SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C.  20549


____________________________________________________





FORM
10-K





o
            ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT
      OF 1934


For
the Fiscal Year Ended July 31, 2009


OR





o
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT
      OF 1934


for
the transaction period from 
to


Commission
File Number 0-02555








Exobox
Technologies Corp.


(Name
of Small Business Issuer in its charter)





Nevada
            88-0456274(State
      or other jurisdiction of incorporation)
            (I.R.S.
      Employer Identification No.)2121
      Sage Road, Suite 200, Houston, Texas
            77056(Address
      of principal executive offices)
            (Zip
      code)





Securities
registered under Section 12(g) of the Exchange Act:


Common
Stock


(Title of
class)





(Title of
class)


Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.o
Yes     x
No


Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.o
Yes     x
No


Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.x
Yes     o
No


Indicate
by check mark if disclosure if delinquent filers pursuant to Item 405 of
Regulation S-K (§ 229.405) is not contained herein, and will not be contained,
to the best of registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K o





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


Large
      accelerated filer  o
            Accelerated
      filer oNon-accelerated
      filer    o
            Smaller
      reporting company x





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes   o
   No   x


State
issuer’s revenues for its most recent fiscal year. $0.


State the
aggregate market value of the voting stock held by non-affiliates computed by
reference to the price at which the stock was sold, or the average bid and asked
prices of such stock, as of a specified date within the past 60 days. The
aggregate market value of the common stock held by non-affiliates of the
registrant was $10,714,162.91, based on the closing price on the OTCBB market on
November 30, 2009.





As of
November 30, 2009, 334,817,591 shares of the registrant's common stock were
outstanding.













Index
            
            PAGEPART
      I.ITEM
      1.
            DESCRIPTION
      OF BUSINESS
            3ITEM
      2.
            DESCRIPTION
      OF PROPERTY
            15ITEM
      3.
            LEGAL
      PROCEEDINGS
            15ITEM
      4.
            SUBMISSION
      OF MATTERS TO A VOTE OF THE SECURITY HOLDERS
            15PART
      II
            
            16ITEM
      5.
            MARKET
      FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER
      PURCHASES OF EQUITY SECURITIES
            16ITEM
      6.
            MANAGEMENT'S
      DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
            19ITEM
      7.
            FINANCIAL
      STATEMENTS AND RELATED FOOTNOTES
            23ITEM
      8.
            CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE
            39ITEM
      8A.
            CONTROLS
      AND PROCEDURES
            39ITEM
      8B.
            OTHER
      INFORMATION
            40PART
      III.
            
            41ITEM
      9.
            DIRECTORS,
      EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION
      16(a) OF THE EXCHANGE ACT
            41ITEM
      10.
            EXECUTIVE
      COMPENSATION
            42ITEM
      11.
            SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS
            45ITEM
      12.
            CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS
            46ITEM
      13.
            EXHIBITS
            46ITEM
      14.
            PRINCIPAL
      ACCOUNTANT FEES AND SERVICES
            47Signatures
            48

















FORWARD
LOOKING STATEMENTS





This Form
10K contains forward-looking statements. These statements relate to future
events or future financial performance and involve known and unknown risks,
uncertainties and other factors that may cause Exobox Technologies Corp.
(“Exobox,” “Company,” “our” or “we”) or its industry’s actual results, levels of
activity, performance or achievements to be materially different from any future
results, levels of activity, performance or achievements expressed or implied by
the forward-looking statements.





In some
cases, you can identify forward-looking statements by terminology such as “may,”
“will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,”
“predicts,” “potential,” or the negative of these terms or other comparable
terminology.  Such statements include, without limitation, all
statements as to expectation or belief and statements as to our future results
of operations, the progress of any research, product development and clinical
programs, the need for, and timing of, additional capital and capital
expenditures, partnering prospects, the protection of and the need for
additional intellectual property rights, effects of regulations, the need for
additional facilities and potential market opportunities. The Company’ actual
results may vary materially from those contained in such forward-looking
statements because of risks to which the Company is subject, such as lack of
available funding, competition from third parties, intellectual property rights
of third parties, regulatory constraints, litigation and other risks to which
the Company is subject.  These statements are only predictions. Actual
events or results may differ materially.





Although
the Company believes that the expectations reflected in the forward-looking
statements are reasonable, the Company cannot guarantee future results, levels
of activity, performance or achievements. Moreover, neither the Company nor any
other person assumes responsibility for the accuracy and completeness of these
forward-looking statements. The Company is under no duty to update any of the
forward-looking statements after the date of this report to conform its prior
statements to actual results.








PART 1





ITEM 1. DESCRIPTION OF BUSINESS





Overview





Exobox
Technologies Corp. develops, markets and sells security software solutions that
help organizations protect and recover their most valuable information
assets.  Specifically, our security solutions help clients mitigate
risks associated with the unauthorized disclosure of data and information that
compromises market reputation, strategic advantage, credit exposure, and
governance compliance.  We refer to our offerings as “information risk
management and security software solutions”.





We
believe that many public companies and government organizations are experiencing
data leaks, beyond their own networks and company-owned
computers.  Some of the biggest contributors to information security
risks include the emergence and growth of Web 2.0 and 3.0 applications
encouraging the open exchange of information through the Internet, rapid growth
of a mobile workforce, online and remote team collaboration,  and the
increasing importance of data retention as it relates to compliance with
regulatory and corporate governance requirements, including: Sarbanes-Oxley Act
(SOX), Health Insurance Portability and Accountability Act (HIPPA), and Basel
II.





Industry
Background





Keeping valuable information protected
from data leaks continues to be a pressing problem and traditional security
technology solutions have been ineffective in providing a strong platform for
data security because these existing technologies focus on a company’s networks
and computers, but ignore data leaked into the public domain. We believe the
information risk management and security solutions we are developing will
provide proactive solutions that assist business users in managing and
protecting their valuable data throughout a typical path or lifecycle of
information from creation, distribution, storage, copying, transformation and
disposal.





Exobox is
in a growth industry, characterized by the following segment
labels:


·
            Information
      Risk Management·
            Data
      Leak Detection (DLD)·
            Information
      Leak Detection and Prevention (ILDP)·
            Content
      Monitoring and Filtering (CMF)/Data Loss Prevention
  (DLP)





Our
approach to information security is based on the assumption that the most
valuable asset needed to be protected by our customers is their
information.  A recent survey of 253 global IT professionals and
security decision makers in companies around the world, conducted by Forrester,
indicate that data leaks have reached the level of an epidemic and although Data
Loss Prevention (DLP) is high on the list of concerns DLP is low on the
near-term, high-priority action list. Higher on the near-term, priorities is
proactively detecting information leaks in a timely manner, in order to prevent
further data loss.  The biggest contributors to information security
risks are the open exchange of information through the Internet, rapid growth of
a mobile workforce, termination of employment, lack of understanding that
information is confidential – just to name a few.  In fact, the market
is so concerned about these issues that security software revenue is expected to
reach $19.0 billion by 2013 with a average annual growth of 9.3% according to
Gartner.




3





The
market for security technology continues to experience attractive growth as
global use of the Internet becomes more ubiquitous and governmental regulation
relating to data security becomes increasingly stringent. Based on third-party
market analysis, proprietary data leaks have reached pandemic portions,
presenting a high-growth market opportunity. Consider the following market
statistics:





The
market for security technology continues to experience attractive growth as
global use of the Internet becomes more ubiquitous and governmental regulation
relating to data security becomes increasingly stringent. Consider the following
market statistics:






            According
      to Internet World Stats, 1.661 billion people used the Internet as of June
      30, 2009 and it is expected to grow to approximately 1.650 billion by
      2010.






            According
      to Gartner, Inc., worldwide spending on security technology is estimated
      to reach $44 billion in 2009 of
which:





o
            Network
      security equipment represents $7.7
billion





o
            Security
      software represented $14.0 billion,
and





o
            Security
      services represented $22.2 billion.






            According
      to Datamonitor, a leading business information research firm, an average
      data leak incident today costs a company approximately $1.8 million
      dollars





·According to
      Gartner, revenue from SaaS-based enterprise software reached $6.4 billion
      in 2008 and is expected to double by
2012.





Companies
and organizations must quickly identify information leaks, rapidly understand
how the leak occurred (forensics), and swiftly plug the “holes” so the data
leaks do not reoccur.





The
Company’s primary target audience are companies that must abide by Governance,
Risk, and Compliance (GRC) policies - Fortune 500 public companies; the
secondary target audience are those companies with valuable at-risk information,
including: financial services providers, healthcare providers, and
high-technology providers.





The
Exobox Technologies Corp. Solution





The
Company is dedicated to developing and delivering high-value and high-quality
information risk management and security solutions.  Through
innovation, Exobox is committed to taking on challenges that others didn’t or
failed to address, ensuring our customers receive superior solutions to meet and
exceed their needs.





The
Exobox Integration Platform Technology (ExoSystem) is designed to
share the same graphic user interface and seamlessly share information with
future Exobox software products to holistically detect, audit, recover, control,
and protect data and information assets within and beyond the
enterprise.













ExoSystem
is an advanced shared infrastructure for all Exobox Information Risk Management
products, delivering higher efficiency while lowering total cost of
ownership.  All common services are delivered with one familiar look
and feel, one learning curve, and require only one installation and maintenance
update/upgrade for any number of Exobox solutions.  We believe that by
providing a scalable, integration platform increases the probability of an
existing customer purchasing additional Exobox products.





4


Due to
the fundamental architecture of our technology, our goal is to develop
variations which will result in several different products reaching across the
spectrum of information risk management and security solutions, including, but
not limited to:











            ExoDetectTMfor Data Leak
      Detection






            ExoAudit for Data
      Auditing






            ExoRecover for Data
      Recovery and Retention






            ExoControl for Data
      Access and Change Control






            ExoProtect for Data Leak
      Prevention








ExoDetectTM
for Data Leak Detection





ExoDetectTM
is the first product that we released on June 30, 2009.  It is a Data
Leak Detection (DLD) SaaS solution, and to our knowledge is the only Web-based
software solution available today that simultaneously delivers the ability to
perform thorough scans for compromised data on any exposed area in the Internet
Cloud; classify the discovered information according to confidence and severity
ratings; and capture the forensic evidence needed to address the breach,
including litigation or prosecution.





ExoDetectTM
provides a unique approach to information security, by identifying data leaks,
beyond corporate networks or computers – often referred to as “the
enterprise”.  As a result ExoDetectTM delivers a high level of risk
mitigation for greater protection of intellectual property and other critical
information assets that may be “leaked” from organizations.





Business
Model and Growth Strategy





The
global market for such software is expanding rapidly as more enterprises search
for proactive, effective solutions to ever increasing threats and the demands of
increasing regulatory compliance.  We intend to structure our business
on a business-to-business licensing model. In doing so, we plan to build an
efficient eco-system by identifying the key providers in certain industries,
geographic territories and market segments – including Internet service
providers, banks and financial institutions, government agencies, software
makers, computer hardware manufacturers, home PC users, business PC users,
educational institutions, and e-commerce companies – and license the software
for use by those institutions. We believe this model will eliminate significant
expenses for inventory control, distribution, end user tech support and
payroll.





Furthermore,
at this time our business strategy is to license our technology on a selective
and worldwide basis to OEM, computer and software development and services
companies which design and implement software and network systems for end
users.  Such companies include, but are not limited to IBM, Accenture,
BearingPoint, HP/EDS, CSC Computer Sciences Corp. and Perot
Systems.  OEMs may include companies such as Dell, HP, Apple, and
Seagate, among many others.





Key
elements of the business model we intend to implement include:





Software-as-a-Service (SaaS)
technology delivery model.  The SaaS software business model
has been impressively growing over the past few years, with some estimating SaaS
will become the standard for the market in a relatively short
term.  ExoDetectTM, Exobox’s first product offering, is a Web-based or
SaaS solution.  As expense pressures hit companies harder than ever,
SaaS is often the chosen alternative to expensive, resource-prone traditional
software approaches to addressing business needs. In fact, according to Gartner
in a 2008 study, they predicted that SaaS would become 25% of the overall
software market by 2011.  The research firm forecasts worldwide
enterprise application SaaS revenue to reach $11.5 billion by 2011 and, while
the CAGR varied between different types of services, the overall CAGR is touted
at 26.5%.





Consultative
Support.We further strengthen our solutions by providing
consultative support with every Exobox solution.  Consultative support
is going beyond traditional technical issues or functionality end-user
support.  The Exobox Support Team is staffed with security experts,
trained in information forensics to help an Exobox software subscriber
understand and interpret the data uncovered, audited, or protected by Exobox
products.  By extending the traditional support model, we believe the
support that we provide will differentiate us from other security software
providers, further differentiating Exobox and establishing market
leadership.





5


Establish and Grow Technology
Leadership. We believe that we are developing advanced products for the
protection of data assets and committed to continuing research and development
efforts, both internally and in conjunction with our future partners to further
improve our products and technologies. We plan to continue our emphasis on
research and development by assigning significant portions of our current and
future engineering staff to developing future generations of our platform
technology and product offerings.





Generate Revenue through
Subscription Fees over Fixed-Term Contracts. We currently generate
revenues through the form of one-time configuration services and trial scan,
which we attempt to convert to fixed-term contracts that are paid in the form of
monthly subscription fees. Our paid trial programs generally allow a prospective
customer to utilize our service on a limited-usage and limited-time
basis.





Sales,
Marketing and Distribution





Sales





Consistent
with the Company’s business model, it will focus its sales activities on two
parallel paths, direct sales and indirect channels.





The
direct sales channel is intended to establish referenceable
accounts.   Our direct sales channel is targeting senior operational
executives focused on a corporation’s business operations, finance, governance,
human resources, market reputation, and security. We are vertically focused on
organizations with an ongoing need to protect their valuable information assets
including public companies in technology, retail, healthcare, pharma,
transportation, financial services, and energy; higher educational institutions;
and local, state, and federal government entities.





The
indirect sales channel includes a broad affiliate network of value-added
resellers (VARs), security technology distributors, business security system
integrators (SIs), and original equipment manufacturers (OEMs); that rely on and
strengthen each security solution with Exobox technologies, ultimately
delivering best-of-breed business security solutions for their client
base.  Ultimately, the Exobox Technologies Corp. customer will have a
turnkey solution from definition to deployment from this network of
affiliates.  By building relationships within an indirect sales
channel, we are able to establish market pull, instead of a more time-consuming
market push effort.





The
combination of direct and indirect sales channels will help establish a more
rapid market penetration, while in parallel, build and strengthen our long-term
sales strategy of a channel sales model.





Marketing





The
primary goals of our marketing strategy are to generate qualified sales leads,
as well as build brand awareness among our target audience and target affiliates
for our indirect sales channel.





To meet
these goals, our strategy is based on relationship marketing to establish
personalized dialogue with each segment of our target audience.  Our
marketing initiatives include:





·
            Active
      public relations efforts to establish an ongoing relationship with the
      business, security, and IT media;·
            Establish
      thought leadership through publishing, blogging, and speaking
      engagements;·
            Sponsorship
      of business, security, and IT professional
associations;·
            Participation
      at select trade shows and industry events;·
            Host
      events and engage social media (LinkedIn, Facebook, Twitter, etc.)
      channels;·
            Support
      a strong Web presence with instant gratification channels such as Live
      Chat and Instant Inquiries;·
            Engage
      in “White Hat” search engine optimization (SEO)
  practices;·
            Rollout
      highly-targeted search engine marketing (SEM)
  campaigns;





Customer
Service, Training and Support





We
believe that one of key differentiators is our approach to delivering customer
support that over delivers.  Therefore, our approach is unique by
providing consultative support with every Exobox
solution.  Consultative support is going beyond traditional technical
issues or functionality end-user support.  The Exobox Support Team is
staffed with security experts, trained in information forensics to help an
Exobox software subscriber understand and interpret the data uncovered, audited,
or protected by Exobox products.  Our technical support group provides
support to any question related to protecting the organization’s valuable
assets.  Core to this support model is to be readily available via
Live Chat, telephone, email, and an online support ticket system.  We
also proactively contribute to data protection by providing free education to
the information-centric community, as well as paid training sessions for our
customers.





6


Software
Development Expenses





Our
software development efforts over the last three years have resulted in the
filing of more than twenty-two patent applications for our technology with
additional patent applications forthcoming.  We intend to focus our
product development efforts on creating new applications that enhance and extend
the protection of valuable information assets across the entire data
lifecycle.  Our research and development group also focuses on software
development, research of data leak trends and identification of “holes” that
facilitate data leaks, quality assurance, and documentation.  Research and
development individuals are assigned to the ExoSystem platform technology group
or specific product research and development teams.  Quality assurance is a
separate department to encourage objective testing of our products.  Our
research and development (“R&D”) expenses include the personnel expenses
associated with the research and development of new product offerings and the
enhancement of our existing software offerings.




Capitalization
of material development costs of software to be sold, leased, or otherwise
marketed are subject to capitalization beginning when our products’
technological feasibility has been established, which we define as completion of
beta testing.  Because of the insignificant amount of costs incurred
between completion of beta testing and general customer release, we have not
capitalized any software development costs in the accompanying financial
statements.




Competition





The
markets for the products we plan to build are intensely competitive and are
subject to rapid changes in technology. We expect competition to continue to
increase in the future. We believe that the principal competitive factors
affecting these markets include, but are not limited to performance,
functionality, quality, customer support, breadth of product group, frequency of
upgrades and updates, integration of products, manageability of products, brand
name recognition, reputation, global reach and price.





Our
current, principal competitors include:


·
            Evidence
      collection or data loss service providers, such as Tiversa, Accenture,
      Applied Discovery·
            Content
      Monitoring and Filtering (CMF)/Data Loss Prevention (DLP) software
      providers, such as Websense, Symantec, Vericept·
            Information
      Risk Management software and service providers, such as RSA, Computer
      Associates, Check Point Software·
            Anti-Virus
      software providers, such as McAfee, TrendMicro, and Panda
      Security





Most of
the companies we are competing against have longer operating histories, greater
name recognition, stronger relationships with channel partners, larger technical
staffs, established relationships with hardware vendors and/or greater
financial, technical and marketing resources, all factors we have just begun to
establish. These factors may provide our competitors with an advantage in
penetrating markets with their information risk management and security software
products.





In order
for us to effectively compete in this market segment, we believe that our
technology solution needs to include the following factors:


·
            Robust,
      scalable platform technology that enables seamless information sharing
      between Exobox products;·
            Product
      suite that extends across the entire data lifecycle;·
            SaaS
      product delivery model;·
            World-class
      consultative customer support;·
            Ability
      to integrate or share information with third-party security
      products;·
            Competitive
      pricing model





Protection
of Intellectual Property





We have
filed twenty-two patent applications and numerous trademark applications
protecting our intellectual property.  We attempt to protect our
software technology by relying on a combination of copyright, patent, trade
secret and trademark laws, restrictions on disclosure and other
methods.  In particular, we have a number of registered trademarks and
currently hold patents in the United States, as well as patent holdings in other
countries, relating to our technology and trade names.  We have
regularly filed applications for patents and trademarks in order to protect
proprietary intellectual property that we believe are important to our
business.





As we
develop products and begin to market them, we may face a number of risks
relating to our intellectual property, including unauthorized use and
unauthorized copying, or piracy of our software solutions. Litigation may be
necessary to enforce our intellectual property rights, to protect trade secrets
or trademarks, or to determine the validity and scope of the proprietary rights
of others. Furthermore, any patents that have been issued to us could be
determined to be invalid and may not be enforceable against competitive products
in every jurisdiction. Moreover, other parties have asserted and may, in the
future, assert infringement claims against us. These claims and any litigation
may result in invalidation of our proprietary rights. Litigation, even if not
meritorious, could result in substantial costs and diversion of resources and
management attention. In addition, third party licenses may not continue to be
available to us on commercially acceptable terms, or at all.





To
mitigate these risks, we intend to implement worldwide strategies on multiple
intellectual property fronts. As part of this comprehensive strategy, patent
applications covering our Secure Operating System technology have been submitted
in eleven different foreign jurisdictions.  Further, we have submitted
applications covering our Secure User Environment Technology in five different
foreign jurisdictions. In addition, we have recently filed three provisional
applications and one trademark application covering various aspects of our
ExoDetectTM product.





7


Employees





We
presently have two employees.





Legal
Proceedings





We have
no legal proceedings at this time and are unaware of any legal proceedings that
may be pending against us.





Facilities





Our
current headquarters are located at 2121 Sage Rd, Suite 200, Houston, Texas
77056.





