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EXCEL - IDEA: XBRL DOCUMENT - SOCIAL CUBE INCFinancial_Report.xls
EX-32 - EXHIBIT 32 - SOCIAL CUBE INCexhibit32_ex32.htm
EX-31.1 - EXHIBIT 31 - SOCIAL CUBE INCexhibit311_ex31z1.htm
EX-31.2 - EXHIBIT 31 - SOCIAL CUBE INCexhibit312_ex31z2.htm

UNITED STATES

 SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.20549


FORM 10-Q


(Mark One)


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


For the fiscal period ended: September 30, 2011


[ ] 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.)


14830 Desman Road

90638

(Address of principal executive offices)

(Zip Code)

Issuer's telephone number, including area code:(714) 522-0270


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 is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. [ ]


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 [ ]

 (2) Yes [ x ] No [ ]


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.)

 Yes [ x ] No [ ]


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of the Act). See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):






Large accelerated filer [ ]

Accelerated filer [ ]

Non-accelerated filer [ ]

Smaller reporting company [ x ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).


Yes [ ] No [ x ]















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


As of November 21, 2011, Lexon had 492,535shares of common stock, par value $0.001 outstanding.




ITEM 1.  FINANCIAL STATEMENTS


INDEX TO FINANCIAL STATEMENTS

 

 

 

 

Page

 

 

 

Financial Statements:

 

 

Balance Sheets (unaudited)

 

4

Statements of Operations (unaudited)

 

6

Statements of Cash Flows(unaudited)

 

7

Notes to Financial Statements(unaudited)

 

9





LEXON TECHNOLOGIES, INC.

BALANCE SHEETS

 

 

 

 

(Unaudited)

 

 

September 30,

December 31,

ASSETS

2011

2010

Current assets:

 

 

Cash and cash equivalents

$             -

$10,218

Accounts receivable, net

-

276,764

Inventories

-

573,137

Other current assets

-

18,000

 

 

 

Total current assets

-

878,119

 

 

 

Due from related parties

-

138,000

Property and equipment, net

-

60,310

Other assets:

 

 

Intangibles, net of amortization

-

375,944

Security deposits

-

20,748

Goodwill

-

3,214,289

Total other assets

-

3,610,981

Total assets

$   -

$4,687,410

 

 

 

LIABILITIES AND STOCKHOLDERS’DEFICIENCY

 

 

Current liabilities:

 

 

Bank overdraft

$20,347

$20,454

Accounts  payable

98,544

616,637

Due to related parties

91,960

91,960

Accrued expenses

77,400

317,694

Line of credit

  -

450,000

Current portion of notes payable

 -

65,778

Current portion of capital lease obligations

 -

20,447

Total current liabilities

288,251

1,582,970

 

 

 

Long-term liabilities:

 

 

Notes payable, net of current portion

-

31,203

Capital lease obligations, net of current portion

-

9,863

Deferred rent

-

42,900

Settlement payable

206,548

206,548

Total long-term liabilities

206,548

290,514

Total liabilities

494,799

1,873,484

 

 

 

Stockholders’ deficiency:

 

 

Common stock $.001 par value; 2,000,000,000 shares authorized, 492,535 and 510,789,721 issued and outstanding as of September 30, 2011 and December 31, 2010, respectively

493

510,790

Additional paid-in capital

1,699,201

3,088,905

Stock subscription receivable

 -

                      (100,000)

Accumulated deficit

                   (2,194,493)

                      (685,769)

Total stockholders’ deficiency

                      (494,799)

                    2,813,926

Total liabilities and stockholders’ deficiency

$                      -

$4,687,410


The accompanying notes are an integral part of the unaudited financial statements.





LEXON TECHNOLOGIES, INC.

STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

 

 

 

Three Months Ended

Nine Months Ended

 

September 30,

September 30,

 

2011

2010

2011

2010

 

 

 

 

 

Net sales

$

7,383 

$

985,926 

$

32,543 

$

3,200,503 

 

 

 

 

 

Cost of goods sold

921,260 

2,896,815 

Gross profits

7,383 

64,666 

32,543 

303,688 

 

 

 

 

 

Selling, general and administrative expenses

202,200 

401,065 

371,340 

1,412,140 

 

 

 

 

 

Loss from operations

(194,817)

(336,399)

(338,797)

(1,108,452)

 

 

 

 

 

Other income (expenses):

 

 

 

 

Gain on forgiveness of debt

 

274,610 

Loss on website impairment

(229,194)

 

(229,194)

 

Loss on goodwill impairment

(940,733)

Interest expense

(14,943)

(44,889)

Net other income (expense)

(229,194)

(14,943)

(1,169,927)

229,721 

 

 

 

 

 

Loss before income tax provision

(424,011)

(351,342)

(1,508,724)

(878,731)

 

 

 

 

 

Provision for income taxes

Net loss

$

(424,011)

$

(351,342)

$

(1,508,724)

$

(878,731)

 

 

 

 

 

Earnings per share of common stock – Basic

(0.002)

(0.001)

(0.005)

(0.002)

 

 

 

 

 

Earnings per share of common stock - Diluted

(0.002)

(0.001)

(0.005)

(0.002)

 

 

 

 

 

Weighted average shares of common stock outstanding

260,248,906

548,623,187

292,687,341

548,623,187


The accompanying notes are an integral part of the unaudited financial statements.




LEXON TECHNOLOGIES, INC.

STATEMENTS OF CASHFLOWS

(Unaudited)

 

 

 

 

For  The Nine Months Ended

 

September 30,

 

2011

2010

Cash flows from operating activities:

 

 

Net loss

$

(1,508,724)

$

(878,731)

Adjustments to reconcile net loss

 

 

to net cash provided by (used in) operating activities:

 

 

Bad debt expense

  - 

  42,450 

Depreciation and amortization

  146,750 

  198,975 

Loss on goodwill impairment

  940,733 

  - 

Loss on website impairment

  229,194 

 

      Gain on forgiveness of debt

  - 

  (274,610)

      Noncash professional services

  100,000 

  30,000 

Noncash employee compensation

  - 

  20,000 

Changes in assets and liabilities:

 

 

Accounts receivable

  276,764 

  112,025 

Inventories

  573,137 

  394,487 

Security deposit

  20,748 

  - 

Goodwill

  2,273,555 

  - 

Accounts payable

  (518,093)

  107,435 

Accrued expenses

  (240,294)

  193,352 

Bank overdraft

  (107)

  - 

Deferred rent

  (42,900)

  (15,776)

Other current liabilities

  - 

  25,695 

 

 

 

Total adjustments

  3,759,487 

  834,033 

Net cash provided by (used in) operating activities

  2,250,763 

  (44,698)

 

 

 

Cash flows from investing activities:

 

 

      Property and equipment

  60,310 

  - 

Note receivable

  18,000 

  - 

Due from related parties

  138,000 

  60,000 

Net cash provided by investing activities

  216,310 

  60,000 

 

 

 

Cash flows from financing activities:

 

 

Payments on notes payable

  (546,981)

  (60,916)

Payments on capital lease obligations

  (30,310)

  (16,747)

Issuance of common stock

 

  11,000 

Cancellation of common stock

  (1,900,000)

 

Distributions to stockholder

  - 

  (8,000)

Net cash used in financing activities

  (2,477,291)

  (74,663)

 

 

 

Net decrease in cash

  (10,218)

  (59,361)

Cash and cash equivalents, at the beginning of period

  10,218 

  61,661 

Cash and cash equivalents, at the end of period

 $ - 

 $ 2,300.00 

 

 

 

Supplemental disclosures:

 

 

Cash paid during the period:

 

 

Income taxes

 $ - 

 $ - 

Interest expense

 $ - 

 $ 30,154 

Noncash investing and financing activities:

 

 

Common stock issued for acquisition of intangibles

 $ - 

 $ 310,000 

Common stock issued for employee compensation

 $ - 

 $ 11,500 


The accompanying notes are an integral part of the unaudited financial statements



LEXON TECHNOLOGIES, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS


Note 1 - Nature of Business


Lexon Technologies, Inc. ("the Company" or "Lexon") was incorporated in April 1989 under the laws of state of Delaware. 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 (“LexonKorea”) as a wholly-owned subsidiary in Korea for the purpose of entering into potential business combinations with Korean operating entities. LexonKorea was reorganized in August 2005, and as a result, the Company’s equity share in LexonKorea 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 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 January 1, 2011, 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.



LEXON TECHNOLOGIES, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS


Note 2 - Summary of Significant Accounting Policies


This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s financial statements.  The financial statements and notes are representations of the Company’s management, who is responsible for their integrity and objectivity.  These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.


Use of Estimates


The preparation of the financial statements in conformity 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 accompanying notes. Estimates are primarily used for depreciation of property and equipment, amortization of intangible assets, allowances for doubtful accounts and inventory valuation. Actual results could differ from those estimates.


Revenue Recognition


In 2010, the Company recognizes revenues from product sales when earned. Specifically, revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred (or services have been rendered), the price is fixed or determinable, and collectability is reasonably assured. Revenue is not recognized until title and risk of loss have transferred to the customer. The shipping terms for the majority of the Company’s revenue arrangements are FOB (free on board) destination. Revenue is recorded net of customer returns, allowances and discounts that occur under arrangements established with customers.


For the nine months ended September 30, 2011, the Company generates revenues from the operation of the internet properties. The Company has subcontracted all of the operational activities of the Websites and has received 15% of all revenues generated from the Websites on a regular basis.


Cash and Cash Equivalents


The Company considers all highly liquid investments purchased with original maturities of three months or less to be categorized as cash and cash equivalents.


Allowance for Doubtful Accounts


The allowance for doubtful accounts is computed based upon the management’s estimate of uncollectible accounts and historical experience.  The Company performs ongoing credit evaluations of its customers to estimate potential credit losses.  Amounts are written off against the allowance in the period the Company determines that the receivable is uncollectible.


Inventories


Inventories are stated at the lower of cost or market.  Cost is determined by the first-in, first-out (FIFO) method.  Appropriate consideration is given to obsolescence, slow moving items and other factors in evaluating net realizable value.  



LEXON TECHNOLOGIES, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS


Property and Equipment


Property and equipment are stated at cost. The straight-line method is used to calculate depreciation over their estimated useful lives ranging as follows:


Automobile

3 years

Furniture & fixture

5 to 7 years

Leasehold improvement

5 years

Machinery and equipment

5 years


Leasehold improvements are depreciated to expense over the shorter of the life of the improvement or the remaining lease term. Capital expenditures that enhance the value or materially extend the useful life of the related assets are reflected as additions to property and equipment. Expenditures for repairs and maintenance are charged to expense as incurred. Upon a sale or disposition of assets, a gain or a loss is included in the statement of operations.


Impairment of Long-lived Assets


The Company periodically reviews the recoverability of its long-lived assets using the methodology prescribed in accounting guidance now codified as FASB ASC Topic 360, “Property, Plant and Equipment.” The Company also reviews these assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of these assets is determined by comparing the forecasted undiscounted future net cash flows from the operations to which the assets relate, based on management’s best estimates using appropriate assumptions and projections at the time, to the carrying amount of the assets. If the carrying value is determined not to be recoverable from future operating cash flows, the asset is deemed impaired and an impairment loss is recognized equal to the amount by which the carrying amount exceeds the estimated fair value of the asset. In management’s opinion, no such impairment existed as of September 30, 2011 and December 31, 2010.


