1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 12b-25
NOTIFICATION OF LATE FILING
(Check One)
[X] Form 10-K [ ] Form 20-F [ ] Form 11-K [ ] Form 10-Q [ ] Form N-SAR
For Period Ended: December 31, 2004
SEC FILE NUMBER: 0-24721
CUSIP NUMBER: 52977N 20 8
PART I - REGISTRANT INFORMATION
Full Name of Registrant: Lexon Technologies, Inc.
Address of Principal Executive Offices:
8 Corporate Park, Suite 300, Irvine, California 92606
PART II - Rules 12b-25(b) and (c)
If the subject report could not be filed without unreasonable effort or
expense and the registrant seeks relief pursuant to Rule 12b-25(b), the
following should be completed. (Check box is appropriate)
[x] The reasons described in reasonable detail in Part III of this form could
not be eliminated without unreasonable effort or expense
PART III - NARRATIVE
State below with reasonable detail the reasons why the Form 10-K, 11-K, 10-Q,
NSAR, or the transition report or portion thereof, could not be filed within
the prescribed time period.
Certain aspects of the registrant's review process have not been completed
prior to the filing date.
PART IV - OTHER INFORMATION
(1) Name and telephone number of person to contact in regard to this
notification:
Jehy Lah (949)477-4000
(2) Have all other periodic reports required under Section 13 or 15(d) of the
Securities and Exchange Act of 1934 or Section 30 of the Investment Company
Act of 1940 during the preceding 12 months (or for such shorter) period that
the registrant was required to file such report(s) been filed? If answer is
no, identify report(s). [X] Yes [ ] No
(3) Is it anticipated that any significant change in results of operations
from the corresponding period for the last fiscal year will be reflected by
the earnings statement to be included in the subject report or portion
thereof? [X] Yes [ ] No
2
If so, attach an explanation of the anticipated significant change, both
narratively and quantitatively, and, if appropriate, state the reasons why a
reasonable estimate of the results cannot be made.
Lexon Technologies, Inc. acquired a majority interest in Techone Company,
Ltd., a Republic of Korea corporation ("Techone"), in December 2004. Attached
hereto are audited financial statements for Techone at December 31, 2003.
Because Techone is an operating entity, there may be changes in results of
operations for Lexon from the corresponding period for the last fiscal year.
Audited financial statements for Techone for the current year period are still
being prepared, therefore the effect on the consolidated financial statements
for Lexon is difficult to determine at this time.
Lexon Technologies, Inc.
--------------------------------------------
(Name of Registrant as Specified in Charter)
has caused this notification to be signed on its behalf by the undersigned
hereunder duly authorized.
Date: March 31, 2005
By:/S/Kenneth J. Eaken, Principal Executive Officer
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Techone Company, Ltd.
We have audited the accompanying balance sheet of Techone Company, Ltd. as of
December 31, 2003, and the related statements of operations, stockholders'
equity and comprehensive income, and cash flows for the years ended December
31, 2003 and 2002. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, audits of its internal
control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the Company's internal
control over financial reporting. Accordingly, we express no such opinion.
An audit also includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Techone Company, Ltd. as of
December 31, 2003, and the results of its operations and its cash flows for
the years ended December 31, 2003 and 2002, in conformity with accounting
principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to
the financial statements, the Company has a working capital deficit and has
suffered recurring losses to date, which raises substantial doubt about its
ability to continue as a going concern. Management's plans with regard to
these matters are also described in Note 2. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
/s/Chisholm, Bierwolf & Nilson
Chisholm, Bierwolf & Nilson
North Salt Lake, Utah
March 4, 2005
TECHONE COMPANY, LTD.
Balance Sheet
ASSETS
December 31,
2003
------------
CURRENT ASSETS
Cash and cash equivalents $ 2,716
Accounts receivable (Note 1) 148,762
Inventory (Note 1) 136,501
------------
Total Current Assets 287,979
------------
PROPERTY AND EQUIPMENT, net (Notes 1 and 3) 3,087,990
------------
OTHER ASSETS
Investment, recorded under the equity method (Note 4) 100,025
Prepaid construction costs (Note 3) 115,870
Other assets 17,320
------------
Total Other Assets 233,215
------------
TOTAL ASSETS $ 3,609,184
============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 695,406
Accrued expenses 162,854
Due to related parties (Note 6) 350,298
Notes payable, current (Note 5) 1,779,346
------------
Total Current Liabilities 2,987,904
------------
LONG-TERM DEBT
Notes payable (Note 5) 421,540
------------
Total Long-Term Debt 421,540
------------
Total Liabilities 3,409,444
------------
STOCKHOLDERS' EQUITY
Common stock 1,462,069
Other comprehensive income (116,200)
Accumulated deficit (1,146,129)
------------
Total Stockholders' Equity 199,740
------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,609,184
============
TECHONE COMPANY, LTD.
