UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q








QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d)


OF THE
SECURITIES EXCHANGE ACT OF 1934





For the
quarterly period ended January 31, 2009








logo
                        
                        Exobox Technologies
                          Security
      Beyond the EnterpriseTM


.


(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)








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   ̈





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
               ̈Accelerated
      filer
               ̈ Non-accelerated
      filer
              x Smaller reporting
      company





(Do not
check if a smaller reporting company)





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





As of
March 23, 2009, 2008, there were 405,106,048 shares of Exobox’s common stock
outstanding.







1





EXOBOX TECHNOLOGIES CORP.


FORM
10-QSB FOR THE QUARTER ENDED JANUARY 31, 2009





INDEX





Page No.PARTI.  FINANCIAL
      INFORMATIONItem
      1. Financial StatementsBalance Sheets as ofJanuary 31, 2009andJuly 31,2008(Unaudited).
                                                          3Statements of Operations for the three months
      endedJanuary 31, 2009and 2008and
      for the period fromOctober 21, 2002(Inception)toJanuary 31, 2009(Unaudited).
                                                          4Statements of Cash Flows for the three months
      endedJanuary 31, 2009and2008and for the period fromOctober
      21, 2002(Inception)toJanuary 31, 2009(Unaudited).
                                                          5Notes
      to the Financial Statements (Unaudited)
                                                          6Item
      2. Management's Discussion and Analysis of Financial Condition and Results
      of Operations
                                                          9Item 3.Quantitativeand Qualitative Disclosures about Market Risk
                                                          11Item
      4. Controls and Procedures
                                                          11PART II. OTHER INFORMATIONItem
      1. Legal Proceedings
                                                          13Item
      2. Recent Sales of Unregistered Securities
                                                          13Item
      3. Defaults Upon Senior Securities
                                                          14Item
      4. Submission of Matters to a Vote of Security
      Holders
                                                          14Item
      5. Other Information
                                                          15Item
      6. Exhibits
                                                          15Signatures
                                                          16





2
 Index





PART
1 – FINANCIAL INFORMATION





ITEM 1.
            FINANCIAL
      STATEMENTS








EXOBOX TECHNOLOGIES CORP.


(A
DEVELOPMENT STAGE COMPANY)


BALANCE
SHEETS


(Unaudited)





January
      31, 2009
                  
                  
                  July
      31, 2008ASSETSCurrent
      Assets:Cash
                  
                  $
                  3,832
                  
                  
                  $
                  767,338Other
      Current Assets
                  
                  
                  26,241
                  
                  
                  
                  61,972Prepaid
      Insurance
                  
                  
                  4,940
                  
                  
                  
                  22,628Total
      Current Assets
                  
                  
                  35,013
                  
                  
                  
                  851,938Property
      and equipment, net
                  
                  
                  376,798
                  
                  
                  
                  213,223Other
      Assets:Patents,
      net
                  
                  
                  51,624
                  
                  
                  
                  53,590Intangibles,
      net
                  
                  
                  5,284
                  
                  
                  
                  7,951TOTAL
      ASSETS
                  
                  $
                  468,719
                  
                  
                  $
                  1,126,702LIABILITIES
      AND STOCKHOLDERS' EQUITY(DEFICIT)Current
      Liabilities:Accounts
      Payable
                  
                  $
                  353,730
                  
                  
                  $
                  53,451Advances
      from Stockholders
                  
                  
                  543,000
                  
                  
                  
                  -Accrued
      Liabilities
                  
                  
                  502,002
                  
                  
                  
                  429,217Total
      Current Liabilities
                  
                  
                  1,398,732
                  
                  
                  
                  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 at January 31, 2009 and July
      31, 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 January 31, 2009 and July
      31, 2008, respectively
                  
                  
                  -
                  
                  
                  
                  18Common
      stock, $0.001 par value, 500,000,000 shares authorized, 405,106,048 and
      398,435,250 shares issued and outstanding at January 31, 2009
      and July 31, 2008, respectively
                  
                  
                  405,107
                  
                  
                  
                  398,435Additional
      paid-in capital
                  
                  
                  10,508,624
                  
                  
                  
                  9,952,921Stock
      to be issued
                  
                  
                  9,813
                  
                  
                  
                  -Deficit
      accumulated during development stage
                  
                  
                  (11,853,558
                  )
                  
                  
                  (9,707,346
                  )Total
      stockholders' equity (deficit)
                  
                  
                  (930,013
                  )
                  
                  
                  644,034TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
                  
                  $
                  468,719
                  
                  
                  $
                  1,126,702








See
accompanying notes to the unaudited financial statements





3
 Index





EXOBOX TECHNOLOGIES CORP.