Other
Information





Our
Internet address is www.exobox.com. We make
available free of charge on our website our annual reports on Form 10-K,
quarterly reports on Form 10-Q, and current reports on Form 8-K, and amendments
to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the
Exchange Act as soon as reasonably practicable after we electronically file such
material with, or furnish it to, the Securities and Exchange Commission, or SEC.
Other than the information expressly set forth in this annual report, the
information contained, or referred to, on our website is not part of this annual
report.





The
public may also read and copy any materials we file with the SEC at the SEC’s
Public Reference Room at 100 F Street, NE, Room 1580, Washington, DC 20549. The
public may obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. The SEC also maintains a website at www.sec.gov that contains
reports, proxy and information statements, and other information regarding
issuers, such as us, that file electronically with the SEC.





Risk
Factors





We
have a limited operating history with significant losses and expect losses to
continue for the foreseeable future.




We have
incurred annual operating losses since our inception. As a result, at July 31,
2009, we had an accumulated deficit of $16,188,022. We had no gross revenues for
the year ended July 31, 2009, and a loss from operations of $6,480,676. As we
pursue our business plan, we expect our operating expenses to increase
significantly, especially in the areas of sales and marketing. As a result we
expect continued losses in fiscal 2010 and thereafter.





We will not be able to continue our
business operations unless we raise additional financing.





We are a
development stage company and as such have generated no revenues or profits to
date.  Our success will depend on the ability to attract external
financing for our working capital needs and to develop our patent rights in
connection with our software solutions.  As of the date hereof, we do
not have sufficient funding to satisfy our working capital needs or to develop
the full line of products and, the failure to obtain sufficient funding, will
preclude us from conducting meaningful business operations. We have historically
financed our operations through best efforts private equity and debt
financings, and will continue to finance our operations through such financings
through best efforts private equity and debt financings. We do not have any
commitments for equity or debt funding at this time, and additional funding
may not be available to us on favorable terms, if at all.  We can
provide no assurance we will be successful in seeking any additional financing,
and the failure to obtain any such financing may cause us to curtail
operations





We may not be able to meet our
current and future liabilities and remain in operation until we receive
additional capital.





As of
July 31, 2009, we have current assets of $8,564 and current liabilities of
$1,656,660.   Our current liquidity position only allows us to meet
nominal working capital needs.  We will need $2,000,000 to meet our
working capital needs through fiscal 2010.  Any failure to obtain such
financing could force us to abandon or curtail our operations.





We will need to raise additional
funds to fund product development and acquisitions.





Our cash
does not afford us adequate liquidity to fund our product
development.  In order to fund our full product development, including
marketing and testing, we will need to raise approximately an additional
$9,000,000 over our working capital needs.  We may also issue
additional shares of common stock to finance future acquisitions. We cannot
predict the size of future issuances of our common stock or the effect, if any,
that future issuances and sales of shares of our common stock will have on the
market price of our common stock. Sales of substantial amounts of our common
stock, or the perception that such sales could occur, may adversely affect
prevailing market prices for our common stock. There is no assurance that we can
raise additional capital from external sources, the failure of which could cause
us to sell assets or curtail operations.





8


Ours
auditor has substantial doubts as to our ability to continue as a going
concern.





Our
auditor's report on our July 31, 2009 financial statements expresses an opinion
that substantial doubt exists as to whether we can continue as an ongoing
business.  Because we do not have sufficient capital, we may be
required to suspend or cease the implementation of our business plans within 12
months. Because we have been issued an opinion by its auditors that substantial
doubt exists as to whether we can continue as a going concern it may be more
difficult for us to attract investors.  Our future is dependent upon
our ability to obtain financing and upon future profitable operations from the
sale of our products.





Additional capital may dilute
current stockholders.





In order
to provide capital for the operation of our business we may enter into
additional financing arrangements. These arrangements may involve the issuance
of new common stock, preferred stock that is convertible into common stock, debt
securities that are convertible into common stock or warrants for the purchase
of common stock. Any of these items could result in a material increase in the
number of shares of common stock outstanding which would in turn result in a
dilution of the ownership interest of existing common shareholders. In addition,
these new securities could contain provisions, such as priorities on
distributions and voting rights, which could affect the value of our existing
common stock.





The market price of our common stock
is very volatile and the value of your investment may be subject to sudden
decreases.





The
trading price for our common stock has been, and we expect it to continue to be,
volatile. For example, the price of our stock has fluctuated between $1.15 per
share and $0.005 per share since January 1, 2007. The price at which our common
stock trades depends upon a number of factors, including our historical and
anticipated operating results, and general market and economic conditions, which
are beyond our control.  In addition, the stock market has, from time
to time, experienced extreme price and volume fluctuations. These broad market
fluctuations may lower the market price of our common stock. Moreover, during
periods of stock market price volatility, share prices of many companies have
often fluctuated in a manner not necessarily related to their operating
performance. Accordingly, our common stock may be subject to greater price
volatility than the stock market as a whole.





We lack an operating history which
you can use to evaluate us, making any investment in us
risky.





We lack
an operating history which investors can use to evaluate our previous earnings.
This makes it harder for you as an investor to predict how we may do in the
future. Therefore, an investment in us is risky because we have no business
history and it is hard to predict what kind of return our stock will have in the
future, if at all.





There can be no assurance that we
will successfully commercialize any products or services.





There can
be no assurance that we will successfully commercialize any products and
services based on our technology or manage the related manufacturing, marketing,
sales, licensing and customer support operations in a profitable manner. In
particular, our prospects must be considered in light of the problems, delays,
expenses and difficulties encountered by any company in the startup stage, many
of which may be beyond our control. These problems, delays, expenses and
difficulties include unanticipated problems relating to product development and
formulation, testing, quality control, production, inventory management, sales
and marketing and additional costs and competition, any of which could have a
material adverse effect on our business, financial condition and results of
operations. There can be no assurance that our products and services can be
successfully marketed or that it will ever achieve significant revenues or
profitable operations.





There
can be no assurance that we will ever be profitable.





To be
profitable, we must successfully commercialize our technologies. We are in the
early stages of development and will require significant further research,
development and testing, and are subject to the risks of failure inherent in the
development of products based on innovative or novel technologies.





Our industry changes rapidly due to
evolving technology standards and our future success will depend on our ability
to adapt to market change.





Our
future success will depend on our ability to address the increasingly
sophisticated needs of the market. We will have to keep pace with technological
developments, evolving industry standards and changing customer requirements. We
expect that we will have to respond quickly to rapid technological change,
changing customer needs, frequent new product introductions and evolving
industry standards that may render our contemplated products obsolete. We may
not have sufficient resources to make the necessary investments, which could
have a material adverse effect on our business.





We depend upon our intellectual
property and our failure to protect existing intellectual property or secure and
enforce such rights for new proprietary technology could adversely affect our
future growth and success.





Our
ability to successfully protect our proprietary technology is essential to our
success. We have filed trademark and patent applications to protect intellectual
property rights for technology that we have developed. Our future success also
may depend upon our ability to obtain additional licenses for other intellectual
properties. We may not be successful in acquiring additional intellectual
property rights with significant commercial value on acceptable terms. Even if
we are successful in acquiring such rights, it can provide no assurance that we
will be successful in adapting or deploying them as to the timing or cost of
such development efforts or as to the commercial success of the resulting
products or services.





9





Our competitors may develop
non-infringing products or technologies that adversely affect our future growth
and revenues.





It is
possible that our competitors will produce proprietary technologies similar to
ours without infringing on our intellectual property rights. We also rely on
unpatented proprietary technologies. It is possible that others will
independently develop the same or similar technologies or otherwise obtain
access to the unpatented technologies upon which we rely for future growth and
revenues. Failure to meaningfully protect our trade secrets, know-how or other
proprietary information could adversely affect our future growth and
revenues.





Our success is dependent upon our
ability to protect our proprietary technologies.





Our
success is substantially dependent upon our proprietary technologies and our
ability to protect our intellectual property rights. Exobox received a formal
“Notice of Allowance” from the United States Patent and Trademark Office (USPTO)
for its second patent, Application No. 11/591,112, issued on August 9, 2007. We
currently have filed for 22 patent applications with the U.S. Patent Office and
other foreign patent offices that relate to software security solutions. We rely
upon our patent applications and trade secret laws, non-disclosure agreements
with our employees, consultants and third parties to protect our intellectual
property rights. The complexity of patent and common law, combined with our
limited resources, create risk that our efforts to protect our proprietary
technologies may not be successful. We cannot assure you that our patent
applications will be upheld or that third parties will not invalidate our patent
rights. In the event our intellectual property rights are not upheld, such an
event would have a material adverse effect on us. In addition, there is a risk
that third parties may independently develop substantially equivalent or
superior technologies.





Any litigation to protect our
intellectual property or any third party claims to invalidate our patents could
have a material adverse effect on our business.





Our
success depends on our ability to protect our intellectual property rights. In
the future, it may be necessary for us to commence patent litigation against
third parties whom we believe require a license to our patents. In addition, we
may be subject to third-party claims seeking to invalidate our patents. These
types of claims, with or without merit, may subject us to costly litigation and
diversion of management’s focus. In addition, based on our limited financial
resources, we may not be able to pursue litigation as aggressively as
competitors with substantially greater financial resources. Based on our limited
financial resources, it may be necessary for us to engage third party
professionals on a contingency basis pursuant to which such parties would be
entitled to share in the proceeds of any successful enforcement of our
intellectual property rights. If third parties making claims against us seeking
to invalidate our patent are successful, they may be able to obtain injunctive
or other equitable relief, which effectively could block our ability to license
or otherwise capitalize on our proprietary technologies. Successful litigation
against us resulting in a determination that our patent applications are invalid
would have a material adverse effect on us.





We may be unable to successfully
compete against companies with resources greater than ours, if we are unable to
protect our patent rights and trade secrets, or if we infringe on the
proprietary rights of third parties .





We will
need to obtain additional patents on our technology to protect our rights to our
technology. To obtain a patent on an invention, one must be the first to invent
it or the first to file a patent application for it. We cannot be sure that the
inventors of subject matter covered by patents and patent applications that we
own or may license in the future were the first to invent, or the first to file
patent applications for, those inventions. Furthermore, patents we own or may
license in the future may be challenged, infringed upon, invalidated, found to
be unenforceable, or circumvented by others, and our rights under any issued
patents may not provide sufficient protection against competing software or
otherwise cover commercially valuable software or processes.





We seek
to protect trade secrets and other un-patented proprietary information, in part
by means of confidentiality agreements with our collaborators, employees, and
consultants. If any of these agreements is breached, we may be without adequate
remedies. Also, our trade secrets may become known or be independently developed
by competitors.





Our industry is competitive and as
such competitive pressures could prevent us from obtaining profits, forcing us
to abandon or curtail our business plan and possibly liquidate our
assets.





One of
the main factors in determining in whether we will be able to realize any
profits and/or be able to continue its business plan will be whether or not we
are able to successfully compete in the software industry. The virus protection
software industry is highly competitive and we may be competing against
companies with greater resources and more experience in the industry. If we are
unable to compete in the marketplace and fail to generate any profits, we may be
forced to liquidate its assets and any investment in us could be
lost.





We rely upon key personnel and if
any one leaves us our business plan and our business operations could be
adversely effected.





We rely
on our executives for our success. Their experience and inputs create the
foundation for our business and they are responsible for the implementation and
control over our development activities. We currently have one employment
contract and we do not hold “key man” insurance on any of these people. Moving
forward, should they be lost for any reason, we will incur costs associated with
recruiting replacement personnel and could face potential delays in operations.
If we are unable to replace any one of them with other suitably trained
individuals, we may be forced to scale back or curtail our business plan. As a
result of this, your securities in us could become devalued.





10




Investors may face significant
restrictions on the resale of our common stock due to federal regulations of
penny stocks.





Our
common stock is listed on the OTC Bulletin Board, however, it will be subject to
the requirements of Rule 15(g)9, promulgated under the Securities Exchange Act
of 1934 (“Exchange Act”), as long as the price of our common stock is below
$5.00 per share. Under such rule, broker-dealers who recommend low-priced
securities to persons other than established customers and accredited investors
must satisfy special sales practice requirements, including a requirement that
they make an individualized written suitability determination for the purchaser
and receive the purchaser’s consent prior to the transaction. The Securities
Enforcement Remedies and Penny Stock Reform Act of 1990, also requires
additional disclosure in connection with any trades involving a stock defined as
a penny stock. Generally, the Commission defines a penny stock as any equity
security not traded on an exchange or quoted on NASDAQ that has a market price
of less than $5.00 per share. The required penny stock disclosures include the
delivery, prior to any transaction, of a disclosure schedule explaining the
penny stock market and the risks associated with it. Such requirements could
severely limit the market liquidity of the securities and the ability of
purchasers to sell their securities in the secondary market.





Risks
Related to the Oil & Gas Segment of the Business





We
depend on successful exploration, development and acquisitions to maintain
revenue in the future.





In
general, the volume of production from natural gas and oil properties declines
as reserves are depleted, with the rate of decline depending on reservoir
characteristics. Except to the extent that we conduct successful exploration and
development activities, our proved reserves will decline as reserves are
produced. Additionally, the business of exploring for is capital intensive.
Recovery of our reserves, particularly undeveloped reserves, will require
significant additional capital expenditures and successful drilling operations.
Our ability to make the necessary capital investment to maintain or expand our
asset base of natural gas and oil reserves will be impaired unless other
external sources of capital become available. To the extent that others in the
industry do not have the financial resources we will be adversely
affected.





Although
certain of our oil and gas properties contain known reserves, we may not
discover commercially exploitable quantities of oil or gas that would enable us
to enter into commercial production, achieve revenues and recover the money we
spend on exploration.





There is
no assurance that any prospective oil and gas exploration will result in
establishment of reserves. Unproved or proved reserves on these properties may
never be determined to be economical. There is a substantial risk that these
exploration activities will not result in discoveries of commercially
recoverable reserves of oil and gas. Any determination that properties contain
commercially recoverable quantities of oil and gas may not be reached until such
time that final comprehensive feasibility studies have been concluded that
establish that a reserve is likely to be economic. There is a substantial risk
that any preliminary or final feasibility studies carried out by us will not
result in a positive determination that such properties can be commercially
developed.





Reserve
estimates depend on many assumptions that may turn out to be inaccurate. Any
material inaccuracies in these reserve estimates or underlying assumptions will
materially affect the quantities and present value of our reserves.





The
process of estimating oil and natural gas reserves is complex. It requires
interpretations of available technical data and many assumptions, including
assumptions relating to economic factors. Any significant inaccuracies in these
interpretations or assumptions could materially affect the estimated quantities
and present value of our reported reserves. In order to prepare our estimates,
we must project production rates and the timing of development expenditures. We
must also analyze available geological, geophysical, production and engineering
data. The extent, quality and reliability of this data can vary. The process
also requires that economic assumptions be made about matters such as oil and
natural gas prices, drilling and operating expenses, capital expenditures, taxes
and availability of funds. Therefore, estimates of oil and natural gas reserves
are inherently imprecise.





Actual
future production, oil and natural gas prices received, revenues, taxes,
development expenditures, operating expenses and quantities of recoverable oil
and natural gas reserves most likely will vary from our estimates. Any
significant variance could materially affect the estimated quantities and
present value of our reported reserves. In addition, we may adjust estimates of
proved reserves to reflect production history, results of exploration and
development, prevailing oil and natural gas prices and other factors, many of
which are beyond our control.





Exploration
activities on oil and gas properties may not be commercially successful, which
could lead us to abandon our plans to develop the property and our investments
in exploration.





Our
long-term success depends on our ability to establish commercially recoverable
quantities of oil and gas on our properties that can then be developed into
commercially viable drilling operations. Oil and gas exploration is highly
speculative in nature, involves many risks and is frequently non-productive.
These risks include unusual or unexpected geologic formations, and the inability
to obtain suitable or adequate machinery, equipment or labor. The success of oil
and gas exploration is determined in part by the following factors:





11



            identification
      of potential reserves based on superficial
  analysis;






            availability
      of government-granted exploration
permits;






            the
      quality of management and geological and technical
      expertise; and






            the
      capital available for exploration .





Substantial
expenditures are required to establish proven and probable reserves through
drilling and analysis, and to develop the drilling and processing facilities and
infrastructure at any site chosen. Whether a property will be commercially
viable depends on a number of factors, which include, without limitation, the
particular attributes of the property, such as size, grade and proximity to
infrastructure; oil and gas prices, which fluctuate widely; and government
regulations, including, without limitation, regulations relating to prices,
taxes, royalties, land tenure, land use, importing and exporting of oil and gas
and environmental protection. The decision to abandon a project may reduce the
future trading price of our common stock and impair our ability to raise
financing. We cannot provide any assurance to investors that we will discover
any oil and gas reserves in sufficient quantities on any properties to justify
commercial operations. Further, we will not be able to recover the funds that we
may spend on exploration if we are not able to establish commercially
recoverable quantities of oil and gas.





We
are a new entrant into the oil and gas exploration and development industry
without a profitable operating history.





Our
recent activities have been limited to organizational efforts, obtaining working
capital and acquiring a very limited number of properties. As a result, there is
limited information regarding production or revenue generation. Further, our
future revenues may be limited.





The
business of oil and gas exploration is subject to many risks and if oil and gas
is found in economic production quantities, the potential profitability of
future possible oil and gas ventures depends upon factors beyond our control.
The potential profitability of oil and gas properties if economic quantities of
oil and gas are found is dependent upon many factors and risks beyond our
control, including, but not limited to: (i) unanticipated ground conditions;
(ii) geological problems; (iii) drilling and other processing problems; (iv) the
occurrence of unusual weather or operating conditions and other force majeure
events; (v) lower than expected reserve quantities; (vi) accidents; (vii) delays
in the receipt of or failure to receive necessary government permits; (viii)
delays in transportation; (ix) labor disputes; (x) government permit
restrictions and regulation restrictions; (xi) unavailability of materials and
equipment; and (xii) the failure of equipment or drilling to operate in
accordance with specifications or expectations.





Our
drilling operations may not be successful.





We intend
to test certain zones in wellbores already drilled on the properties and if
results are positive and capital is available, drill additional wells and begin
production operations from existing and new wells. There can be no assurance
that such well re-completion activities or future drilling activities will be
successful, and we cannot be sure that our overall drilling success rate or our
production operations within a particular area will ever come to fruition and,
if it does, will not decline over time. We may not recover all or any portion of
our capital investment in the wells or the underlying leaseholds. Unsuccessful
drilling activities would have a material adverse effect upon our results of
operations and financial condition. The cost of drilling, completing, and
operating wells is often uncertain, and a number of factors can delay or prevent
drilling operations including: (i) unexpected drilling conditions; (ii) pressure
or irregularities in geological formations; (iii) equipment failures or
accidents; (iv) adverse weather conditions; and (iv) shortages or delays in
availability of drilling rigs and delivery of equipment.





We
may be unable to identify liabilities associated with the properties or obtain
protection from sellers against them.





Our
reviews of acquired properties are inherently incomplete because it generally is
not feasible to review in depth every individual property involved in each
acquisition. A detailed review of records and properties may not necessarily
reveal existing or potential problems, nor will it permit a buyer to become
sufficiently familiar with the properties to assess fully their deficiencies and
potential. Further, environmental problems, such as ground water contamination,
are not necessarily observable even when an inspection is undertaken. We may not
be able to obtain indemnification or other protections from the sellers against
such potential liabilities, which would have a material adverse effect upon our
results of operations.





The
potential profitability of oil and gas ventures depends upon global political
and market related factors beyond our control.





World
prices and markets for oil and gas are unpredictable, highly volatile,
potentially subject to governmental fixing, pegging, controls, or any
combination of these and other factors, and respond to changes in domestic,
international, political, social, and economic environments. Additionally, due
to worldwide economic uncertainty, the availability and cost of funds for
production and other expenses have become increasingly difficult, if not
impossible, to project. These and other changes and events may materially affect
our financial performance. The potential profitability of oil and gas properties
is dependent on these and other factors beyond our control.





Production
or oil and gas resources if found are dependent on numerous operational
uncertainties specific to the area of the resource that affects its
profitability.





