UNITED
STATES


SECURITIES
AND EXCHANGE
COMMISSION


Washington,
D.C. 20549





FORM
10-QSB








QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d)


OF THE
SECURITIES EXCHANGE ACT OF 1934





For the
quarterly period ended January 31, 2008





Logo


(Exact
name of registrant as specified 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)





6303
Beverly Hill, Suite 210, Houston, Texas 77057


(Former
name, former address, and former fiscal


year if
changed since last report)





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








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





Outstanding
Common stock, par value $0.001 per share as of March 17,
2008:  395,176,458 shares







1





EXOBOX TECHNOLOGIES CORP.


FORM
10-QSB FOR THE QUARTER ENDED January 31, 2008





INDEX





PAGEPART I.
      FINANCIAL INFORMATIONItem
      1. Financial StatementsBalance Sheets as of January 31, 2008 and July 31, 2007
      (Unaudited).
            3Statements of Operations for the three and six months ended
      January 31, 2008 and 2007 and for the period from Inception to January 31,
      2008 (Unaudited).
            4Statements of Cash Flows for the six months ended January
      31, 2008 and 2007 and for the period from Inception to January 31, 2008
      (Unaudited).
            5Notes to the Financial Statements
      (Unaudited)
            6Item 2. Management's Discussion and Analysis of Financial
      Condition and Results of Operations
            13Item 3. Controls and Procedures
            17PART
      II. OTHER INFORMATIONItem 1. Legal Proceedings
            17Item 3. Defaults Upon Senior Securities
            17Item 6. Exhibits
            17Signatures
            18




2
 Index





EXOBOX TECHNOLOGIES CORP.


(A
DEVELOPMENT STAGE COMPANY)


BALANCE
SHEETS


(Unaudited)


January
      31, 2008
                  
                  
                  July
      31, 2007ASSETSCurrent
      assetsCash
                  
                  $
                  772,532
                  
                  
                  $
                  8,363Other
      Current Assets
                  
                  
                  3,911
                  
                  
                  
                  14,000Total
      Current Assets
                  
                  
                  776,443
                  
                  
                  
                  22,363Property
      and Equipment, net
                  
                  
                  9,088
                  
                  
                  
                  12,164Patents
                  
                  
                  67,233
                  
                  
                  
                  67,233Intangibles,
      net
                  
                  
                  2,030
                  
                  
                  
                  3,290TOTAL
      ASSETS
                  
                  $
                  854,794
                  
                  
                  $
                  105,050LIABILITIES
      AND STOCKHOLDERS' (DEFICIT)Current
      Liabilities:Accounts
      Payable
                  
                  $
                  90,289
                  
                  
                  $
                  46,148Accounts
      Payable-Stockholder
                  
                  
                  4,909
                  
                  
                  
                  4,461Accrued
      Liabilities
                  
                  
                  539,837
                  
                  
                  
                  1,391,853Advances
      from Stockholder
                  
                  
                  168,590
                  
                  
                  
                  194,800Convertible
      Note Payable
                  
                  
                  -
                  
                  
                  
                  105,000Derivative
      Liability
                  
                  
                  -
                  
                  
                  
                  2,025,042Total
      Current Liabilities
                  
                  
                  803,625
                  
                  
                  
                  3,767,304Note
      Payable
                  
                  
                  500,000
                  
                  
                  
                  -Total
      liabilities
                  
                  
                  1,303,625
                  
                  
                  
                  3,767,304STOCKHOLDERS'
      (DEFICIT)Preferred
      stock:Series
      A convertible preferred stock, $0.001 par, 2,500,000 shares authorized,
      6,378 shares issued and outstanding at January 31, 2008 and 2,031,986
      shares issued and outstanding at July 31, 2007
                  
                  
                  6
                  
                  
                  
                  2,032Series
      B convertible preferred stock, $0.001 par, 2,000,000 shares authorized,
      17,668 shares issued and outstanding at January 31, 2008 and 660,132
      shares issued and outstanding at July 31, 2007
                  
                  
                  18
                  
                  
                  
                  661Series
      C convertible preferred stock, $0.001 par, 25,000 shares authorized, 0
      shares issued and outstanding at January 31, 2008 and 19,400 shares issued
      and 19,400 shares outstanding at July 31, 2007
                  
                  
                  -
                  
                  
                  
                  19Series
      D convertible preferred stock, $0.001 par, 110,150 shares authorized,
      2,203 shares issued and outstanding at  January 31, 2008 and
      104,992 shares issued and outstanding at July 31, 2007Class
      A Common stock, $0.001 par value, 9,939,101 shares authorized 0 shares
      issued and outstanding at January 31, 2008 and 9,939,101 Shares
      issued and outstanding at July 31, 2007
                  
                  
                  2-
                  
                  
                  
                  1059,939Common
      stock, $0.001 par value, 500,000,000 shares authorized, 377,220,505 shares
      issued and outstanding at January 31, 2008 and 78,172,639 shares issued
      and outstanding at July 31, 2007
                  
                  
                  377,221
                  
                  
                  
                  78,173Additional
      paid-in capital
                  
                  
                  7,492,103
                  
                  
                  
                  2,736,566Deficit
      accumulated during the development stage
                  
                  
                  (8,318,181
                  )
                  
                  
                  (6,489,749
                  )Total
      stockholders' (deficit)
                  
                  
                  (448,831
                  )
                  
                  
                  (3,662,254
                  )TOTAL
      LIABILITIES AND STOCKHOLDERS' (DEFICIT)
                  
                  $
                  854,794
                  
                  
                  $
                  105,050




See
accompanying notes to the financial statements





3
 Index





EXOBOX TECHNOLOGIES CORP.