Goodwill - The Company accounts for intangible assets in accordance with the ASC 350, Intangibles - Goodwill and Other. ASC 350 requires that goodwill no longer be amortized, but instead be tested for impairment at least annually. Additionally, ASC 350 requires that recognized intangible assets be amortized over their respective estimated lives and reviewed for impairment in accordance with ASC 360, Property, Plant, and Equipment.  Any recognized intangible assets determined to have an indefinite useful lives will not be amortized, but instead tested for impairment until its life is determined to no longer be indefinite.  ASC 350 requires that the values of intangible assets be tested for impairment on at least an annual basis, by comparing the fair value of the assets to their carrying amounts.  As a result of the impairment testing, the Company determined that goodwill was significantly impaired due to sales of Paragon Toner division. Goodwill amount was $0 and $3,214,289 as of September 30, 2011 and December 31, 2010, respectively.    

Accrued Expenses


The Company’s accrued expenses consist of amounts payable for salaries, payroll taxes and sales taxes.


Deferred Rent


The Company recognizes rent expense equal to the total of the payments and free rent received due over the lease term, divided by the number of months of the lease term applying the straight-line method. The difference between rent expense recorded and the amount paid is credited or charged to deferred rent.



LEXON TECHNOLOGIES, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS


Shipping and Handling


Certain shipping and handling fees are charged to customers and these are classified as revenue. The costs associated with all shipping to customers are recorded as operating expenses. Shipping expenses for the nine months ended September 30, 2011 and 2010 amounted to $0 and $119,482 respectively.


Income Taxes


The Company uses the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and net operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in income tax rates is recognized in the results of operations in the period that includes the enactment date. The realizability of deferred tax assets is evaluated based on a “more likely than not” standard, and to the extent this threshold is not met, a valuation allowance is recorded. See Note 13Income Taxes for more information about the Company’s income taxes.


Recent Accounting Pronouncements


In June 2011, the FASB issued new guidance regarding the presentation of comprehensive income. This guidance eliminates the option to present components of other comprehensive income as part of the statement of changes in stockholder’s equity and requires that all changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. This guidance is effective retrospectively for fiscal years, and interim periods within those fiscal year, beginning after December 15, 2011 with early adoption permitted.


In September 2011, the FASB issued new guidance addressing the valuation process for goodwill. This guidance provides the ability to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. Under this guidance,  an entity will no longer be required to calculate the fair value of a reporting unit unless it determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. This guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted.



LEXON TECHNOLOGIES, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS


Note 3 - Inventories


The following table provides the components of inventories as of  September 30, 2011 and December 31, 2010:


 

September 30,

December 31,

 

2011

2010

 

 

 

Finished goods

$      -

$335,084

Raw materials

-

273,039

 

-

608,123

Less: Inventory reserve

       -

-34,986

Total

$    -

$573,137


Overhead allocated to the inventory amounted to $0 and $45,853 for the nine months ended September 30, 2011 and 2010, respectively.


Note 4- Property and Equipment


Property and equipment consist of the following as of  September 30, 2011 and December 31, 2010:


 

September 30,

December 31,

 

2011

2010

 

 

 

Automobile

$    -

$34,092

Furniture and fixture

-

53,388

Leasehold improvement

-

5,060

Machinery and equipment

-

439,030

 

-

531,570

Less: Accumulated depreciation

-

-471,260

Net property and equipment

$ -

$60,310


Depreciation expense amounted to $0 and $40,578 for the nine months ended September 30, 2011 and 2010, respectively.




LEXON TECHNOLOGIES, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS


Note 5 - Capitalized Website Costs


The Company amortizes its website over the estimated useful life of three years. The carrying amount and accumulated amortization related to the website costs as of September 30, 2011 and December 31, 2010, are as follows:


 

September 30,

December 31,

 

2011

2010

 

 

 

Gross balance

$633,589

$633,589

Less: Accumulated amortization

-404,395

-257,645

 Loss on website impairment

-229,194

 

Net balance

$           -   

$375,944



Total amortization expenses were $146,750 and $158,397 for the nine months ended September30, 2011 and 2010, respectively. Amortizable intangible assets are tested for impairment when impairment indicators are present, and, if impaired, written down to fair value based on either discounted cash flows or appraised values. As a result of the impairment testing, the Company determined that the value of website was significantly impaired due to sales of Paragon Toner division. Net value of website is $0 and $375,944 as of September 30, 2011 and December 31 2010, respectively.