Production
area specifics affect profitability. Adverse weather conditions can hinder
drilling operations and ongoing production work. A productive well may become
uneconomic in the event water or other deleterious substances are encountered
which impair or prevent the production of oil and/or gas from the well.
Production and treatments on other wells in the area can have either a positive
or negative effect on our production and wells. In addition, production from any
well may be unmarketable if it is impregnated with water or other deleterious
substances. The content of hydrocarbons is subject to change over the life of
producing wells. The marketability of oil and gas from any specific reserve
which may be acquired or discovered will be affected by numerous factors beyond
our control. These factors include, but are not limited to, the proximity and
capacity of oil and gas pipelines, availability of room in the pipelines to
accommodate additional production, processing and production equipment operating
costs and equipment efficiency, market fluctuations of prices and oil and gas
marketing relationships, local and state taxes, mineral owner and other
royalties, land tenure, lease bonus costs and lease damage costs, allowable
production, and environmental protection. These factors cannot be accurately
predicted and the combination of these factors may result in us not receiving an
adequate return on our invested capital.





12


We
are dependent upon transportation and storage services provided by third
parties.





We are
dependent on the transportation and storage services offered by various
interstate and intrastate pipeline companies for the delivery and sale of our
oil and gas supplies.  Both the performance of transportation and
storage services by interstate pipelines and the rates charged for such services
are subject to the jurisdiction of the Federal Energy Regulatory Commission or
state regulatory agencies. An inability to obtain transportation and/or storage
services at competitive rates could hinder our processing and marketing
operations and/or affect our sales margins.





Our
results of operations are dependent upon market prices for oil and gas, which
fluctuate widely and are beyond our control.





If and
when production from oil and gas properties is reached, our revenue,
profitability, and cash flow depend upon the prices and demand for oil and
natural gas. The markets for these commodities are very volatile and even
relatively modest drops in prices can significantly affect our financial results
and impede our growth. Prices received also will affect the amount of future
cash flow available for capital expenditures and may affect our ability to raise
additional capital. Lower prices may also affect the amount of natural gas and
oil that can be economically produced from reserves either discovered or
acquired. Factors that can cause price fluctuations include: (i) the level of
consumer product demand; (ii) domestic and foreign governmental regulations;
(iii) the price and availability of alternative fuels; (iv) technical advances
affecting energy consumption; (v) proximity and capacity of oil and gas
pipelines and other transportation facilities; (vi) political conditions in
natural gas and oil producing regions; (vii) the domestic and foreign supply of
natural gas and oil; (viii) the ability of members of Organization of Petroleum
Exporting Countries to agree to and maintain oil price and production controls;
(ix) the price of foreign imports; and (x) overall domestic and global economic
conditions.





The
availability of a ready market for our oil and gas depends upon numerous factors
beyond our control, including the extent of domestic production and importation
of oil and gas, the relative status of the domestic and international economies,
the proximity of our properties to gas gathering systems, the capacity of those
systems, the marketing of other competitive fuels, fluctuations in seasonal
demand and governmental regulation of production, refining, transportation and
pricing of oil, natural gas and other fuels.





The
oil and gas industry in which we operate involves many industry related
operating and implementation risks that can cause substantial losses, including,
but not limited to, unproductive wells, natural disasters, facility and
equipment problems and environmental hazards.





Our
success largely depends on the success of our exploitation, exploration,
development and production activities. Our oil and natural gas exploration and
production activities are subject to numerous risks beyond our control,
including the risk that drilling will not result in commercially viable oil or
natural gas production. Drilling for oil and natural gas can be unprofitable,
not only from dry holes, but from productive wells that do not produce
sufficient revenues to return a profit. In addition, our drilling and producing
operations may be curtailed, delayed or canceled as a result of other drilling
and production, weather and natural disaster, equipment and service failure,
environmental and regulatory, and site specific related factors, including but
not limited to: (i) fires; (ii) explosions; (iii) blow-outs and surface
fractures; (iv) uncontrollable flows of underground natural gas, oil, or
formation water; (v) natural disasters; (vi) facility and equipment failures;
(vii) title problems; (viii) shortages or delivery delays of equipment and
services; (ix) abnormal pressure formations; (x) environmental hazards such as
natural gas leaks, oil spills, pipeline ruptures and discharges of toxic gases
and (xi) weather related events such as hurricanes can cause disruption of
deliveries or destruction of producing facilities, either on or off
shore.  Such damage may be to our facilities or to facilities operated
by other companies needed for the delivery of our production.





If any of
these events occur, we could incur substantial losses as a result of: (i) injury
or loss of life; (ii) severe damage to and destruction of property, natural
resources or equipment; (iii) pollution and other environmental damage; (iv)
clean-up responsibilities; (v) regulatory investigation and penalties; (vi)
suspension of our operations; or (vii) repairs necessary to resume
operations.





If we
were to experience any of these problems, it could affect well bores, gathering
systems and processing facilities, any one of which could adversely affect our
ability to conduct operations. We may be affected by any of these events more
than larger companies, since we have limited working capital.





Terrorist
attacks aimed at our energy operations could adversely affect our
business.





The
continued threat of terrorism and the impact of military and other government
action has led and may lead to further increased volatility in prices for oil
and natural gas and could affect these commodity markets or the financial
markets used by us. In addition, the U.S. government has issued warnings that
energy assets may be a future target of terrorist organizations. These
developments have subjected our oil and natural gas operations to increased
risks.





13
 The
oil and gas industry is highly competitive and there is no assurance that we
will be successful in acquiring leases.





The oil
and natural gas industry is intensely competitive, and we compete with other
companies that have greater resources. Many of these companies not only explore
for and produce oil and natural gas, but also carry on refining operations and
market petroleum and other products on a regional, national or worldwide basis.
These companies may be able to pay more for productive oil and natural gas
properties and exploratory prospects or define, evaluate, bid for and purchase a
greater number of properties and prospects than our financial or human resources
permit. In addition, these companies may have a greater ability to continue
exploration activities during periods of low oil and natural gas market prices.
Our larger competitors may be able to absorb the burden of present and future
federal, state, local and other laws and regulations more easily than we can,
which would adversely affect our competitive position.





We
may not be able to keep pace with technological developments in our
industry.





The
natural gas and oil industry is characterized by rapid and significant
technological advancements and introduction of new products and services which
utilize new technologies. As others use or develop new technologies, we may be
placed at a competitive disadvantage or competitive pressures may force us to
implement those new technologies at substantial costs. In addition, other
natural gas and oil companies may have greater financial, technical, and
personnel resources that allow them to enjoy technological advantages and may in
the future allow them to implement new technologies before we are able to. We
may not be able to respond to these competitive pressures and implement new
technologies on a timely basis or at an acceptable cost. If one or more of the
technologies we use now or in the future were to become obsolete or if we are
unable to use the most advanced commercially available technology, our business,
financial condition, and results of operations could be materially adversely
affected.





The
marketability of natural resources will be affected by numerous factors beyond
our control, which may result in us not receiving an adequate return on invested
capital to be profitable or viable.





The
marketability of natural resources which may be acquired or discovered by us
will be affected by numerous factors beyond our control. These factors include
market fluctuations in oil and gas pricing and demand, the proximity and
capacity of natural resource markets and processing equipment, governmental
regulations, land tenure, land use, regulation concerning the importing and
exporting of oil and gas and environmental protection regulations. The exact
effect of these factors cannot be accurately predicted, but the combination of
these factors may result in us not receiving an adequate return on invested
capital to be profitable or viable.





Oil
and gas operations are subject to comprehensive regulation which may cause
substantial delays or require capital outlays in excess of those anticipated
causing an adverse effect on our business operations.





Oil and
gas operations are subject to federal, state, and local laws relating to the
protection of the environment, including laws regulating removal of natural
resources from the ground and the discharge of materials into the environment.
Oil and gas operations are also subject to federal, state, and local laws and
regulations which seek to maintain health and safety standards by regulating the
design and use of drilling methods and equipment. Various permits from
government bodies are required for drilling operations to be conducted; no
assurance can be given that such permits will be received. Environmental
standards imposed by federal, provincial, or local authorities may be changed
and any such changes may have material adverse effects on our activities.
Moreover, compliance with such laws may cause substantial delays or require
capital outlays in excess of those anticipated, thus causing an adverse effect
on us. Additionally, we may be subject to liability for pollution or other
environmental damages which we may elect not to insure against due to
prohibitive premium costs and other reasons. To date we have not been required
to spend material amounts on compliance with environmental regulations. However,
we may be required to do so in future and this may affect our ability to
maintain our operations.





We
may not have enough insurance to cover all of the risks that we face and
operations of prospects in which we participate may not maintain or may fail to
obtain adequate insurance.





We cannot
insure fully against pollution and environmental risks. The occurrence of an
event not fully covered by insurance could have a material adverse effect on our
financial condition and results of operations. The impact of recent hurricanes
has resulted in escalating insurance costs and less favorable coverage
terms.





Oil and
natural gas operations are subject to particular hazards incident to the
drilling and production of oil and natural gas, such as blowouts, cratering,
explosions, uncontrollable flows of oil, natural gas or well fluids, fires and
pollution and other environmental risks. These hazards can cause personal injury
and loss of life, severe damage to and destruction of property and equipment,
pollution or environmental damage and suspension of operation. The occurrence of
a significant adverse event that is not fully covered by insurance could result
in the loss of our total investment in a particular prospect which could have a
material adverse effect on our financial condition and results of
operations





14


Any
change to government regulation/administrative practices may have a negative
impact on our ability to operate and our profitability.





The laws,
regulations, policies or current administrative practices of any government
body, organization or regulatory agency in the United States or any other
jurisdiction, may be changed, applied or interpreted in a manner which will
fundamentally alter our ability to carry on business. The actions, policies or
regulations, or changes thereto, of any government body or regulatory agency, or
other special interest groups, may have a detrimental effect on us. Any or all
of these situations may have a negative impact on our ability to operate and/or
our profitably.





ITEM 2. DESCRIPTION OF PROPERTY





During
2009 we leased approximately 6,178 square feet of office space in a building
located at 2121 Sage Road, Suite 200, Houston, Texas 77056. The premises are
leased from an arms-length third party, pursuant to a lease agreement at the
rate of $9,781.83 per month.  On November 12, 2009, the parties agreed
to amend the lease whereby the $49,564.85 the company owed to the Lessor at that
time was amortized into the monthly lease payment.  The monthly rent
payment will increase by $1,371.11 to $11,152.94 per month over the remaining
41.5 months of the lease term.  The amortization will use an 8%
interest rate.





ITEM
3. LEGAL PROCEEDINGS





None





ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS





None






























15





PART II





ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY
SECURITIES





Market
Information





Our
common stock has been traded under the stock symbol “EXBX” on the OTCBB and Pink
Sheets market. The chart below breaks down the high and the low prices for our
last two fiscal years which quotations reflect inter-dealer price, without
retail mark-up, mark-down or commission, and may not reflect actual
transactions. The trading price for our common stock has been, and we expect it
to continue to be, volatile. During 2009, 2008 and 2007, the high and low prices
were as follows:





Quarter
      Ended
            
            High
            
            
            LowJuly
      31, 2009
            
            $
            0.235
            
            
            $
            0.05April
      30, 2009
            
            $
            0.10
            
            
            $
            0.055January
      31, 2009
            
            $
            0.135
            
            
            $
            0.07October
      31, 2008
            
            $
            0.23
            
            
            $
            0.11July
      31, 2008
            
            $
            0.30
            
            
            $
            0.078April
      30, 2008
            
            $
            0.48
            
            
            $
            0.20January
      31, 2008
            
            $
            0.30
            
            
            $
            0.03October
      31, 2007
            
            $
            0.45
            
            
            $
            0.20








On
November 30, 2009 the last sales price of our common stock was $0.032 per
share.





Holders





The
approximate number of holders of record of our common stock is over
3,000.





Dividends





We have
not paid any cash dividends on our equity security and our board of directors
has no present intention of declaring any cash dividends.





Recent
Sales of Securities





Set forth
below is certain information concerning issuances of common stock that were not
registered under the Securities Act of 1933 (“Securities Act”) that occurred in
the fourth quarter of fiscal 2009, as well as during fiscal 2009.





On
October 10, 2008, an unaffiliated third party acquired 550,000 shares of our
common stock for services rendered to the Company valued at
$77,000.





On
November 5, 2008, two employees acquired 31,250 shares of our common stock for
services rendered to the Company valued at $4,219.




On
November 5, 2008 a unaffiliated shareholder converted 5,000 shares of Series A
Preferred Stock and 17,568 shares of Series B Preferred Stock into 460,295 and
1,617,291 shares of common stock, respectively.





On
December 9, 2008, an unaffiliated third party acquired 500,000 shares of our
common stock for services rendered to the Company valued at
$52,500.





On
December 9, 2008, an employee acquired 12,500 shares of our common stock for
services rendered to the Company valued at $1,313.





On
January 14, 2009, an unaffiliated third party acquired 250,000 shares of our
common stock for services rendered to the Company valued at
$26,250.





On
January 14, 2009, Mr. Scott Copeland, Dr. Evans, Mr. Pernia and Mr. Studdard
acquired 25,000 shares each of our common stock totaling 100,000 shares for
services rendered to the Company valued at $10,500.





16


On March
9, 2009, Mr. Scott Copeland acquired 2,462,712 shares of our common stock for
accrued payroll owed to him by the Company $147,763.





On April
15, 2009, Mr. Dillon acquired 250,000 shares of our common stock for services
rendered to the Company valued at $17,500.





On April
15, 2009, Mr. Wirtz acquired 250,000 shares of our common stock for services
rendered to the Company valued at $17,500.





On April
15, 2009, Mr. Regan acquired 5,325,000 shares of our common stock for services
rendered to the Company valued at $372,750.





On April
15, 2009, Mr. Leibowitz acquired 50,000 shares of our common stock for services
rendered to the Company valued at $3,500.





On April
15, 2009, two employees acquired 37,500 shares of our common stock for services
rendered to the Company valued at $2,625.





On April
15, 2009, four unaffiliated third parties acquired 1,000,000 shares of our
common stock for services rendered to the Company valued at
$70,000.





On April
29, 2009, an unaffiliated third party acquired warrants to purchase 500,000
shares of Company common stock at $0.03 per share as part of a $25,000
convertible note convertible into 625,000 shares of our common stock which were
subsequently converted on August 10, 2009.





On April
30, 2009, an unaffiliated third party acquired warrants to purchase 1,100,000
shares of Company common stock at $0.03 per share as part of a $55,000
convertible note convertible into 1,375,000 shares of our common stock which
were subsequently converted on July 30, 2009.





On May
15, 2009, Mr. Dillon acquired 384,792 shares of our common stock as agreed to by
the Company as part of his Termination Agreement valued at $19,240.





On May
15, 2009, Mr. Wirtz acquired 230,875 shares of our common stock as agreed to by
the Company as part of his Termination Agreement valued at $12,236.





On May
18, 2009, Mr. Ernst acquired 3,750,000 shares of our common stock for services
rendered to the Company valued at $187,500.





On May
18, 2009, Mr. Leibowitz acquired 3,250,000 shares of our common stock for
services rendered to the Company valued at $172,250.





On May
18, 2009, four employees acquired 837,500 shares of our common stock for
services rendered to the Company valued at $44,388.





On May
18, 2009, three unaffiliated third parties acquired 4,500,000 shares of our
common stock for services rendered to the Company valued at
$238,500.





On May
20, 2009, an unaffiliated third party acquired 3,333,333 shares of our common
stock in consideration of $110,000.





On May
28, 2009, an unaffiliated third party acquired 250,000 shares of our common
stock and three-year warrants to purchase 200,000 shares of common stock at an
exercise price of $0.03 in consideration of $7,500.





On May
28, 2009, two unaffiliated third parties acquired 1,533,333 shares of our common
stock and three-year warrants to purchase 980,000 shares of common stock at an
exercise price of $0.03 in consideration of $46,000.





On June
1, 2009, an unaffiliated third party acquired 250,000 shares of our common stock
in consideration of $12,500.





On June
1, 2009, two unaffiliated third parties acquired 825,000 shares of our common
stock and three-year warrants to purchase 825,000 shares of common stock at an
exercise price of $0.03 in consideration of $35,000.





On June
4, 2009, four unaffiliated third parties acquired 1,325,000 shares of our common
stock in consideration of $70,000.





On June
4, 2009, six unaffiliated third parties acquired 2,075,000 shares of our common
stock and three-year warrants to purchase 2,075,000 shares of common stock at an
exercise price of $0.03 in consideration of $90,000.





17


On June
12, 2009, an unaffiliated third party acquired 83,333 shares of our common stock
and three-year warrants to purchase 83,333 shares of common stock at an exercise
price of $0.12 in consideration of $10,000.





On June
15, 2009, Mr. Dillon acquired 384,792 shares of our common stock as agreed to by
the Company as part of his Termination Agreement valued at $19,240.





On June
15, 2009, Mr. Wirtz acquired 230,875 shares of our common stock as agreed to by
the Company as part of his Termination Agreement valued at $12,236.





On June
18, 2009, an unaffiliated third party acquired 1,675,460 shares of our common
stock for services rendered to the Company valued at $149,357.





On June
18, 2009, an unaffiliated third party acquired 4,818,608 shares of our common
stock in exchange for debt that the Company owed to the third party valued at
$149,357.





On June
22, 2009, two employees acquired 30,000 shares of our common stock for services
rendered to the Company valued at $5,110.





On June
29, 2009, an unaffiliated third party acquired 1,408,451 shares of our common
stock and three-year warrants to purchase 1,408,451 shares of common stock at an
exercise price of $0.0497 in consideration of $100,000.





On July
15, 2009, Mr. Dillon acquired 384,792 shares of our common stock as agreed to by
the Company as part of his Termination Agreement valued at $20,394.





On July
15, 2009, Mr. Wirtz acquired 230,875 shares of our common stock as agreed to by
the Company as part of his Termination Agreement valued at $11,544.





On July
30, 2009, an unaffiliated third party acquired 1,375,000 shares of our common
stock in exchange for debt that the Company owed to the third party valued at
$55,000.





On August
7, 2009, an unaffiliated third party acquired 250,000 shares of our common stock
in consideration of $15,000.





On August
7, 2009, eighteen unaffiliated third parties acquired 1,690,000 shares of our
common stock through the exercise of warrants at $0.06 per share for a total
consideration of $101,400.





On August
10, 2009, an unaffiliated third party acquired 625,000 shares of our common
stock in exchange for debt that the Company owed to the third party valued at
$25,000.





On August
26, 2009, an unaffiliated third party acquired 90,000 shares of our common stock
for leasehold improvements to the Company’s office space valued at
$8,100





At
November 20, 2009, there were no longer any shares of Class A Common Stock,
Series B Preferred Stock, Series C Preferred Stock and Series D Preferred
Stock.  The only preferred stock that remains outstanding is 1,378
shares of Series A Preferred Stock that is convertible into 126,857 shares of
Common Stock.





The issuances referenced above were
consummated pursuant to Section 4(2) of the Securities Act and the rules and
regulations promulgated thereunder on the basis that such transactions did not
involve a public offering and the offerees were sophisticated, accredited
investors with access to the kind of information that registration would
provide. The recipients of these securities represented their intention to
acquire the securities for investment only and not with a view to or for sale in
connection with any distribution thereof and appropriate legends were affixed to
the share certificates and other instruments issued in such transactions. No
sales commissions were paid to register brokers in connection with these
issuances listed above.





18


EQUITY
COMPENSATION PLAN INFORMATION





The
following table sets forth certain information, as of July 31, 2009, concerning
securities authorized for issuance under the 2007 Stock Option Plan and other
outstanding options, warrants and rights:





Number
      of Securities to be Issued Upon Exercise of Outstanding Options, Warrants
      & Rights
              (a)
            
            
            Weighted
      Averaged Exercise Price of Outstanding Options, Warrants &
      Rights
              (b)
            
            
            Number
      of Securities Remaining Available for Future Issuance Under Equity
      Compensation Plans (Excluding Securities Reflected in Column
      (a)
              (c)Equity
      compensation plans approved by security holders:None
            
            
            --
            
            
            
            --
            
            
            
            --Equity
      compensations plans not approved by security holders:2007
      Directors, Officers and Consultants Stock Option, Stock Warrant and Stock
      Award Plan
            
            
            16,760,578
            (1)
            
            $
            .2978
            (2)
            
            
            3,239,422Total
            
            
            16,760,578
            
            
            $
            .2978
            
            
            
            3,239,422


______________


(1)  The
Company has issued an aggregate of 11,210,578 shares to consultants and vendors
during the fiscal year ended July 31, 2009 and 4,000,000 in total shares in
prior years.  1,500,000 shares were granted under a warrant to a
consultant during the fiscal year ended July 31, 2008.  No options,
warrants or other rights were issued during the fiscal year ended July 31, 2009
or the fiscal year ended July 31, 2008.