(A
DEVELOPMENT STAGE COMPANY)


STATEMENTS
OF OPERATIONS


(Unaudited)





Three
      Months
                Ended
                January
      31,
                2008
              
              
              Three
      Months
                Ended
                January
      31,
                2007
                (restated)
              
              
              Six
      Months
                Ended
                January
      31,
                2008
              
              
              Six
      Months
                Ended
                January
      31,
                2007
                (restated)
              
              
              Inception
                (January
      21,
                2002)
                toJanuary 31,
                2008Revenues
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -General
      & Administrative
              
              
              1,491,231
              
              
              
              27,676
              
              
              
              1,529,436
              
              
              $
              119,916
              
              
              
              2,089,225Depreciation
      and amortization
              
              
              2,168
              
              
              
              2,168
              
              
              
              4,336
              
              
              
              4,336
              
              
              
              17,979Professional
      Fees
              
              
              618,103
              
              
              
              51,186
              
              
              
              1,344,700
              
              
              
              95,822
              
              
              
              2,583,953Payroll
      Expenses
              
              
              288,000
              
              
              
              293,050
              
              
              
              576,000
              
              
              
              588,279
              
              
              
              2,473,236Software
      development expense
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              243
              
              
              
              446,393Research
      and Development
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              288,259Total
      Operating Expenses
              
              
              2,399,502
              
              
              
              374,080
              
              
              
              3,454,472
              
              
              
              808,596
              
              
              
              7,899,045Loss
      from Operations
              
              
              (2,399,502
              )
              
              
              (374,080
              )
              
              
              (3,454,472
              )
              
              
              (808,596
              )
              
              
              (7,899,045
              )Other
      Income (Expense):
              
              
              -
              
              
              
              (42,263
              )
              
              
              1,630,042
              
              
              
              (1,581,561
              )
              
              
              (295,000
              )Gain
      (Loss) on derivativesLoss
      on Extinguishment of Convertible Note
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Interest
      Expense
              
              
              (925
              )
              
              -
              
              
              (4,003
              )
              
              
              -
              
              
              
              (124,136
              )Total
      Other Income (Expenses)
              
              
              (925
              )
              
              
              -
              
              
              
              1,626,039
              
              
              
              
              
              
              
              (419,136
              )Income
      (Loss) Before Income Taxes
              
              
              (2,400,427)
              
              
              
              (416,343
              )
              
              
              (1,828,433
              )
              
              
              (2,390,157
              )
              
              
              (8,318,181
              )Provision
      for Income Taxes
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Net
      Income (Loss)
              
              $
              (2,400,427
              )
              
              $
              (416,343
              )
              
              $
              (1,828,433
              )
              
              $
              (2,390,157
              )
              
              $
              (8,318,181
              )Basic
      and dilutedNet
      Income (loss) per common share-basic and diluted
              
              $
              (
      0.01
              )
              
              $
              (0.02
              )
              
              $
              (0.01
              )
              
              $
              (0.03
              )Weighted
      average shares outstanding-basic and diluted
              
              
              324,485,224
              
              
              
              26,911,277
              
              
              
              231,163,433
              
              
              
              18,917,389








See
accompanying notes to the financial statements





4
 Index





EXOBOX TECHNOLOGIES CORP.


STATEMENTS
OF CASH FLOWS


(Unaudited)





6
      Months
            
            
            6
      Months
            
            
            Inception
              (January
      21,
              2002)Ended
            
            
            Ended
            
            
            toJanuary
      31,
            
            
            January
      31,
            
            
            January
      31,2008
            
            
            2007
            
            
            2008(restated)CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      Income (Loss)
            
            $
            (1,828,433
            )
            
            $
            (2,390,157
            )
            
            $
            (8,318,181
            )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Share-based
      compensation
            
            
            1,417,800
            
            
            
            481,500
            
            
            
            2,167,800Warrant
      issued for consulting services
            
            
            434,165
            
            
            
            -
            
            
            
            446,660Stock
      issued for services
            
            
            742,642
            
            
            
            -
            
            
            
            915,642Depreciation
      and amortization
            
            
            4,336
            
            
            
            4,336
            
            
            
            17,979(Gain)/Loss
      on derivatives
            
            
            (2,025,042
            )
            
            
            1,581,561
            
            
            
            5,000Loss
      on debt extinguishment
            
            
            395,000
            
            
            
            -
            
            
            
            395,000Changes
      in operating assets and liabilities:Prepaid
      and other current assets
            
            
            14,184
            
            
            
