content: U.S. SECURITIES AND EXCHANGE COMMISSION
  Washington, D.C. 20549
  
  FORM 10-QSB
  
  [X] QUARTERLY REPORT PURSUANT TO SECTION
  13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
  OF 1934
  
  For the quarterly period ended June 30, 2008
  
  
  [   ] TRANSITION REPORT PURSUANT TO SECTION
  13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
  OF 1934
  
  For the transition period from
  
  Commission File No. 000-52503
  
  Illusion Digital Systems, Inc.
  (Name of Small Business Issuer in its charter)
  
  Colorado
  -------------------
  (State or other jurisdiction
  of
  (I.R.S. employer
  incorporation or formation)
  identification number)
  
  9595 Wilshire Blvd., Suite 900
  Beverly Hills, CA 92012
   (Address of principal executive offices) (Zip
  Code)
  
  Issuer's telephone number: (877) 565-0515
  Issuer's facsimile number: (302) 861-3738
  
  Illusion Digital Systems, Inc.
  7486 La Jolla Blvd., Suite 479
  La Jolla, CA 92037
   (Former name, former address and former
  fiscal year, if changed since last report)
  
  
  Check whether the issuer (1) filed all reports required to
  be filed by Section 13 or 15(d) of the Exchange Act
  during the preceding 12 months (or for such shorter
  period that the issuer was required to file such reports),
  and (2) has been subject to such filing requirements for
  the past 90 days. Yes [X] No [   ]
  
  Indicate by check mark whether the registrant is a shell
  company (as defined in Rule 12b-2 of the Exchange
  Act). Yes [  ] No [X]
  
  State the number of shares outstanding of each of the
  issuer's classes of common equity, as of August 18,
  2008: 1,390,000 shares of common stock.
  
  
  
  
  ILLUSION DIGITAL SYSTEMS, INC.
  
  FINANCIAL STATEMENTS
  (Unaudited)
  
  June 30, 2008
  
  
  ILLUSION DIGITAL SYSTEMS, INC.
  (A Development Stage Enterprise)
  INDEX TO INTERIM AND UNAUDITED FINANCIAL
  STATEMENTS
  June 30, 2008
  (Unaudited)
  
  
  Page
  
  
  Financial Statements
  
  
  
  Balance Sheet
  F-1
  
  
  Statements of Operations
  F-2
  
  
  Statements of Changes in Stockholder's Equity
  F-3
  
  
  Statements of Cash Flows
  F-4
  
  
  
  
  Notes to Financial Statements
  F-5 -
  F-6
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  ILLUSION DIGITAL SYSTEMS, INC.
  (A Development Stage Enterprise)
  INTERIM AND UNAUDITED BALANCE SHEET
  JUNE 30, 2008
  
  
  
  June 30,
  2008
  
  
  
  (Unaudited)
  
  
  
  
  
  ASSETS
  
  
  
  
  
  
  
  
  
   Total assets
  
  $
  -
  
  
  
  
  
  
  LIABILITIES AND
  STOCKHOLDER'S EQUITY
  
  
  
  
  
  
  
  
  
  Commitment and contingencies
  
  $
  -
  
  
  
  
  
  
  Stockholder's equity
  
  
  -
  
  Preferred stock, $.001 par value,
  
  
  
  
   authorized 20,000,000 shares,
  none issued
  
  
  
  
  Common stock, $.001 par value,
  
  
  
  
   authorized 100,000,000 shares,
  
  
  1,390
  
   1,390,000 issued and
  outstanding
  
  
  
  
  Additional paid in capital
  
  
  2,360
  
  Deficit accumulated during the
  development stage
  
  
  (3,750)
  
  
  
  
  
  
   Total stockholder's equity
  
  
  
  
  
  
  
  
  
   Total liabilities and stockholder's
  equity
  
  
  -
  
  
  
  
  
  
  
  
  $
  -
  
  
  The accompanying notes are an integral part of these
  financial statements
  
  F-1
  
  
  
  
  
  
  
  
  
  
  
  
  
  ILLUSION DIGITAL SYSTEMS, INC.
  (A Development Stage Enterprise)
  INTERIM AND UNAUDITED STATEMENTS OF
  OPERATIONS
  (Unaudited)
  
  Income
  For
  the
  six
  mont
  hs
  ended
  June
  30,
  2008
  For the
  three
  months
  ended
  June 30,
  2008
  and
  2007
  For
  the
  perio
  d of
  Febru
  ary
  16,
  2007
  (ince
  ption)
  throu
  gh
  June
  30,
  2007
  
  For the
  period
  16-Feb-
  07
  (Incepti
  on)
  through
  June
  30,
  2008
  
  
  
  
  
  
  
  
  Revenue
  -
  $
  -
  
  
  $
  -
  --
  
  Expenses
  -
  $
  -
  
  
  $
  -
  --
  
  General and Administrative
  -
  $
  -
  
  
  $
  (1,39
  0)
  (3,750)
  
  Total Expenses
  -
  $
  -
  
  
  $
  (1,39
  0)
  (3,750)
  
  
  
  
  
  
  
  
  
  
  Net loss per share (basic and
  diluted)
  (.00)
  $
  (.00)
  )
  
  $
  (139
  0)
  (3750
  )
  Weighted average shares
  outstanding (basic and diluted)
  1,390,
  000
  
  1,390,0
  00
  
  
  1,39
  0,00
  0
  1,390,0
  00
  
  
  The accompanying notes are an integral part of these
  financial statements
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  F-2
  
  
  
  ILLUSION DIGITAL SYSTEMS, INC.
  (A Development Stage Enterprise)
  INTERIM AND UNAUDITED STATEMENTS OF
  CHANGES IN STOCKHOLDER'S EQUITY
  For the period from February 16, 2007 (Inception) to
  June 30, 2008
  (Unaudited)
  
  , ,  ,  , Additional Paid-in Capital , Deficit accumulated ,
  Total
  , , Common Stock , , ,
  , , Shares , Amount , , ,
  Issuance of Common Stock , , , , , , ,
  Balance February 16, 2007, , 0, 0, 0, 0, , 0
  Shares issued in Lieu of expenses paid, February 16,
  2007  , , 1,390,000, $1,390.00, $0.00, $0.00, ,
  $1,390.00
  , , , , , , ,
  Contributed Capital for Services, , ,        , 2,360, , ,
  $2,360.00
  Net Loss , , , , , ($2,360.00), , ($3,750.00)
  Balance  June 30, 2008, , , , , , ,
  , , 1,390,000, $1,390.00, $2,360, ($3,750.00), , 0.00
  , , , , , , ,
  		 	 	Additional Paid-in Capital 	Deficit accumulated 	Total
  
  
  	The accompanying notes are an integral part
  of these financial statements
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  F-3
  
  
  ILLUSION DIGITAL SYSTEMS, INC.
  (A Development Stage Enterprise)
  INTERIM AND UNAUDITED STATEMENTS OF
  CASH FLOWS
  (Unaudited)
  
  
  For the
  Six
  months
  ended
  June
  30,
  2008
  For the
  period
  February
  16, 2007
  (Inception
  ) through
  June 30,
  2007
  
  For the
  period
  February
  16, 2007
  (Inception
  ) through
  June 30,
  2008
  
  
  
  
  
  
  Cash flows from
  operating activities
  $
  -
  --
  
  
  
  Net Loss
  $
  -
  (1390)
  
  $
  (3,750)
  Shares issued in lieu of
  expenses paid
  $
  -
  1390
  
  
  1390
  
  $
  -
  
  
  
  
  Contributed Capital for
  Services
  
  
  
  
  
  2,360
  
  $
  
  
  
  
  
   Cash flows used in
  operating activities
  
  -
  --
  
  
  -0-
  
  
  
  
  
  
  
  Net increase in cash
  
  
  --
  
  
  -
  
  
  
  
  
  
  
  Cash, beginning of
  period
  
  
  --
  
  
  -
  
  
  
  
  
  
  