(2)  Calculated
based on the fair market price of our common stock on the date of
issuance.





ITEM
6   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION





CRITICAL
ACCOUNTING POLICIES





In
December 2001, the Securities and Exchange Commission requested that all
registrants discuss their "critical accounting policies" in management's
discussion and analysis of financial condition and results of operations. The
SEC indicated that a "critical accounting policy" is one that is both important
to the portrayal of the company's financial condition and results and that
requires management's most difficult, subjective or complex judgments. Such
judgments are often the result of a need to make estimates about the effect of
matters that are inherently uncertain. While Exobox’s significant accounting
policies are more fully described in Note 1 to its financial statements included
elsewhere in this annual report Exobox currently believes the following
accounting policies to be critical:





Development
Stage Company





Exobox is
considered to be in the development stage as defined in Statement of Financial
Accounting Standards (SFAS) No. 7, Accounting Standards Codification (“ASC”)
ASC915 “Accounting and
Reporting by Development Stage Enterprises”. Exobox has devoted
substantially all of its efforts to business planning, raising capital, research
and development, recruiting management and technical staff, and acquiring
operating assets.  We have experienced a loss since
inception.





Research and
Development





Research
and product development includes all research and development expenses and
software development costs. We expense all research and development expenses as
incurred. We expense all software development costs associated with establishing
technological feasibility, which we define as completion of beta testing.
Because of the insignificant amount of costs incurred between completion of beta
testing and general customer release, we have not capitalized any software
development costs in the accompanying financial statements.





Income
Taxes





The
income tax benefit is computed on the pre-tax loss based on the current tax law.
Deferred income taxes are recognized for the tax consequences in future years of
differences between the tax basis of assets and liabilities and their financial
reporting amounts at each year-end based on enacted tax laws and statutory tax
rates. No benefit is reflected for the fiscal year ended July 31,
2009.





Valuation
of the Embedded and Warrant Derivatives





The
valuation of our embedded derivatives and warrant derivatives are determined
primarily by the Black-Scholes option pricing model. An embedded derivative is a
derivative instrument that is embedded within another contract, which under the
convertible note (the host contract) includes the right to convert the note by
the holder, certain default redemption right premiums and a change of control
premium (payable in cash if a fundamental change occurs). In accordance with
SFAS No. 133, as amended, ASC 815 “Accounting for Derivative
Instruments and Hedging Activities”, as amended, these embedded
derivatives are marked-to-market each reporting period, with a corresponding
non-cash gain or loss charged to the current period. A warrant derivative
liability is determined in accordance with Emerging Issues Task Force (“EITF”)
EITF 00-19, ASC 815. Based on EITF 00-19, ASC 815, warrants which are determined
to be classified as derivative liabilities are marked-to-market each reporting
period, with a corresponding non-cash gain or loss charged to the current
period. The practical effect of this has been that when our stock price
increases so does our derivative liability and resulting in a non-cash loss
charge that reduces our earnings and earnings per share. When our stock price
declines, we record a non-cash gain, increasing our earnings and earnings per
share.





19


To determine the fair value of our
embedded derivatives, management evaluates assumptions regarding the probability
of certain future events. Other factors used to determine fair value include our
period end stock price, historical stock volatility, risk free interest rate and
derivative term. The fair value recorded for the derivative liability varies
from period to period. This variability may result in the actual derivative
liability for a period either above or below the estimates recorded on our
consolidated financial statements, resulting in significant fluctuations in
other income (expense) because of the corresponding non-cash gain or loss
recorded.





Property
and Equipment and Other Identifiable Intangibles





Property
and Equipment is stated at cost and depreciated using the straight-line method
over the shorter of the estimated useful life of the asset or the least term,
ranging from three to five years.  Significant improvements and
betterments are capitalized.  Routine repairs and maintenance are
expensed when incurred.  When property and equipment is sold or
otherwise disposed of, the asset account and related accumulated depreciation
account are relieved, and any gain or loss is included in
operations.





The
Company reviews property, plant, and equipment and certain identifiable
intangibles, excluding goodwill, for impairment in accordance with SFAS No. 144,
ASC 360 “Accounting for the
Impairment of Long-Lived Assets” and for “Long-Lived Assets to Be Disposed
Of”. Long-lived assets are reviewed for impairment whenever events or
changes in circumstances indicate the carrying amount of an asset may not be
recoverable. Recoverability of these assets is measured by comparison of its
carrying amount to future undiscounted cash flows the assets are expected to
generate. If property, plant, and equipment and certain identifiable intangibles
are considered to be impaired, the impairment to be recognized equals the amount
by which the carrying value of the assets exceeds its fair market value. The
Company did not record any impairments during 2009 and 2008.





Stock-based
Compensation





Exobox
adopted SFAS No. 123(R), ASC 718 “Compensation—Stock
Compensation” in 2007 using the modified prospective method. ASC 718
requires companies to measure the cost of employee services received in exchange
for an award of an equity instrument based on the grant-date fair value of the
award. For stock-based awards granted on or after January 1, 2006, stock-based
compensation expense is recognized on a straight-line basis over the requisite
service period. We account for non-employee share-based awards in accordance
with EITF No. 98-18, ASC 505 – 50 (formerly EITF 96-18 “Accounting for Equity Instruments
Issued to Non-Employees for Acquiring, or in Conjunction with Selling, Goods or
Services”.





Overview





Exobox
Technologies Corp. develops and delivers information risk management and security software
solutions that help organizations protect and recover their most valuable
information assets. We are committed to our vision of creating a more secure
environment for the information-centric community through the development of new
technologies and security services.  This information-centric
community is primarily comprised of companies that must abide by Governance,
Risk and Compliance (GRC) policies - Fortune 500 public companies; the secondary
target audience are those companies with valuable at-risk information,
including: financial services providers, healthcare providers and
high-technology providers.





Information
follows a typical path, or lifecycle:  creation, distribution,
storage, copying, transformation, and disposal.  Throughout this data
lifecycle, an organization’s information or intellectual property is at risk to
exposure of being in the wrong hands or in the wrong place.  Nearly
every organization has been exploited through data leaks. Intellectual property,
financial information, confidential client lists, customer, patient and employee
data . . . it is all at risk of exposure from both internal and external
threats. The biggest contributors to information security risks are the open
exchange of information through the Internet, especially via web 2.0
applications such as social-networking sites, video-sharing sites and blogs, the
rapid growth of a mobile workforce, the termination of employment, the lack of
understanding that information is confidential – just to name a
few.  In fact, the market is so concerned about these issues that
security software revenue is expected to exceed $13.1 billion by 2012 or a
compound average growth rate (CAGR) of 10.5% by 2012 according to
Gartner.





Recently,
we have achieved several key milestones:





·
            We
      appointed Richard J. Kampa as President, Chief Executive Officer and
      Director to lead the strategic and daily operations of the company and
      brought back Michael G. Wirtz as Chief Financial
  Officer.·
            We
      brought the ExoDetectTM product to general
      availability.  ExoDetectTM is our first
  product.·
            We
      released ExoDetectTM at the end of June, 2009.  This first
      product is an affordable, software-as-a-service (SaaS) data leak detection
      (DLD) software solution that discovers and rates the risk of unauthorized
      “data in the wild.”  ExoDetectTM reports on the knowledge needed
      to tighten an organization’s data leak prevention (DLP) controls, while
      providing the first step in mitigating the financial and legal risks
      associated with stolen or misappropriated confidential
      information.  ExoDetect TM performs scans for compromised data on
      any exposed area in the Internet Cloud; classifies the discovered
      information according to confidence and severity ratings; and captures the
      forensic evidence needed to address the breach, including litigation or
      prosecution. We have an ongoing process of updating and refining the
      ExoDetectTM product.·
            The
      Company is focused on marketing to its clients its current products,
      ExoDetectTM and ExoWatchTM and developing its other proprietary
      technology.





Exobox
was founded in 2002 and, in conjunction with becoming a publicly-traded company
in September 2005, merged with a successor Nevada corporation which was
originally incorporated in 1999.




20





RESULTS
OF OPERATIONS THE TWELVE MONTHS ENDED JULY 31, 2009 COMPARED TO JULY 31,
2008





Net Sales . The Company has
no sales since inception.





Research and Development
Expenses . The Company had no research and development expenses for the
year ended July 31, 2009 and July 31, 2008. The Company has incurred $1,191,083
in research and development expenses since inception.





General and Administrative Expense
("G&A") . The Company's G&A expenses for the years ended July 31,
2008 and 2009 increased from $324,179 to $3,794,389. The increase was primarily
due to an increase in stock-based compensation and the increased rent expense
due to change in leases and increased travel.





Loss/Gain on Derivatives. The
derivative liability is in connection with the convertible notes issued in
September 2006, which was extinguished by July 31, 2008 resulting in a gain of
$2,025,042.  The Company had no derivative liability for the year
ended July 31, 2009.





Professional Fees. The
Company’s professional fees for the years ended decreased from $2,176,970 to
$796,115. The decrease was primarily due to decrease for demand for professional
services.





Payroll Expenses. The
Company’s payroll expenses for the years ended decreased from $2,646,755 to
$1,336,156. The decrease was primarily decrease in staff for the year ended July
31, 2009.





Net Loss. The Company’s net
loss for the years ended increased from $ $3,217,597 to $6,480.676. The increase
was primarily due to stock based compensation and options expense.





COMMON
STOCK ISSUANCES





During
the fiscal year ended July 31, 2009, 23,380,751 shares of restricted stock were
issued to employees, consultants and stock purchasers for cash and consideration
of $1,501,443.





Additionally,
during the fiscal year ended July 31, 2009, 10,498,903 shares of unrestricted
stock were issued to employees and consultants from the 2007 Directors, Officers
and Consultants Stock Option, Stock Warrant and Stock Award Plan for services
rendered to the Company valued at $800,163.





LIQUIDITY
AND CAPITAL RESOURCES





As of
July 31, 2009, we have current assets of $8,564, mainly consisting deposit of
Sage Park for $8,561, current liabilities of $1,656,660, of which $875,081 is
for Advance from Shareholders.  We have property and equipment and
other intangible assets which total $401,907 and no long-term
liabilities.





We have a
working capital deficit of $1,648,096 and a total deficit accumulated during the
development stage of $16,188,022 as of July 31, 2009.





We had $2,556,774 of net cash used in
operating activities for the year ended July 31, 2009, which was mainly due to
stock issued for services $2,335,486.  We had $228,642 of net cash
used in investing activities for the year ended July 31, 2009, which was mainly
due to the acquisition of property and equipment.  We had $2,018,081
of net cash provided by financing activities for the year ended July 31, 2009,
which was mainly due to advances from stockholders of $1,397,081.





Our
current liquidity position only allows us to meet nominal working capital
needs.  We will need $2,000,000 to meet our working capital needs
through fiscal 2009.  In order to fund our full product development,
including marketing and testing, we will need to raise at least an additional
$9,000,000.





Our
inability to obtain immediate financing from third parties will negatively
impact our ability to fund operations and execute our business
plan.  Any failure to obtain such financing could force us to abandon
or curtail our operations.  There is no assurance that we can raise
additional capital from external sources, the failure of which could cause us to
sell assets or curtail operations.  We have no credit facilities in
place or commitments to provide any financing and we have historically relied on
best efforts debt and equity funding.   Our auditors have issued
a going concern opinion for our financial statements due to the substantial
doubt about our ability to continue as a going concern.





21


Preferred
Stock Conversions





On
November 5, 2008, a shareholder converted 5,000 shares of Series A Preferred
Stock and 17,568 shares of Series B Preferred Stock into 460,295 and 1,617,291
shares of common stock, respectively.  Subsequently at November 20,
2009, there were no longer any shares of Class A Common Stock, Series B
Preferred Stock, Series C Preferred Stock and Series D Preferred
Stock.  The only preferred stock that remains outstanding is 1,378
shares of Series A Preferred Stock that is convertible into 126,857 shares of
Common Stock.





Off
Balance Sheet Arrangements





None.





Contractual
Commitments





None












































22


ITEM
7. FINANCIAL STATEMENTS AND RELATED FOOTNOTES





Report of Independent
Registered Public Accounting Firm





To the
Board of Directors


Exobox
Technologies Corp.


(a
development stage company)


Houston,
Texas





We have
audited the accompanying balance sheets of Exobox Technologies Corp. (the
“Company”) as of July 31, 2009 and 2008 and the related statements of
operations, stockholders’ equity (deficit), and cash flows for the years then
ended and for the period from October 21, 2002 (inception) through July 31,
2009. These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these financial
statements based on our audits.





We
conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion.   An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.





In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Exobox Technologies Corp., as of
July 31, 2009 and 2008 and the results of its operations and its cash flows for
the years then ended and for the period from October 21, 2002 (inception)
through July 31, 2009 in conformity with accounting principles generally
accepted in the United States of America.





The
accompanying financial statements have been prepared assuming that Exobox
Technologies Corp. will continue as a going concern. As discussed in Note 2 to
the financial statements, Exobox Technologies Corp. has suffered recurring
losses from operations, has negative cash flow from operations, and has an
accumulated deficit, which raise substantial doubt about its ability to continue
as a going concern. Management’s plans regarding these matters also are
described in Note 2. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.





/s/ Malone & Bailey,
PC





www.malone-bailey.com


Houston,
Texas





November
30, 2009














23








EXOBOX
TECHNOLOGIES CORP.


(A
DEVELOPMENT STAGE COMPANY)


BALANCE
SHEETS





ASSETS
              
              July
      31, 2009
              
              
              July
      31, 2008Current
      Assets:Cash
              
              $
              3
              
              
              $
              767,338Other
      Current Assets
              
              
              8,561
              
              
              
              61,972Prepaid
      Insurance
              
              
              -
              
              
              
              22,628Total
      Current Assets
              
              
              8,564
              
              
              
              851,938Property
      and equipment, net
              
              
              395,338
              
              
              
              213,223Other
      Assets:Patents,
      net
              
              
              1
              
              
              
              53,590Intangibles,
      net
              
              
              6,568
              
              
              
              7,951TOTAL
      ASSETS
              
              $
              410,471
              
              
              $
              1,126,702LIABILITIES
      AND STOCKHOLDERS' DEFICITCurrent
      Liabilities:Accounts
      Payable
              
              $
              432,621
              
              
              $
              53,451Accounts
      Payable-Stockholders
              
              
              2,594
              
              
              
              -Accrued
      Liabilities
              
              
              314,964
              
              
              
              429,217Advances
      from Stockholders
              
              
              875,081
              
              
              
              -Note
      Payable
              
              
              30,000
              
              
              
              -Deferred
      Income
              
              
              1,400
              
              
              
              -Total
      Current Liabilities
              
              
              1,656,660
              
              
              
              482,668STOCKHOLDERS'
      EQUITY (DEFICIT)Preferred
      stock:Series
      A convertible preferred stock, $0.001 par, 2,500,000 shares authorized,
      1,378 and 6,378 shares issued and outstanding as of July 31, 2009 and
      2008, respectively
              
              
              1
              
              
              
              6Series
      B convertible preferred stock, $0.001 par, 2,000,000 shares authorized, 0
      and 17,568 shares issued and outstanding at July 31, 2009 and 2008,
      respectively
              
              
              -
              
              
              
              18Common
      stock, $0.001 par value, 500,000,000 shares authorized, 460,664,395 and
      398,435,250 shares issued and outstanding at July 31, 2009 and 2008,
      respectively
              
              
              460,664
              
              
              
              398,435Additional
      paid-in capital
              
              
              14,481,168
              
              
              
              9,952,921Deficit
      accumulated during development stage
              
              
              (16,188,022
              )
              
              
              (9,707,346
              )Total
      stockholders' equity (deficit)
              
              
              (1,246,189
              )
              
              
              644,034TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
              
              $
              410,471
              
              
              $
              1,126,702





See
accompanying notes to the financial statements








24


EXOBOX
TECHNOLOGIES CORP.


(A
DEVELOPMENT STAGE COMPANY)


STATEMENTS
OF OPERATIONS


For the
Years Ended July 31, 2009 and 2008,


and
October 21, 2002 (Inception) to July 31, 2009





Year
      Ended July 31,
            
            
            Year
      Ended July 31,
            
            
            October 21,
      2002 (Inception) To July 31,2009
            
            
            2008
            
            
            2009Revenues
            
            $
            -
            
            
            $
            -
            
            
            $
            -Cost
      of Revenue
            
            
            14,657
            
            
            
            -
            
            
            
            14,657Gross
      Loss
            
            
            14,657
            
            
            
            -
            
            
            
            14,657Operating
      Expenses:General
      & administrative
            
            
            3,794,389
            
            
            
            324,179
            
            
            
            4,678,177Depreciation
      and amortization
            
            
            90,013
            
            
            
            24,680
            
            
            
            128,336Professional
      fees
            
            
            796,115
            
            
            
            2,176,970
            
            
            
            4,212,338Payroll
      expenses
            
            
            1,336,156
            
            
            
            2,646,755
            
            
            
            5,880,147Loss
      on disposal of assets
            
            
            9,855
            
            
            
            -
            
            
            
            9,855Loss
      on impairment of assets
            
            
            50,591
            
            
            
            -
            
            
            
            50,591Research
      and development
            
            
            381,431
            
            
            
            75,000
            
            
            
            1,191,083Total
      Operating Expenses
            
            
            6,458,550
            
            
            
            5,247,584
            
            
            
            16,150,527Loss
      from Operations
            
            
            6,473,207
            
            
            
            5,247,584
            
            
            
            16,165,184Other
      Income (Expenses):Gain
      on derivatives
            
            
            -
            
            
            
            2,025,042
            
            
            
            100,000Gain
      on extinguishment of AP
            
            
            84,065
            
            
            
            -
            
            
            
            84,065Gain
      on extinguishment of note
            
            
            -
            
            
            
            7,137
            
            
            
            7,137Interest
      income
            
            
            1,489
            
            
            
            2,089
            
            
            
            3,578Interest
      expense
            
            
            (93,023
            )
            
            
            (4,281)
            
            
            
            (217,618)Total
      Other Income (Expenses)
            
            
            (7,469)
            
            
            
            2,029,987
            
            
            
            (22,838)Loss
      Before Income Taxes
            
            
            6,480,676
            
            
            
            3,217,597
            
            
            
            16,188,022Provision
      for Income Taxes
            
            
            -
            
            
            
            -
            
            
            
            -Net
      Loss
            
            $
            (6,480,676
            )
            
            $
            (3,217,597
            )
            
            $
            (16,188,022)Basic
      and dilutedNet
      loss per common share-basic and diluted
            
            $
            (.02
            )
            
            $
            (0.01
            )Weighted
      average shares outstanding-basic and diluted
            
            
            414,532,158
            
            
            
            313,297,790





See
accompanying notes to the financial statements








25


EXOBOX
TECHNOLOGIES CORP.