Note 6 - Transactions with Related Parties


Due from Related Parties


Advances to family members of the stockholder are unsecured, non-interest bearing and due on demand. The Company has $0 and $138,000 due from related parties as of September 30, 2011 and December 31, 2010, respectively.


Due to Related Parties


Interest bearing notes payable to related parties consisting of the following as of September 30, 2011 and December 31, 2010:


 

September30,

December 31,

 

2011

2010

Unsecured note payable to a shareholder, with interest at 7.5% per annum. Note is in default and is payable on demand.

$5,000

$5,000

Expired convertible debt issued to a former employee, with interest at 7.5% per annum. The conversion maturity date was in October 2004. The note is payable on demand.

30,000

30,000

Expired convertible debt issued to a Director, with interest at 7.5% per annum. The conversion maturity date was in October 2005. The note is payable on demand.

56,960

56,960

Total notes payable

$91,960

$91,960




LEXON TECHNOLOGIES, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS


Note 7- Line of Credit


The Company has a line of credit with a bank with a maximum borrowing limit of $450,000. The outstanding balance was $0 and $450,000 as of September 30, 2011 and December 31, 2010.


The Company incurred interest expenses on this line of credit of $0 and $26,872 for the nine months ended September 30, 2011 and 2010, respectively.


Note 8 - Notes Payable


The Company has long term notes payable as follows:


 

September30,

December 31,

 

2011

2010

 

 

 

A note payable to a bank, due in monthly installments of $2,931, including interest at the bank’s prime plus 1.25% (4.50% as of March 31, 2010). The note matures in May 2011, and is collateralized by substantially all the assets of the Company. The note is subject to various restrictive covenants, including maintenance of financial ratios at all times.

$         -

$14,423

A note payable to a bank, due in monthly installments of $4,587, including interest at the bank’s prime plus 1.50% with minimum interest rate of 6.25% (6.25% as of March 31, 2010). The note matures in January 2012, and is collateralized by substantially all the assets of the Company.

-

82,558

Total notes payable

-

96,981

Less: Current portion

-

                      (65,778)

Notes payable, net of current

$            -

$31,203


Total interest expense on the notes payable were $0 and $6,742 for the nine months ended September 30, 2011and 2010, respectively.



Note 9 - Capital Lease Obligations


The Company entered into numerous capital lease agreements with leasing companies to purchase certain equipment and transportation vehicles.  As of September 30, 2011 and December 31, 2010, these assets are carried as follows:  


 

September 30,

December 31,

 

2011

2010

 

 

 

Equipment

$     -

$162,889

 Transportation vehicles

-

32,800

Less: Accumulated depreciation

 -

-190,340

 

$    -

$5,349




LEXON TECHNOLOGIES, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS


The related future minimum lease payments under the capital lease obligations are as follows:

 

September 30,

December 31,

 

2011

2010

 

 

 

Total minimum lease payments

 $   -

 $                              34,868

Less: Amount representing interest

 -

                                 (4,558)

Present value of net minimum lease payments

 -

                                 30,310

Less: Current portion

 -

                               (20,447)

Capital lease obligations, net of current portion

 $    -

 $                                9,863



Total interest expenses from the capital lease obligations were $0 and $6,103 for the six months ended June 30, 2011 and 2010, respectively.