(A
DEVELOPMENT STAGE COMPANY)


STATEMENTS
OF EXPENSES


(Unaudited)





Three Months Ended January 31, 2009
                                
                                
                                Three Months Ended January 31, 2008
                                
                                
                                Six Months Ended January 31, 2009
                                
                                
                                Six Months Ended January 31, 2008
                                
                                
                                Inception (October 21, 2002) to January 31, 2009Expenses:General
      & Administrative
                                
                                $
                                179,816
                                
                                
                                $
                                73,431
                                
                                
                                $
                                338,562
                                
                                
                                $
                                111,636
                                
                                
                                $
                                1,222,350Depreciation
      and amortization
                                
                                
                                26,431
                                
                                
                                
                                2,168
                                
                                
                                
                                47,216
                                
                                
                                
                                4,336
                                
                                
                                
                                85,539Professional
      Fees
                                
                                
                                552,079
                                
                                
                                
                                618,103
                                
                                
                                
                                955,575
                                
                                
                                
                                1,344,700
                                
                                
                                
                                4,371,798Payroll
      Expenses
                                
                                
                                482,694
                                
                                
                                
                                1,705,800
                                
                                
                                
                                794,164
                                
                                
                                
                                1,993,800
                                
                                
                                
                                5,338,155Software
      development expense
                                
                                
                                11,110
                                
                                
                                
                                -
                                
                                
                                
                                11,110
                                
                                
                                
                                -
                                
                                
                                
                                532,503Research
      and Development
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                288,259Total
      Operating Expenses
                                
                                
                                1,252,130
                                
                                
                                
                                2,399,502
                                
                                
                                
                                2,146,627
                                
                                
                                
                                3,454,472
                                
                                
                                
                                11,838,604Loss
      from Operations
                                
                                
                                (1,252,130
                                )
                                
                                
                                (2,399,502
                                )
                                
                                
                                (2,146,627
                                )
                                
                                
                                (3,454,472
                                )
                                
                                
                                (11,838,604
                                )Other
      Income (Expense):Gain
      on Derivatives
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                2,025,042
                                
                                
                                
                                100,000Gain
      on Extinguishment of Note
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                (395,000
                                )
                                
                                
                                7,137Interest
      Income
                                
                                
                                129
                                
                                
                                
                                -
                                
                                
                                
                                1,452
                                
                                
                                
                                -
                                
                                
                                
                                3,541Interest
      Expense
                                
                                
                                (412
                                )
                                
                                
                                (925
                                )
                                
                                
                                (1,037
                                )
                                
                                
                                (4,003
                                )
                                
                                
                                (125,632
                                )Total
      Other Income (Expenses)
                                
                                
                                (283
                                )
                                
                                
                                (925
                                )
                                
                                
                                415
                                
                                
                                
                                1,626,039
                                
                                
                                
                                (14,954
                                )Loss
      Before Income Taxes
                                
                                
                                (1,252,413
                                )
                                
                                
                                (2,400,427
                                )
                                
                                
                                (2,146,212
                                )
                                
                                
                                (1,828,433
                                )
                                
                                
                                (11,853,558
                                )Provision
      for Income Taxes
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -Net
      Loss
                                
                                $
                                (1,252,413
                                )
                                
                                $
                                (2,400,427
                                )
                                
                                $
                                (2,146,212
                                )
                                
                                $
                                (1,828,433
                                )
                                
                                $
                                (11,853,558
                                )Basic
      and dilutedNet
      loss per common share-basic and diluted
                                
                                $
                                ( 0.00
                                )
                                
                                $
                                (
      0.01
                                )
                                
                                $
                                (0.01
                                )
                                
                                $
                                (0.01
                                )Weighted
      average shares outstanding-basic and diluted
                                
                                
                                402,447,715
                                
                                
                                
                                324,485,224
                                
                                
                                
                                400,646,350
                                
                                
                                
                                231,163,433








See
accompanying notes to unaudited financial statements





4
 Index





EXOBOX TECHNOLOGIES CORP.