  Cash, end of period
  
  
  --
  
  $
  -
  
  
  
  
  
  
  
  SUPPLEMENTAL
  DISCLOSURE OF CASH
  FLOW INFORMATION:
  
  
  --
  
  
  
  Cash paid during the
  period for:
  
  
  
  
  
  
  Interest
  
  
  
  
  
  -
  Income taxes
  
  
  
  
  
  -
  
  
  
  --
  
  
  
  
  
  
  --
  
  
  
  
  
  The accompanying notes are an integral part of these
  financial statements
  
  
  
  
  F-4
  
  
  
  
  ILLUSION DIGITAL SYSTEMS, INC.
  (A Development Stage Enterprise)
  NOTES TO INTERIM AND UNAUDITED
  FINANCIAL STATEMENTS
  June 30, 2008
  
  NOTE 1 - Organization and Significant Accounting
  Policies
  
  Nature of Operations
  
  Lexit Technology, Inc. ("the Company") was
  incorporated in the State of Colorado on February 16,
  2007 and has been inactive since inception. The
  company changed its name to Illusion Digital Systems,
  Inc on August 14, 2008. The company intends to serve
  as a vehicle to effect an asset acquisition, merger,
  exchange of capital stock or other business
  combination with a domestic or foreign business. It is
  currently in its development stage.
  
  As a blank check company, the Company's business is
  to pursue a business combination through acquisition,
  or merger with, an existing company. As of the date of
  the financial statements, the Company has identified
  an undisclosed potential target company for a possible
  business combination.  The Company is currently
  engaged in preliminary negotiations with the target
  company.  No assurances can be given that the
  Company will be successful in locating or negotiating
  with any target company.
  
  Since inception, the Company has been engaged in
  organizational efforts.
  
  General
  
  The accompanying unaudited financial statements
  include all adjustments of a normal and recurring
  nature, which, in the opinion of Company's
  management, are necessary to present fairly the
  Company's financial position as of June 30, 2008, the
  results of its operations for the three and six months
  ended June 30, 2008, and from the date of inception
  (February 16, 2007) through June 30, 2008, and cash
  flows for the six months ended June 30, 2008 and from
  the date of inception (February 16, 2007) through June
  30, 2008.
  
  Certain information and footnote disclosures normally
  included in financial statements prepared in
  accordance with generally accepted accounting
  principles have been omitted pursuant to the rules and
  regulations of the Securities and Exchange
  Commission.
  
  The results of operations and cash flows for the periods
  ended June 30, 2008 are not necessarily indicative of
  the results to be expected for the full year's operation.
  
  
  NOTE 2 - SUMMARY OF SIGNIFICANT
  ACCOUNTING POLICIES
  
  The accompanying financial statements are prepared
  in accordance with accounting principles generally
  accepted in the United States. Significant accounting
  policies follow:
  
  Loss per Common Share: Basic loss per share is
  calculated using the weighted-average number of
  common shares outstanding during each period.
  Diluted loss per share includes potentially dilutive
  securities such as outstanding options and warrants,
  using various methods such as the treasury stock or
  modified treasury stock method in the determination of
  dilutive shares outstanding during each period. The
  Company does not have any potentially dilutive
  instruments.
  F-5
  
  
  
  New Accounting Pronouncements:
  
  Management does not believe that any other recently
  issued, but not yet effective accounting
  pronouncements, if adopted, would have a material
  effect on the accompanying financial statements.
  
  NOTE 3 - GOING CONCERN
  
  The accompanying financial statements have been
  prepared assuming that the Company will continue as
  a going concern, which contemplates the recoverability
  of assets and the satisfaction of liabilities in the normal
  course of business.
  
  The Company has had no revenue and has incurred
  accumulated net losses from February 16, 2007
  (inception) through the period ended June 30, 2008 of
  $3,750. In addition, the Company's development
  activities since inception have been financially
  sustained through equity financing.
  
  The ability of the Company to continue as a going
  concern is dependent upon its ability to find a suitable
  acquisition/merger candidate, raise additional capital
  from the sale of common stock, and receive additional
  paid-in capital from its shareholder and, ultimately, the
  achievement of significant operating revenues. The
  accompanying financial statements do not include any
  adjustments that might be required should the
  Company be unable to recover the value of its assets or
  satisfy its liabilities
  
  NOTE 4 - SHAREHOLDER'S EQUITY
  
  Holders of shares of common stock shall be entitled to
  cast one vote for each common share held at all
  stockholder's meetings for all purposes, including the
  election of directors. The common stock does not have
  cumulative voting rights.
  
  The preferred stock of the Company shall be issued by
  the Board of Directors of the Company in one or more
  classes or one or more series within any class and such
  classes or series shall have such voting powers, full or
  limited, or no voting powers, and such designations,
  preferences, limitations or restrictions as the Board of
  Directors of the Company may determine, from time to
  time.
  
  No holder of shares of stock of any class shall be
  entitled as a matter of right to subscribe for or purchase
  or receive any part of any new or additional issue of
  shares of stock of any class, or of securities convertible
  into shares of stock of any class, whether now hereafter
  authorized or whether issued for money, for
  consideration other than money, or by way of
  dividend.
  
  Item 2.                      Management's Discussion and
  Analysis or Plan of Operation.
  
  Plan of Operation
  
  The Company will attempt to locate and negotiate with
  a business entity for the combination of that target
  company with the Company. The combination will
  normally take the form of a merger, stock-for-stock
  exchange or stock-for- assets exchange (the "business
  combination"). In most instances the target company
  will wish to structure the business combination to be
  within the definition of a tax-free reorganization under
  Section 351 or Section 368 of the Internal Revenue
  Code of 1986, as amended. As of the date of this
  report, the Company has identified an undisclosed
  potential target company for a possible business
  combination.  The Company is currently engaged in
  preliminary negotiations with the target company.  No
  assurances can be given that the Company will be
  successful in locating or negotiating with any target
  company.
  F-5
  
  The Company has not restricted its search for any
  specific kind of businesses, and it may acquire a
  business which is in its preliminary or development
  stage, which is already in operation, or in essentially
  any stage of its business life. It is impossible to predict
  the status of any business in which the Company may
  become engaged, in that such business may need to
  seek additional capital, may desire to have its shares
  publicly traded, or may seek other perceived
  advantages which the Company may offer.
  
  In implementing a structure for a particular business
  acquisition, the Company may become a party to a
  merger, consolidation, reorganization, joint venture, or
  licensing agreement with another corporation or entity.
  
  It is anticipated that any securities issued in any such
  business combination would be issued in reliance upon
  exemption from registration under applicable federal
  and state securities laws. In some circumstances,
  however, as a negotiated element of its transaction, the
  Company may agree to register all or a part of such
  securities immediately after the transaction is
  consummated or at specified times thereafter. If such
  registration occurs, it will be undertaken by the
  surviving entity after the Company has entered into an
  agreement for a business combination or has
  consummated a business combination. The issuance of
  additional securities and their potential sale into any
  trading market which may develop in the Company's
  securities may depress the market value of the
  Company's securities in the future if such a market
  develops, of which there is no assurance. However, if
  the Company cannot effect a non-cash acquisition, the
  Company may have to raise funds from a private
  offering of its securities under Rule 506 of Regulation
  D. There is no assurance the Company would obtain
  any such equity funding.
  
  The Company will participate in a business
  combination only after the negotiation and execution
  of appropriate agreements. Negotiations with a target
  company will likely focus on the percentage of the
  Company which the target company shareholders
  would acquire in exchange for their shareholdings.
  
  Although the terms of such agreements cannot be
  predicted, generally such agreements will require certain
  representations and warranties of the parties thereto,
  will specify certain events of default, will detail the
  terms of closing and the conditions which must be
  satisfied by the parties prior to and after such closing
  and will include miscellaneous other terms. Any merger
  or acquisition effected by the Company can be
  expected to have a significant dilutive effect on the
  percentage of shares held by the Company's
  shareholders at such time.
  