Statements of Operations
For the Years Ended
December 31,
2003 2002
----------- -----------
REVENUES $ 125,028 $ 279,549
----------- -----------
EXPENSES
Cost of sales 93,481 201,640
Research and development 279,617 185,141
Selling, general and administrative 239,422 40,779
Depreciation and amortization 170,385 101,535
----------- -----------
Total Expenses 782,905 529,095
----------- -----------
LOSS FROM OPERATIONS (657,877) (249,546)
----------- -----------
OTHER INCOME (EXPENSE)
Interest income 13 220
Other income 23,477 6,256
Gain (loss) on disposition of assets 67,039 (14)
Loss on investment (Note 4) (25,942) -
Interest expense (162,767) (100,276)
----------- -----------
Total Other Income (Expense) (98,180) (93,814)
----------- -----------
NET LOSS (756,057) (343,360)
----------- -----------
OTHER COMPREHENSIVE INCOME (LOSS)
Gain (loss) on foreign currency exchange 6,496 (123,387)
----------- -----------
NET COMPREHENSIVE LOSS $ (749,561) $ (466,747)
=========== ===========
BASIC LOSS PER SHARE $ (2.20) $ (1.70)
=========== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 343,024 202,137
=========== ===========
TECHONE COMPANY, LTD
Statements of Stockholders' Equity and Comprehensive Income
Other
Common Stock
Comprehensive Accumulated
Shares Amount
Income Deficit
---------- ----------
- ---------- ----------
Balance, January 1, 2002 200,000 $ 753,967 $
691 $ (57,403)
Common stock issued for cash 20,000 83,546
- - -
Currency translation adjustment - -
(123,387) -
Net loss for the year ended
December 31, 2002 - -
- - (343,360)
---------- ----------
- ---------- ----------
Balance, December 31, 2002 220,000 837,513
(122,696) (400,763)
Common stock issued for cash 150,000 624,556
- - -
Currency translation adjustment - -
6,496 -
Net loss for the year ended
December 31, 2003 - -
- - (756,057)
---------- ----------
- ---------- ----------
Balance, December 31, 2003 370,000 $ 1,462,069 $
(116,200) $(1,156,820)
========== ==========
========== ==========
TECHONE COMPANY, LTD.
Statements of Cash Flows
For the Years Ended
December 31,
2003 2002
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (756,057) $ (343,360)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 170,385 101,535
(Gain) loss on disposition of assets (67,039) 14
Loss on investment 25,942 -
Changes in assets and liabilities:
Decrease in other assets 12,180 86,204
Increase in accounts receivable (85,017) (12,154)
Increase in inventory (124,521) (11,980)
Increase in accounts payable
and accrued expenses 371,874 186,449
----------- -----------
Net Cash Used in Operating Activities (452,253) 6,708
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for property and equipment (338,688) (1,253,973)
Cash paid for investments (125,967) -
Cash paid for construction costs (4,543) (44,407)
----------- -----------
Net Cash Used in Investing Activities (469,198) (1,298,380)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments made on notes payable (292,251) (906,408)
Proceeds from notes payable 252,264 2,193,456
Change in related party payables 332,747 (6,734)
Cash received from issuance of common stock 624,556 83,546
----------- -----------
Net Cash Provided by Financing Activities 917,316 1,363,860
----------- -----------
EFFECT OF CURRENCY EXCHANGE RATE CHANGES
ON CASH AND CASH EQUIVALENTS 6,496 (123,387)
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 2,361 (51,199)
CASH AND CASH EQUIVALENTS AT BEG OF YEAR 355 51,554
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 2,716 $ 355
=========== ===========
TECHONE COMPANY, LTD
Notes to the Financial Statements
December 31, 2003 and 2002
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
The financial statements presented are those of Techone Company, Ltd. (the
Company). The Company was incorporated in the Republic of South Korea and
manufactures and sells 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.
b. Accounting Methods
The Company's financial statements are prepared using the accrual method of
accounting. The Company has elected a December 31 year end.
c. Cash and Cash Equivalents
Cash equivalents include short-term, highly liquid investments with maturities
of three months or less at the time of acquisition.
d. Accounts Receivable
Accounts receivable are shown net of an allowance for doubtful accounts of $0
at December 31, 2003.
e. Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the financial statements and
expenses during the reporting period. In these financial statements, assets,
liabilities and expenses involve extensive reliance on management's estimates.