            -
            
            
            
            184Increase
      in accounts payable
            
            
            44,142
            
            
            
            79,109
            
            
            
            90,289Increase
      in accrued liabilities
            
            
            577,637
            
            
            
            1,296
            
            
            
            1,970,218Accounts
      payable to shareholders
            
            
            448
            
            
            
            322
            
            
            
            4,909NET
      CASH USED IN OPERATING ACTIVITIES
            
            
            (223,121
            )
            
            
            (242,033
            )
            
            
            (2,304,500
            )CASH
      FLOW FROM INVESTING ACTIVITIESInvestment
      in patents
            
            
            -
            
            
            
            -
            
            
            
            (67,233
            )Investment
      in intangible assets
            
            
            -
            
            
            
            -
            
            
            
            (7,700
            )Investment
      in property and equipment
            
            
            -
            
            
            
            -
            
            
            
            (21,397
            )NET
      CASH USED IN INVESTING ACTIVITIES
            
            
            -
            
            
            
            -
            
            
            
            (96,330
            )CASH
      FLOWS FROM FINANCING ACTIVITIESProceeds
      from sale of stock
            
            
            1,000,000
            
            
            
            -
            
            
            
            2,874,000Advances
      from stockholder
            
            
            133,990
            
            
            
            24,400
            
            
            
            400,702Proceeds
      from warrants exercised
            
            
            13,500
            
            
            
            -
            
            
            
            31,500Repayment
      of advances from     stockholders
            
            
            (160,200
            )
            
            
            -
            
            
            
            (232,840
            )Convertible
      note proceeds (payments)
            
            
            -
            
            
            
            100,000
            
            
            
            100,000NET
      CASH PROVIDED BY FINANCING ACTIVITIES
            
            
            987,290
            
            
            
            124,400
            
            
            
            3,173,362NET
      CHANGE IN CASH AND CASH EQUIVALENTS
            
            
            764,169
            
            
            
            (117,633
            )
            
            
            772,532Cash
      and cash equivalents at beginning of period
            
            
            8,363
            
            
            
            117,719
            
            
            
            -Cash
      and cash equivalents at end of period
            
            $
            772,532
            
            
            $
            86
            
            
            $
            772,532SUPPLEMENTAL
      DISCLOSURESCash
      paid for interest
            
            $
            4,006
            
            
            $
            -Cash
      paid for income taxes
            
            
            -
            
            
            
            -




See
accompanying notes to the financial statements





5
 Index





EXOBOX TECHNOLOGIES CORP.


(A
DEVELOPMENT STAGE COMPANY)


NOTES TO
THE FINANCIAL STATEMENTS


(UNAUDITED)





NOTE 1 -
SUMMARY OF ACCOUNTING POLICIES





Organization
and Nature of Operations. 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.





Exobox is
a developer of innovative enterprise and home user endpoint and server security
software products, headquartered in Houston, Texas. Exobox’s patented and
patent-pending technology is based on enforcing appropriate system and
application behaviors by isolating and controlling real-time access to the file
system, memory, network and inter-process communication with the goal to insure
that the security implemented is proactive, not reactive. Exobox’s technology
creates an isolated user environment that protects the host environment from all
unauthorized modifications by treating all data from all sources as if it is
malicious. Traditional computer security, such as common anti-virus and
anti-spy/ad-ware, tends to rely on a data-base of known signatures, rendering it
capable only of attempting to provide security against perpetually updated lists
of previously identified threats. Exobox’s technology integrates into the
operating system, which enables it to provide protection for the user’s computer
and network.





Use of
Estimates. In preparing financial statements, management makes estimates and
assumptions that affect the reported amounts of assets and liabilities in the
balance sheet and expenses in the statement of expenses. Actual results could
differ from those estimates. Areas involving the use of significant estimates
include revenue recognition; estimation of our allowance for doubtful accounts
and billing adjustments; valuation and recoverability of long-lived assets,
including depreciation, impairment, amortization and intangible assets;
determination of technological feasibility and capitalization of software
development costs; and income taxes.





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.





Impairment
of Long−lived assets. Exobox periodically reviews the carrying value of
intangible assets not subject to amortization to determine whether impairment
may exist. Statement of Financial Accounting Standards (SFAS) No. 142, “Goodwill
and Other Intangible Assets”, requires that certain intangible assets be
assessed annually for impairment using fair value measurement techniques. The
impairment test for other intangible assets not subject to amortization consists
of a comparison of the fair value of the intangible asset with its carrying
value. If the carrying value of the intangible asset exceeds its fair value, an
impairment loss is recognized in an amount equal to that excess. The estimates
of fair value of intangible assets not subject to amortization are determined
using various discounted cash flow valuation methodologies. Significant
assumptions are inherent in this process, including estimates of discount rates.
Discount rate assumptions are based on an assessment of the risk inherent in the
respective intangible assets.





Revenue
Recognition. Exobox recognizes revenue when persuasive evidence of an
arrangement exists, services have been rendered, the sales price is fixed or
determinable, and collectability is reasonably assured. For the period from
Inception to January 31, 2008, Exobox had no revenues.