  Item 2. Management's Discussion and Analysis of
  Financial Conditions and Results of Operations Plan of
  Operation
  
  On February 20, 2008, the Registrant terminated the
  Asset Purchase Agreement with SmartWear
  Technologies, Inc, dated November 6, 2007, among the
  Registrant and SmartWear Technologies, Inc. The
  terms of the Agreement were previously disclosed by
  the Registrant on Form 8-K filed with the Securities and
  Exchange Commission on November 8, 2007.
  
  The termination of the agreement was authorized by
  Section 10.1 (a) of the Agreement "by mutual consent
  of Lexit and SWT". The Registrant and SmartWear
  Technologies mutually agreed to the termination of the
  Agreement.
  
  The Company has not restricted its search for any
  specific kind of businesses, and it may acquire a
  business which is in its preliminary or development
  stage, which is already in operation, or in essentially
  any stage of its business life. It is impossible to predict
  the status of any business in which the Company may
  become engaged, in that such business may need to
  seek additional capital, may desire to have its shares
  publicly traded, or may seek other perceived
  advantages which the Company may offer.
  
  In implementing a structure for a particular business
  acquisition, the Company may become a party to a
  merger, consolidation, reorganization, joint venture, or
  licensing agreement with another corporation or entity.
  
  It is anticipated that any securities issued in any such
  business combination would be issued in reliance upon
  exemption from registration under applicable federal
  and state securities laws. In some circumstances,
  however, as a negotiated element of its transaction, the
  Company may agree to register all or a part of such
  securities immediately after the transaction is
  consummated or at specified times thereafter. If such
  registration occurs, it will be undertaken by the
  surviving entity after the Company has entered into an
  agreement for a business combination or has
  consummated a business combination. The issuance of
  additional securities and their potential sale into any
  trading market which may develop in the Company's
  securities may depress the market value of the
  Company's securities in the future if such a market
  develops, of which there is no assurance. However, if
  the Company cannot effect a non-cash acquisition, the
  Company may have to raise funds from a private
  offering of its securities under Rule 506 of Regulation
  D. There is no assurance the Company would obtain
  any such equity funding.
  
  The Company will participate in a business
  combination only after the negotiation and execution
  of appropriate agreements. Negotiations with a target
  company will likely focus on the percentage of the
  Company which the target company shareholders
  would acquire in exchange for their shareholdings.
  Although the terms of such agreements cannot be
  predicted, generally such agreements will require certain
  representations and warranties of the parties thereto,
  will specify certain events of default, will detail the
  terms of closing and the conditions which must be
  satisfied by the parties prior to and after such closing
  and will include miscellaneous other terms. Any merger
  or acquisition effected by the Company can be
  expected to have a significant dilutive effect on the
  percentage of shares held by the Company's
  shareholders at such time.
  
  Results of Operation
  
  The Company has not conducted any active
  operations since inception, except for its efforts to
  locate suitable acquisition candidates. No revenue has
  been generated by the Company from February 16,
  2007 (inception) to June 30, 2008. It is unlikely the
  Company will have any revenues unless it is able to
  effect an acquisition or merger with an operating
  company, of which there can be no assurance.
  
  Liquidity and Capital Resources
  
  Expenses incurred since inception are primarily due to
  legal, accounting and other professional service fees.
  
  At June 30, 2008, the Company had no capital
  resources and will rely upon the issuance of common
  stock and additional capital contributions from
  shareholders to fund administrative expenses pending
  acquisition of an operating company.
  
  Management anticipates seeking out a target company
  through solicitation. Such solicitation may include
  newspaper or magazine advertisements, mailings and
  other distributions to law firms, accounting firms,
  investment bankers, financial advisors and similar
  persons, the use of one or more World Wide Web sites
  and similar methods. No estimate can be made as to
  the number of persons who will be contacted or
  solicited. Management may engage in such solicitation
  directly or may employ one or more other entities to
  conduct or assist in such solicitation. Management and
  its affiliates will pay referral fees to consultants and
  others who refer target businesses for mergers into
  public companies in which management and its
  affiliates have an interest. Payments are made if a
  business combination occurs, and may consist of cash
  or a portion of the stock in the Company retained by
  management and its affiliates, or both.
  
  The Company and/or shareholders will supervise the
  search for target companies as potential candidates for
  a business combination. The Company and/or
  shareholders may pay as their own expenses any costs
  incurred in supervising the search for a target company.
  The Company and/or shareholders may enter into
  agreements with other consultants to assist in locating a
  target company and may share stock received by it or
  cash resulting from the sale of its securities with such
  other consultants.
  
  Off-balance sheet arrangements
  
  The Company does not have any off-balance sheet
  arrangements that have or are reasonably likely to
  have a current or future effect on the Company's
  financial condition, changes in financial condition,
  revenues or expenses, results of operations, liquidity,
  capital expenditures or capital resources that is material
  to investors.
  
  Item 3.                      Controls and Procedures.
  
  The management of the Company, including the
  principal executive and financial officer, conducted an
  evaluation of the effectiveness of the design and
  operation of our disclosure controls and procedures as
  defined in Exchange Act Rule 13a-15(e) and 15d-15(e)
  as of December 31, 2007. Based on that evaluation,
  the principal executive and financial officer concluded
  that as of December 31,2007, our disclosure controls
  and procedures were effective at the reasonable
  assurance level to ensure (i) that information required
  to be disclosed by us in the reports we file or submit
  under the Exchange Act is recorded, processed,
  summarized and reported within the time periods
  specified in the SEC's rules and forms and (ii) that
  information required to be disclosed in reports that we
  file or submit under the Exchange Act is accumulated
  and communicated to our management including our
  chief executive and financial officer, to allow timely
  decisions regarding required disclosure.
  
  
  No change in our internal control over financial
  reporting (as defined in Rules 13a-15(f) and 15d-15(f)
  under the Exchange Act) occurred during the fiscal
  quarter ended June 30, 2008 that has materially
  affected, or is reasonably likely to materially affect, the
  Company's internal control over financial reporting.
  
  PART II - OTHER INFORMATION
  
  Item 1. Legal Proceedings.
  
  	None.
  
  Item 2. Changes in Securities.
  
         None
  
  Item 3. Defaults Upon Senior Securities.
  
         None
  
  Item 4. Submission of Matters to a Vote of
  Security Holders.
  	None
  
  Item 5. Other Information.
  
         None
  
  Item 6. Exhibits and Reports of Form 8-K.
  
         (a) Exhibits
  
  No.:
  
  Description:
  31.1
  
  Certification of Chief Executive Officer pursuant
  to Section 302 of Sarbanes Oxley Act of 2002
  
  
  
  31.2
  
  Certification of Chief Financial Officer pursuant
  to Section 302 of Sarbanes Oxley Act of 2002
  
  
  
  32.1
  
   Certification of Chief Executive Officer
  pursuant to Section 906 of Sarbanes Oxley Act
  of 2002
  
  
  
  32.2
  
  Certification of Chief Financial Officer pursuant
  to Section 302 of Sarbanes Oxley Act of 2002
  
  * Filed as an exhibit to the Company's Registration
  Statement on Form 10-SB, as filed with the Securities
  and Exchange Commission on March 24, 2007, and
  incorporated herein by this reference.
  
         (b) Reports of Form 8-K
  
         None
  
  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, there unto duly
  authorized.
  