(A
DEVELOPMENT STAGE COMPANY)


STATEMENTS
OF CASH FLOWS


(Unaudited)





Six
      months Ended January 31,
                    
                    
                    Six
      Months Ended January 31,
                    
                    
                    October
      21, 2002 (Inception) to January 31,2009
                    
                    
                    2008
                    
                    
                    2009CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      Loss
                    
                    $
                    (2,146,212
                    )
                    
                    $
                    (1,828,433
                    )
                    
                    $
                    (11,853,558
                    )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Share-based
      compensation
                    
                    
                    13,192
                    
                    
                    
                    1,417,800
                    
                    
                    
                    2,315,992Warrant
      issued for consulting services
                    
                    
                    -
                    
                    
                    
                    434,165
                    
                    
                    
                    446,660Stock
      issued for services
                    
                    
                    549,307
                    
                    
                    
                    742,642
                    
                    
                    
                    1,916,075Depreciation
      and amortization
                    
                    
                    47,216
                    
                    
                    
                    4,336
                    
                    
                    
                    85,539(Gain)
      Loss on derivative
                    
                    
                    -
                    
                    
                    
                    (2,025,042
                    )
                    
                    
                    5,000(Gain)
      Loss on debt extinguishment
                    
                    
                    -
                    
                    
                    
                    395,000
                    
                    
                    
                    (7,137
                    )Changes
      in operating assets and liabilities:Prepaid
      and other current assets
                    
                    
                    53,420
                    
                    
                    
                    14,184
                    
                    
                    
                    (31,180
                    )Accounts
      payable
                    
                    
                    309,945
                    
                    
                    
                    44,142
                    
                    
                    
                    363,396Accrued
      expenses
                    
                    
                    72,785
                    
                    
                    
                    577,637
                    
                    
                    
                    1,934,520Accounts
      payables to stockholders
                    
                    
                    -
                    
                    
                    
                    448
                    
                    
                    
                    -NET CASH
      USED IN OPERATING ACTIVITIES
                    
                    
                    (1,100,347
                    )
                    
                    
                    (223,121
                    
                    
                    
                    (4,824,693
                    )CASH
      FLOWS FROM INVESTING ACTIVITIESInvestment
      in patents
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (67,233
                    )Investment
      in intangible assets
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (16,000
                    )Investment
      in property and equipment
                    
                    
                    (206,159
                    )
                    
                    
                    -
                    
                    
                    
                    (436,014
                    )NET CASH
      USED IN INVESTING ACTIVITIES
                    
                    
                    (206,159
                    )
                    
                    
                    -
                    
                    
                    
                    (519,247
                    )CASH
      FLOWS FROM FINANCING ACTIVITIESProceeds
      from sale of stock
                    
                    
                    -
                    
                    
                    
                    1,000,000
                    
                    
                    
                    4,774,000Advances
      from stockholders
                    
                    
                    543,000
                    
                    
                    
                    133,990
                    
                    
                    
                    574,500Proceeds
      from warrants exercised
                    
                    
                    -
                    
                    
                    
                    13,500
                    
                    
                    
                    400,702Repayment
      of advances from stockholders
                    
                    
                    -
                    
                    
                    
                    (160,200
                    )
                    
                    
                    (401,430
                    )Payments
      to third party
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (100,000
                    )Convertible
      note proceeds
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    100,000NET CASH
      PROVIDED BY FINANCING ACTIVITIES
                    
                    
                    543,000
                    
                    
                    
                    987,290
                    
                    
                    
                    5,347,772NET
      CHANGE IN CASH AND CASH EQUIVALENTS
                    
                    
                    (763,506
                    )
                    
