content: U.S. SECURITIES AND
  EXCHANGE COMMISSION
  Washington, D.C. 20549
  
  FORM 10-Q
  
  [X] QUARTERLY REPORT PURSUANT TO
  SECTION 13 OR 15(d) OF THE SECURITIES
  EXCHANGE ACT OF 1934
  
  For the quarterly period ended September 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
  November 14, 2008: 1,390,000 shares of common
  stock.
  
  
  
  
  ILLUSION DIGITAL SYSTEMS, INC.
  
  FINANCIAL STATEMENTS
  (Unaudited)
  
  September 30, 2008
  
  
  ILLUSION DIGITAL SYSTEMS, INC.
  (A Development Stage Enterprise)
  INDEX TO FINANCIAL STATEMENTS
  September 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)
  BALANCE SHEET
  SEPTEMBER 30, 2008
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  September
  30, 2008
  
  
  
  
  
  
  
  
  December
  31, 2007
  
  
  (Unaudited)
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  ASSETS
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  Total assets
  
  $
  -
  
  
  
  
  
  
  
     $
  -
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  LIABILITIES AND
  STOCKHOLDERS' EQUITY
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  Commitment and contingencies
  
  $
  -
  
  
  
  
  
  
  
     $
     -
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  Stockholders' equity:
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  Preferred stock, $.001 par value,
  authorized 20,000,000 shares, none
  issued
  
  
  -
  
  
  
  
  
  
  
  
  -
  
  
  
  
  
  
  
  
  
  
  
  
  Common stock, $.001 par value,
  authorized 100,000,000 shares,
  1,390,000 issued and outstanding
  
  
  1,
  39
  0
  
  
  
  
  
  
  
  
  1,390
  
  
  
  
  
  
  
  
  
  
  
  
  
  Additional paid in capital
  
  
  2,
  36
  0
  
  
  
  
  
  
  
  
  
  2,360
  
  
  
  
  
  
  
  
  
  
  
  
  
  Deficit accumulated during the
  development stage
  
  
  (3,
  75
  0)
  
  
  
  
  
  
  
  
  (3,750)
  
  
  
  
  
  
  
  
  
  
  
  
  
  Total stockholders' equity
  
  
  -
  
  
  
  
  
  
  
  
  -
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  Total liabilities and stockholders'
  equity
  
  
  -
  
  
  
  
  
  
  
  
  -
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  $
  
  
  
  
  
  
  
  
  $
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  The accompanying notes are an integral part of these
  financial statements
  
  
  
  
  
  
  
  
  F-1
  
  
  
  
  
  
  
  ILLUSION DIGITAL SYSTEMS, INC.
  (A Development Stage Enterprise)
  STATEMENTS OF OPERATIONS
  (Unaudited)
  
  Income
  For
  the
  nine
  mont
  hs
  ended
  Septe
  mber
  30,
  2008
  For the
  three
  months
  ended
  Septem
  ber 30,
  2008
  and
  2007
  
  For
  the
  perio
  d of
  Febru
  ary
  16,
  2007
  (ince
  ption
  )
  throu
  gh
  Septe
  mber
  30,
  2007
  
  For the
  period
  16-Feb-
  07
  (Incepti
  on)
  through
  Septem
  ber 30,
  2008
  
  
  
  
  
  
  
  
  Revenue
  -
  $
  -
  
  
  $
  -
  --
  
  Expenses
  -
  $
  -
  
  
  $
  -
  --
  
  General and Administrative
  -
  $
  -
  
  
  $
  (1,3
  90)
  (3,750)
  
  Total Expenses
  -
  $
  -
  
  
  $
  (1,3
  90)
  (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)
  , ,  ,  , 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
  
  
  
  
  ($3,750.00
  )
  
  ($3,750.00
  )
  Balance  December 2007 and
  September 30, 2008
  
  
  
  
  
  
  
  
  
  1,390,000
  $1,390.00
  $2,360
  ($3,750.00
  )
  
  0.00
  
  
  
  
  
  
  
  
  
  STATEMENTS OF CHANGES IN
  STOCKHOLDER'S EQUITY
  For the period from February 16, 2007 (Inception) to
  September 30, 2008
  (Unaudited)
  
  		 	 	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)
  STATEMENTS OF CASH FLOWS
  (Unaudited)
  
  
  
  
  
  
  
  
  
  
  
  
  For the
  nine
  months
  ended
  Septem
  ber
  30, 2008
  
  
  
  
  
   For the
  period
  February
  16, 2007
  (Inceptio
  n)
  through
  Septembe
  r 30, 2007
        For
  the period
  
  February
  16, 2007
  
  (Inception)
  through
  
  September
  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
  
  
  -
  
  
  
  -
  
  
  
  
  
  
  
  
  
  
  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 FINANCIAL STATEMENTS
  September 30, 2008
  (Unaudited)
  
  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 September 30,
  2008, the results of its operations for the three and
  nine months ended September 30, 2008 and 2007,
  and from the date of inception (February 16, 2007)
  through September 30, 2008, and cash flows for the
  nine months ended September 30, 2008 and 2007
  from the date of inception (February 16, 2007)
  through September 30, 2007 and 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 September 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 September 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 September 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 September 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 September 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: November 14, 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: November 14, 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: November 14, 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 September 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 September
  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 September 30,
  2008, fairly presents, in all material respects,
  the financial condition and results of
  operations of the Company.
  
