LTCC-related market, although we have not reached any definitive agreements to date.

Results of Operation for Three Months Ended March 31, 2007 Compared to March 31, 2006

Revenues.  Due to the suspension of the business operations of Lexon Semiconductor Corporation (“Lexon Semi”) since July 2006, we had no revenues for the three months ended March 31, 2007 and no revenues for the prior year period.

Operating Expenses. Operating expenses for the three months ended March 31, 2007 were $87,803, consisting of $87,574 in selling, general and administrative expenses, and $229 in depreciation and amortization.  Operating expenses for the prior year period were $302,540, consisting of $277,093 in selling, general and administrative expenses, $12,794 in research and development, and $12,653 in depreciation and amortization.  The decrease in operating expenses for the current period is due to the suspension of the business operations of Lexon Semi since July 2006 and our efforts to reduce expenses because resources have not been available.  

Operating expenses since inception (July 18, 2001) total $4,540,674.  Our net loss per share for the three months ended March 31, 2007 was $0.01, based on a weighted average of 34,183,778 shares outstanding.

Other Income (Expense). Other expense for the three months ended March 31, 2007 consisted of $1,998 in interest expense. Other expense for the prior year period totaled $2,840 in interest expense, a loss of $10,079 on the sale of assets, and $19 in interest income.

Liquidity and Capital Resources

At March 31, 2007, we had current assets of $288,300 and current liabilities of $3,148,027 for negative working capital of $2,859,727.  Current assets consisted primarily of cash and cash equivalents of $288,300.

At March 31, 2007, we had property and equipment, net totaling $0.  We had other assets of $109,865 in investments, deposits and other assets, for total assets of $398,165.

Current liabilities at March 31, 2007, consisted of accounts payable of $40,492, accounts payable - related parties of $404,277, accrued expenses of $1,741,316, convertible notes payable of $86,960 and notes payable of $374,982. We also had contingent liabilities of $274,610, including accrued payables to creditors.

For the three months ended March 31, 2007, net cash flows used in operating activities totaled $30,320 compared to net cash flows used in operating activities of $425,330 in the prior year period.  Our operating activities since inception have been funded primarily by the sale of our common stock and the issuance of convertible notes and promissory notes.

17
 
For the three months ended March 31, 2007, net cash provided by investing activities totaled $0 compared to net cash provided in operating activities of $417,000 in the prior year period.
 
Net cash received in financing activities for the three months ended March 31, 2007 consisted of $308,367 cash paid on notes payable. In the prior year period, cash used by financing activities totaled $222.

To date, our primary source of liquidity has been proceeds from the sale of our common stock and notes payable to finance operations and business activities.  In each year we incurred significant losses which have resulted in an accumulated deficit of $6,014,371 at March 31, 2007, a working capital deficit and limited internal financial resources.  Accordingly, our financial statements include a going concern qualification raising substantial doubt about Lexon’s ability to continue as a going concern. Our management hopes to be able to find additional sources of funding and/or a possible business opportunity in order to commence revenue producing business operations during fiscal year 2007. No definitive terms or agreements for funding or a business combination have been reached at the date of this Report.


Our Chief Executive Officer, President, and Chief Financial Officer (the “Certifying Officer”) is responsible for establishing and maintaining disclosure controls and procedures for the Company. The Certifying Officer has designed such disclosure controls and procedures to ensure that material information is made known to them, particularly during the period in which this report was prepared. The Certifying Officer has evaluated the effectiveness of the Company's disclosure controls and procedures within 90 days of the date of this report and believe that the Company’s disclosure controls and procedures are effective based on the required evaluation. There have been no significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
 
18

PART II - OTHER INFORMATION
 
ITEM 1.  LEGAL PROCEEDINGS

To the best knowledge of management, there are no legal proceedings pending or threatened against the Company.
 
ITEM 2.  CHANGES IN SECURITIES

None.
 
ITEM 3.  DEFAULT BY THE COMPANY ON ITS SENIOR SECURITIES

None.
 
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

No matters were submitted to the shareholders during the quarter ended March 31, 2007.
 
ITEM 5.  OTHER INFORMATION

Directors and Officers

Effective March 30, 2007, J. Jehy Lah and Kenneth J. Eaken resigned as the Chairman of the Board and President/ Director of the Company, respectively. In their place, Joon Ho Chang was appointed as the Chairman of the Board, and Hyung Soon Lee was appointed as the President, Chief Executed Officer, and Chief Financial Officer on March 30, 2007 by the single remaining director, Kyu Hong Hwang.

All of our directors will hold office until the next Annual Meeting of Shareholders and until their successors have been elected and qualified. The term of office for each Officer is one year and until a successor is elected at the annual meeting of the Board of Directors and is qualified, subject to the removal by the Board of Directors. We will reimburse Directors for their expenses associated with attending Directors’ meeting. However, Directors have not, nor is it anticipated they will, receive any additional compensation for attending Directors’ meeting.

Executive Compensation

The Company has accrued an aggregate of unpaid compensation owed to its former officers in the amount of $1,741,316 as of March 31, 2007.

Pursuant to a resolution of the Board of Directors, Joon Ho Chang and Ben Hwang will receive $1 per month beginning April 1, 2007, and Hyung Soon Lee has been accruing salary at an annual rate of $36,000 per year.

Change of Auditor

Effective April 12, 2007, the Company’s Board of Directors has engaged Kim and Lee Corporation (“Kim and Lee”) of Los Angeles, California, as its certifying accountants for the period ending December 31, 2006 and the quarterly period ending March 31, 2007. The financial statements of the Company as of December 31, 2005 were audited by the Company’s prior principal accountant, Chisholm, Bierwolf & Nilson, LLC of Salt Lake City, Utah (“CN&B”). However, as of April 12, 2007, the Company accepted CB&N’s resignation and engaged Kim and Lee as its independent auditor.

The Company has not had any disagreements with CB&N on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which disagreements if not resolved to CB&N’s satisfaction, would have caused CB&N to make reference to the subject matter of the disagreement in connection with its report. The Company has not consulted Kim and Lee on either the effectiveness of the Company’s internal control over financial reporting or the application of accounting principles to a specified transaction, completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements.
 
19

ITEM 6.  EXHIBITS

Exhibit 31.1 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934, RULES 13(A)-14 AND 15(D)-14, AS ADOPTED PURSUANT TO SECTIONI 302 OF THE SARBANES-OXLEY ACT OF 2002.

Exhibit 31.2 - CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934, RULES 13(A)-14 AND 15(D)-14, AS ADOPTED PURSUANT TO SECTIONI 302 OF THE SARBANES-OXLEY ACT OF 2002.

Exhibit 32 - CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002.
 
SIGNATURES

In accordance with the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, duly authorized.
 
Date: May 18, 2007

LEXON TECHNOLOGIES, INC.

/S/ Hyung Soon Lee, President, Chief Executive Officer, Chief Financial Officer
 
20