  Dated: August 18,2008
  Illusion Digital Systems, Inc.
  By: /s/ AL Kennedy
  President
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  Exhibit 31.1
  
  CERTIFICATION OF
  CHIEF EXECUTIVE OFFICER
  PURSUANT TO
  18 U.S.C. SECTION 1350,
  AS ADOPTED PURSUANT TO SECTION 302 OF THE
  SARBANES-OXLEY ACT OF 2002
  
  
  I, AL Kennedy, certify that:
  
         1. 	I have reviewed this Form 10-Q of
  Illusion Digital Systems, Inc. (the "Company");
  
         2. 	Based on my knowledge, this report
  does not contain any untrue statement of a material
  fact or omit to state a material fact necessary to make
  the statements made, in light of the circumstances
  under which such statements were made, not
  misleading with respect to the period covered by this
  report;
  
         3. 	Based on my knowledge, the
  financial statements, and other financial information
  included in this report, fairly present in all material
  respects the financial condition, results of operations
  and cash flows of the Company as of, and for, the
  periods present in this report;
  
         4. 	The Company's other certifying
  officer(s) and I are responsible for establishing and
  maintaining disclosure controls and procedures (as
  defined in Exchange Act Rules 13a-15(e) and 15d-
  15(e)) and internal control over financial reporting (as
  defined in Exchange Act Rules 13a-15(f) and 15d-
  15(f)) for the Company and have:
  
         (a)           Designed such disclosure
  controls and procedures, or caused such
  disclosure controls and procedures to be
  designed under our supervision, to ensure that
  material information relating to the Company,
  including its consolidated subsidiaries, is made
  known to us by others within those entities,
  particularly during the period in which this
  report is being prepared;
  
         (b)           Designed such internal
  control over financial reporting, or caused
  such internal control over financial reporting
  to be designed under our supervision, to
  provide reasonable assurance regarding the
  reliability of financial reporting and the
  preparation of financial statements for
  external purposes in accordance with generally
  accepted accounting principles;
  
         (c)           Evaluated the effectiveness
  of the Company's disclosure controls and
  procedures and presented in this report our
  conclusions about the effectiveness of the
  disclosure controls and procedures, as of the
  end of the period covered by this report based
  on such evaluation; and
  
         (d) 	Disclosed in this report any
  change in the Company's internal control over
  financing reporting that occurred during the
  Company's most recent fiscal quarter (the
  Company's fourth fiscal quarter in the case of
  an annual report) that has materially affected,
  or is reasonably likely to materially affect, the
  Company's internal control over financial
  reporting; and
  
         5. 	The Company's other certifying
  officer(s) and I have disclosed, based on our most
  recent evaluation of internal control over financial
  reporting, to the Company's auditors and the audit
  committee of the Company's board of directors (or
  persons performing the equivalent functions):
  
         (a) 	All significant deficiencies
  and material weaknesses in the design or
  operation of internal control over financial
  reporting which are reasonable likely to
  adversely affect the Company's ability to
  record, process, summarize and report
  financial information; and
  
         (b) 	Any fraud, whether or not
  material, that involved management or other
  employees who have a significant role in the
  Company's internal control over financial
  reporting.
  
  
  Dated: August 18, 2008
  
  /s/ AL Kennedy
  AL Kennedy
  President
  (Principal Executive Officer)
  
  
  
  
  
  Exhibit 31.2
  CERTIFICATION OF
  CHIEF FINANCIAL OFFICER
  PURSUANT TO
  18 U.S.C. SECTION 1350,
  AS ADOPTED PURSUANT TO SECTION 302 OF THE
  SARBANES-OXLEY ACT OF 2002
  
  
  I, AL Kennedy, certify that:
  
         1. 	I have reviewed this Form 10-Q of
  Illusion Digital Systems, Inc. (the "Company");
  
         2. 	Based on my knowledge, this report
  does not contain any untrue statement of a material
  fact or omit to state a material fact necessary to make
  the statements made, in light of the circumstances
  under which such statements were made, not
  misleading with respect to the period covered by this
  report;
  
         3. 	Based on my knowledge, the
  financial statements, and other financial information
  included in this report, fairly present in all material
  respects the financial condition, results of operations
  and cash flows of the Company as of, and for, the
  periods present in this report;
  
  	4. 	The Company's other certifying
  officer(s) and I are responsible for establishing and
  maintaining disclosure controls and procedures (as
  defined in Exchange Act Rules 13a-15(e) and 15d-
  15(e)) and internal control over financial reporting (as
  defined in Exchange Act Rules 13a-15(f) and 15d-
  15(f)) for the Company and have:
  
         (a)           Designed such disclosure
  controls and procedures, or caused such
  disclosure controls and procedures to be
  designed under our supervision, to ensure that
  material information relating to the Company,
  including its consolidated subsidiaries, is made
  known to us by others within those entities,
  particularly during the period in which this
  report is being prepared;
  
         (b)           Designed such internal
  control over financial reporting, or caused
  such internal control over financial reporting
  to be designed under our supervision, to
  provide reasonable assurance regarding the
  reliability of financial reporting and the
  preparation of financial statements for
  external purposes in accordance with generally
  accepted accounting principles;
  
         (c)           Evaluated the effectiveness
  of the Company's disclosure controls and
  procedures and presented in this report our
  conclusions about the effectiveness of the
  disclosure controls and procedures, as of the
  end of the period covered by this report based
  on such evaluation; and
  
         (d) Disclosed in this report any
  change in the Company's internal control over
  financing reporting that occurred during the
  Company's most recent fiscal quarter (the
  Company's fourth fiscal quarter in the case of
  an annual report) that has materially affected,
  or is reasonably likely to materially affect, the
  Company's internal control over financial
  reporting; and
  
         5. 	The Company's other certifying
  officer(s) and I have disclosed, based on our most
  recent evaluation of internal control over financial
  reporting, to the Company's auditors and the audit
  committee of the Company's board of directors (or
  persons performing the equivalent functions):
  
         (a) 	All significant deficiencies
  and material weaknesses in the design or
  operation of internal control over financial
  reporting which are reasonable likely to
  adversely affect the Company's ability to
  record, process, summarize and report
  financial information; and
  
  	(b) 	Any fraud, whether or not
  material, that involved management or other
  employees who have a significant role in the
  Company's internal control over financial
  reporting.
  
  
  Dated: August 18, 2008
  
  /s/ AL Kennedy
  AL Kennedy
  President
  (Principal Financial Officer)
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  Exhibit 32.1
  
  CERTIFICATION OF CHIEF EXECUTIVE OFFICER
  PURSUANT TO 18 U.S.C. SECTION 1350
  
         In connection with the accompanying
  Quarterly Report on Form 10-Q of Illusion Digital
  Systems, Inc. (the "Company") for the quarter ending
  June 30, 2008, I, AL Kennedy, President of the
  Company hereby certify pursuant to 18 U.S.C. Section
  1350, as adopted pursuant to Section 906 of the
  Sarbanes-Oxley Act of 2002, to the best of my
  knowledge and belief, that:
  
         1. 	Such Quarterly Report on
  Form 10-Q for the quarter ending June 30,
  2008, fully complies with the requirements of
  section 13(a) or 15(d) of the Securities
  Exchange Act of 1934; and
  
         2. 	The information contained
  in such Quarterly Report on Form 10-Q for the
  quarter ending June 30, 2008, fairly presents,
  in all material respects, the financial condition
  and results of operations of the Company.
  
  
  Dated: August 18, 2008
  
  /s/ AL Kennedy
  AL Kennedy
  President
  (Principal Executive Officer)
  
  
  
  Exhibit 32.2
  
  CERTIFICATION OF CHIEF FINANCIAL OFFICER
  PURSUANT TO 18 U.S.C. SECTION 1350
  
         In connection with the accompanying
  Quarterly Report on Form 10-Q of Illusion Digital
  Systems, Inc. (the "Company") for the quarter ending
  June 30, 2008, I, AL Kennedy, President of the
  Company hereby certify pursuant to 18 U.S.C. Section
  1350, as adopted pursuant to Section 906 of the
  Sarbanes-Oxley Act of 2002, to the best of my
  knowledge and belief, that:
  
         1. 	Such Quarterly Report on
  Form 10-Q for the quarter ending June 30,
  2008, fully complies with the requirements of
  section 13(a) or 15(d) of the Securities
  Exchange Act of 1934; and
  
         2. 	The information contained
  in such Quarterly Report on Form 10-Q for the
  quarter ending June 30, 2008, fairly presents,
  in all material respects, the financial condition
  and results of operations of the Company.
  