(A
DEVELOPMENT STAGE COMPANY)


STATEMENTS
OF CASH FLOWS


For the
Years Ended July 31, 2009 and 2008,


and
October 21, 2002 (Inception) to July 31, 2009


Year
      Ended July 31,
              
              
              Year
      Ended July 31,
              
              
              October 21,
      2002 (Inception) to July 31,2009
              
              
              2008
              
              
              2009CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      Loss
              
              $
              (6,480,676
              )
              
              $
              (3,217,597
              )
              
              $
              (16,188,022
              )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Shares
      issued for services
              
              
              2,335,486
              
              
              
              1,193,767
              
              
              
              3,702,254Warrant
      issued for consulting services
              
              
              -
              
              
              
              434,165
              
              
              
              446,660Loss
      on disposal of assets
              
              
              9,855
              
              
              
              -
              
              
              
              9,855Loss
      on impairment of assets
              
              
              50,591
              
              
              
              -
              
              
              
              50,591Depreciation
      and amortization
              
              
              90,013
              
              
              
              24,680
              
              
              
              128,337Share-based
      compensation
              
              
              593,977
              
              
              
              1,552,800
              
              
              
              2,896,777(Gain)
      Loss on derivative
              
              
              -
              
              
              
              (2,025,042
              )
              
              
              5,000Gain
      on debt extinguishment
              
              
              -
              
              
              
              (7,137
              )
              
              
              (7,137
              )Gain
      on accounts payable
              
              
              (84,065
              )
              
              
              -
              
              
              
              (84,065
              )Contributed
      capital
              
              
              62,522
              
              
              
              -
              
              
              
              62,522Amortization
      of debt discount
              
              
              80,000
              
              
              
              -
              
              
              
              80,000Changes
      in operating assets and  liabilitiesPrepaid
      and other current assets
              
              
              76,039
              
              
              
              (70,600
              )
              
              
              (8,561
              )Accounts
      payable
              
              
              499,093
              
              
              
              7,306
              
              
              
              517,545Accrued
      expenses
              
              
              206,397
              
              
              
              469,153
              
              
              
              2,068,131Deferred
      income
              
              
              1,400
              
              
              
              -
              
              
              
              1,400Accounts
      payables to stockholders
              
              
              2,594
              
              
              
              (4,461
              )
              
              
              2,594NET
      CASH USED IN OPERATING ACTIVITIES
              
              
              (2,556,774
              )
              
              
              (1,642,966
              )
              
              
              (6,281,119
              )CASH
      FLOW FROM INVESTING ACTIVITIESInvestment
      in patents
              
              
              -
              
              
              
              -
              
              
              
              (67,233
              )Investment
      in intangible assets
              
              
              -
              
              
              
              (8,300
              )
              
              
              (16,000
              )Investment
      in property and equipment
              
              
              (228,642
              )
              
              
              (208,459
              )
              
              
              (458,498
              )NET
      CASH USED IN INVESTING ACTIVITIES
              
              
              (228,642
              )
              
              
              (216,759
              )
              
              
              (541,731
              )CASH
      FLOWS FROM FINANCING ACTIVITIESProceeds
      from sale of stock
              
              
              509,200
              
              
              
              2,900,000
              
              
              
              5,283,200Advances
      from stockholders
              
              
              1,397,081
              
              
              
              133,990
              
              
              
              1,428,581Proceeds
      from warrants exercised
              
              
              136,800
              
              
              
              13,500
              
              
              
              537,502Repayment
      of advances from stockholders
              
              
              (100,000
              )
              
              
              (328,790
              )
              
              
              (501,430
              )Convertible
      note proceeds
              
              
              80,000
              
              
              
              -
              
              
              
              180,000Proceeds
      from third party debt, net
              
              
              (5,000
              )
              
              
              (100,000
              )
              
              
              (105,000
              )NET
      CASH PROVIDED BY FINANCING ACTIVITIES
              
              
              2,018,081
              
              
              
              2,618,700
              
              
              
              6,822,853NET
      CHANGE IN CASH AND CASH EQUIVALENTS
              
              
              (767,335
              )
              
              
              758,975
              
              
              
              3Cash
      and cash equivalents at beginning of period
              
              
              767,338
              
              
              
              8,363
              
              
              
              -Cash
      and cash equivalents at end of period
              
              $
              3
              
              
              $
              767,338
              
              
              $
              3
    26
     SUPPLEMENTAL
      DISCLOSURESCash
      paid for interest
              
              $
              5,712
              
              
              $
              4,281Cash
      paid for income taxes
              
              
              -
              
              
              
              -NON-CASH
      TRANSACTIONSConversion
      of preferred shares to common shares
              
              $
              23
              
              
              $
              259,643Stock
      issued for accrued liabilities
              
              
              320,650
              
              
              
              -Series
      C cancelled
              
              
              -
              
              
              
              11,853Debt
      settled with stock
              
              
              502,000
              
              
              
              -Investment
      in leasehold improvements
              
              
              49,818
              
              
              
              -Accounts
      payable settled with fixed assets
              
              
              4,000
              
              
              
              -Accounts
      payable converted to debt
              
              
              35,000
              
              
              
              -





See
accompanying notes to the financial statements




















































27


EXOBOX
TECHNOLOGIES CORP.


(A
DEVELOPMENT STAGE COMPANY)


STATEMENTS
OF STOCKHOLDERS’ EQUITY (DEFICIT)


October
21, 2002, (inception) to July 31, 2009





Members'
            
            
            
            
            
            
            
            
            Series
      A
            
            
            Series
      B
            
            
            Series
      C
            
            
            Series
      D
            
            
            Additional
            
            
            Accumulated
      Deficit duringCapital
            
            
            Common
      Stock
            
            
            Preferred
      Stock
            
            
            Preferred
      Stock
            
            
            Preferred
      Stock
            
            
            Preferred
      Stock
            
            
            Paid
      in
            
            
            DevelopmentAmount
            
            
            Shares
            
            
            Amount
            
            
            Shares
            
            
            Amount
            
            
            Shares
            
            
            Amount
            
            
            Shares
            
            
            Amount
            
            
            Shares
            
            
            Amount
            
            
            Capital
            
            
            Stage
            
            
            TotalOctober
      21, 2002 (LLC inception)
            
            $
            -
            
            
            
            -
            
            
            $
            -
            
            
            
            -
            
            
            $
            -
            
            
            
            -
            
            
            $
            -
            
            
            
            -
            
            
            $
            -
            
            
            
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            --Capital
      Contribution by Members
            
            
            234,000
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            $
            234,000Net
      Loss
            
            
            (167,747
            )
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            2,393
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (167,747
            )Balances,
      July 31, 2003
            
            
            66,253
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            66,253Capital
      Contribution by Members
            
            
            140,000
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            140,000June
      28, 2004 (corporation inception)
            
            
            (206,253
            )
            
            
            10,867,500
            
            
            
            10,868
            
            
            
            2,392,915
            
            
            
            2,393
            
            
            
            1,120,930
            
            
            
            1,121
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            359,618
            
            
            
            (167,747
            )
            
            
            -Net
      Loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (152,855
            )
            
            
            (152,855
            )Balance
      July 31, 2004
            
            
            
            
            
            
            10,867,500
            
            
            
            10,868
            
            
            
            2,392,915
            
            
            
            2,393
            
            
            
            1,120,930
            
            
            
            1,121
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            359,618
            
            
            
            (320,602
            )
            
            
            53,398Net
      Loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (11,939
            )
            
            
            (11,939
            )Balance
      July 31, 2005
            
            
            
            
            
            
            10,867,500
            
            
            
            10,868
            
            
            
            2,392,915
            
            
            
            2,393
            
            
            
            1,120,930
            
            
            
            1,121
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            359,618
            
            
            
            (332,541
            )
            
            
            41,459Issuance
      of capital stock series B in private placement for cash
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            110,150
            
            
            
            110
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            999,890
            
            
            
            
            
            
            
            1,000,000Shares
      issued for consulting services
            
            
            
            
            
            
            50,000
            
            
            
            50
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            749,950
            
            
            
            
            
            
            
            750,000Issuance
      of capital stock series C for cash under Security Purchase Agreement
      w/  Manillo Investors, Ltd.
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            20,000
            
            
            
            20
            
            
            
            
            
            
            
            
            
            
            
            499,980
            
            
            
            
            
            
            
            500,000Warrant
      Issued for consulting services
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            12,495
            
            
            
            
            
            
            
            12,495Net
      Loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (2,488,331
            )
            
            
            (2,488,331
            )Balance
      July 31, 2006 (restated)
            
            
            
            
            
            
            10,917,500
            
            
            
            10,918
            
            
            
            2,392,915
            
            
            
            2,393
            
            
            
            1,231,080
            
            
            
            1,231
            
            
            
            20,000
            
            
            
            20
            
            
            
            
            
            
            
            
            
            
            
            2,621,933
            
            
            
            (2,820,872
            )
            
            
            (184,377
            )Conversion
      of Series B to Series D
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (110,150
            )
            
            
            (110
            )
            
            
            
            
            
            
            
            
            
            
            110,150
            
            
            
            110
            
            
            
            
            
            
            
            
            
            
            
            -Conversion
      of Preferred to Common Stock
            
            
            
            
            
            
            76,654,240
            
            
            
            76,654
            
            
            
            (360,929
            )
            
            
            (361
            )
            
            
            (460,798
            )
            
            
            (460
            )
            
            
            (600
            )
            
            
            (1
            )
            
            
            (5,158
            )
            
            
            (5
            )
            
            
            (75,827
            )
            
            
            
            
            
            
            -Stock
      issued for services
            
            
            
            
            
            
            450,000
            
            
            
            450
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            172,550
            
            
            
            
            
            
            
            173,000Stock
      issued under exercise of warrants
            
            
            
            
            
            
            90,000
            
            
            
            90
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            17,910
            
            
            
            
            
            
            
            18,000Net
      Loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (3,668,877
            )
            
            
            (3,668,877
            )Balance
      July 31, 2007
            
            
            -
            
            
            
            88,111,740
            
            
            
            88,112
            
            
            
            2,031,986
            
            
            
            2,032
            
            
            
            660,132
            
            
            
            661
            
            
            
            19,400
            
            
            
            19
            
            
            
            104,992
            
            
            
            105
            
            
            
            2,736,566
            
            
            
            (6,489,749
            )
            
            
            (3,662,254
            )Manillo
      Investors Settlement
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (19,400
            )
            
            
            (19
            )
            
            
            
            
            
            
            
            
            
            
            11,872
            
            
            
            
            
            
            
            11,853Stock
      issued to Employees
            
            
            
            
            
            
            14,678,000
            
            
            
            14,678
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            2,955,922
            
            
            
            
            
            
            
            2,970,600Conversion
      of Preferred Stock to Common
            
            
            
            
            
            
            259,643,010
            
            
            
            259,643
            
            
            
            (2,025,608
            )
            
            
            (2,026
            )
            
            
            (642,564
            )
            
            
            (643
            )
            
            
            
            
            
            
            
            
            
            
            (104,992
            )
            
            
            (105
            )
            
            
            (256,869
            )
            
            
            
            
            
            
            -Stock
      Issued through Private Placement
            
            
            
            
            
            
            29,000,000
            
            
            
            29,000
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            2,043,453
            
            
            
            
            
            
            
            2,072,453Warrants
      issued in relation to PPM
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            827,547
            
            
            
            
            
            
            
            827,547Stock
      Issued under exercise of Warrant
            
            
            
            
            
            
            67,500
            
            
            
            67
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            13,433
            
            
            
            
            
            
            
            13,500Warrants
      Granted
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            434,165
            
            
            
            
            
            
            
            434,165Stock
      Issued for Consulting Services
            
            
            
            
            
            
            6,935,000
            
            
            
            6,935
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            1,186,832
            
            
            
            
            
            
            
            1,193,767Net
      Loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (3,217,597
            )
            
            
            (3,217,597
            )Balance
      July 31, 2008
            
            
            
            
            
            
            398,435,250
            
            
            $
            398,435
            
            
            
            6,378
            
            
            $
            6
            
            
            
            17,568
            
            
            $
            18
            
            
            
            -
            
            
            $
            -
            
            
            
            -
            
            
            $
            -
            
            
            $
            9,952,921
            
            
            $
            (9,707,346
            )
            
            $
            644,034





See
accompanying notes to the financial statements














28




















EXOBOX
TECHNOLOGIES CORP.


(A
DEVELOPMENT STAGE COMPANY)


STATEMENTS
OF STOCKHOLDERS’ DEFICIT


October
21, 2002, (inception) to July 31, 2009





Members'
              
              
              
              
              
              
              
              
              Series
      A
              
              
              Series
      B
              
              
              Series
      C
              
              
              Series
      D
              
              
              Additional
              
              
              Accumulated
      Deficit duringCapital
              
              
              Common
      Stock
              
              
              Preferred
      Stock
              
              
              Preferred
      Stock
              
              
              Preferred
      Stock
              
              
              Preferred
      Stock
              
              
              Paid
      in
              
              
              DevelopmentAmount
              
              
              Shares
              
              
              Amount
              
              
              Shares
              
              
              Amount
              
              
              Shares
              
              
              Amount
              
              
              Shares
              
              
              Amount
              
              
              Shares
              
              
              Amount
              
              
              Capital
              
              
              Stage
              
              
              TotalBalance
      July 31, 2008
              
              
              -
              
              
              
              398,435,250
              
              
              
              398,435
              
              
              
              6,378
              
              
              
              6
              
              
              
              17,568
              
              
              
              18
              
              
              
              -
              
              
              $
              -
              
              
              
              -
              
              
              $
              -
              
              
              $
              9,952,921
              
              
              $
              (9,707,346
              )
              
              $
              644,034Shares
      issued for Services
              
              
              
              
              
              
              33,879,654
              
              
              
              33,880
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              2,301,606
              
              
              
              
              
              
              
              2,335,486Stock
      issued for Cash
              
              
              
              
              
              
              11,733,450
              
              
              
              11,733
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              284,800
              
              
              
              
              
              
              
              296,533Warrants
      issued in relations to stock for cash
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              212,667
              
              
              
              
              
              
              
              212,667Shares
      issued for accrued liabilities
              
              
              
              
              
              
              4,138,172
              
              
              
              4,138
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              316,512
              
              
              
              
              
              
              
              320,650Stock
      issued for debt conversion
              
              
              
              
              
              
              6,818,608
              
              
              
              6,819
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              495,181
              
              
              
              
              
              
              
              502,000Options
      issued for Compensation
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              593,977
              
              
              
              
              
              
              
              593,977Shares
      issued for Warrants Exercised
              
              
              
              
              
              
              2,870,000
              
              
              
              2,870
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              133,930
              
              
              
              
              
              
              
              136,800Shares
      issued for PP&E
              
              
              
              
              
              
              711,675
              
              
              
              712
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              49,106
              
              
              
              
              
              
              
              49,818Conversion
      of Preferred Stock
              
              
              
              
              
              
              2,077,586
              
              
              
              2,077
              
              
              
              (5,000
              )
              
              
              (5
              )
              
              
              (17,568
              )
              
              
              (18
              )
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (2,054
              )
              
              
              
              
              
              
              -Contributed
      Capital
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              62,522
              
              
              
              
              
              
              
              62,522Debt
      Discount
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              80,000
              
              
              
              
              
              
              
              80,000Net
      Loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (6,480,676
              )
              
              
              (6,480,676
              )Balance
      July 31, 2009
              
              
              
              
              
              
              460,664,395
              
              
              
              460,664
              
              
              
              1,378
              
              
              
              1
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              14,481,168
              
              
              
              (
      16,188,022
              )
              
              
              (1,246,189
              )

































29


EXOBOX
TECHNOLOGIES CORP.


(A
DEVELOPMENT STAGE COMPANY)


NOTES TO
THE FINANCIAL STATEMENTS





NOTE 1 –
NATURE OF BUSINESS AND SUMMARY OF ACCOUNTING POLICIES





Nature of
Business. Exobox Technologies Corp. (formerly known as Exobox Technologies LLC),
referred to as “Exobox” or the “Company”, was incorporated in Delaware on June
28, 2004 to patent and market proprietary internet security technology. Exobox
Technologies LLC was incorporated in Texas on October 21, 2002 (inception) and
legally dissolved with the formation of Exobox Technologies Corp. Kilis, Inc.
was originally incorporated in Nevada on December 8, 1999.  On June
22, 2005,
Kilis, Inc. changed its name to JinPin, Inc.  On September 14, 2005,
JinPin, Inc. changed its name to Exobox Technologies Corp.  On
September 15, 2005, Exobox (Nevada) acquired Exobox Technologies Corp., a
Delaware corporation (Exobox) in exchange for 3,513,845 shares of Exobox
(Nevada) convertible preferred stock (2,392,915 shares of Series A convertible
preferred stock and 1,120,930 shares of Series B convertible preferred
stock).  On the effective date, all of the issued and outstanding
shares of common stock of Exobox (Nevada) were converted into the 3,513,845
shares of preferred stock of Exobox (Nevada) with the Exobox shareholders owning
100% of Exobox’s outstanding shares of preferred stock and constituted a change
in control.





Exobox is
an enterprise and home user network and data security development company formed
to capitalize upon the growing need for a modern, reliable, efficient, effective
and proactive network and data security solutions.





Summary
of Significant Accounting Policies





Use
of Estimates





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amount of revenues and expenses
during the reporting period.  Actual results could differ from those
estimates.





Reclassifications





Certain
prior year amounts have been reclassified to conform with the current year
presentation.





Development
Stage Company





Exobox
follows the presentation and disclosure requirements of Statement of Financial
Accounting Standards SFAS No. 7, Accounting Standards Codification (“ASC”)
ASC915 “Accounting and
Reporting by Development Stage Enterprises” as we are in the development
stage therein defined as of and for the year ended July 31, 2009.





Property
and Equipment





Property
and Equipment is stated at cost and depreciated using the straight-line method
over the shorter of the estimated useful life of the asset or the least term,
ranging from three to five years.  Significant improvements and
betterments are capitalized.  Routine repairs and maintenance are
expensed when incurred.  When property and equipment is sold or
otherwise disposed of, the asset account and related accumulated depreciation
account are relieved, and any gain or loss is included in
operations.





The
Company reviews property, plant, and equipment and certain identifiable
intangibles, excluding goodwill, for impairment in accordance with SFAS No. 144,
ASC 360 “Accounting for the
Impairment of Long-Lived Assets” and for “Long-Lived Assets to Be Disposed
Of”. Long-lived assets are reviewed for impairment whenever events or
changes in circumstances indicate the carrying amount of an asset may not be
recoverable. Recoverability of these assets is measured by comparison of its
carrying amount to future undiscounted cash flows the assets are expected to
generate. If property, plant, and equipment and certain identifiable intangibles
are considered to be impaired, the impairment to be recognized equals the amount
by which the carrying value of the assets exceeds its fair market value. The
Company did not record any impairments during 2009 and 2008.





Valuation
of Intangible Assets.





We
periodically evaluate our intangible assets in accordance with ASC 360-10.
Property, Plant and Equipment ("ASC 360-10"), for indicators of impairment,
whenever events or changes in circumstances indicate that the carrying value may
not be recoverable. Our intangible assets include customer relationships,
technology, customer backlog, trade marks and a trade names and in-process
research and development. Factors that can trigger an impairment review include
significant under-performance relative to historical or projected future
operating results, significant changes in the manner that we use the assets or
the strategy for our overall business, or significant negative industry or
economic trends. In-process research and development is evaluated at the
completion or abandonment of related development projects.




Intangible
assets are assessed for impairment whenever events or changes in circumstances
indicate that an asset's carrying amount may not be recoverable. An impairment
loss would be recognized when the sum of the estimated future cash flows
expected to result from the use of the asset and its eventual disposition is
less than its carrying amount. Such impairment loss would be measured as the
difference between the carrying amount of the asset and its fair value. Cash
flow assumptions used in calculating the fair value are based on historical and
forecasted revenue, operating costs, and other relevant factors. If our estimate
of future operating results changes, or if there are changes to other
assumptions, the estimate of the fair value of our intangible assets could
change significantly. Such change could result in impairment charges in future
periods, which could have a significant negative impact on our unaudited
financial statements.




30




Impairment of Long-Lived
Assets.




We assess
the carrying values of long-lived assets for possible impairment in accordance
with the requirements of ASC 360-10. We conduct impairment tests when we
identify events or when we believe that circumstances may have changed to
indicate that the carrying amount of a long-lived asset may not be recoverable.
Such events or changes in circumstances may include the discontinuation of a
product or product line, a sudden or consistent decline in the forecast for a
product, changes in technology or in the way an asset is being used, or an
adverse change in legal factors or in the business climate. Our impairment
review, to determine if a potential impairment charge is required, is based on
an undiscounted cash flow analysis. This analysis requires judgment with respect
to many factors, including future cash flows, changes in technology, the
continued success of product lines and future volume and revenue and expense
growth rates. It is possible that our estimates of these assumptions may change
in the future, resulting in the need to reassess the carrying value of our
long-lived assets for impairment.





Income
Taxes





In
accordance with SFAS No. 109, ASC 740 “Accounting for Income Taxes”,
the provision for income taxes is computed using the asset and liability method.
Under the asset and liability method, deferred income tax assets and liabilities
are determined based on the differences between the financial reporting and tax
bases of assets and liabilities and are measured using the currently enacted tax
rates and laws. A valuation allowance is provided for the amount of deferred tax
assets that, based on available evidence, are not expected to be
realized.





Earnings
Per Share





Basic
and diluted earnings or loss per share (EPS) amounts in the financial statements
are computed in accordance SFAS No. 128, ASC260 – 10 “Earnings per Share”, which
establishes the requirements for presenting EPS.  Basic EPS is based
on the weighted average number of common shares outstanding. Diluted EPS is
based on the weighted average number of common shares outstanding and dilutive
common stock equivalents. Basic EPS is computed by dividing net income/loss
available to common stockholders (numerator) by the weighted average number of
common shares outstanding (denominator) during the period. Weighted average
number of shares used to calculate basic and diluted loss per share is
considered the same as the effect of dilutive shares is
anti-dilutive.