                    
                    764,169
                    
                    
                    
                    3,832Cash
      and cash equivalents at beginning of period
                    
                    
                    767,338
                    
                    
                    
                    8,363
                    
                    
                    
                    -Cash
      and cash equivalents at end of period
                    
                    $
                    3,832
                    
                    
                    $
                    772,532
                    
                    
                    $
                    3,832SUPPLEMENTAL
      DISCLOSURESCash
      paid for interest
                    
                    $
                    1,037
                    
                    
                    $
                    4,066Cash
      paid for income taxes
                    
                    
                    -
                    
                    
                    
                    -NON-CASH
      TRANSACTIONSConversion
      of Preferred shares to Common Shares
                    
                    $
                    2,078
                    
                    
                    
                    -








See
accompanying notes to the unaudited financial statements





5
 Index





EXOBOX TECHNOLOGIES CORP.


(A
DEVELOPMENT STAGE COMPANY)


NOTES
TO THE FINANCIAL STATEMENTS


(UNAUDITED)





Note
1.  Nature of Business and Summary of Accounting Policies





The
accompanying unaudited interim financial statements of Exobox Technologies
Corporation, a Nevada corporation, have been prepared in accordance with
accounting principles generally accepted in the United States of America and the
rules of the Securities and Exchange Commission and should be read in
conjunction with the audited financial statements and notes thereto contained in
our latest Annual Report filed with the SEC on Form 10-KSB. In the opinion of
management, all adjustments, consisting of normal recurring adjustments,
necessary for a fair presentation of financial position and the results of
operations for the interim periods presented have been reflected herein. The
results of operations for interim periods are not necessarily indicative of the
results to be expected for the full year.





Notes to
the financial statements which would substantially duplicate the disclosure
contained in the audited financial statements for the most recent fiscal year,
July 31, 2008, as reported in Form 10-KSB, have been omitted.





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





Note
2.  Going Concern





From
Inception to January 31, 2009, we have accumulated losses of $11,853,558. Our
ability to emerge from the development stage with respect to any planned
principal business activity is dependent upon its success in raising additional
equity or debt financing and/or attaining profitable operations. Our management
is seeking additional capital because it feels the $2.9 million that it raised
isn’t sufficient to continue the complete coding of its expanded software
products and introduce the resulting products to market. There is no guarantee
that we will be able to complete any of the above objectives. These factors
raise substantial doubt regarding our ability to continue as a going
concern.





Note
3.  Property and Equipment





Property
and equipment consisted of the following at January 31, 2009 and July 31,
2008:


January
      31, 2009
                            
                            
                            July
      31, 2008Description
                            Life
                            
                            Amount
                            
                            
                            AmountFurniture
      and fixtures
                            5
      years
                            
                            $
                            169,038
                            
                            
                            $
                            98,338Leasehold
      improvements
                            5
      years
                            
                            
                            154,802
                            
                            
                            
                            59,016Computers
                            3
      years
                            
                            
                            69,924
                            
                            
                            
                            49,172Telephone
      system
                            5
      years
                            
                            
                            37,960
                            
                            
                            
                            19,042Copier
                            5
      years
                            
                            
                            4,288
                            
                            
                            
                            4,286436,012
                            
                            
                            
                            229,854Less:
      accumulated depreciation
                            
                            
                            (59,214)
                            
                            
                            
                            (16,631
                            )$
                            376,798
                            
                            
                            $
                            213,223





Depreciation
expense totaled $42,584 and $ 3,076 for the six months ended January 31, 2009
and January 31, 2008, respectively.





We
acquired assets totaling $ 206,159 and $ 0 for the six months ended January 31,
2009 and January 31, 2008, respectively.





Note
4.  Patents





We have
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.





6
 Index





Patents
are mainly comprised of legal services paid to a shareholder and patent
application fees.  We began amortizing these costs since the patents
have been granted.  Amortization totaled $ 4,632 and $ 1,260 for
the six month ended January 31, 2009 and January 31,
2008 respectively.