Income
Taxes. Income taxes are 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 with SFAS No. 128,
"Earnings Per Share." 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.





6
 Index





Potential
shares related to preferred stock that was not converted during the three and
six months ended January 31, 2008 and 2007 were not included in the computation
of diluted EPS because their conversion would have an antidilutive effect on the
computation of diluted loss per share.





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 receivable and 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.  Exobox
has used a financial derivative instrument on our debt outstanding. We account
for our derivative instruments under the provisions of Statement of Financial
Accounts Standard ("SFAS") No. 133, “Accounting for Derivative Instruments and
Hedging Activities.” Under this statement, derivative instruments, other than
those meeting the normal purchases and sales exception or other exceptions, are
recorded on our balance sheet as either assets or liabilities measured at fair
value determined by reference to published future market prices and interest
rates with changes in the fair value of derivatives recorded in net income or
other comprehensive income as appropriate.





Research
and Product 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.





Recent
Accounting Pronouncements. On February 1, 2006, Exobox adopted SFAS No. 123(R),
“Share-Based Payment.” SFAS 123(R) replaced SFAS No. 123 and supersedes APB
Opinion No. 25. SFAS 123(R) requires all share-based payments to employees,
including grants of employee stock options, to be recognized in the financial
statements based upon their fair values. The pro forma disclosures previously
permitted under SFAS No. 123 are no longer an alternative to financial statement
recognition. As of January 31, 2008, Exobox had no outstanding employee stock
options.





In
September 2006, FASB issued SFAS 157 ‘Fair Value Measurements’. This Statement
defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles (GAAP), and expands disclosures about
fair value measurements. This Statement applies under other accounting
pronouncements that require or permit fair value measurements, the Board having
previously concluded in those accounting pronouncements that fair value is the
relevant measurement attribute. Accordingly, this Statement does not require any
new fair value measurements. However, for some entities, the application of this
Statement will change current practice. This Statement is effective for
financial statements issued for fiscal years beginning after November 15, 2007,
and interim periods within those fiscal years. The Company’s management is
currently evaluating the effect of this pronouncement on the financial
statements.





In July
2006, the FASB released FASB Interpretation No. 48, Accounting for Uncertainty
in Income Taxes, an interpretation of FASB Statement No. 109 (FIN 48) FIN 48
clarifies the accounting and reporting for uncertainties in income tax law. This
interpretation prescribes a comprehensive model for the financial statement
recognition, measurement, presentation and disclosure of uncertain tax positions
taken or expected to be taken in income tax returns. This statement is effective
for fiscal years beginning after December 15, 2006. The Company’s management
believes that the effect of the adoption of FIN 48 was immaterial.





In
February 2006, FASB issued SFAS No. 155, “Accounting for Certain Hybrid
Financial Instruments.” SFAS No. 155 amends SFAS No 133, “Accounting for
Derivative Instruments and Hedging Activities,” and SFAF No. 140, “Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities.” SFAS No. 155, permits fair value remeasurement for any hybrid
financial instrument that contains an embedded derivative that otherwise would
require bifurcation, clarifies which interest-only strips and principal-only
strips are not subject to the requirements of SFAS No. 133, establishes a
requirement to evaluate interest in securitized financial assets to identify
interests that are freestanding derivatives or that are hybrid financial
instruments that contain an embedded derivative requiring bifurcation, clarifies
that concentrations of credit risk in the form of subordination are not embedded
derivatives, and amends SFAS No. 140 to eliminate the prohibition on the
qualifying special-purpose entity from holding a derivative financial instrument
that pertains to a beneficial interest other than another derivative financial
instrument. The Company’s management believe that there will be no material
effect to its financial statements by SFAS No. 155.





In May
2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections".
SFAS No. 154 replaces APB Opinion No. 20 "Accounting Changes" and SFAS No. 3,
"Reporting Accounting Changes in Interim Financial Statements". SFAS No. 154
requires retrospective application to prior periods' financial statements of
changes in accounting principle, unless it is impracticable to determine either
the period-specific effects or the cumulative effect of the change. The adoption
of SFAS No. 154 did not impact the Company's financial statements.





Certain
reclassifications have been made to the prior years’ financial statements to
conform to the current year presentation. These reclassifications had no effect
on previously reported results of operations, financial position, or cash
flows.





7
 Index





NOTE 2 -
GOING CONCERN





From
Inception to January 31, 2008, Exobox has accumulated losses of $8,318,181. 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 if it feels the $2.9 million that has
been raised isn’t sufficient to continue its coding of its software and
introduce the resulting product to market. 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.





NOTE 3 –
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.  No amortization will be recorded until the patents
have been granted.





NOTE 4 -
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 $2 million at January 31, 2008, and will expire
in the years 2023 through 2025.





At
January 31, 2008, deferred tax assets consisted of the following:





Deferred
      tax assets
            
            $
            750,000Valuation
      allowance
            
            
            (750,000
            )Net
      deferred taxes
            
            $
            0





NOTE 5 –
RELATED PARTIES





Accounts
payable to stockholders represent amounts owed to stockholders primarily for
reimbursement of general and administrative costs paid on behalf of
Exobox.  Accounts payable to stockholders totaled $4,909 at January
31, 2008.