Fair
Value of Financial Instruments





Fair
value is described as the amount at which the instrument could be exchanged in a
current transaction between informed willing parties, other than a forced
liquidation.  Cash and cash equivalents, accounts payable, accrued
expenses and other current liabilities are reported on the balance sheet at
carrying value which approximates fair value due to the short-term maturities of
these instruments.  Exobox does not have any off balance sheet
financial instruments.





Derivatives





The
valuation of our embedded derivatives and warrant derivatives are determined
primarily by the Black-Scholes option pricing model. An embedded derivative is a
derivative instrument that is embedded within another contract, which under the
convertible note (the host contract) includes the right to convert the note by
the holder, certain default redemption right premiums and a change of control
premium (payable in cash if a fundamental change occurs). In accordance with
SFAS No. 133, as amended, ASC 815 “Accounting for Derivative
Instruments and Hedging Activities”, as amended, these embedded
derivatives are marked-to-market each reporting period, with a corresponding
non-cash gain or loss charged to the current period. A warrant derivative
liability is determined in accordance with EITF 00-19, ASC 815. Based on EITF
00-19, ASC 815, warrants which are determined to be classified as derivative
liabilities are marked-to-market each reporting period, with a corresponding
non-cash gain or loss charged to the current period. The practical effect of
this has been that when our stock price increases so does our derivative
liability and resulting in a non-cash loss charge that reduces our earnings and
earnings per share. When our stock price declines, we record a non-cash gain,
increasing our earnings and earnings per share.





To
determine the fair value of our embedded derivatives, management evaluates
assumptions regarding the probability of certain future events. Other factors
used to determine fair value include our period end stock price, historical
stock volatility, risk free interest rate and derivative term. The fair value
recorded for the derivative liability varies from period to period. This
variability may result in the actual derivative liability for a period either
above or below the estimates recorded on our consolidated financial statements,
resulting in significant fluctuations in other income (expense) because of the
corresponding non-cash gain or loss recorded.





31





Research
and Development





Research
and development includes all research and development expenses and software
development costs. We expense all research and development expenses as incurred.
We expense all software development costs associated with establishing
technological feasibility, which we define as completion of beta testing.
Because of the insignificant amount of costs incurred between completion of beta
testing and general customer release, we have not capitalized any software
development costs in the accompanying financial statements.





Stock-based
Compensation





Exobox
adopted SFAS No. 123(R), ASC 718 “Compensation—Stock
Compensation” in 2007 using the modified prospective method. ASC 718
requires companies to measure the cost of employee services received in exchange
for an award of an equity instrument based on the grant-date fair value of the
award. For stock-based awards granted on or after January 1, 2006, stock-based
compensation expense is recognized on a straight-line basis over the requisite
service period. We account for non-employee share-based awards in accordance
with ASC 505 – 50 (formerly EITF 96-18 “Accounting for Equity Instruments
Issued to Non-Employees for Acquiring, or in Conjunction with Selling, Goods or
Services”.





During
year ended July 31, 2009 and 2008, the fair value of each warrant award was
determined as of the date of grant using the Black-Scholes option-pricing model
with the following weighted-average assumptions:








Assumption:
            
            2009
            
            
            2008Expected
      Volatility
            
            
            202.37-
      202.60
            %
            
            
            263.77
      - 273.25
            %Expected
      term (years)
            
            
            3
            
            
            
            2.0
      - 2.5Risk-free
      interest rate
            
            
            1.47-1.94
            %
            
            
            1.93
      - 4.14
            %Expected
      dividend yield
            
            
            -
            
            
            
            -





Expected
volatility is based solely on historical volatility of our common stock over the
period that approximates the expected term. We rely solely on historical
volatility as we do not have traded options.  The expected term
calculation is based on the simplified method. The risk-free interest rate is
based on the U.S. Treasury yield in effect at the time of grant for an
instrument with a maturity that is commensurate with the expected term. The
dividend yield of zero is based on the fact that we have never paid cash
dividends on our common stock, and we have no present intention to pay cash
dividends.





Recent
Accounting Pronouncements





In June
2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards Codification
TM and the Hierarchy of Generally Accepted Accounting Principles – a replacement
of FASB Statement No. 162.”  The FASB Accounting Standards
Codification TM became the source of authoritative GAAP recognized by the FASB
to be applied by nongovernmental entities. Rules and interpretive releases of
the SEC under authority of federal securities laws are also sources of
authoritative GAAP for SEC registrants. On the effective date of SFAS 168, the
Codification superseded all then-existing non-SEC accounting and reporting
standards. All other non-grandfathered non-SEC accounting literature not
included in the Codification became non-authoritative.





Following
SFAS 168, the FASB will no longer issue new standards in the form of Statements,
FASB Staff Positions, or Emerging Issues Task Force Abstracts; instead, it will
issue Accounting Standards Updates (ASU’s). The FASB will not consider ASU’s as
authoritative in their own right; rather these updates will serve only to update
the Codification, provide background information about the guidance, and provide
the bases for conclusions on the change(s) in the Codification. SFAS No. 168 is
incorporated in ASC Topic 105, Generally Accepted Accounting Principles. The
Company adopted SFAS No. 168 in the first quarter of 2009, and the Company will
provide reference to both the Codification topic reference and the previously
authoritative references related to Codification topics and subtopics, as
appropriate.





Exobox
does not expect the adoption of any recently issued accounting pronouncements to
have a significant impact on their financial position, results of operations or
cash flows.





NOTE 2 -
GOING CONCERN





From
Inception to July 31, 2009, Exobox has accumulated losses of $16,188,022. The
ability of Exobox to emerge from the development stage with respect to any
planned principal business activity is dependent upon its success in raising
additional equity financing and/or attaining profitable operations. Management
has plans to seek additional capital . There is no guarantee that Exobox will be
able to complete any of the above objectives. These factors raise substantial
doubt regarding Exobox's ability to continue as a going concern.





32


NOTE 3 -
PROPERTY AND EQUIPMENT





Property
and equipment consisted of the following:





Description
            
            Life
            
            July
      31, 2009
            
            
            July
      31, 2008Furniture
      and fixtures
            
            5
      years
            
            $
            159,930
            
            
            $
            98,338Leasehold
      improvements
            
            5
      years
            
            
            225,503
            
            
            
            59,016Computers
            
            3
      years
            
            
            69,924
            
            
            
            49,172Telephone
      system
            
            5
      years
            
            
            37,960
            
            
            
            19,042Copier
            
            5
      years
            
            
            4,286
            
            
            
            4,286497,603
            
            
            
            229,854Less:
      accumulated depreciation
            
            
            
            
            (102,265
            )
            
            
            (16,631
            )$
            395,338
            
            
            $
            212,223





Acquisitions
made in cash totaled $228,642 and $208,459 in fiscal 2009 and 2008,
respectively.  Additionally, 711,675 shares of common stock were
issued for acquisition of fixed assets totaling $49,818 and $0, in fiscal 2009
and 2008, respectively.  $4,000 in accounts payable was extinguished
with the transfer of fixed assets with a value of $13,856, resulting in a loss
of $9,856.  Depreciation expense totaled $85,633 and $ 7,398 in fiscal
2009 and 2008, respectively.





NOTE 4 –
PATENTS





Exobox
has two technological inventions with patents pending in United States and
throughout the world.   The rights and interest include, among
other things, (i) the patent applications and any changes or amendments thereto,
(ii) the invention, (iii) the technical information, trade secrets, identities
of customers, studies, plans, drawings, blueprints and specifications,
production methods, (iv) the embodiment of any claim described and claimed in
any valid claim of the patent application, (v) right to file foreign patent
applications, and (vi) any all patents resulting from current patent
applications.





Patents
are mainly comprised of legal services paid to a shareholder and patent
application fees.  Exobox began amortizing these costs since the
patents have been granted.  Amortization totaled $4,380 and $13,643 in
fiscal 2009 and 2008, respectively.  Patents were impaired as of July
31, 2009 in the amount of $50,591.





NOTE 5 -
INCOME TAXES





Exobox
has incurred net losses since inception and, therefore, has no tax
liability.  The net deferred tax asset generated by the loss
carry-forward has been fully reserved. The cumulative net operating loss
carry-forward is approximately $9.8 million at July 31, 2009, and will expire in
the years 2027 through 2029.





At July
31, 2009 and 2008, deferred tax assets consisted of the following:





Deferred
      tax assets
            
            $
            3,404,556
            
            
            
            2,158,704Valuation
      allowance
            
            
            (3,404,556
            )
            
            
            (2,158,704
            )Net
      deferred taxes
            
            $
            -
            
            
            $
            -





NOTE 6 –
RELATED PARTIES





Certain
of Exobox’s stockholders have loaned cash to the company for working capital
purposes of $1,397,081.  The loans were issued through promissory
notes, have zero stated interest rate, and have maturity dates which range from
0 to 8 years. Imputed interest expense related to these notes totaled $37,522
during fiscal 2009.  In accordance with the loan agreements, Exobox
paid $100,000 in cash as of July 31, 2009.  In June 2009, Exobox entered
into a settlement agreement with Michael Wittenburg in which Exobox repaid
$422,000 of non-interest bearing demand indebtedness through the issuance of
4,818,608 shares of common stock.




Accounts
payable to stockholders represent amounts owed to stockholders primarily for
reimbursement of general and administrative costs paid on behalf of
Exobox.





33


NOTE 7 –
COMMITMENTS





Leases





In 2008,
Exobox leased 6,178 square feet of office space in Houston, Texas from a third
party for $9,781.83 per month.  The lease is for a five (5) year
term.  Subsequent to fiscal year end July 31, 2009, on November 12,
2009, the parties agreed to amend the lease whereby the $49,564.85 the company
owed to the Lessor at that time was amortized into the monthly lease
payment.  The monthly rent payment will increase by $1,371.11 to
$11,152.94 per month over the remaining 41.5 months of the lease
term.  The amortization will use an 8% interest rate.





Rent
expense totaled $119,572, for the year ended July 31, 2009 and $59,147 for the
year ended July 31, 2008.





Future
minimum lease payments under a non-cancelable operating lease are as
follows:





Year
      Ending July 31,2010
            
            $
            118,4622011
            
            
            118,4622012
            
            
            118,4622013
            
            
            49,359After
      2013
            
            
            0








NOTE 8 – DEBT




In April 2009, Exobox
borrowed $80,000 under convertible notes payable to two individuals.  The
notes bear interest at 10% per year, matured on July 30, 2009, and are
convertible into common shares at $0.03 per share.  In connection with the
notes, Exobox issued warrants to purchase 1,600,000 common shares at $0.03 per
share for a term of three years.  Exobox evaluated the terms of the
notes in accordance with SFAS No. 133, as amended, ASC 815 “Accounting for Derivative
Instruments and Hedging Activities”, and ASC 815EITF Issue 00-19, “Accounting for Derivative Financial
Instruments to and Potentially Settled in a Company’s Own
Stock.”  Exobox determined that the convertible notes are not
derivative instruments.  Exobox evaluated the conversion feature under
EITF 98-5 and EITF 00-27, ASC 470 and determined that a beneficial conversion
feature should be recognized and gave rise to a debt discount of $80,000. In
July 2009, the note holders converted their note payable into 2,000,000 common
shares.  Additionally, the $80,000 in debt discounts was accelerated and
recorded as interest expense.





In June,
2009, Exobox issued an unsecured promissory note with RSA Corp pursuant to an
agreement for employee recruiting services dated November 7, 2008 by converting
the $35,000 outstanding accounts payable balance to the note.  The note
bears interest of 0% per year and matures December 1, 2009.  In June 2009,
Exobox paid $5,000 towards the principal.





Exobox
exchanged proceeds with stockholders - see note 6 for details.





NOTE 9 –
STOCKHOLDERS’ EQUITY





Exobox is
authorized to issue 500,000,000 shares of Class A common stock and undesignated
common stock, $.001 par value, and 4,630,150 shares of preferred stock, $.001
par value, of which 2,500,000 shares have been designated Series A convertible
preferred stock, 2,000,000 shares  designated Series B convertible
preferred stock, 20,000 shares designated Series C convertible preferred stock,
110,150 shares designated Series D convertible preferred stock, and 1,163,000
shares designated Series E convertible preferred stock.





Preferred
Stock





Series A
Convertible Preferred Stock. Exobox designated 2,500,000 shares as “Series A
convertible preferred stock." The shares of the Series A preferred stock rank
prior to the common stock, and prior to any class or series of capital stock now
outstanding or hereafter created. No dividends shall be payable to the holder of
shares of Series A preferred stock, except dividends in
liquidation.  Each share of Series A preferred stock has the number of
votes equal to the number authorized by the shares of Class A common stock into
which such share of Series A preferred stock is then convertible. Except as
otherwise required by law, the holders of shares of common stock and Series A
preferred stock shall vote together and not as separate classes.





Series A
preferred stock is convertible 12 months after issue into common stock. The
shares of Series A preferred, along with the shares of Series B preferred, are
convertible into 92% of the total outstanding common before the issuance of any
shares of Series C preferred stock. The holders of Series A preferred vote on an
as converted basis.





Series B
Preferred Stock. Exobox has designated 2,000,000 shares as Series B convertible
preferred stock. The shares of the Series B preferred stock rank prior to the
common stock; and prior to any class or series of capital stock now outstanding
or hereafter created. No dividends shall be payable to the holder of shares of
Series B preferred stock, except dividends in liquidation. Each share of
outstanding Series B preferred stock has the number of votes equal to the number
of shares of common stock into which such share of Series B preferred stock is
then convertible. Except as otherwise required by law or by the Articles, the
holders of shares of common stock and Series B preferred stock shall vote
together and not as separate classes.





34


Series B
preferred stock is convertible 12 months after issue into common stock. The
shares of Series B preferred, along with the shares of Series A preferred, are
convertible into 92% of the total outstanding common before the issuance of any
shares of Series C preferred stock. The holders of Series B preferred vote on an
as converted basis.





Series C
Preferred Stock. Exobox has designated 20,000 shares as Series C convertible
preferred stock each in the face amount of $25.  No dividends shall be
payable to the holders of shares of Series C preferred stock.





The
Shares of Series C preferred stock are collectively convertible into five (5%)
percent of the total number of outstanding shares of all classes of common stock
immediately after conversion of all outstanding shares of Series A and Series B
preferred stock.





Series D
Preferred Stock. Exobox has designated 110,150 shares as Series D convertible
preferred stock each in the face amount of $0.001. No dividends shall be payable
to the holders of shares of Series D preferred stock.





The
Shares of Series D preferred stock are collectively convertible into 4.00064800%
of the total number of outstanding shares of all classes of common stock
immediately after conversion of all outstanding shares of Series A, Series B,
and Series C preferred stock.





During
November 2008, a shareholder converted 5,000 Series A preferred stock and 17,568
Series B preferred stock to 2,077,586 shares of common stock.  This
leaves the Company with only 1,378 shares of Series A preferred stock as the
only preferred stock outstanding at July 31, 2009 which is convertible into
126,857 shares of common stock.





Series E
convertible preferred stock – see Note 10 – SPQR Energy.





Stock
Issued for Services





During
fiscal 2009, we issued 33,879,654 common shares to consultants and employees
pursuant to consulting and employment agreements with a value of
$2,335,487.





Stock
Issued for Cash





During
fiscal 2009, we issued 11,733,450 common shares with warrants representing
5,571,784 common shares for $509,200 in cash.  The relative fair value
of the warrants totaled $212,667.





Stock
Issued for Extinguishment of Liabilities





During
the fiscal year of 2009, we issued 4,138,172 common shares to consultants and
employees for accrued liabilities totaling $320,650.  Additionally,
Exobox issued common stock for extinguishment of debt – see Note 8.





Stock
Issued for Warrants Exercised





During
fiscal 2009, we issued 2,870,000 common shares in relation to warrants exercised
for $136,800.





Stock
Issued for Fixed Assets





Shares
were issued for acquisition of fixed assets – see Note 3.





Stock Option, Stock Warrant and Stock Award
Plan





OPTIONS





In
October, 2008, Exobox granted two senior developers of Exobox an option to
purchase 100,000 shares each with an exercise price of $0.25 a
share.  25,000 shares vested immediately for each individual and an
additional 25,000 shares for each individual shall vest every year until October
2011.





In
November, 2008, we granted to an employee an option to purchase 100,000 shares
with an exercise price of $0.25 a share.  25,000 shares vested
immediately and an additional 25,000 shares shall vest every year until November
2011.





In
December, 2008, we granted to two employees options to purchase125,000
shares  with an exercise price of $.25 a share.  31,250
shares vested immediately and an additional 31,250 shares shall vest every year
until December 2011.





In April
2009, we granted two employees options to purchase 300,000 shares of common
stock with an exercise price of $0.25 per share.  75,000 shares vested
immediately, and the remaining shares vest over the following six
quarters.





35


In May,
2009, Exobox granted Kevin Regan an option to purchase 7,500,000 shares with an
exercise price of $0.15-$0.75 a share which vest immediately and can be
exercised at any time.   Exobox also granted Gary Leibowitz and Ted
Ernst 6,000,000 shares each at an exercise price of $0.15-$0.40 a share which
vest immediately and can be exercised at any time.





The
following assumptions were applied to value the options:





Expected
      volatility
            
            
            174%-
      243%Term
      (years)
            
            
            1.5
      – 3Risk-free
      interest rate
            
            
            1.16%
      - 3.01%Expected
      dividend yield
            
            
            0%





Black-Scholes
was applied to value the options and Exobox recognized $593,977 of stock based
compensation expense for the year ended July 31, 2009.  The remaining
386,198 unvested shares have an unrecognized value of $34,833.  The
options intrinsic value is $0 as of July 31, 2009.





The
status of the options as of July 31, 2009, is as follows:


Options
            
            
            Weighted
      Average Exercise PriceOutstanding,
      July 31, 2007
            
            
            -
            
            
            $
            -Granted
            
            
            -
            
            
            
            -Expired
            
            
            -
            
            
            
            -Exercised
            
            
            -
            
            
            
            -Outstanding,
      July 31, 2008
            
            
            -
            
            
            $
            -Granted
            
            
            20,225,000
            
            
            
            0.28Expired
            
            
            -
            
            
            
            -Exercised
            
            
            -
            
            
            
            -Outstanding,
      July 31, 2009
            
            
            20,225,000
            
            
            $
            0.28





Following
is the details of options outstanding as of July 31, 2009:




Number
      of Common Stock Equivalents
            
            
            Expiration
      Date
            
            Remaining
      Contracted Life (Years)
            
            
            Exercise
      Price50,000
            
            
            10/14/2011
            
            
            2.50
            
            
            
            0.2525,000
            
            
            11/14/2011
            
            
            2.58
            
            
            
            0.2550,000
            
            
            12/7/2011
            
            
            2.67
            
            
            
            0.2575,000
            
            
            12/16/2011
            
            
            2.67
            
            
            
            0.2550,000
            
            
            10/14/2012
            
            
            3.75
            
            
            
            0.2525,000
            
            
            11/14/2012
            
            
            3.58
            
            
            
            0.2550,000
            
            
            10/14/2013
            
            
            4.50
            
            
            
            0.2525,000
            
            
            11/14/2013
            
            
            4.58
            
            
            
            0.2550,000
            
            
            10/14/2014
            
            
            5.50
            
            
            
            0.2525,000
            
            
            11/14/2014
            
            
            5.58
            
            
            
            0.2525,000
            
            
            4/1/2012
            
            
            3.00
            
            
            
            0.2550,000
            
            
            4/28/2012
            
            
            3.00
            
            
            
            0.2525,000
            
            
            5/28/2012
            
            
            3.08
            
            
            
            0.2525,000
            
            
            6/28/2012
            
            
            3.17
            
            
            
            0.2525,000
            
            
            7/28/2012
            
            
            3.25
            
            
            
            0.2525,000
            
            
            8/28/2012
            
            
            3.33
            
            
            
            0.2525,000
            
            
            9/28/2012
            
            
            3.42
            
            
            
            0.2525,000
            
            
            10/28/2012
            
            
            3.50
            
            
            
            0.2525,000
            
            
            4/1/2013
            
            
            4.00
            
            
            
            0.2525,000
            
            
            4/1/2014
            
            
            5.00
            
            
            
            0.2525,000
            
            
            4/1/2015
            
            
            6.00
            
            
            
            0.252,500,000
            
            
            1/1/2014
            
            
            4.62
            
            
            
            0.151,500,000
            
            
            1/1/2014
            
            
            4.62
            
            
            
            0.251,500,000
            
            
            1/1/2014
            
            
            4.62
            
            
            
            0.401,000,000
            
            
            1/1/2014
            
            
            4.62
            
            
            
            0.151,000,000
            
            
            1/1/2014
            
            
            4.62
            
            
            
            0.252,500,000
            
            
            5/18/2011
            
            
            2.00
            
            
            
            0.152,000,000
            
            
            5/18/2011
            
            
            2.00
            
            
            
            0.251,500,000
            
            
            5/18/2011
            
            
            2.00
            
            
            
            0.402,500,000
            
            
            5/18/2011
            
            
            2.00
            
            
            
            0.152,000,000
            
            
            5/18/2011
            
            
            2.00
            
            
            
            0.251,500,000
            
            
            5/18/2011
            
            
            2.00
            
            
            
            0.4020,225,000
            
            
            
            
            
            3.55
            
            
            
            0.28




36


The
following is a summary of non-vested shares:





OPTIONSNon-vested
      shares at July 31, 2007
            
            
            -Granted
            
            
            -Vested
            
            
            -Expired
            
            
            -Exercised
            
            
            -Non-vested
      shares at July 31, 2008
            
            
            -Granted
            
            
            20,225,000Vested
            
            
            (19,838,802
            )Expired
            
            
            -Exercised
            
            
            -Nonvested
      shares at July 31, 2009
            
            
            386,198








WARRANTS





At July
31, 2009, we had outstanding and exercisable warrants to purchase an aggregate
of 15,994,284 shares of common stock with an intrinsic value of
$0.  The weighted average remaining life is 2.58 years and the
weighted average price per share is $0.47 per share.





