Form 10-Q for LEXON TECHNOLOGIES INC
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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.
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 had developed and manufactured 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 business activities.
Initially registered as California Cola Distributing Company, Inc, the Company changed its name twice; first 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, Lexon, reflected the assets and liabilities of Lexon and CMC at their historical book values. Lexon dissolved CMC in 2002.
In April 2002, Lexon acquired 100% of the outstanding common stock of Phacon Corporation (Phacon) in exchange for 17,500,000 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 Korea for the purpose of entering into potential business combinations with Korean operating entities. Lexon Korea was reorganized in August 2005, and as a result, the Company's equity share in Lexon Korea was reduced to 10%.
In December 2004, the Company acquired 90.16% of the voting stock of Techone Company, Ltd, a company in Korea, by investing $1,588,000. The Company recognized goodwill of $1,851,692 in the acquisition. The Company acquired Techone to develop it as the Company's core operating business in Korea for manufacturing and selling LTCC related products. However, the development of the LTCC related products was not successful, and the operations of Techone became highly leveraged financially. In August 2005, certain creditors filed an involuntary foreclosure and sold Techone's assets through public auction to satisfy 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. Lexon Semi was dissolved on October 28, 2009 based on a decision of shareholders meeting. Lexon Semi has $241,000 of due to related party and $415,000 of liabilities relation to discontinued operations as of September 30,2009.
On October 7, 2009, Paragon Toner Inc, a California corporation, entered into an Agreement and Plan of Merger (the "Merger Agreement") with the Company whereby the Company issued 347,448,444 shares of common stock (the "Common Stock") of the Company (the "Acquisition Shares") to the shareholders of We, representing approximately 67% of the issued and outstanding Common Stock after completion of the merger in October 2009. The effective date of the Merger was October 22, 2009 ("Effective Date"). We have decided to maintain the name of our predecessor company.
On December 31, 2010, all of the assets and all of the liabilities of the Paragon Toner Division of Lexon Technologies Inc. were exchanged for existing Lexon Technologies Inc. shares specifically 166,300,000 shares held by James Park and 66,700,000 shares held by Young Won. The internet properties namely 7 inkjet.com, nanoinket.com and Yourcartridges.com remain with Lexon Technologies Inc., and become the main operation of the company. As these websites are ongoing concerns and revenue generating, we have an operation in place. We are also anticipating a reverse merger or sale of the company in the near future.
Results of Operation for the Three Months Ended March 31, 2011 as Compared to the Three Months Ended March 31, 2010
Revenues decreased by $1,315,457 to $14,842 for the three months ended March 31, 2011 as compared to $1,330,281 for the three months ended March 31, 2010. This decline was primarily attributed to the disposition of the toner manufacturing division.
Cost of Goods Sold.
Cost of Goods Sold decreased by $1,041,550 to 0 for the three months ended March 31, 2011 as compared to $1,041,550 for the three months ended March 31, 2010.
Selling, General and Administrative Expenses.
Selling, General and Administrative Expenses ("SG&A") decreased by $486,703 to $64,417 for the three months ended March 31, 2011 as compared to $551,120 for the three months ended March 31, 2010. This decrease of $486,703 in SG&A was attributed to the disposition of the toner manufacturing division.
Other Income and Expenses.
Other income for the three months ended March 31, 2011 consisted of $0 compared with other expenses of $257,647 for the three months ended March 31, 2010. Interest expenses for the three months ended March 31, 2011 was 0 compared to $16,963 in interest expenses for the three months ended March 31, 2010.
As a result, we recorded a net loss of $49,575 for the three months ended March 31, 2011 compared with a net loss of $4,742 for the three months ended March 31, 2010.
Liquidity and Capital Resources.
At March 31, 2011, we had current assets of $0 and current liabilities of $196,862.
Current liabilities at March 31, 2011, consisted of a bank overdraft of $658, accounts payable of $26,844 and accounts payable due to related parties of $91,960 and accrued expenses of $77,400.
For the three months ended March 31, 2011, net cash provided by operating activities totaled $2,250,763 compared to net cash provided by operating activities of $50,942 in the prior year period. Our operating activities since inception have been funded primarily by income organically generated by the company and by the limited sale of our common stock.
Net cash provided by investing activities for the three months ended March 31, 2011 amounted to $216,310 compared to net cash used in investment activities of $30,000 for the same previous year period.
Net cash used in financing activities for the three months ended March 31, 2010 was $2,477,291 compared to net cash used in financing activities of $24,213 for the three months ended March 31, 2010.
Net cash and cash equivalents at March 31, 2011 was $0.
Off-Balance Sheet Arrangements.