Certain
of Exobox’s stockholders have advanced cash to the company for working capital
purposes.  The advances are payable upon demand and do not accrue
interest.  Advances totaled $168,590 at January 31, 2008.








NOTE 6 –
COMMITMENTS





Beginning
in September 2004, Exobox leased on a month-to-month basis an office in Houston,
Texas from a third party for $500 per month.  Rent expense totaled
$1,500 for the quarter ended January 31, 2008. See footnote 8 for subsequent
lease agreement.








NOTE 7 –
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 have been designated Series B convertible
preferred stock, 25,000 shares have been designated Series C convertible
preferred stock and 110,150 shares have been designated Series D convertible
preferred stock.





Exobox
issued a private placement on December 19, 2007 for up to $10,000,000 consisting
of up to 400 units offered at $25,000 per unit.  Each unit consists of
250,000 shares of common stock and a redeemable common stock purchase warrant
for 50,000 shares with an exercise price of $1/share which expire on December
31, 2011.  Proceeds received during the quarter totaled $1,000,000 and
additional costs included 2,150,000 in warrants.  The proceeds of the
offering were allocated based on the relative fair market value of the common
stock issued in relation to the equity raise and the warrants.  The
relative fair value of the warrants was $214,378.  Black-Scholes was
used to estimate the fair value of the warrants.





8
 Index





Exobox
analyzed the warrants for derivative accounting consideration under SFAS 133 and
EITF 00-19. Exobox determined the warrants met the criteria for classification
in stockholders equity under SFAS 133 and EITF 00-19. Therefore, derivative
accounting was not applicable for these warrants.





Common
Stock





Holders
of common stock are entitled to one vote per share on all matters to be voted
upon by the shareholders and holders of Class A common stock are entitled to 100
votes per share. Except as otherwise provided by law, the holders of shares of
common stock vote as one class.





Except
for the voting rights for Class A common stock, each share of common stock shall
have the same relative powers, preferences and rights as, and shall be identical
in all respects with, all our other shares of common stock.





Shares of
Class A common stock convert to shares of common stock in certain circumstances,
including (i) upon sale or other transfer, (ii) at the time the holder of shares
of Class A common stock ceases to be affiliated with our company, and (iii) upon
the sale of the shares in a registered public offering.





Preferred
Stock





Exobox is
authorized to issue 4,630,150 shares of preferred stock in one or more
series.





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.





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
Bpreferred 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
August through December, 2007, the majority of the holders of the all of the
Company’s Class A Common Stock, Series A Preferred Stock, Series B Preferred
Stock and Series D Preferred Stock converted into shares of the Company’s common
stock.  Due to the conversions the Company exchanged (i) 9,939,101 shares
of common stock for 9,939,101 shares of our Class A Common Stock, (ii)
187,062,449 shares of our common stock for 2,031,986 shares of Series A
Preferred Stock, (iii) 58,041,041shares of our common stock for 660,132 shares
of Series B Preferred Stock and (iv) 14,013,930 shares of our common stock for
104,992 shares of Series D Preferred Stock.





Stock
Option, Stock Warrant and Stock Award Plan





9
 Index





On
September 15, 2005, Exobox adopted a stock option, stock warrant and stock award
plan for officers, directors, consultants and key employees of Exobox. Exobox
will reserve 1,630,125 shares of common stock, warrants, options, preferred
stock or any combination thereof for the plan.





On June
18, 2007 Exobox filed with the SEC an S-8 registration statement registering
20,000,000 shares reserved for officers, directors, consultants and key
employees of Exobox.





WARRANTS


At
January 31, 2008, Exobox had outstanding and exercisable warrants to purchase an
aggregate of 8,042,500hares of


common
stock. The weighted average remaining life is 3.45 years and the weighted
average price per share is $0.43 per share as follows:





The
status of the warrants as of January 31, 2008, is as follows:


WeightedAverageExerciseWarrants
      Outstanding and Exercisable
            
            Warrants
            
            
            PriceOUTSTANDING,
      July 31, 2006
            
            
            4,550,000
            
            
            $
            0.20Granted
            
            
            -
            
            
            
            -Expired
            
            
            -
            
            
            
            -Exercised
            
            
            (90,000
            )
            
            $
            0.20OUTSTANDING,
      July 31, 2007
            
            
            4,460,000
            
            
            $
            0.20Granted
            
            
            3,650,000
            
            
            $
            0.71Expired
            
            
            -
            
            
            
            -Exercised
            
            
            (67,500
            )
            
            $
            0.20OUTSTANDING,
      January 31, 2008
            
            
            8,042,500
            
            
            $
            0.43





Following
is the details of warrants outstanding as of January 31, 2008





Number
      of Common Stock
              Equivalents
            
            Expiration
              Date
            
            Remaining
              Contracted
              Life
      (Years)
            
            
            Exercise
              Price4,342,500
            
            10/31/2010
            
            
            2.75
            
            
            $
            0.201,500,000
            
            9/24/2012
            
            
            4.67
            
            
            $
            0.3050,000
            
            7/31/2011
            
            
            3.5
            
            
            $
            0.252,150,000
            
            12/31/2011
            
            
            3.92
            
            
            $
            1.00





For the
quarter ended January 31, 2008, no warrants were exercised.