  
  Dated: November 14, 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 September 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 September
  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 September 30,
  2008, fairly presents, in all material respects,
  the financial condition and results of
  operations of the Company.
  
  
  Dated: November 14, 2008
  
  /s/ AL Kennedy
  AL Kennedy
  President
  (Principal Financial Officer)
metadata_documents: [{"type": "10-Q", "sequence": "1", "filename": "lexit93008q.txt", "secsgml_size_bytes": 32367}, {"type": "10-Q", "sequence": "8", "filename": "lexit93008q.pdf", "secsgml_size_bytes": 129058}]
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": "081193243"}, "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-Q
  
  [X] QUARTERLY REPORT PURSUANT TO
  SECTION 13 OR 15(d) OF THE SECURITIES
  EXCHANGE ACT OF 1934
  
  For the quarterly period ended September 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
  November 14, 2008: 1,390,000 shares of common
  stock.
  
  ILLUSION DIGITAL SYSTEMS, INC.
  
  FINANCIAL STATEMENTS
  (Unaudited)
  
  September 30, 2008
  
  ILLUSION DIGITAL SYSTEMS, INC.
  (A Development Stage Enterprise)
  INDEX TO FINANCIAL STATEMENTS
  September 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)
  BALANCE SHEET
  SEPTEMBER 30, 2008
  
  September
  30, 2008
  
  December
  31, 2007
  
  (Unaudited)
  
  ASSETS
  
  Total assets
  
  $
  -
  
     $
  -
  
  LIABILITIES AND
  STOCKHOLDERS' EQUITY
  
  Commitment and contingencies
  
  $
  -
  
     $
     -
  
  Stockholders' equity:
  
  Preferred stock, $.001 par value,
  authorized 20,000,000 shares, none
  issued
  
  -
  
  -
  
  Common stock, $.001 par value,
  authorized 100,000,000 shares,
  1,390,000 issued and outstanding
  
  1,
  39
  0
  
  1,390
  
  Additional paid in capital
  
  2,
  36
  0
  
  2,360
  
  Deficit accumulated during the
  development stage
  
  (3,
  75
  0)
  
  (3,750)
  
  Total stockholders' equity
  
  -
  
  -
  
  Total liabilities and stockholders'
  equity
  
  -
  
  -
  
  $
  
  $
  
  The accompanying notes are an integral part of these
  financial statements
  
  F-1
  
  ILLUSION DIGITAL SYSTEMS, INC.
  (A Development Stage Enterprise)
  STATEMENTS OF OPERATIONS
  (Unaudited)
  
  Income
  For
  the
  nine
  mont
  hs
  ended
  Septe
  mber
  30,
  2008
  For the
  three
  months
  ended
  Septem
  ber 30,
  2008
  and
  2007
  
  For
  the
  perio
  d of
  Febru
  ary
  16,
  2007
  (ince
  ption
  )
  throu
  gh
  Septe
  mber
  30,
  2007
  
  For the
  period
  16-Feb-
  07
  (Incepti
  on)
  through
  Septem
  ber 30,
  2008
  
  Revenue
  -
  $
  -
  
  $
  -
  --
  
  Expenses
  -
  $
  -
  
  $
  -
  --
  
  General and Administrative
  -
  $
  -
  
  $
  (1,3
  90)
  (3,750)
  
  Total Expenses
  -
  $
  -
  
  $
  (1,3
  90)
  (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)
  , ,  ,  , 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
  
  ($3,750.00
  )
  
  ($3,750.00
  )
  Balance  December 2007 and
  September 30, 2008
  
  1,390,000
  $1,390.00
  $2,360
  ($3,750.00
  )
  
  0.00
  
  STATEMENTS OF CHANGES IN
  STOCKHOLDER'S EQUITY
  For the period from February 16, 2007 (Inception) to
  September 30, 2008
  (Unaudited)
  
  		 	 	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)
  STATEMENTS OF CASH FLOWS
  (Unaudited)
  
  For the
  nine
  months
  ended
  Septem
  ber
  30, 2008
  
   For the
  period
  February
  16, 2007
  (Inceptio
  n)
  through
  Septembe
  r 30, 2007
        For
  the period
  
  February
  16, 2007
  
  (Inception)
  through
  
  September
  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
  
  -
  
  -
  
  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 FINANCIAL STATEMENTS
  September 30, 2008
  (Unaudited)
  
  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 September 30,
  2008, the results of its operations for the three and
  nine months ended September 30, 2008 and 2007,
  and from the date of inception (February 16, 2007)
  through September 30, 2008, and cash flows for the
  nine months ended September 30, 2008 and 2007
  from the date of inception (February 16, 2007)
  through September 30, 2007 and 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 September 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 September 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 September 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 September 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 September 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: November 14, 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: November 14, 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: November 14, 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 September 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 September
  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 September 30,
  2008, fairly presents, in all material respects,
  the financial condition and results of
  operations of the Company.
  
  Dated: November 14, 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 September 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 September
  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 September 30,
  2008, fairly presents, in all material respects,
  the financial condition and results of
  operations of the Company.
  
  Dated: November 14, 2008
  
  /s/ AL Kennedy
  AL Kennedy
  President
  (Principal Financial Officer)