Note 10 - Commitments and Contingencies


Legal Proceedings


On July 14, 2008, Advanced Digital Technology Co. Ltd., a Korean corporation (“ADT”), filed a claim against Lexon and certain named individuals who are former and current officers of the Company.  The claim alleges breach of an agreement to settle an earlier dispute, involving ADT's investment of $150,000 in Lexon on or about January 16, 2007 and ADT's subsequent unilateral decision to rescind and demand a refund of this investment.  The total amount of damages claimed under the pending lawsuit is the investment amount of $150,000 plus filing costs, interest and attorney fees for an aggregate amount of $178,522.  On November 9, 2010, judgment was entered against Lexon Technologies for the amount of $206,548.  Lexon has already appealed such decision.  The amount of such loss is reflected in our financials.   


However, on September 5, 2008, Vivien and David Bollenberg, a current shareholder (the “Bollenbergs”), filed a claim against Lexon and other third parties, including ByungHwee Hwang (also referred to as "Ben Hwang") and other financial agents and institutions involved in the alleged fraudulent transaction. The lawsuit is currently pending in the Orange County Superior Court in Santa Ana, California. The filed complaint alleges that Ben Hwang together with his representatives, including his accountant, escrow agent and real estate agent/broker, made certain representations to and solicited the Bollenbergs to make an investment in several companies and ventures including Lexon with the intent to misappropriate the solicited funds for personal use. The Bollenbergs allege that they invested a total of $1,500,000 among and between the various companies and ventures recommended by Ben Hwang, of which investment amount approximately $550,000 was invested in Lexon ($150,000 for 600,000 shares at $0.25 per share and $400,000 initially invested in Lexon Korea and later converted into 1,150,000 shares in Lexon for a total of 1,750,000 shares in Lexon). On April 1, 2011, after a trial was concluded, judgment was entered in favor of the Lexon Technologies whereby Lexon was not found liable for any causes of action brought by the Plaintiff.




LEXON TECHNOLOGIES, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS


Note 11 – Sales of Paragon Toner, Inc.


On January 1, 2011, 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.


Note 12 – Services Contract


On January 1, 2011, Lexon and Paragon have decided to enter into contractual relationship regarding Lexon’s internet properties. Lexon has subcontracted all of the operational activities to Paragon Toner including but not limited to billing, collection, maintenance of website, advertising and all other activities related to the operation of the Websites. In return for the operation of the Websites, Paragon hereby agrees to pay to Lexon the agreed amount of 15% of all revenues generated from the Websites.  This agreement shall be enforceable between the Parties for a period of 2 years from the date of agreement. However, it is subject to renegotiation at end of each year.  


Note 13 – Redemption of stock subscription


On October 3, 2011, Lexon Technologies Inc. entered into four subscriptions agreements with new investors, Senderbell Holdings Limited, Treasure Chest Holdings Limited, Blueberry Enterprises Limited, and Hockworth Holdings Limited. The total number of share subscribed is 3,500,000 and the total amount of investment is $300,000.  Investments will be paid in the promissory note for a term of six months. The transactions will be cancelled if the Company does not execute a contract to raise $4,400,000 by October 30, 2011.



Note 14 - Income Taxes

 

Significant components of deferred tax assets are as follows:


 

September 30,

December 31,

 

2011

2010

 

 

 

Loss carry forwards

 $                    3,000,000

 $                    2,179,612

Other

229,720

229,720

Total deferred tax asset

3,229,720

2,409,332

 

 

 

Valuation allowance

 

2,409,332

Total deferred tax asset, net

 $                                -   

 $                                -   



As of September 30, 2011, the Company had approximately $3,000,000 of net operating loss (“NOL”) carryforwards for U.S. federal income tax purposes expiring in 2020 through 2030. In addition, the Company has California state NOL carryforwards of approximately $2,600,000 expiring in 2013 through 2020.  



LEXON TECHNOLOGIES, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS


The ability to realize the tax benefits associated with deferred tax assets, which includes benefits related to NOL’s, is principally dependent upon the Company’s ability to generate future taxable income from operations.  The Company has provided a full valuation allowance for its net deferred tax assets due to the Company’s net operating losses.  The valuation allowance has increased by $820,388 during the nine months ended September 30, 2011.