Note
Payable





On
September 14, 2006, Exobox received $100,000 cash from a Preferred Shareholder
in exchange for a 10% Convertible Promissory Note for $100,000 due on January 1,
2007. The conversion option of this note was determined to be a
derivative.  The note payable was in default at July 31, 2007and was
subsequently cancelled.   Effective September 10, 2007, we
entered into a settlement agreement and mutual release with Manillo
Investments, Ltd (“Manillo Settlement”), pursuant to which we agreed to issue
Manillo Investment, Ltd a new promissory note in the principal amount of
$500,000 with principal and accrued interest due in five years in exchange for
Manillo Investment, Ltd. (i) cancelling a convertible note with an outstanding
balance as of July 31, 2007 of $105,000, (ii) terminating the securities
purchase agreement issued in connection with the convertible note, and (iii)
assigning the Series C Preferred Stock to Exobox.  Therefore as a
result of the Manillo Settlement, there is no Series C Preferred Stock
outstanding.





NOTE 8 –
SUBSEQUENT EVENTS





In
February 2008, the Company issued 18,250,000 shares of Company common stock and
warrants to purchase a total of 3,650,000 shares of Company common stock to
various investors.  The Company received total proceeds of $1,825,000
from the issuance of such shares and warrants and paid no sales commissions,
producing net proceeds of $1,825,000.  The Company issued the shares
and warrants for the purpose of raising proceeds to fund working capital
expenditures, including hiring of personnel to begin coding of the Company’s
proprietary software.  In total, the Company raised a total of
$2,900,000 through its Private Placement and issued a total of 29,000,000 shares
of Company common stock and warrants to purchase a total of 5,800,000 shares of
Company common stock.





10
 Index





The
warrants are exercisable at a price of $1.00 per share and expire in December
2011.  If fully exercised, the warrants will produce an additional
$5,800,000 in proceeds for the Company.  The warrants contain standard
adjustment provisions for stock splits, distributions, reorganizations, mergers
and consolidations.





The
offers and sales were made without registration under the Act, or the securities
laws of certain states, in reliance on the exemptions provided by Section 4(2)
of Act and Regulation D under the Act and in reliance on similar exemptions
under applicable state laws.  The shares of common stock and the
shares of common stock underlying the warrants are restricted as defined in Rule
144 of the Securities Act of 1933.





The
Company has signed a 62 month lease for new office space in Houston, Texas
beginning March 15, 2008 from a third party for a base rate of $8,561 per
month.








NOTE
9--RESTATEMENT





The
Company determined that its compensation expense was understated by $288,000 in
the quarter ended January 31, 2007 and needed to accrue in 2007 an amount of
$288,000.  Additionally, compensation expense was understated by
$481,500 for the year ended January 31, 2007.





Below is
the detailed effect of the restatement for the year ended January 31,
2007:





2007
            
            
            2007As
      Reported
            
            
            As
      RestatedBalance
      SheetASSETSCurrent
      Assets
            
            $
            86
            
            
            $
            86Non-current
      Assets
            
            $
            87,023
            
            
            $
            87,023TOTAL
      ASSETS
            
            $
            87,109
            
            
            $
            87,109LIABILITIESCurrent
      Liabilities
            
            $
            1,870,144
            
            
            $
            2,351,644Non-current
      Liabilities
            
            
            -
            
            
            
            -Total
      Liabilities
            
            $
            1,870,144
            
            
            $
            2,351,644STOCKHOLDERS'
      EQUITYCapital
      Stock
            
            $
            38,449
            
            
            $
            38,449Additional
      Paid-in capital
            
            $
            2,598,046
            
            
            $
            2,598,046Accumulated
      Deficit
            
            $
            (4,419,530
            )
            
            $
            (4,901,030
            )TOTAL
      STOCKHOLDERS' EQUITY
            
            $
            (1,783,035
            )
            
            $
            (2,264,535
            )TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY
            
            $
            87,109
            
            
            $
            87,109STATEMENT
      OF OPERATIONSNet
      Revenue
            
            
            -
            
            
            
            -Total
      Operating Expenses
            
            $
            128,343
            
            
            $
            609,843Loss
      from Operations
            
            $
            (128,343
            )
            
            $
            (606,843
            )Other
      Expenses
            
            
            -
            
            
            
            -Loss
      before Income Taxes
            
            $
            (128,343
            )
            
            $
            (609,843
            )Provision
      for Income Taxes
            
            
            -
            
            
            
            -Net
      Loss
            
            $
            (128,343
            )
            
            $
            (609,843
            )Earnings
      (Loss) per common share (basic and diluted)
            
            $
            (0.01
            )
            
            $
            (0.02
            )Weighted
      averages shares outstanding
            
            
            18,917,389
            
            
            