Note
5.  Advances from Stockholders





Certain
of Exobox’s stockholders have loaned cash to the company for working capital
purposes.  The loans were issued through promissory notes and have
zero stated interest rate.  Exobox will have to consider imputing
interest on these notes in the next quarter.  These loans totaled
$543,000 at January 31, 2009.  During the months of February and March
certain stockholders loaned cash to the company totaling
$344,981.  These loans also were issued through promissory
notes.





Note 6.  Stockholders’
Equity





Stock
Option, Stock Warrant and Stock Award Plan





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





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





During
November, we converted 5,000 series A preferred stock and 17,568 series B
preferred stock to 2,077,568 shares of common stock.





During
the first quarter of 2009, we issued 1,145,000 shares to consultants and
employees pursuant to consulting and employment agreements with a value of
$180,550.





During
the second quarter of 2009, we issued 3,448,750 shares of our common stock to
consultants and employees pursuant to consulting and employment agreements with
a value of $368,756.





Warrants





At
January 31, 2009, we had outstanding and exercisable warrants to purchase an
aggregate of 11,692,500 shares of common stock with an intrinsic value of
$0.  The weighted average remaining life is 2.48 years and the
weighted average price per share is $0.61 per share.





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





Warrants
      Outstanding and Exercisable
                      
                      Warrants
                      
                      
                      Weighted
      Average Exercise PriceOutstanding,
      July 31, 2007
                      
                      
                      4,460,000
                      
                      
                      $
                      0.20Granted
                      
                      
                      7,300,000
                      
                      
                      
                      0.86Expired
                      
                      
                      -
                      
                      
                      
                      -Exercised
                      
                      
                      (67,500)
                      
                      
                      
                      0.20Outstanding,
      July 31, 2008
                      
                      
                      11,692,500
                      
                      
                      $
                      0.61Granted
                      
                      
                      -
                      
                      
                      
                      -Expired
                      
                      
                      -
                      
                      
                      
                      -Exercised
                      
                      
                      -
                      
                      
                      
                      -Outstanding,
      January 31, 2009
                      
                      
                      11,692,500
                      
                      
                      $
                      0.61





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





Number
      of Common Stock Equivalents
                              
                              
                              Expiration
      Date
                              
                              
                              Remaining
      Contracted Life (Years)
                              
                              
                              Exercise
      Price4,342,500
                              
                              
                              10/31/2010
                              
                              
                              
                              1.75
                              
                              
                              $
                              0.201,500,000
                              
                              
                              9/24/2012
                              
                              
                              
                              3.70
                              
                              
                              $
                              0.3050,000
                              
                              
                              7/31/2011
                              
                              
                              
                              2.50
                              
                              
                              $
                              0.255,800,000
                              
                              
                              12/31/2011
                              
                              
                              
                              2.72
                              
                              
                              $
                              1.00





7
 Index





For the
quarter ended January 31, 2009, no warrants were exercised.





Options





In
November, 2008, we granted to an employee an option to purchase 100,000 shares
with an exercise price of $.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.





Black-Scholes
was applied to value the options totaling $21,820 for the 225,000
shares.  The simplified method was applied in calculating the
term.





The
following assumptions were applied to value the options:





Expected
      volatility
                      
                      
                      180.98%Term
      (years)
                      
                      
                      1.5
      – 3Risk-free
      interest rate
                      
                      
                      1.82%
      - 3.01%Expected
      dividend yield
                      
                      
                      0%





We
recognized $13,045 for the 118,750 shares that vested as of January 31,
2009.  The remaining 306,250 unvested shares have an unrecognized
value of $33,387.  The options intrinsic value is $0.