Section 382 of the Internal Revenue Code (“IRC”) imposes limitations on the use of NOL’s and credits following changes in ownership as defined in the IRC. The limitation could reduce the amount of benefits that would be available to offset future taxable income each year, starting with the year of an ownership change.


Note 15 - Subsequent Events


On October 26, 2011, shareholdersof Lexon Technologies Inc. appointed new directors, Byung Jin Kim, Eu Gene Lee, and KyuSeok Lee. The effective date for appointment to be November 7, 2011. The current directors will also resign on that separate date. An additional 8-K will disclose the completion of the effective date as well as possibly other 8-K disclosure required events. The shareholders of the Company all voted in favor for the changed from Lexon Technologies Inc. to SOCIAL BANK INCORPORATED.










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.


Results of Operation for the Three Months Ended September 30, 2011 as Compared to the Three Months Ended September 30, 2010


Revenues.


Revenues decreased by $978,543 to $7,383 for the three months ended September 30, 2011 as compared to $985,926for the three months ended September 30, 2010. This decline was primarily attributed to the restructuring of the Company, whereby only the internet properties remain.


Cost of Goods Sold.


Cost of Goods Sold decreased by $ 921,260 to $0 for the three months ended September30, 2011 as compared to $921,260for the three months ended September 30, 2010. This decline was primarily attributed to the restructuring of the Company, whereby only the internet properties remain.


Selling, General and Administrative Expenses.


Selling, General and Administrative Expenses (“SG&A”) decreased by $198,865 to $202,200 for the three months ended September30, 2011 as compared to $401,065 for the three months ended September 30, 2010. This decrease of $306,865 in SG&A was attributed to the restructuring whereby only internet properties remain and overhead has been significantly reduced.


Other Income and Expenses.


Other expenses for the three months ended September 30, 2011 was $229,194 as compared to $14,943 for the three months ended September 30, 2010.Interest expenses for the three months September 30, 2011 was $0 compared to $14,943 in interest expenses for the three months ended September 30, 2010.


Net loss


As a result, we recorded a net loss of $424,011 for the three months ended September 30, 2011 compared with a net loss of $351,342 for the three months ended September 30, 2010.





Results of Operation for the Nine Months Ended September 30, 2011 as Compared to the Nine Months Ended September 30, 2010


Revenues.


Revenues decreased by $3,167,960 to $32,543 for the nine months ended September 30, 2011 as compared to $3,200,503 for the nine months ended September 30, 2010. This decline was primarily attributed to a sharp decrease in sales because of the restructuring of Lexon as well as a reduced budget for internet marketing.




Cost of Goods Sold.


Cost of Goods Sold decreased by $ 2,896,815to $0 for the nine months ended September 30, 2011 as compared to $2,896,815for the nine months ended September 30, 2010. This decline was primarily attributed to the restructuring of the Company, whereby only the internet properties remain.


Selling, General and Administrative Expenses.


Selling, General and Administrative Expenses (“SG&A”) decreased by $1,040,800 to $371,340 for the nine months ended September 30, 2011 as compared to $1,412,140 for the nine months ended September 30, 2010. This decrease of $1,040,800in SG&A occurred as result of reduced overhead expenses post restructuring.


Other Income and Expenses.


Other expenses for the nine months ended September 30, 2011 was $1,169,927 compared with other income of $229,721 for the nine months ended September 30, 2010. This increase was primarily attributed to the loss on goodwill impairment as result of the restructuring of the Company. Interest expenses for the nine months ended September 30, 2011 was $0 compared to $44,489 in interest expenses for the nine months ended September 30, 2010.


Net loss


As a result, we recorded a net loss of $1,508,724 for the nine months ended September 30, 2011 compared with a net loss of $878,731for the nine months ended September 30, 2010.



Liquidity and Capital Resources.