Actual results could differ from those estimates.
f. 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 period of the
financial statements.
December 31,
2003 2002
Numerator - (loss) $(756,057) $(343,360)
Denominator - weighted average number of
shares outstanding 343,024 202,137
-------- --------
Loss per share $ (2.20) $ (1.70)
======== ========
TECHONE COMPANY, LTD
Notes to the Financial Statements
December 31, 2003 and 2002
NOTE 1 -ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
g. Property and Equipment
Property and equipment is recorded at cost. Major additions and improvement
are capitalized. The cost and related accumulated depreciation of equipment
retired or sold are removed from the accounts and any differences between the
undepreciated amount and the proceeds from the sale are recorded as gain or
loss on sale. Depreciation is computed using the straight-line method over
the estimated useful life of the assets as follows:
Description Estimated Useful Life
Buildings and improvements 30 years
Machinery and equipment 10 years
Automobiles 5 years
Office and other equipment 5 years
Depreciation expense for the years ended December 31, 2003 and 2002 was
$170,385 and $101,535, respectively.
In accordance with Financial Accounting Standards Board Statement 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. At December 31, 2003, no impairments were recognized.
h. Inventory
Raw materials are stated at the lower of cost (on a first-in, first-out basis)
or market. The inventory at December 31, 2003 consists of raw materials used
in the assembly and production of the electronic components.
i. Provision for Income Taxes
No provision for income taxes has been recorded due to net operating loss
carryforwards totaling approximately $1,146,000 that will be offset against
future taxable income. No tax benefit has been reported in the financial
statements because the Company believes there is a 50% or greater chance the
carryforwards will expire unused.
j. Revenue Recognition
Revenue is recognized when persuasive evidence of an arrangement exists, the
seller's price to the buyer is fixed or determinable, collectibility is
reasonably assured and delivery has occurred. As such, the Company recognizes
revenues 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.
TECHONE COMPANY, LTD.
Notes to the Financial Statements
December 31, 2003 and 2002
NOTE 1 -ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
k. Functional Currency & Foreign Currency Translation
The Company's functional currency is the South Korean Won. In accordance with
the Statement of Financial Accounting Standard No. 52, Foreign Currency
Translation, the assets and liabilities denominated in foreign currency are
translated into U.S. dollars at the current rate of exchange existing at
period end and revenues and expenses are translated at average monthly
exchange rates. Related translation adjustments are reported as a separate
component of stockholders' equity, whereas, gains or losses relating from
foreign currency transactions are included in the results of operations.
l. Newly Adopted Pronouncements
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 June
15, 2005. In addition, this new standard will apply to unvested options
granted prior to the effective date. The Company will adopt this new standard
effective for the fourth fiscal quarter of 2005, and has not yet determined
what impact this standard will have on its financial position or results of
operations.
In November 2004, the FASB issued SFAS No. 151, Inventory Costs - an amendment
of ARB No. 43, Chapter 4. This Statement amends the guidance in ARB No. 43,
Chapter 4 "Inventory Pricing" to clarify the accounting for abnormal amounts
of idle facility expense, freight, handling costs, and wasted material
(spoilage). Paragraph 5 of ARB 43, Chapter 4 previously stated that ". . .
under some circumstances, items such as idle facility expense, excessive
spoilage, double freight, and rehandling costs may be so abnormal as to
require treatment as current period charges. . . ." This Statement requires
that those items be recognized as current-period charges regardless of whether
they meet the criterion of "so abnormal." In addition, this Statement requires
that allocation of fixed production overheads to the costs of conversion be
based on the normal capacity of the production facilities. This statement is
effective for inventory costs incurred during fiscal years beginning after
June 15, 2005. Management does not believe the adoption of this Statement will
have any immediate material impact on the Company.
TECHONE COMPANY, LTD.
Notes to the Financial Statements
December 31, 2003 and 2002
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. The Company has historically incurred significant losses which have
resulted in an accumulated deficit of $1,146,129 at December 31, 2003, a
working capital deficit of approximately $2,700,000, and limited internal
financial resources. These factors combined, raise substantial doubt about
the Company's ability to continue as a going concern. The Company was able to
raise an additional $624,556 through the issuance of common stock during the
year ended December 31, 2003 which has been used for operations, property and
equipment purchases and investment acquisitions. The accompanying 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 until revenues are sufficient to cover the operating expenses.