  
  Dated: August 18, 2008
  
  /s/ AL Kennedy
  AL Kennedy
  President
  (Principal Financial Officer)
metadata_documents: [{"type": "10-Q", "sequence": "1", "filename": "lexit63008q.txt", "secsgml_size_bytes": 31837}, {"type": "10-Q", "sequence": "3", "filename": "lexit63008q.pdf", "secsgml_size_bytes": 137015}]
metadata_filer: {"company-data": {"conformed-name": "ILLUSION DIGITAL SYSTEMS, INC.", "cik": "0001392544", "assigned-sic": "6770", "irs-number": "208298560", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "000-52503", "film-number": "081028404"}, "business-address": {"street1": "9595 WILSHIRE BLVD.", "street2": "SUITE 900", "city": "BEVERLY HILLS", "state": "CA", "zip": "92012", "phone": "877-565-0515"}, "mail-address": {"street1": "9595 WILSHIRE BLVD.", "street2": "SUITE 900", "city": "BEVERLY HILLS", "state": "CA", "zip": "92012"}, "former-company": {"former-conformed-name": "LEXIT TECHNOLOGY, INC.", "date-changed": "20070309"}}
text: U.S. SECURITIES AND EXCHANGE COMMISSION
  Washington, D.C. 20549
  
  FORM 10-QSB
  
  [X] QUARTERLY REPORT PURSUANT TO SECTION
  13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
  OF 1934
  
  For the quarterly period ended June 30, 2008
  
  [   ] TRANSITION REPORT PURSUANT TO SECTION
  13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
  OF 1934
  
  For the transition period from
  
  Commission File No. 000-52503
  
  Illusion Digital Systems, Inc.
  (Name of Small Business Issuer in its charter)
  
  Colorado
  -------------------
  (State or other jurisdiction
  of
  (I.R.S. employer
  incorporation or formation)
  identification number)
  
  9595 Wilshire Blvd., Suite 900
  Beverly Hills, CA 92012
   (Address of principal executive offices) (Zip
  Code)
  
  Issuer's telephone number: (877) 565-0515
  Issuer's facsimile number: (302) 861-3738
  
  Illusion Digital Systems, Inc.
  7486 La Jolla Blvd., Suite 479
  La Jolla, CA 92037
   (Former name, former address and former
  fiscal year, if changed since last report)
  
  Check whether the issuer (1) filed all reports required to
  be filed by Section 13 or 15(d) of the Exchange Act
  during the preceding 12 months (or for such shorter
  period that the issuer was required to file such reports),
  and (2) has been subject to such filing requirements for
  the past 90 days. Yes [X] No [   ]
  
  Indicate by check mark whether the registrant is a shell
  company (as defined in Rule 12b-2 of the Exchange
  Act). Yes [  ] No [X]
  
  State the number of shares outstanding of each of the
  issuer's classes of common equity, as of August 18,
  2008: 1,390,000 shares of common stock.
  
  ILLUSION DIGITAL SYSTEMS, INC.
  
  FINANCIAL STATEMENTS
  (Unaudited)
  
  June 30, 2008
  
  ILLUSION DIGITAL SYSTEMS, INC.
  (A Development Stage Enterprise)
  INDEX TO INTERIM AND UNAUDITED FINANCIAL
  STATEMENTS
  June 30, 2008
  (Unaudited)
  
  Page
  
  Financial Statements
  
  Balance Sheet
  F-1
  
  Statements of Operations
  F-2
  
  Statements of Changes in Stockholder's Equity
  F-3
  
  Statements of Cash Flows
  F-4
  
  Notes to Financial Statements
  F-5 -
  F-6
  
  ILLUSION DIGITAL SYSTEMS, INC.
  (A Development Stage Enterprise)
  INTERIM AND UNAUDITED BALANCE SHEET
  JUNE 30, 2008
  
  June 30,
  2008
  
  (Unaudited)
  
  ASSETS
  
   Total assets
  
  $
  -
  
  LIABILITIES AND
  STOCKHOLDER'S EQUITY
  
  Commitment and contingencies
  
  $
  -
  
  Stockholder's equity
  
  -
  
  Preferred stock, $.001 par value,
  
   authorized 20,000,000 shares,
  none issued
  
  Common stock, $.001 par value,
  
   authorized 100,000,000 shares,
  
  1,390
  
   1,390,000 issued and
  outstanding
  
  Additional paid in capital
  
  2,360
  
  Deficit accumulated during the
  development stage
  
  (3,750)
  
   Total stockholder's equity
  
   Total liabilities and stockholder's
  equity
  
  -
  
  $
  -
  
  The accompanying notes are an integral part of these
  financial statements
  
  F-1
  
  ILLUSION DIGITAL SYSTEMS, INC.
  (A Development Stage Enterprise)
  INTERIM AND UNAUDITED STATEMENTS OF
  OPERATIONS
  (Unaudited)
  
  Income
  For
  the
  six
  mont
  hs
  ended
  June
  30,
  2008
  For the
  three
  months
  ended
  June 30,
  2008
  and
  2007
  For
  the
  perio
  d of
  Febru
  ary
  16,
  2007
  (ince
  ption)
  throu
  gh
  June
  30,
  2007
  
  For the
  period
  16-Feb-
  07
  (Incepti
  on)
  through
  June
  30,
  2008
  
  Revenue
  -
  $
  -
  
  $
  -
  --
  
  Expenses
  -
  $
  -
  
  $
  -
  --
  
  General and Administrative
  -
  $
  -
  
  $
  (1,39
  0)
  (3,750)
  
  Total Expenses
  -
  $
  -
  
  $
  (1,39
  0)
  (3,750)
  
  Net loss per share (basic and
  diluted)
  (.00)
  $
  (.00)
  )
  
  $
  (139
  0)
  (3750
  )
  Weighted average shares
  outstanding (basic and diluted)
  1,390,
  000
  
  1,390,0
  00
  
  1,39
  0,00
  0
  1,390,0
  00
  
  The accompanying notes are an integral part of these
  financial statements
  
  F-2
  
  ILLUSION DIGITAL SYSTEMS, INC.
  (A Development Stage Enterprise)
  INTERIM AND UNAUDITED STATEMENTS OF
  CHANGES IN STOCKHOLDER'S EQUITY
  For the period from February 16, 2007 (Inception) to
  June 30, 2008
  (Unaudited)
  
  , ,  ,  , Additional Paid-in Capital , Deficit accumulated ,
  Total
  , , Common Stock , , ,
  , , Shares , Amount , , ,
  Issuance of Common Stock , , , , , , ,
  Balance February 16, 2007, , 0, 0, 0, 0, , 0
  Shares issued in Lieu of expenses paid, February 16,
  2007  , , 1,390,000, $1,390.00, $0.00, $0.00, ,
  $1,390.00
  , , , , , , ,
  Contributed Capital for Services, , ,        , 2,360, , ,
  $2,360.00
  Net Loss , , , , , ($2,360.00), , ($3,750.00)
  Balance  June 30, 2008, , , , , , ,
  , , 1,390,000, $1,390.00, $2,360, ($3,750.00), , 0.00
  , , , , , , ,
  		 	 	Additional Paid-in Capital 	Deficit accumulated 	Total
  
  	The accompanying notes are an integral part
  of these financial statements
  
  F-3
  
  ILLUSION DIGITAL SYSTEMS, INC.
  (A Development Stage Enterprise)
  INTERIM AND UNAUDITED STATEMENTS OF
  CASH FLOWS
  (Unaudited)
  
  For the
  Six
  months
  ended
  June
  30,
  2008
  For the
  period
  February
  16, 2007
  (Inception
  ) through
  June 30,
  2007
  
  For the
  period
  February
  16, 2007
  (Inception
  ) through
  June 30,
  2008
  
  Cash flows from
  operating activities
  $
  -
  --
  
  Net Loss
  $
  -
  (1390)
  