The status of the warrants as of July
31, 2009, is as follows:


Warrants
      Outstanding and Exercisable
            
            Warrants
            
            
            Weighted
      Average Exercise PriceOutstanding,
      July 31, 2007
            
            
            4,460,000
            
            
            $
            .20Granted
            
            
            7,300,000
            
            
            
            .86Expired
            
            
            -
            
            
            
            -Exercised
            
            
            (67,500
            )
            
            
            .20Outstanding,
      July 31, 2008
            
            
            11,692,500
            
            
            $
            0.61Granted
            
            
            7,171,784
            
            
            
            0.03Expired
            
            
            -
            
            
            
            -Exercised
            
            
            (2,870,000
            )
            
            
            (0.05)Outstanding,
      July 31, 2009
            
            
            15,994,284
            
            
            $
            0.47





Following
is the details of warrants outstanding as of July 31, 2009:





Number
      of Common Stock Equivalents
            
            
            Expiration
      Date
            
            
            Remaining
      Contracted Life (Years)
            
            
            Exercise
      Price2,902,500
            
            
            10/31/2010
            
            
            
            1.50
            
            
            $
            0.2050,000
            
            
            7/31/2011
            
            
            
            2.25
            
            
            $
            0.255,550,000
            
            
            12/31/2011
            
            
            
            2.45
            
            
            $
            1.001,600,000
            
            
            4/30/2012
            
            
            
            3.00
            
            
            $
            0.03825,000
            
            
            6/1/2012
            
            
            
            3.00
            
            
            $
            0.032,075,000
            
            
            6/4/2012
            
            
            
            3.00
            
            
            $
            0.0383,333
            
            
            6/12/2012
            
            
            
            3.00
            
            
            $
            0.031,408,451
            
            
            6/29/2012
            
            
            
            3.00
            
            
            $
            0.031,500,000
            
            
            9/24/2012
            
            
            
            3.45
            
            
            $
            0.30








37


NOTE 10 – SUBSEQUENT EVENTS





Subsequent
events through November 30, 2009, are as follows:





Convertible
Note





On
September 4, 2009, Exobox Technologies, Corp., obtained a convertible promissory
note loan from two shareholders in the principal amount of $30,000.  The
loan proceeds were advanced in a single tranche on September 4, 2009.  The
loan is due in principal and interest on September 4, 2010 or upon the closing
of any underwritten public offering of securities by Maker which ever date is
the earliest.  The unpaid principal amount of this 10% Convertible
Promissory Note shall be convertible, in whole or in part, at the option of the
Payee, at any time prior to the close of business on the maturity date hereof
converted into shares of Restricted Common Stock (“Conversion Shares”), par
value $.001per share (the Common Stock”).  Conversion of this Convertible
Promissory Note shall be made on the basis of thirty-three and one third (33.33)
shares of Conversion Shares for each one dollar ($1.00) of principal amount of
this Convertible Promissory Note so converted (the “Conversion
Rate”).





On
September 10, 2009, Exobox Technologies, Corp. assigned all right, title, and
interest of all the SOS Patents to Scott Copeland in return for $50,000. 
On November 1st,
2009, Scott Copeland re-assigned all the SOS patents to Exobox Technologies,
Corp. in exchange for a royalty equal to three percent (3%) of the net proceeds,
if any, derived by Exobox from the SOS technology and issue directly to three
(3) other individuals or entities of Copeland’s choosing, a collective total of
1,250,000 shares of Exobox common stock restricted under Rule 144. Exobox also
entered into consulting agreement with Scott Copeland, see Subsequent Event,
“Employment Agreement” section.





Purchase
of SPQR Energy, Inc.





Effective
October 22, 2009, Exobox purchased 16 oil and gas wells located in Ohio that
produce from the Clinton and Marcellus Shale formations from a private oil and
gas company  SPQR Energy, Inc.. The assets were purchased for $13.25
million, which includes (1) the assumption of approximately $3.0 million in
total existing debt associated with these Assets, (2) a 5-year,
7.5%  note for $1.5 million convertible into common stock at $.21 per
share, (3) 1,163,000 shares of Series E Convertible Preferred Stock convertible
into common stock at $0.477 per share and cumulative annual dividends of 7.5%,
and (4) 3,000,000 common shares.





Employment
and Consulting Agreements





On
October22, 2009, the Company entered into a consulting agreement with Scott R.
Copeland to assist the Company in developing its SUEZ and other proprietary
technologies, including developing the next generation products from the
Company’s existing initial two technologies, beyond the original 6 products
being developed by the Company. Mr. Copeland has agreed to retain a portion of
the Company stock he previously had agreed to return to the Company and will
cancel all debts owed to him by the Company including all sums owed for unpaid
past compensation and /or repayment of loans made by Copeland to the Company
which is approximately $250,000.  Mr. Copeland also has agreed to a
limit of how much stock he may sell in any 90 day period until November 1,
2010.





On
November 1, 2009, the Company hired Mr. Richard J. Kampa to serve as President,
Chief Executive Officer and a Director. The agreement, with a term of six
months, calls for a salary of $20,000 per month and an initial issuance of
1,000,000 common shares.  When the agreement continues beyond six
months, Mr. Kampa will receive 100,000 shares of common stock for each month the
agreement remains in effect.





On
December 1, 2009, the Company hired Mr. Michael G. Wirtz to return and serve as
Vice President and Chief Financial Officer. Mr. Wirtz had served in the same
position from 2006 through May 6, 2009.





Shareholders
Return of their Common Stock





During
November, 2009, several shareholders have returned over 128 million shares of
the Company’s common stock to the Company’s treasury.  Shareholders have
agreed to return 134,900,000 shares of the stock to the company’s treasury. It
is expected that all of the 134,900,000 shares will be returned to the Company’s
treasury in the near future thus reducing the number of the company’s
outstanding common shares.





Lease
Agreement





On
November 12, 2009, the Company’s office space lessor amended its lease whereby
the $49,565 the company owed to the Lessor at that time was amortized into the
monthly lease payment.  The monthly rent payment will increase by
$1,371.11 to $11,152.94 per month over the remaining 41.5 months of the lease
term.  The amortization will use an 8% interest rate.





Stock
Issued





3,392,001
common shares have been issued for services from consultants or employees with a
value totaled $210,541.





8,500,000
common shares have been sold to former management or board members for $85,000
in cash for services rendered valued at nominal cash consideration.





38


ITEM
8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE





None





ITEM 8A. CONTROLS AND PROCEDURES





We have
carried out an evaluation, under the supervision and with the participation of
our management, including our Chief Executive Officer (the "CEO") and our Chief
Financial Officer (the "CFO"), of the effectiveness of the design and operation
of our disclosure controls and procedures (as defined in Rule 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Act")) as
of the end of the fiscal quarter covered by this report. Based upon that
evaluation, our CEO and CFO concluded that our disclosure controls and
procedures are not effective in providing reasonable assurance that (a) the
information required to be disclosed by us in the reports that we file or submit
under the Act is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and forms,
and (b) such information is accumulated and communicated to our management,
including our CEO and CFO, as appropriate to allow timely decisions regarding
required disclosure. Specifically, our independent auditor identified weaknesses
in our disclosure controls related to valuing and accounting for share based
payments, derivative financial instruments and accrued expenses. We plan to
remediate this deficiency in disclosure controls by increasing the supervision
and training of accounting employees.





There has
been no change in our internal control over financial reporting during the
fiscal year covered by this report that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting





Disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities  Exchange Act of 1934 (the "Exchange  Act")) are
designed to ensure that information required to be disclosed in reports filed or
submitted under the Exchange Act is recorded, processed, summarized and reported
within the time periods  specified in Securities and Exchange
Commission rules and forms and that such information is accumulated and
communicated to management, including the Chief  Executive Officer and
Principal Accounting Officer, to allow timely decisions regarding required
disclosures.





In
connection with the preparation of this Annual Report on Form10-K, our
management, with the participation of our Chief Executive Officer and our
Principal Accounting Officer, carried out an evaluation of the effectiveness of
our disclosure controls and procedures as of July 31, 2009, as required by Rule
13a-15 of the Exchange Act.  Based on the evaluation described above,
our management, including our principal executive officer and principal
accounting officer, have concluded that, as of July 31, 2009, our disclosure
controls and procedures were not effective.





Notwithstanding
the existence of the material weaknesses described below, we concluded that the
consolidated financial statements in this Annual Report on Form 10-K present
fairly, in all material respects, the Company's financial condition, results of
its operations and cash flows for the year ended July 31, 2009, in conformity
with U.S. generally accepted accounting principles ("GAAP").





Management's
Report on Internal Control over Financial Reporting





Management
of the Company is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act.  Internal control over financial
reporting is a process designed under the supervision of our principal executive
and principal financial officers to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with GAAP.





Due to
inherent limitations, internal control over financial reporting may not prevent
or detect misstatements and, even when determined to be effective, can only
provide reasonable, not absolute, assurance with respect to financial statement
preparation and presentation.  Projections of any evaluation of
effectiveness to future periods are subject to risk that controls may become
inadequate as a result of changes in conditions or deterioration in the degree
of compliance.





Under the
supervision and with the participation of our management, including our Chief
Executive Officer and Principal Accounting Officer, we conducted an evaluation
of the effectiveness of our internal control over financial reporting as of July
31, 2009, based on the criteria framework established in Internal Control -
Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission ("COSO").





As a
result of the material weaknesses described below, management concluded that as
of July 31, 2009, we did not maintain effective internal control over financial
reporting based on the criteria established in Internal Control - Integrated
Framework, issued by COSO.





39


A
material weakness in internal controls is a significant deficiency, or a
combination of significant deficiencies, that results in more than a remote
likelihood that a material misstatement of the financial statements would not be
prevented or detected on a timely basis by the Company.  While our
control deficiencies have not resulted in any material misstatements of account
balances or disclosures that we are aware of, they could result in misstatements
or disclosures which could cause a material misstatement of annual or interim
financial statements that would not be prevented or
detected.  Accordingly, management has determined that these control
deficiencies constitute a material weakness.  An evaluation of entity
level and process level controls was completed during the year.  In
connection with management's evaluation of our internal control over financial
reporting, we identified the following material weaknesses in our internal
control over financial reporting as of July 31, 2009, that had not been fully
remedied:





1.
            Deficiency
      in the Company’s Entity Level Controls.  The Company’s entity
      level controls environment did not sufficiently promote effective internal
      controls over financial reporting throughout the
      organization.  This material weakness exists as a result of a
      deficiency to attract a “financial expert” to the Audit
      Committee.  The Principal Accounting Officer is actively
      involved in the preparation and approval of financial schedules and
      journal entries, and therefore cannot provide an independent review and
      quality assurance function within the accounting and financial reporting
      group.  The limited number of accounting personnel and a lack of
      a “financial expert” on the Audit Committee results in an inability to
      have independent review and of financial accounting entries and the
      financial statements and related footnotes.  There is a risk
      that a material misstatement of the financial statements could be caused,
      or at least not be detected in a timely manner, due to insufficient
      financial expert oversight.





2.
            Deficiency
      in Segregation of Duties.  There is a lack of segregation of
      duties between the custody of assets and the recording of
      transactions.  Specifically, the Principal Accounting Officer
      signs checks, receives and reviews unopened bank statements and cancelled
      checks and performs bank reconciliations. This condition could provide an
      opportunity for misappropriation of funds and concealment of such
      activity.  There is a risk for fraud or management override due
      to the lack of segregation of duties between the custody of assets and the
      recording of transactions.





Remediation
Initiatives





During
fiscal 2010, we plan to implement a number of remediation measures to address
the material weaknesses described above.  These organizational and
process changes will improve our internal controls environment.  The
changes made through the date of this annual report includes our retention of an
outside consulting  firm to assist us in the evaluation and testing of
our internal control system and to identify improvement opportunities
related  to our accounting and financial reporting processes in
order  to streamline and improve the effectiveness of these
processes.  The Company's remediation plans include complete
implementation and execution of controls and procedures identified in
management's assessment of the entity level, financial reporting and other
process level controls.





Management
recognizes that many of these enhancements require continual monitoring and
evaluation for effectiveness.  The development of these actions is an
iterative process and will evolve as the Company continues to evaluate and
improve our internal controls over financial reporting.  The results
of management's assessment were reviewed with our Board of
Directors.





Management
will review progress on these activities on a consistent and ongoing basis at
the Chief Executive Officer and senior management level in conjunction with our
Board of Directors.  We also plan to take additional steps to elevate
Company awareness about, and communication of, these important issues through
formal channels such as Company meetings, departmental meetings, and
training.





This
annual report does not include an attestation report of the company's registered
public accounting firm regarding internal control over financial
reporting.  Management's report was not subject to attestation by the
company's registered public accounting firm pursuant to rules of the Securities
and Exchange Commission that permit the company to provide only management's
report in this annual report.





ITEM
8B OTHER INFORMATION





None






40


PART III





ITEM 9 . DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT





Directors and Executive
Officers .





The
position(s) held by each of our executive officers and Directors as of November
20, 2009 are shown in the following table. Biographical information for each is
set forth following the table. Each Director serves until a successor is elected
and has qualified.





Name
            Age
            PositionMichael
      S. Studdard
            59
            Chairman
      of the BoardRichard  J.
      Kampa
            62
            President
      & CEO and DirectorMichael
      G. Wirtz
            49
            Chief
      Financial Officer





Michael S. Studdard was
appointed to the Exobox board on April 4, 2008 and became Chairman in October,
2009. Mr. Studdard has served since July 2006 as president and a director of
Wentworth Energy, Inc., a publicly-traded oil and gas exploration and
development company based in Palestine, Texas, for which he successfully
arranged $32.35 million in financing.  Mr. Studdard served from 1992
until July 2006 as an independent landman with Michael S. Studdard &
Associates, a private company specializing in seismic permitting and exploration
ventures.  Mr. Studdard has more than 25 years experience in operating
several diversified companies in the oil and gas industry and brings strong,
independent general business skills to the Exobox Board of
Directors.





Richard J. Kampa became
President, CEO and Director of Exobox on November 1, 2009.  Mr. Kampa comes
from a healthcare background where he served as Chairman, President and CEO of
Spectrum Diagnostic Imaging from 2004 to 2007 .   Kampa was the former
Chairman, President and Chief Executive Officer of U.S. Healthworks, Inc., a
national provider of occupational healthcare services with $225 million in
revenue. He was the senior vice president of operations for HealthSouth Corp.
from 1996 to 1998.  The last two years Mr. Kampa has been a consultant
for several healthcare startup enterprises.





Michael G. Wirtz
serves as Vice President and Chief Financial Officer.  He joined the
Company in 2005 and was there through May, 2009.  In the interim he
served as a corporate consultant until he returned in December,
2009.  Prior to working with the Company, Mr. Wirtz was self
employed.  Mr. Wirtz is a 1984 MBA graduate of
Texas Tech University who also earned a B.S. degree in Accounting from
the University of Mary. He is a financial professional with experience as a
corporate comptroller for a group of marine companies and previously managed
another public corporation.





Code
of Ethics for the CEO, CFO and Senior Financial Officers





In 2005,
in accordance with SEC rules, the Board of Directors adopted the Code of
Business Conduct and Ethics. The Board of Directors believes that each officer,
director and employee must set an exemplary standard of conduct, particularly in
the areas of accounting, internal accounting control, auditing and finance. This
code sets forth ethical standards to which the designated officers must adhere
and other aspects of accounting, auditing and financial
compliance.  The Code of Ethics may be found on the Company’s website
at www.exobox.com





Audit
Committee and Audit Committee Financial Expert; Nominating
Directors





Other
than  Mr. Studdard, none of the directors are independent as defined
by Rule 10A-3 of the Exchange Act.  The Company’s Audit Committee is
comprised of Mr. Studdard (Chairman of the Audit Committee) as its sole member.
The Company does not have an “Audit Committee Financial Expert” as a member of
its audit committee. The Company does not have available any person with the
requisite background and experience, nor has the Company been able to attract
anyone to its Board with the requisite background.  We have not
adopted any procedures regarding security holders’ nominating
directors.





Compliance
with Section 16(a) of The Exchange Act





To our
knowledge, based solely on a review of the copies of the reports furnished to us
and written representations that no other reports were required, during the year
ended July 31, 2009, all Section 16(a) filing requirements applicable to our
officers, directors and greater than 10% beneficial owners were complied with
and no reports or transactions were filed late except for the
following:  Reginald Goodman failed to timely report a transaction on
Form 4 for a November 7, 2008, sale, which was subsequently reported on a Form 4
on November 11, 2008, and a transaction on Form 4 for a February 2, 2009, sale,
which was subsequently reported on a Form 4 on February 5, 2009; Scott R.
Copeland failed to timely report transactions on Form 4 for October 7, 2008,
sales, which were subsequently reported on a Form 4 on October 10, 2008,
transactions on Form 4 for  December 18, 2008, sale, which was
subsequently reported on a Form 4 on December 22, 2008, transactions on Form 4
for December 23 and 26, 2008, sales, which were subsequently reported on a Form
4 on January 5, 2009,  transactions on Form 4 for January 8 and 9,
2009, sales, which were subsequently reported on a Form 4 on January 13, 2009,
transactions on Form 4 for February 24, 2009 and April 15, 16, 17, 20 and 29,
2009, sales, which were subsequently reported on a Form 4 on May 1, 2009, a
transaction on Form 4 for a May 6, 2009, sale, which was subsequently reported
on a Form 4 on May 11, 2009, a transaction on Form 4 for a June 2, 2009, sale,
which was subsequently reported on a Form 4 on June 5, 2009, transactions on
Form 4 for May 26, 2009, sales, which were subsequently reported on a Form 4 on
June 5, 2009, a transaction on Form 4 for a August 19, 2009, sale, which was
subsequently reported on a Form 4 on August 24, 2009, transactions on Form 4 for
a August 19, 20 and 312009, and September 1, 2, 3, 4 and 8,
2009,  sales, which were subsequently reported on a Form 4 on
September 11, 2009, and a transaction on a Form 4 for September 14, 2009, sale,
which was subsequently reported on a Form 4 on September 17, 2009; Michael G.
Wirtz failed to timely report transactions on Form 4 for April 15, 16, 27, 28
and 29, 2009 and May 7, 2009, sales, which were subsequently reported on a Form
4 on May 7, 2009, transactions on Form 4 for a May 15, 2009, acquisition and
June 3, 4 and 11 sales, which were subsequently reported on a Form 4 on June 19,
2009, and transactions on Form 4 for June 23, 29 and 30, 2009, and July 15, 16,
20, 24 and 31, 2009, and August 3, 2009, sales; Marcos B. Pernia failed to
timely report transactions on Form 4 for November 18, 20, 24, 25 and 26, 2008,
sales, which were subsequently reported on a Form 4 on December 3, 2008,
transactions on Form 4 for January 13, 14, 15 and 16, 2009, which were
subsequently reported on a Form 4 on January 22, 2009, and transactions on Form
4 for May 27, 2009, and June 1 and 2, 2009, sales, which were subsequently
reported on a Form 4 on June 16, 2009;  Robert B. Dillon failed to
timely report transactions on Form 4 for December 29, 2008, March 26 and 27,
2009, April 22, 23, 24 and 30, 2009 and May 1, 4, 5, 12, 13 and 14, 2009 sales,
and a April 15, 2009, acquisition, which were subsequently reported on a Form 4
on May 18, 2009, a transaction on Form 4 for May 15, 2009, sale, which was
subsequently reported on a Form 4 on May 22, 2009 and transactions on Form 4 for
a May 15, 2009, acquisition, and May 26, 2009 and June 4, 9, 12, 15, and 16,
2009, sales, which were subsequently reported on a Form 4 on June 19, 2009.