At September 30, 2011, we had current assets of $0 and current liabilities of $288,251.


Current liabilities at September 30, 2011 was $288,251, consisted of accounts payable of $98,544, accounts payable due to related parties of $91,960, bank overdraft of $20,347 and accrued expenses of $77,400.


For the nine months ended September 30, 2011, net cash provided by operating activities totaled $2,250,763 compared to net cash used in operating activities of $44,698 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 nine months ended September 30, 2011 amounted to $216,310 compared to net provided by in investment activities of $60,000 for the same previous year period.


Net cash used infinancing activities for the nine months ended September 30, 2011 was $2,477,291 compared to net cash used in financing activities of$74,663 for the nine months ended September 30, 2010. This increase was primarily attributed to the cancellation of common stock as result of the restructuring of the Company.


Net cash and cash equivalents at September 30, 2011 was $0.


None.


ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.


ITEM 4.

CONTROLS AND PROCEDURES

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 believes 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.


ITEM 4T.

CONTROLS AND PROCEDURES

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.


PART II

ITEM 1.

LEGAL PROCEEDINGS

To the best knowledge of management, there are two pending legal proceedings against us.


On July 14, 2008, Advanced Digital Technology Co. Ltd., a Korean corporation (“ADT”), filed a claim against Lexon and certain named individuals who are former and current officers of the Company.  The claim alleges breach of an agreement to settle an earlier dispute, involving ADT's investment of $150,000 in Lexon on or about January 16, 2007 and ADT's subsequent unilateral decision to rescind and demand a refund of this investment.  The total amount of damages claimed under the pending lawsuit is the investment amount of $150,000 plus filing costs, interest and attorney fees for an aggregate amount of $178,522.  On November 9, 2010, judgment was entered against Lexon Technologies for the amount of $206,548.  Lexon has already appealed such decision.  The amount of such loss is reflected in our financials.   



However, on September 5, 2008, Vivien and David Bollenberg, a current shareholder (the “Bollenbergs”), filed a claim against Lexon and other third parties, including ByungHwee Hwang (also referred to as "Ben Hwang") and other financial agents and institutions involved in the alleged fraudulent transaction. The lawsuit is currently pending in the Orange County Superior Court in Santa Ana, California. The filed complaint alleges that Ben Hwang together with his representatives, including his accountant, escrow agent and real estate agent/broker, made certain representations to and solicited the Bollenbergs to make an investment in several companies and ventures including Lexon with the intent to misappropriate the solicited funds for personal use. The Bollenbergs allege that they invested a total of $1,500,000 among and between the various companies and ventures recommended by Ben Hwang, of which investment amount approximately $550,000 was invested in Lexon ($150,000 for 600,000 shares at $0.25 per share and $400,000 initially invested in Lexon Korea and later converted into 1,150,000 shares in Lexon for a total of 1,750,000 shares in Lexon). On April 1, 2011, after a trial was concluded, judgment was entered in favor of the Lexon Technologies whereby Lexon was not found liable for any causes of action brought by the Plaintiff.


ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


None

ITEM 3.

DEFAULT UPON SENIOR SECURITIES


None.

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

None.

ITEM 5.

OTHER INFORMATION

None.

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 SECTION 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 SECTION 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. *




101.INS**       XBRL Instance Document


101.SCH**      XBRL Taxonomy Extension Schema Document


101.CAL**      XBRL Taxonomy Extension Calculation Linkbase Document


101.LAB**      XBRL Taxonomy Extension Label Linkbase Document


101.PRE**      XBRL Taxonomy Extension Presentation Linkbase Document


101.DEF**      XBRL Taxonomy Extension Definition Linkbase Document

________________________


*Filed herewith.


**Furnished herewith.




SIGNATURES


     In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

LEXON TECHNOLOGIES, INC.

 

 

 

Date: November 21, 2011

By:

/s/ James Park

 

 

James Park

 

 

President, Chief Executive Officer

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates stated.