  $
  (3,750)
  Shares issued in lieu of
  expenses paid
  $
  -
  1390
  
  1390
  
  $
  -
  
  Contributed Capital for
  Services
  
  2,360
  
  $
  
   Cash flows used in
  operating activities
  
  -
  --
  
  -0-
  
  Net increase in cash
  
  --
  
  -
  
  Cash, beginning of
  period
  
  --
  
  -
  
  Cash, end of period
  
  --
  
  $
  -
  
  SUPPLEMENTAL
  DISCLOSURE OF CASH
  FLOW INFORMATION:
  
  --
  
  Cash paid during the
  period for:
  
  Interest
  
  -
  Income taxes
  
  -
  
  --
  
  --
  
  The accompanying notes are an integral part of these
  financial statements
  
  F-4
  
  ILLUSION DIGITAL SYSTEMS, INC.
  (A Development Stage Enterprise)
  NOTES TO INTERIM AND UNAUDITED
  FINANCIAL STATEMENTS
  June 30, 2008
  
  NOTE 1 - Organization and Significant Accounting
  Policies
  
  Nature of Operations
  
  Lexit Technology, Inc. ("the Company") was
  incorporated in the State of Colorado on February 16,
  2007 and has been inactive since inception. The
  company changed its name to Illusion Digital Systems,
  Inc on August 14, 2008. The company intends to serve
  as a vehicle to effect an asset acquisition, merger,
  exchange of capital stock or other business
  combination with a domestic or foreign business. It is
  currently in its development stage.
  
  As a blank check company, the Company's business is
  to pursue a business combination through acquisition,
  or merger with, an existing company. As of the date of
  the financial statements, the Company has identified
  an undisclosed potential target company for a possible
  business combination.  The Company is currently
  engaged in preliminary negotiations with the target
  company.  No assurances can be given that the
  Company will be successful in locating or negotiating
  with any target company.
  
  Since inception, the Company has been engaged in
  organizational efforts.
  
  General
  
  The accompanying unaudited financial statements
  include all adjustments of a normal and recurring
  nature, which, in the opinion of Company's
  management, are necessary to present fairly the
  Company's financial position as of June 30, 2008, the
  results of its operations for the three and six months
  ended June 30, 2008, and from the date of inception
  (February 16, 2007) through June 30, 2008, and cash
  flows for the six months ended June 30, 2008 and from
  the date of inception (February 16, 2007) through June
  30, 2008.
  
  Certain information and footnote disclosures normally
  included in financial statements prepared in
  accordance with generally accepted accounting
  principles have been omitted pursuant to the rules and
  regulations of the Securities and Exchange
  Commission.
  
  The results of operations and cash flows for the periods
  ended June 30, 2008 are not necessarily indicative of
  the results to be expected for the full year's operation.
  
  NOTE 2 - SUMMARY OF SIGNIFICANT
  ACCOUNTING POLICIES
  
  The accompanying financial statements are prepared
  in accordance with accounting principles generally
  accepted in the United States. Significant accounting
  policies follow:
  
  Loss per Common Share: Basic loss per share is
  calculated using the weighted-average number of
  common shares outstanding during each period.
  Diluted loss per share includes potentially dilutive
  securities such as outstanding options and warrants,
  using various methods such as the treasury stock or
  modified treasury stock method in the determination of
  dilutive shares outstanding during each period. The
  Company does not have any potentially dilutive
  instruments.
  F-5
  
  New Accounting Pronouncements:
  
  Management does not believe that any other recently
  issued, but not yet effective accounting
  pronouncements, if adopted, would have a material
  effect on the accompanying financial statements.
  
  NOTE 3 - GOING CONCERN
  
  The accompanying financial statements have been
  prepared assuming that the Company will continue as
  a going concern, which contemplates the recoverability
  of assets and the satisfaction of liabilities in the normal
  course of business.
  
  The Company has had no revenue and has incurred
  accumulated net losses from February 16, 2007
  (inception) through the period ended June 30, 2008 of
  $3,750. In addition, the Company's development
  activities since inception have been financially
  sustained through equity financing.
  
  The ability of the Company to continue as a going
  concern is dependent upon its ability to find a suitable
  acquisition/merger candidate, raise additional capital
  from the sale of common stock, and receive additional
  paid-in capital from its shareholder and, ultimately, the
  achievement of significant operating revenues. The
  accompanying financial statements do not include any
  adjustments that might be required should the
  Company be unable to recover the value of its assets or
  satisfy its liabilities
  
  NOTE 4 - SHAREHOLDER'S EQUITY
  
  Holders of shares of common stock shall be entitled to
  cast one vote for each common share held at all
  stockholder's meetings for all purposes, including the
  election of directors. The common stock does not have
  cumulative voting rights.
  
  The preferred stock of the Company shall be issued by
  the Board of Directors of the Company in one or more
  classes or one or more series within any class and such
  classes or series shall have such voting powers, full or
  limited, or no voting powers, and such designations,
  preferences, limitations or restrictions as the Board of
  Directors of the Company may determine, from time to
  time.
  
  No holder of shares of stock of any class shall be
  entitled as a matter of right to subscribe for or purchase
  or receive any part of any new or additional issue of
  shares of stock of any class, or of securities convertible
  into shares of stock of any class, whether now hereafter
  authorized or whether issued for money, for
  consideration other than money, or by way of
  dividend.
  
  Item 2.                      Management's Discussion and
  Analysis or Plan of Operation.
  
  Plan of Operation
  
  The Company will attempt to locate and negotiate with
  a business entity for the combination of that target
  company with the Company. The combination will
  normally take the form of a merger, stock-for-stock
  exchange or stock-for- assets exchange (the "business
  combination"). In most instances the target company
  will wish to structure the business combination to be
  within the definition of a tax-free reorganization under
  Section 351 or Section 368 of the Internal Revenue
  Code of 1986, as amended. As of the date of this
  report, the Company has identified an undisclosed
  potential target company for a possible business
  combination.  The Company is currently engaged in
  preliminary negotiations with the target company.  No
  assurances can be given that the Company will be
  successful in locating or negotiating with any target
  company.
  F-5
  
  The Company has not restricted its search for any
  specific kind of businesses, and it may acquire a
  business which is in its preliminary or development
  stage, which is already in operation, or in essentially
  any stage of its business life. It is impossible to predict
  the status of any business in which the Company may
  become engaged, in that such business may need to
  seek additional capital, may desire to have its shares
  publicly traded, or may seek other perceived
  advantages which the Company may offer.
  
  In implementing a structure for a particular business
  acquisition, the Company may become a party to a
  merger, consolidation, reorganization, joint venture, or
  licensing agreement with another corporation or entity.
  
  It is anticipated that any securities issued in any such
  business combination would be issued in reliance upon
  exemption from registration under applicable federal
  and state securities laws. In some circumstances,
  however, as a negotiated element of its transaction, the
  Company may agree to register all or a part of such
  securities immediately after the transaction is
  consummated or at specified times thereafter. If such
  registration occurs, it will be undertaken by the
  surviving entity after the Company has entered into an
  agreement for a business combination or has
  consummated a business combination. The issuance of
  additional securities and their potential sale into any
  trading market which may develop in the Company's
  securities may depress the market value of the
  Company's securities in the future if such a market
  develops, of which there is no assurance. However, if
  the Company cannot effect a non-cash acquisition, the
  Company may have to raise funds from a private
  offering of its securities under Rule 506 of Regulation
  D. There is no assurance the Company would obtain
  any such equity funding.
  
  The Company will participate in a business
  combination only after the negotiation and execution
  of appropriate agreements. Negotiations with a target
  company will likely focus on the percentage of the
  Company which the target company shareholders
  would acquire in exchange for their shareholdings.
  
  Although the terms of such agreements cannot be
  predicted, generally such agreements will require certain
  representations and warranties of the parties thereto,
  will specify certain events of default, will detail the
  terms of closing and the conditions which must be
  satisfied by the parties prior to and after such closing
  and will include miscellaneous other terms. Any merger
  or acquisition effected by the Company can be
  expected to have a significant dilutive effect on the
  percentage of shares held by the Company's
  shareholders at such time.
  