NOTE 3 -PROPERTY AND EQUIPMENT
Property and equipment consists of the following at December 31, 2003:
Buildings and improvements $ 1,708,143
Land 455,436
Machinery and equipment 1,047,600
Automobiles 45,130
Office and other equipment 126,481
Accumulated depreciation (294,800)
----------
Total Property and Equipment $ 3,087,990
==========
The Company has also advanced funds on the construction of a new building and
related equipment totaling $115,870 at December 31, 2003. Once the required
paperwork is completed, the amounts will be reclassified to
construction-in-progress in the accompanying financial statements.
NOTE 4 - INVESTMENT RECORDED UNDER THE EQUITY METHOD
During 2003, the Company invested a total of $125,967 into a Korean company
called Mirae Sojae Company, and acquired a total of 30,000 shares of common
stock, representing a 10% interest. The investment is being recorded under
the equity method of accounting under which the Company's share of the net
income (loss) is recognized as income (loss) in the Company's statement of
operations and added (deducted) to the investment account. Any distributions
received are deducted from the investment account. During 2003, the Company
recorded a loss on this investment of $25,942 representing the Company's share
of the 2003 loss for Mirae Sojae Company, reducing the investment to $100,025
at December 31, 2003.
TECHONE COMPANY, LTD
Notes to the Financial Statements
December 31, 2003 and 2002
NOTE 5 -NOTES PAYABLE
Notes payable consisted of the following at December 31, 2003:
Notes payable for three automobiles, principal and interest
due monthly at rates of 8.20% to 16.0%, mature from
February 2004 to August 2005, secured by the vehicles. $ 11,062
Note payable to a bank in Korea, interest at
6.15% per annum, due in March 2004,
secured by assets of the Company. 1,426,980
Note payable to a bank in Korea, interest at
6.22% per annum, due in May 2003, currently
in default, secured by assets of the Company. 68,552
Notes payable to a bank in Korea, interest at
19,0% per annum, due in February 2004, secured
by assets of the Company. 159,930
Note payable to a bank in Korea, interest at
8.00% per annum, due in March 2004,
secured by assets of the Company. 41,970
Note payable to a bank in Korea, interest at
9.65% per annum, due in January 2004,
secured by assets of the Company. 41,970
Note payable to a bank in Korea, interest at
6.09% per annum, due in August 2011,
secured by assets of the Company. 419,700
Other notes payable 30,722
----------
Total Notes Payable 2,200,886
Less: Current Portion (1,779,346)
---------
Long-Term Notes Payable $ 421,540
=========
The aggregate principal maturities of notes payable are as follows:
Year Ended
December 31, Amount
2004 $ 1,779,346
2005 -
2006 -
2007 -
2008 -
2009 and thereafter 421,540
----------
Total $ 2,200,886
==========
TECHONE COMPANY, LTD
Notes to the Financial Statements
December 31, 2003 and 2002
NOTE 6 - RELATED PARTY TRANSACTIONS
The Company has been advanced funds totaling $350,298 at December 31, 2003
from certain officers of the Company and other related individuals which funds
have been used for operating costs. These amounts are non-interest bearing
and payable on demand.
NOTE 7 - FINANCIAL INSTRUMENTS
The recorded amounts for financial instruments, including cash equivalents,
receivables, investments, accounts payable and accrued expenses, and long-term
debt approximate their market values as of December 31, 2003. The Company has
no investments in derivative financial instruments.
NOTE 8 - STOCK TRANSACTIONS
During 2002, the Company issued 20,000 shares of common stock to a private
investor at $4.22 per share for total proceeds of $83,546, net of offering
costs.
During 2003, the Company issued a total of 150,000 shares of common stock to
private investors at $4.20 per share for total proceeds of $624,556, net of
offering costs.
NOTE 9 - SUBSEQUENT EVENT
Effective December 2004, a controlling interest (87.45%) of the Company's
common stock was acquired by Lexon Technologies, Inc., a U.S. public company,
for consideration of $1,585,000.
NOTE 10 - OTHER COMPREHENSIVE INCOME
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:
December 31,
2003 2002
Balance, beginning of year $ (122,696) $ 691
Effect of currency exchange rate changes 6,496 (123,387)
--------- ---------
Balance, end of year $ (116,200) $ (122,696)
========= =========