            18,917,389STATEMENTS
      OF CASH FLOWS (6 Months)Net
      Income (Loss)
            
            $
            (1,908,657
            )
            
            $
            (2,390,157
            )Net
      cash used in operating activities
            
            $
            (242,033
            )
            
            $
            (242,033
            )Net
      cash used in investing activities
            
            
            -
            
            
            
            -Net
      cash provided by financing activities
            
            $
            124,400
            
            
            $
            124,400Net
      decrease in cash and cash equivalents
            
            $
            117,633
            
            
            $
            117,633




11
 Index





Below is
the detailed effect of the restatement for the quarter ended January 31,
2007:





2007
            
            
            2007As
      Reported
            
            
            As
      RestatedBalance
      SheetASSETSCurrent
      Assets
            
            $
            86
            
            
            $
            86Non-current
      Assets
            
            $
            87,023
            
            
            $
            87,023TOTAL
      ASSETS
            
            $
            87,109
            
            
            $
            87,109LIABILITIESCurrent
      Liabilities
            
            $
            1,870,144
            
            
            $
            2,158,144Non-current
      Liabilities
            
            
            -
            
            
            
            -Total
      Liabilities
            
            $
            1,870,144
            
            
            $
            2,158,144STOCKHOLDERS'
      EQUITYCapital
      Stock
            
            $
            38,449
            
            
            $
            38,449Additional
      Paid-in capital
            
            $
            2,598,046
            
            
            $
            2,598,046Accumulated
      Deficit
            
            $
            (4,419,530
            )
            
            $
            (4,707,530
            )TOTAL
      STOCKHOLDERS' EQUITY
            
            $
            (1,783,035
            )
            
            $
            (2,071,035
            )TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY
            
            $
            87,109
            
            
            $
            87,109STATEMENT
      OF OPERATIONSNet
      Revenue
            
            
            -
            
            
            
            -Total
      Operating Expenses
            
            $
            128,343
            
            
            $
            416,343Loss
      from Operations
            
            $
            (128,343
            )
            
            $
            (416,343
            )Other
      Expenses
            
            
            -
            
            
            
            -Loss
      before Income Taxes
            
            $
            (128,343
            )
            
            $
            (416,343
            )Provision
      for Income Taxes
            
            
            -
            
            
            
            -Net
      Loss
            
            $
            (128,343
            )
            
            $
            (416,343
            )Earnings
      (Loss) per common share (basic and diluted)
            
            $
            (0.01
            )
            
            $
            (0.02
            )Weighted
      averages shares outstanding
            
            
            26,911,277
            
            
            
            26,911,277STATEMENTS
      OF CASH FLOWS (6 Months)Net
      Income (Loss)
            
            $
            (1,908,657
            )
            
            $
            (2,196,657
            )Net
      cash used in operating activities
            
            $
            (242,033
            )
            
            $
            (242,033
            )Net
      cash used in investing activities
            
            
            -
            
            
            
            -Net
      cash provided by financing activities
            
            $
            124,400
            
            
            $
            124,400Net
      decrease in cash and cash equivalents
            
            $
            117,633
            
            
            $
            117,633




12
 Index





PART I





ITEM
2





MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS





This
report on Form 10-QSB contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 23E of the
Securities Act of 1934, as amended. These statements relate to the Company's
expectations regarding future events or future financial performance. Any
statements contained in this report that are not statements of historical fact
may be deemed forward-looking statements. In some cases, forward-looking
statements can be identified by terminology such as "may," "will," "should,"
"expect," "plan," "anticipate," "intend", "believe," "estimate," "predict,"
"potential" or "continue," or the negative of such terms or other comparable
terminology. 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 entity, assumes responsibility for the accuracy and completeness of the
forward-looking statements. The Company is under no obligation to update any of
the forward-looking statements after the filing of this Form 10-QSB to conform
such statements to actual results or to changes in the Company's
expectations.





The
following discussion should be read in conjunction with the Company's condensed
consolidated financial statements, related notes and the other financial
information appearing elsewhere in this Form 10-QSB. Readers are also urged to
carefully review and consider the various disclosures made by the Company, which
attempt to advise interested parties of the factors which affect the Company's
business, including without limitation, the disclosures made under the caption
"Certain Factors That May Affect Future Performance."





Certain
Factors that may Affect Future Performance




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 January
31, 2008, we had an accumulated deficit of $8,318,181. We had no gross revenues
for the quarter ended January 31, 2008, and a loss from operations of
$2,399,502. 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 2008 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
our 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. 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 may not be able to meet our
current and future liabilities and remain in operation until we receive
additional capital.




As of
January 31, 2008, we have current assets of $776,443, and current liabilities of
$803,625, of which $539,837 is for an accrued liability.  In
connection with the Manillo Settlement, the $105,000 convertible note has been
replaced with a long term note with an original principal amount of $500,000.
Additionally, as a result of the Manillo Settlement, in which the Series C
Preferred Stock was returned to us, the derivative liability of $2,025,042 was
reversed during the quarter ending October 31, 2007 and will no longer be
reflected on our balance sheet on that date.  Our current liquidity
position only allows us to meet nominal working capital needs.  We
will need no additional funding to meet our working capital needs through fiscal
2008.  Beyond 2008, any failure to obtain such financing could force
us to abandon or curtail our operations.