  Item 2. Management's Discussion and Analysis of
  Financial Conditions and Results of Operations Plan of
  Operation
  
  On February 20, 2008, the Registrant terminated the
  Asset Purchase Agreement with SmartWear
  Technologies, Inc, dated November 6, 2007, among the
  Registrant and SmartWear Technologies, Inc. The
  terms of the Agreement were previously disclosed by
  the Registrant on Form 8-K filed with the Securities and
  Exchange Commission on November 8, 2007.
  
  The termination of the agreement was authorized by
  Section 10.1 (a) of the Agreement "by mutual consent
  of Lexit and SWT". The Registrant and SmartWear
  Technologies mutually agreed to the termination of the
  Agreement.
  
  The Company has not restricted its search for any
  specific kind of businesses, and it may acquire a
  business which is in its preliminary or development
  stage, which is already in operation, or in essentially
  any stage of its business life. It is impossible to predict
  the status of any business in which the Company may
  become engaged, in that such business may need to
  seek additional capital, may desire to have its shares
  publicly traded, or may seek other perceived
  advantages which the Company may offer.
  
  In implementing a structure for a particular business
  acquisition, the Company may become a party to a
  merger, consolidation, reorganization, joint venture, or
  licensing agreement with another corporation or entity.
  
  It is anticipated that any securities issued in any such
  business combination would be issued in reliance upon
  exemption from registration under applicable federal
  and state securities laws. In some circumstances,
  however, as a negotiated element of its transaction, the
  Company may agree to register all or a part of such
  securities immediately after the transaction is
  consummated or at specified times thereafter. If such
  registration occurs, it will be undertaken by the
  surviving entity after the Company has entered into an
  agreement for a business combination or has
  consummated a business combination. The issuance of
  additional securities and their potential sale into any
  trading market which may develop in the Company's
  securities may depress the market value of the
  Company's securities in the future if such a market
  develops, of which there is no assurance. However, if
  the Company cannot effect a non-cash acquisition, the
  Company may have to raise funds from a private
  offering of its securities under Rule 506 of Regulation
  D. There is no assurance the Company would obtain
  any such equity funding.
  
  The Company will participate in a business
  combination only after the negotiation and execution
  of appropriate agreements. Negotiations with a target
  company will likely focus on the percentage of the
  Company which the target company shareholders
  would acquire in exchange for their shareholdings.
  Although the terms of such agreements cannot be
  predicted, generally such agreements will require certain
  representations and warranties of the parties thereto,
  will specify certain events of default, will detail the
  terms of closing and the conditions which must be
  satisfied by the parties prior to and after such closing
  and will include miscellaneous other terms. Any merger
  or acquisition effected by the Company can be
  expected to have a significant dilutive effect on the
  percentage of shares held by the Company's
  shareholders at such time.
  
  Results of Operation
  
  The Company has not conducted any active
  operations since inception, except for its efforts to
  locate suitable acquisition candidates. No revenue has
  been generated by the Company from February 16,
  2007 (inception) to June 30, 2008. It is unlikely the
  Company will have any revenues unless it is able to
  effect an acquisition or merger with an operating
  company, of which there can be no assurance.
  
  Liquidity and Capital Resources
  
  Expenses incurred since inception are primarily due to
  legal, accounting and other professional service fees.
  
  At June 30, 2008, the Company had no capital
  resources and will rely upon the issuance of common
  stock and additional capital contributions from
  shareholders to fund administrative expenses pending
  acquisition of an operating company.
  
  Management anticipates seeking out a target company
  through solicitation. Such solicitation may include
  newspaper or magazine advertisements, mailings and
  other distributions to law firms, accounting firms,
  investment bankers, financial advisors and similar
  persons, the use of one or more World Wide Web sites
  and similar methods. No estimate can be made as to
  the number of persons who will be contacted or
  solicited. Management may engage in such solicitation
  directly or may employ one or more other entities to
  conduct or assist in such solicitation. Management and
  its affiliates will pay referral fees to consultants and
  others who refer target businesses for mergers into
  public companies in which management and its
  affiliates have an interest. Payments are made if a
  business combination occurs, and may consist of cash
  or a portion of the stock in the Company retained by
  management and its affiliates, or both.
  
  The Company and/or shareholders will supervise the
  search for target companies as potential candidates for
  a business combination. The Company and/or
  shareholders may pay as their own expenses any costs
  incurred in supervising the search for a target company.
  The Company and/or shareholders may enter into
  agreements with other consultants to assist in locating a
  target company and may share stock received by it or
  cash resulting from the sale of its securities with such
  other consultants.
  
  Off-balance sheet arrangements
  
  The Company does not have any off-balance sheet
  arrangements that have or are reasonably likely to
  have a current or future effect on the Company's
  financial condition, changes in financial condition,
  revenues or expenses, results of operations, liquidity,
  capital expenditures or capital resources that is material
  to investors.
  
  Item 3.                      Controls and Procedures.
  
  The management of the Company, including the
  principal executive and financial officer, conducted an
  evaluation of the effectiveness of the design and
  operation of our disclosure controls and procedures as
  defined in Exchange Act Rule 13a-15(e) and 15d-15(e)
  as of December 31, 2007. Based on that evaluation,
  the principal executive and financial officer concluded
  that as of December 31,2007, our disclosure controls
  and procedures were effective at the reasonable
  assurance level to ensure (i) that information required
  to be disclosed by us in the reports we file or submit
  under the Exchange Act is recorded, processed,
  summarized and reported within the time periods
  specified in the SEC's rules and forms and (ii) that
  information required to be disclosed in reports that we
  file or submit under the Exchange Act is accumulated
  and communicated to our management including our
  chief executive and financial officer, to allow timely
  decisions regarding required disclosure.
  
  No change in our internal control over financial
  reporting (as defined in Rules 13a-15(f) and 15d-15(f)
  under the Exchange Act) occurred during the fiscal
  quarter ended June 30, 2008 that has materially
  affected, or is reasonably likely to materially affect, the
  Company's internal control over financial reporting.
  
  PART II - OTHER INFORMATION
  
  Item 1. Legal Proceedings.
  
  	None.
  
  Item 2. Changes in Securities.
  
         None
  
  Item 3. Defaults Upon Senior Securities.
  
         None
  
  Item 4. Submission of Matters to a Vote of
  Security Holders.
  	None
  
  Item 5. Other Information.
  
         None
  
  Item 6. Exhibits and Reports of Form 8-K.
  
         (a) Exhibits
  
  No.:
  
  Description:
  31.1
  
  Certification of Chief Executive Officer pursuant
  to Section 302 of Sarbanes Oxley Act of 2002
  
  31.2
  
  Certification of Chief Financial Officer pursuant
  to Section 302 of Sarbanes Oxley Act of 2002
  
  32.1
  
   Certification of Chief Executive Officer
  pursuant to Section 906 of Sarbanes Oxley Act
  of 2002
  
  32.2
  
  Certification of Chief Financial Officer pursuant
  to Section 302 of Sarbanes Oxley Act of 2002
  
  * Filed as an exhibit to the Company's Registration
  Statement on Form 10-SB, as filed with the Securities
  and Exchange Commission on March 24, 2007, and
  incorporated herein by this reference.
  
         (b) Reports of Form 8-K
  
         None
  
  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, there unto duly
  authorized.
  