41


ITEM 10. EXECUTIVE COMPENSATION





Compensation
of Management





The
following table sets forth the compensation paid to our Chief Executive Officer
or such other officer who fulfilled the duties of the Chief Executive Officer
for the periods indicated. Except for the individuals named, no executive
officers had a total annual salary and bonus of $100,000 or more.





Summary
Compensation Table





Name
              Principal
      Position
            
            
            Salary
            
            
            Bonus
            
            
            Stock
      Awards
            
            
            Option
      Awards
            
            
            Non-Equity
      Incentive Plan Compensation
            
            
            All
      Other Compensation
            
            
            TotalRobert
      B. Dillon
            7/31/2009
            
            $
            225,000
            
            
            
            -
            
            
            $
            17,500
            
            
            
            -
            
            
            
            -
            
            
            $
            82,000
            1
            
            $
            324,500Former
      Chairman, CEO, Pres.
            7/31/2008
            
            $
            290,000
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            $
            290,000&
      Director
            7/31/2007
            
            $
            240,000
            
            
            $
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            $
            240,000Kevin
      P. Regan
            7/31/2009
            
            $
            203,333
            
            
            
            
            
            
            $
            367,500
            
            
            $
            262,276
            
            
            
            
            
            
            $
            69,933
            2
            
            $
            903,042CEO,
      President & Director
            7/31/2008
            
            
            17,500
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            17,5007/31/2007
            
            $
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            $
            -Scott
      Copeland
            7/31/2009
            
            $
            116,443
            
            
            
            -
            
            
            $
            2,625
            
            
            
            -
            
            
            
            -
            
            
            $
            3,250
            3
            
            $
            122,318Chairman,
      VP-Operations
            7/31/2008
            
            $
            215,000
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            $
            215,0007/31/2007
            
            $
            242,900
            
            
            $
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            $
            242,900Marc
      Pernia
            7/31/2009
            
            $
            110,000
            
            
            
            -
            
            
            $
            2,625
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            $
            112,625Chief
      Product Development
            7/31/2008
            
            $
            200,000
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            $
            200,000Administrator
            7/31/2007
            
            $
            244,000
            
            
            $
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            $
            244,000Michael
      G. Wirtz
            7/31/2009
            
            $
            135,000
            
            
            
            -
            
            
            $
            17,500
            
            
            
            -
            
            
            
            -
            
            
            $
            50,720
            4
            
            $
            203,220Vice
      Pres. & CFO
            7/31/2008
            
            $
            174,000
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            $
            174,0007/31/2007
            
            $
            133,500
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            $
            133,500Theodore
      Ernst
            7/31/2009
            
            $
            250,000
            
            
            
            -
            
            
            $
            213,750
            
            
            $
            152,584
            
            
            
            -
            
            
            $
            7,500
            5
            
            $
            623,834Chief
      Technology Officer
            7/31/2008
            
            $
            52,084
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            $
            52,0847/31/2007
            
            $
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            $
            -Gary
      Leibowitz
            7/31/2009
            
            $
            131,957
            
            
            
            -
            
            
            $
            202,000
            
            
            $
            152,584
            
            
            
            -
            
            
            $
            2,200
            6
            
            $
            488,741Sr.
      VP-Sales & Marketing
            7/31/2008
            
            $
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            $
            -7/31/2007
            
            $
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            $
            -


1Mr. Dillon was paid
three months of his salary during the fiscal year in 1,154,376 shares common
stock valued at $75,000 and had $7,000 in company matching contributions through
the Company’s 401k plan.


2Mr. Regan was paid
475,000 shares of Company common stock during the fiscal year in stock valued at
$67,000 and had $2,933 in company matching contributions through the Company’s
401k plan.


3Mr. Copeland had $3,250
in company matching contributions through the Company’s 401k plan.


4Mr. Wirtz was paid three
months of his salary during the fiscal year in 692,625 shares common stock
valued at $45,000 and had $5,720 in company matching contributions through the
Company’s 401k plan.


5Mr. Ernst had $7,500 in
company matching contributions through the Company’s 401k plan.


6Mr. Leibowitz had $2,200
in company matching contributions through the Company’s 401k plan.





42


Executive
Employment Agreements





Mr.
Dillon’s employment agreement provides for an annual salary of $300,000, was
effective through March 1, 2010, and was terminated on May 6, 2009, as detailed
in a Form 8-K filed with the SEC on May 11, 2009.





Mr.
Regan’s employment agreement provides for an annual salary of $260,000, was
effective through December 31, 2010, and was terminated on October 23, 2009, as
reported in a Form 8-K filed with the SEC on October 23, 2009.





Mr.
Copeland’s employment agreement provides for an annual salary of $150,000, was
effective through March1, 2010, and was terminated on October 23, 2009, as
reported in a Form 8-K filed with the SEC on October 23, 2009.





Mr.
Pernia’s employment agreement provides for an annual salary of $120,000, was
effective through March 1, 2010, and was terminated on September 30,
2009.





Mr.
Wirtz’s employment agreement provides for an annual salary of $180,000, was
effective through March 1, 2010, and was terminated on May 6, 2009, as detailed
in a Form 8-K filed with the SEC on May 11, 2009.





Mr.
Ernst’s employment agreement provides for an annual salary of $250,000, was
effective through May 14, 2011, and was terminated on September 30,
2009.





Mr.
Leibowitz’s employment agreement provides for an annual salary of $240,000, was
effective through May 31, 2012, and was terminated on September 30,
2009.





Business Protection, Severance and
Non-Compete Agreements.  Pursuant to the terms
of each employment agreement with the executives listed above, each executive is
subject to business protection, non-solicitation and non-compete covenants.
These agreements contain restrictive covenants including a confidentiality
provision and non-solicitation of employees and customers provisions that apply
for one year after termination of employment. The non-compete provisions
generally provides that the executive will not compete with us for a period
ranging from one year after termination of employment, and in the event that
termination is by us without cause, we are obligated to pay the executive his
salary for such period.





Change in Control Agreements.
Included in the employment agreements of each of the officers identified above
are change of control provisions.  The agreements have a term equal to
the term of each employment agreement (subject to extension in our sole
discretion) and provide certain benefits to the executive in the event the
executive is terminated without cause or if the executive terminates his
employment for good reason (as defined in the agreement). Upon a termination as
a result of the change of control provision, we are obligated to pay an amount
equal to 24 months of the executives then-current base salary, and all the
rights and benefits the executive may have under all employee benefit, bonus
and/or stock option plans and programs of or agreements with us.





Outstanding
Equity Awards at Fiscal Year End





The
following tables present information regarding the outstanding equity awards
held by each of the named executive officers as of July 31, 2009.





Option
Awards




Option
              Grant
              Date
            Number
      of Securities Underlying
              Unexercised
      Options
              Exercisable
      (#)
            Number
      of Securities Underlying
              Exercised
      Options
              Unexercisable
      (#)
            Option
              Exercise
      Price
              ($/Sh)
            Option
              Expiration
              DateNameRobert
      B. Dillon
            -
            -
            -
            -
            -Kevin
      P. Regan
            5/20/2009
            2,500,000
            -
            $0.15
            1/1/20145/20/2009
            1,500,000
            -
            $0.25
            1/1/20145/20/2009
            1,500,000
            -
            $0.40
            1/1/20145/20/2009
            1,000,000
            -
            $0.50
            1/1/20145/20/2009
            1,000,000
            -
            $0.75
            1/1/2014Scott
      Copeland
            -
            -
            -
            -
            -Marc
      Pernia
            -
            -
            -
            -
            -Michael
      G. Wirtz
            -
            -
            -
            -
            -Ted
      Ernst
            5/18/2009
            2,500,000
            -
            $0.15
            5/18/20115/18/2009
            2,000,000
            -
            $0.25
            5/18/20115/18/2009
            1,500,000
            -
            $0.40
            5/18/2011Gary
      Leibowitz
            5/18/2009
            2,500,000
            -
            $0.15
            5/18/20115/18/2009
            2,000,000
            -
            $0.25
            5/18/20115/18/2009
            1,500,000
            -
            $0.40
            5/18/2011







43


Stock
Awards


Award
            
            Number
      of Shares or Units of Stock That Have Not Vested
            
            Market
      Value of Shares or Units of Stock that Have Not VestedName
            
            Grant
      Date
            
            (#)
            
            ($)Robert
      B. Dillon
            
            4/15/2009
            
            -
            
            -Kevin
      P. Regan
            
            4/15/2009
            
            -
            
            -Scott
      Copeland
            
            1/14/2009
            
            -
            
            -Marc
      Pernia
            
            1/14/2009
            
            -
            
            -Michael
      G. Wirtz
            
            4/15/2009
            
            -
            
            -Ted
      Ernst
            
            1/14/2009
            
            -
            
            -5/18/2009
            
            -
            
            -Gary
      Leibowitz
            
            1/14/2009
            
            -
            
            -5/18/2009
            
            -
            
            -







(1)
            The
      market value is calculated by multiplying the number of shares by the
      closing price of our common stock of $ 0.032 on November 30,
      2009.








Option
Exercises and Stock Vested During the Year Ended July 31, 2009




There
were no options exercised by named executive officers during the year ended July
31, 2009.














44


Director
Compensation





Directors receive $2,500 in compensation for personally
attending Board of Directors meetings. All directors are reimbursed for ordinary
and necessary expenses incurred in attending any meeting of the board of
directors or any board committee or otherwise incurred in their capacities as
directors. During the current fiscal year $25,000 in directors fees were
accrued by the Company.  The company is negotiating agreements with
current and former directors to give up or reduce their accrued
fees.





ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT





The
following table sets forth, as of November 20, 2009, information regarding the
beneficial ownership of shares of common stock by each person known by us to own
five percent or more of the outstanding shares of common stock, and by each of
the named executive officers, directors, and all officers and directors as a
group.





NAME
      AND ADDRESS OF BENEFICAL OWNER
            
            SHARES
      OF COMMON STOCK
              BENEFICIALLY
      OWNEDNUMBER
            
            
            %Robert
      B. Dillon1,
      2
            
            
            15,838,128
            
            
            
            3.86%First
      Brampton Corporation3
            
            
            7,935,736
            
            
            
            1.93%Kevin
      P. Regan4
            
            
            12,115,908
            
            
            
            2.95%Scott
      R. Copeland5
            
            
            20,443,860
            
            
            
            4.98%Marcos
      B. Pernia6
            
            
            2,299,412
            
            
            
            *Theodore
      Ernst7,
      8
            
            
            11,000,000
            
            
            
            2.68%Gary
      Leibowitz9,10
            
            
            9,550,000
            
            
            
            2.33%SPQR
      Energy, Inc.11
            
            
            34,500,000
            
            
            
            8.40%Michael
      S. Studdard
            
            
            25,000
            
            
            
            *Richard
      J. Kampa
            
            
            1,000,000
            
            
            
            *Michael
      G. Wirtz12
            
            
            3,328,521
            
            
            
            *Officer
      and Directors (3 persons)
            
            
            4,353,521
            
            
            
            1.06%





*Less
than one percent


1Mr.
Dillon owns 14,588,128 shares in his name and may be deemed to be the beneficial
owner of 1,250,000 shares in the name of his wife Christy C. Dillon and 375,000
shares in the name of Gemstone Leasing, LLC.


2Mr.
Dillon has investment and voting control for First Brampton
Corporation.


3Mr.
Dillon does not own any shares of record but is deemed to be the beneficial
owner of the shares owned of record by First Brampton Corporation.


4Includes
7,500,000 shares subject to options exercisable within 60 days after November
20, 2009, and 1,550,000shares subject to
warrants     exercisable within 60 days after November
20, 2009.


5Mr
Copeland’s address is 1710 Effie Lane, Pasadena, Texas 77501.


6Mr
Pernia’s address is 1725 Lake Street, San Mateo, CA 94403.


7Mr
Ernst’s address is 1233 West Loop South, Suite 810, Houston, Texas
77027


8Includes
6,000,000 shares subject to options exercisable within 60 days after November
20, 2009.


9Mr
Leibowitz’s address is 4616 Willow St., Bellaire, Texas 77401.


10Includes
6,000,000 shares subject to options exercisable within 60 days after November
20, 2009.


11SPQR
Energy, Inc.’s address is19607 Piney Place Ct., Houston, Texas
77094


12Mr.
Wirtz owns 2,953,521 shares in his name and may be deemed to be the beneficial
owner of 375,000 shares in the name of Gemstone   Leasing
LLC.





Beneficial
ownership has been determined in accordance with Rule 13d-3 of the Exchange Act.
Under this rule, shares may be deemed to be beneficially owned by more than one
person (if, for example, persons share the power to vote or the power to dispose
of the shares). In addition, shares are deemed to be beneficially owned by a
person if the person has the right to acquire shares (for example, upon exercise
of an option) within 60 days of the date of this table. In computing the
percentage ownership of any person, the amount of shares includes the amount of
shares beneficially owned by the person by reason of these acquisition rights.
As a result, the percentage of outstanding shares of any person does not
necessarily reflect the person’s actual voting power.





To our knowledge, except as indicated
in the footnotes to this table and pursuant to applicable community property
laws, the persons named in the table have sole voting and investment power with
respect to all shares of common stock shown as beneficially owned by
them.  Unless otherwise indicated, the business address of the
individuals listed is 2121 Sage Road, Suite 200, Houston, Texas 77056.








45


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS;
DIRECTORS INDEPENDENCE





Mrs.
Beverly Copeland advanced an aggregate principal amount of $5,000 during the
fiscal year ended July 31, 2009, and the loans do not bear interest.  We
paid principal of $0 and all of the advances during the most recent fiscal year
and the principal amount outstanding on July 31, 2009 was $5,000.




Mr. Mark
Copeland advanced an aggregate principal amount of $85,581 to the Company during
the fiscal year ended July 31, 2009, and the loans do not bear
interest.  We repaid principal of $0 on all of the advances during the
most recent fiscal year and the principal amount outstanding on July 31, 2009
was $85,581.





Mr. Scott
Copeland advanced an aggregate principal amount of $200,000 to the Company
during the fiscal year ended July 31, 2009, and the loans do not bear
interest.  We repaid principal of $0 on all of the advances during the
most recent fiscal year and the principal amount outstanding on July 31, 2009
was $200,000.





Mr.
Robert Dillon advanced an aggregate principal amount of $101,000 to the Company
during the fiscal year ended July 31, 2009, and the loans do not bear
interest.  We repaid principal of $5,000 on all of the advances during
the most recent fiscal year and the principal amount outstanding on July 31,
2009 was $96,000.





Mr.
Reginald Goodman advanced an aggregate principal amount of $210,400 to the
Company during the fiscal year ended July 31, 2009, and the loans do not bear
interest.  We repaid principal of $0 on all of the advances during the
most recent fiscal year and the principal amount outstanding on July 31, 2009
was $210,400.





Mr.
Michael Wirtz advanced an aggregate principal amount of $28,100 to the Company
during the fiscal year ended July 31, 2009, and the loans do not bear
interest.  We repaid principal of $0 on all of the advances during the
most recent fiscal year and the principal amount outstanding on July 31, 2009
was $28,100.





Mr.
Studdard is independent as defined by Rule 10A-3 of the Exchange Act.





ITEM
13. EXHIBITS





EXHIBIT
              NUMBER
            
            DESCRIPTION
      OF EXHIBIT3.1
            
            Amended
      and Restated Articles of Incorporation Exobox Technologies Corp.
      (1)3.2
            
            Bylaws
      of Exobox Technologies Corp. (1)3.3
            
            Certificate
      of Amendment to Articles of Incorporation (3)4.1
            
            Designation
      of Class A Common Stock (included in Exhibit 3.1) (1)4.2
            
            Designation
      of Series A Convertible Preferred Stock (included in Exhibit 3.1)
      (1)4.3
            
            Designation
      of Series B Convertible Preferred Stock (included in Exhibit 3.1)
      (1)4.4
            
            Designation
      of Series C Convertible Preferred Stock (included in Exhibit 3.1)
      (1)4.5
            
            Designation
      of Series D Convertible Preferred Stock (included in Exhibit 3.1)
      (1)4.6
            
            Form
      of Warrants to purchase shares of common stock (1)10.1*
            
            2007
      Stock Option Plan (2)10.2*
            
            Employment
      Agreement between Exobox Technologies Corp. and Robert B. Dillon
      (3)10.3*
            
            Employment
      Agreement between Exobox Technologies Corp. and Michael C. Wittenburg
      (3)10.4*
            
            Employment
      Agreement between Exobox Technologies Corp. and Michael G. Wirtz
      (3)10.5*
            
            Employment
      Agreement between Exobox Technologies Corp. and Marcos Pernia
      (3)10.6*
            
            Employment
      Agreement between Exobox Technologies Corp. and Reginald Goodman
      (3)10.7*
            
            Employment
      Agreement between Exobox Technologies Corp. and Scott Copeland
      (3)10.8
            
            Securities
      Purchase Agreement covering Series C Convertible Preferred Stock
      (1)14.1
            
            Code
      of Business Conduct and Ethics (1)21.1
            
            Subsidiaries
      of the Registrant (1)23.1
            
            Consent
      of auditors for Registrants Form S-8 (2)31.1
            
            Certification
      of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
      Act of 200231.2
            
            Certification
      of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
      Act of 200232.1
            
            Certification
      of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
      Pursuant to Section 906 of the Sarbanes-Oxley Act of
  200232.2
            
            Certification
      of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
      Pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002


*
Management contract or compensatory plan or arrangement.





(1)
Incorporated herein by reference to the Registrant’s Form 10-SB12, filed on
December 21, 2005.


(2)
Incorporated herein by reference to the Registrant’s Form S-8, filed on June 29,
2007.


(3)
Incorporated herein by reference to the Registrant’s Form 10-SB12G/A, filed on
February 3, 2006.





46


ITEM 14. PRINCIPAL ACCOUNTANT FEES AND
SERVICES





During
2008 and 2009 the Company’s principal accountants have been and remain Malone
& Bailey, PC. They have been the company’s principal accountant since the
Company’s triangular merger in September, 2005.





AUDIT
FEES





The
aggregate fees billed for each of the last two fiscal years for professional
services rendered by the Company’s principal accountants for the audit of the
Company’s annual financial statements and review of financial statements
included in the Company’s 10-K and 10-Q filings were approximately: 2009 $86,000
and 2008 $60,000.





AUDIT
RELATED FEES





The
aggregate fees billed for each of the last two fiscal years for professional
services rendered by the Company’s principal accountants for audit related fees:
2009 $ 0 and 2008 $ 0.





TAX
FEES





Services
have been provided to date under this caption for the fiscal years of 2005,
2006, 2007 or 2008.  The aggregate fee billed for each of the last two
fiscal years for Tax fees: 2009 $8,280 and 2008 $0. The Company will retain
its principal accountants to prepare its annual tax return for the year ending
July 31, 2009.





ALL
OTHER FEES





No other
fees were billed in either 2009 or 2008 by the Company’s principal
accountants.














47


EXOBOX
TECHNOLOGIES CORP.





SIGNATURES





Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf of the undersigned thereunto
duly authorized.





EXOBOX
TECHNOLOGIES CORP.








Dated:
      December 1, 2009
            By:  /s/
      Richard J. KampaRichard
      J. KampaChief
      Executive Officer and Director(Principal
      Executive Officer)





Dated:
      December 1, 2009
            By:
      /s/ Michael G. WirtzMichael
      G. WirtzChief
      Financial Officer(Principal
      Financial and Accounting Officer)Dated:
      December 1, 2009
            By:
      /s/ Michael S. StuddardMichael
      S. StuddardChairman
      of the Board of Directors

























48