13
 Index




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




We have
the funds to begin product development, coding and marketing  for our
initial line of products.  We anticipate that we will need additional
capital in excess of $5,000,000 to continue to fund and expand our business
operations beyond 2008. 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.




Our
auditor has substantial doubt as to our ability to continue as a going
concern.




Our
auditor's report on our July 31, 2007 financial statements expresses an opinion
that substantial doubt exists as to whether we can continue as an ongoing
business.  Because at that time we did not have sufficient capital, we
may have been required to suspend or cease the implementation of our business
plans within 12 months. Because of the substantial doubt at that time as to
whether we can continue as a going concern it may have been more difficult for
us to attract investors.  Our future at that time was dependent upon
our ability to obtain financing and upon future profitable operations from the
sale of our products.  Subsequent to that time the Company has raised
$2.9 million as of March 17, 2008 to fund our business operations through
2009.




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 $22.00 per
share and $0.03 per share since January 1, 2006. 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 evaluateExobox, making any
investment inthe
Companyrisky.




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.




To develop our software solutions we
will need to engage third party developers.




At this
time, we do not have the resources to directly conduct full product development,
obtain regulatory approvals, or manufacture or commercialize any products.
Therefore, we depend upon others to carry out such activities. As a result, we
anticipate that we may enter into collaborative agreements with third parties
able to contribute to developing our technologies. Such agreements may limit our
control over any or all aspects of development.




14
 Index




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.




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 was granted its
second patent, Application No. 7,281,266, issued on January 9, 2007 from the
United States Patent and Trademark Office (USPTO). We currently have filed for
20 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.




15
 Index




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 are under a government
investigation which clouds our ability to conduct business.




In
November 2006, we received a subpoena from the United States Securities &
Exchange Commission requesting the production of documents from January 1, 2000
until present and testimony; this formal inquiry following up an informal
inquiry commenced in September 2006. The SEC continues to investigate matters
related to us and this negatively impacts our ability to raise money and hire
personnel.




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 six employment
contracts 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.




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




Our
common stock is not listed on any exchange; however, it is traded in the
over-the-counter market. If our common stock is listed on the OTC Bulletin
Board, it will be subject to the requirements of Rule 15(g)9, promulgated under
the Securities 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.




RESULTS
OF OPERATIONS





NET
SALES. The Company has no sales since inception.





RESEARCH
AND DEVELOPMENT EXPENSES. The Company had no research and development expenses
for the three and six months ended January 31, 2008 and 2007. The Company
incurred $288,259 in research and development expenses since
inception.





16
 Index





GENERAL
AND ADMINISTRATIVE EXPENSES ("G&A"). The Company's G&A expenses for the
three months ended January 31, 2007 and 2008 increased from $27,676 to
$1,491,231, respectively. The increase was primarily due to ramping up the
development of the company’s software and compensation
expense.  Company income (loss) before income taxes for the three
months ended January 31, 2007 and 2008 changed from $(416,343) to
$(2,400,427). The change was primarily due to payment of back pay to the
Company’s officers.





LIQUIDITY
AND CAPITAL RESOURCES. As of January 31, 2008, the Company had working capital
deficit of $27,182. As of January 31, 2007, the Company’s working capital
deficit was $2,351,558. During the periods from July 31, 2007 through January
31, 2008 and July 31, 2006 through January 31, 2007, the Company's working
capital deficit decreased by $3,717,759 and increased by $2,385,824. The
increase in working capital was the result of exchanging the convertible
derivative note for a promissory note and raising additional
capital.  The decrease was the result of a derivative liability from
the convertible derivative note.





The
Company will not require additional capital to support the development stage
activities of the development of its proprietary software. There can be no
assurance that any additional required capital will be available on terms
acceptable to the Company, if at all, at such time or times as required by the
Company. The Company has been funded primarily for the last two years by the
$3,900,000 equity raised from its two private placements, a $500,000
unregistered sale of its securities and non interest bearing loans from the
companies officers and affiliates.





ITEM 3. 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 were 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.





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








PART
II.





EXOBOX
TECHNOLOGIES
CORP.                                                                                      OTHER
INFORMATION





Item 1. Legal Proceedings





The Company is not a party to any
litigation and to the best of the Company's knowledge no litigation is
threatened.




Item 3. Defaults Upon Senior Securities





None





Item 6. Exhibits





(a)
Exhibits





31.1 Certification of CEO, Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002





31.2 Certification of CFO, Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002





32.1 Certification of CEO, Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002





32.2 Certification of CFO, Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002





17
 Index





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:
      March 24, 2008
            By:  /s/
      Robert B. DillonRobert
      B. DillonChief
      Executive Officer(Principal
      Executive Officer)Dated:
      March 24, 2008
            By:
      /s/ Michael G. WirtzMichael
      G. Wirtz
              Chief
      Financial Officer(Principal
      Financial and Accounting Officer)







18