  Dated: August 18,2008
  Illusion Digital Systems, Inc.
  By: /s/ AL Kennedy
  President
  
  Exhibit 31.1
  
  CERTIFICATION OF
  CHIEF EXECUTIVE OFFICER
  PURSUANT TO
  18 U.S.C. SECTION 1350,
  AS ADOPTED PURSUANT TO SECTION 302 OF THE
  SARBANES-OXLEY ACT OF 2002
  
  I, AL Kennedy, certify that:
  
         1. 	I have reviewed this Form 10-Q of
  Illusion Digital Systems, Inc. (the "Company");
  
         2. 	Based on my knowledge, this report
  does not contain any untrue statement of a material
  fact or omit to state a material fact necessary to make
  the statements made, in light of the circumstances
  under which such statements were made, not
  misleading with respect to the period covered by this
  report;
  
         3. 	Based on my knowledge, the
  financial statements, and other financial information
  included in this report, fairly present in all material
  respects the financial condition, results of operations
  and cash flows of the Company as of, and for, the
  periods present in this report;
  
         4. 	The Company's other certifying
  officer(s) and I are responsible for establishing and
  maintaining disclosure controls and procedures (as
  defined in Exchange Act Rules 13a-15(e) and 15d-
  15(e)) and internal control over financial reporting (as
  defined in Exchange Act Rules 13a-15(f) and 15d-
  15(f)) for the Company and have:
  
         (a)           Designed such disclosure
  controls and procedures, or caused such
  disclosure controls and procedures to be
  designed under our supervision, to ensure that
  material information relating to the Company,
  including its consolidated subsidiaries, is made
  known to us by others within those entities,
  particularly during the period in which this
  report is being prepared;
  
         (b)           Designed such internal
  control over financial reporting, or caused
  such internal control over financial reporting
  to be designed under our supervision, to
  provide reasonable assurance regarding the
  reliability of financial reporting and the
  preparation of financial statements for
  external purposes in accordance with generally
  accepted accounting principles;
  
         (c)           Evaluated the effectiveness
  of the Company's disclosure controls and
  procedures and presented in this report our
  conclusions about the effectiveness of the
  disclosure controls and procedures, as of the
  end of the period covered by this report based
  on such evaluation; and
  
         (d) 	Disclosed in this report any
  change in the Company's internal control over
  financing reporting that occurred during the
  Company's most recent fiscal quarter (the
  Company's fourth fiscal quarter in the case of
  an annual report) that has materially affected,
  or is reasonably likely to materially affect, the
  Company's internal control over financial
  reporting; and
  
         5. 	The Company's other certifying
  officer(s) and I have disclosed, based on our most
  recent evaluation of internal control over financial
  reporting, to the Company's auditors and the audit
  committee of the Company's board of directors (or
  persons performing the equivalent functions):
  
         (a) 	All significant deficiencies
  and material weaknesses in the design or
  operation of internal control over financial
  reporting which are reasonable likely to
  adversely affect the Company's ability to
  record, process, summarize and report
  financial information; and
  
         (b) 	Any fraud, whether or not
  material, that involved management or other
  employees who have a significant role in the
  Company's internal control over financial
  reporting.
  
  Dated: August 18, 2008
  
  /s/ AL Kennedy
  AL Kennedy
  President
  (Principal Executive Officer)
  
  Exhibit 31.2
  CERTIFICATION OF
  CHIEF FINANCIAL OFFICER
  PURSUANT TO
  18 U.S.C. SECTION 1350,
  AS ADOPTED PURSUANT TO SECTION 302 OF THE
  SARBANES-OXLEY ACT OF 2002
  
  I, AL Kennedy, certify that:
  
         1. 	I have reviewed this Form 10-Q of
  Illusion Digital Systems, Inc. (the "Company");
  
         2. 	Based on my knowledge, this report
  does not contain any untrue statement of a material
  fact or omit to state a material fact necessary to make
  the statements made, in light of the circumstances
  under which such statements were made, not
  misleading with respect to the period covered by this
  report;
  
         3. 	Based on my knowledge, the
  financial statements, and other financial information
  included in this report, fairly present in all material
  respects the financial condition, results of operations
  and cash flows of the Company as of, and for, the
  periods present in this report;
  
  	4. 	The Company's other certifying
  officer(s) and I are responsible for establishing and
  maintaining disclosure controls and procedures (as
  defined in Exchange Act Rules 13a-15(e) and 15d-
  15(e)) and internal control over financial reporting (as
  defined in Exchange Act Rules 13a-15(f) and 15d-
  15(f)) for the Company and have:
  
         (a)           Designed such disclosure
  controls and procedures, or caused such
  disclosure controls and procedures to be
  designed under our supervision, to ensure that
  material information relating to the Company,
  including its consolidated subsidiaries, is made
  known to us by others within those entities,
  particularly during the period in which this
  report is being prepared;
  
         (b)           Designed such internal
  control over financial reporting, or caused
  such internal control over financial reporting
  to be designed under our supervision, to
  provide reasonable assurance regarding the
  reliability of financial reporting and the
  preparation of financial statements for
  external purposes in accordance with generally
  accepted accounting principles;
  
         (c)           Evaluated the effectiveness
  of the Company's disclosure controls and
  procedures and presented in this report our
  conclusions about the effectiveness of the
  disclosure controls and procedures, as of the
  end of the period covered by this report based
  on such evaluation; and
  
         (d) Disclosed in this report any
  change in the Company's internal control over
  financing reporting that occurred during the
  Company's most recent fiscal quarter (the
  Company's fourth fiscal quarter in the case of
  an annual report) that has materially affected,
  or is reasonably likely to materially affect, the
  Company's internal control over financial
  reporting; and
  
         5. 	The Company's other certifying
  officer(s) and I have disclosed, based on our most
  recent evaluation of internal control over financial
  reporting, to the Company's auditors and the audit
  committee of the Company's board of directors (or
  persons performing the equivalent functions):
  
         (a) 	All significant deficiencies
  and material weaknesses in the design or
  operation of internal control over financial
  reporting which are reasonable likely to
  adversely affect the Company's ability to
  record, process, summarize and report
  financial information; and
  
  	(b) 	Any fraud, whether or not
  material, that involved management or other
  employees who have a significant role in the
  Company's internal control over financial
  reporting.
  
  Dated: August 18, 2008
  
  /s/ AL Kennedy
  AL Kennedy
  President
  (Principal Financial Officer)
  
  Exhibit 32.1
  
  CERTIFICATION OF CHIEF EXECUTIVE OFFICER
  PURSUANT TO 18 U.S.C. SECTION 1350
  
         In connection with the accompanying
  Quarterly Report on Form 10-Q of Illusion Digital
  Systems, Inc. (the "Company") for the quarter ending
  June 30, 2008, I, AL Kennedy, President of the
  Company hereby certify pursuant to 18 U.S.C. Section
  1350, as adopted pursuant to Section 906 of the
  Sarbanes-Oxley Act of 2002, to the best of my
  knowledge and belief, that:
  
         1. 	Such Quarterly Report on
  Form 10-Q for the quarter ending June 30,
  2008, fully complies with the requirements of
  section 13(a) or 15(d) of the Securities
  Exchange Act of 1934; and
  
         2. 	The information contained
  in such Quarterly Report on Form 10-Q for the
  quarter ending June 30, 2008, fairly presents,
  in all material respects, the financial condition
  and results of operations of the Company.
  
  Dated: August 18, 2008
  
  /s/ AL Kennedy
  AL Kennedy
  President
  (Principal Executive Officer)
  
  Exhibit 32.2
  
  CERTIFICATION OF CHIEF FINANCIAL OFFICER
  PURSUANT TO 18 U.S.C. SECTION 1350
  
         In connection with the accompanying
  Quarterly Report on Form 10-Q of Illusion Digital
  Systems, Inc. (the "Company") for the quarter ending
  June 30, 2008, I, AL Kennedy, President of the
  Company hereby certify pursuant to 18 U.S.C. Section
  1350, as adopted pursuant to Section 906 of the
  Sarbanes-Oxley Act of 2002, to the best of my
  knowledge and belief, that:
  
         1. 	Such Quarterly Report on
  Form 10-Q for the quarter ending June 30,
  2008, fully complies with the requirements of
  section 13(a) or 15(d) of the Securities
  Exchange Act of 1934; and
  
         2. 	The information contained
  in such Quarterly Report on Form 10-Q for the
  quarter ending June 30, 2008, fairly presents,
  in all material respects, the financial condition
  and results of operations of the Company.
  
  Dated: August 18, 2008
  
  /s/ AL Kennedy
  AL Kennedy
  President
  (Principal Financial Officer)