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





Options
                            
                            
                            Weighted
      Average Exercise PriceOutstanding,
      July 31, 2008
                            
                            
                            -
                            
                            
                            $
                            -Granted
                            
                            
                            425,000
                            
                            
                            $
                            0.25Expired
                            
                            
                            -
                            
                            
                            
                            -Exercised
                            
                            
                            -
                            
                            
                            
                            -Outstanding,
      January 31, 2009
                            
                            
                            425,000
                            
                            
                            $
                            0.25





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





Number
      of Common Stock Equivalents
                            
                            
                            Expiration
      Date
                            
                            Remaining
      Contracted Life (Years)
                            
                            
                            Exercise
      Price50,000
                            
                            
                            10/14/2011
                            
                            
                            2.75
                            
                            
                            
                            0.2525,000
                            
                            
                            11/14/2011
                            
                            
                            2.83
                            
                            
                            
                            0.2550,000
                            
                            
                            12/7/2011
                            
                            
                            2.92
                            
                            
                            
                            0.2575,000
                            
                            
                            12/16/2011
                            
                            
                            2.92
                            
                            
                            
                            0.2550,000
                            
                            
                            10/14/2012
                            
                            
                            3.75
                            
                            
                            
                            0.2525,000
                            
                            
                            11/14/2012
                            
                            
                            3.83
                            
                            
                            
                            0.2550,000
                            
                            
                            10/14/2013
                            
                            
                            4.75
                            
                            
                            
                            0.2525,000
                            
                            
                            11/14/2013
                            
                            
                            4.83
                            
                            
                            
                            0.2550,000
                            
                            
                            10/14/2014
                            
                            
                            5.75
                            
                            
                            
                            0.2525,000
                            
                            
                            11/14/2014
                            
                            
                            5.83
                            
                            
                            
                            0.25425,000
                            
                            
                            
                            
                            
                            3.87





8
 Index





The
following is a summary of non-vested shares:





OptionsNonvested
      shares at July 31, 2008
                  
                  
                  -Granted
                  
                  
                  425,000Vested
                  
                  
                  (118,750)Expired
                  
                  
                  -Exercised
                  
                  
                  -Nonvested
      shares at January 31, 2009
                  
                  
                  306,250





Note 7.  Commitments





In August
2008, we established a 401K retirement plan, of which, we are required to
contribute matching contributions of an amount equal to the participant’s
Elective Deferral that does not exceed 3% of the participant’s compensation,
plus 50% of the participant’s Elective Deferral that exceeds 3% of the
participant’s compensation but does not exceed 5% of the participant’s
compensation for the plan year.  In January, 2009, Exobox merged its
401K Plan into a new 401K Plan. Our new 401K retirement plan provides for us to
contribute matching contributions in varying amounts depending on the
participant’s level of contributions up to a maximum of 4% of the participant’s
compensation for the plan year. We are current on their contributions as of
January 31, 2009.   During the quarter ended January 31, 2009, we
contributed $0 in matching contributions due to the merger.  We began
making contributions in February, 2009, to the new plan.





ITEM
2. MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS





This
report on Form 10-Q contains forward-looking statements that 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
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. Moreover, neither we, nor any other entity, assume
responsibility for the accuracy and completeness of the forward-looking
statements. We are under no obligation to update any of the forward-looking
statements after the filing of this Form 10-Q to conform such statements to
actual results or to changes in our expectations.





The
following discussion should be read in conjunction with our condensed
consolidated financial statements, related notes and the other financial
information appearing elsewhere in this Form 10-Q. Readers are also urged to
carefully review and consider the various disclosures made by us, which attempt
to advise interested parties of the factors which affect our business, including
without limitation, the disclosures made under Item 1A. Risk
Factors.





Overview





Exobox
was established a network and data security development company to capitalize
upon the growing need for a modern, reliable, efficient, effective and proactive
network and data security solution.  Keeping computers, networks and data
safe continues to be a pressing problem and traditional solutions have been
ineffective in providing a strong platform for protection. We believe the
products we are developing products that will provide proactive solutions that
assist IT users in managing and protecting their infrastructure assets and
data.





Over time
we intend to deliver a comprehensive and diverse set of security products and
services to large enterprises, governments, small and medium-sized businesses,
and consumers on a worldwide basis. We plan to develop a product delivery
ecosystem for our products that includes direct, inside, and channel sales
resources, as well as various relationships with original equipment
manufacturers, or OEMs





9
 Index





Key
drivers of our product development include the ever-increasing quantity of data
being collected, and the need for that data to be discoverable, protected,
recoverable, and accessible at all times. Other factors driving demand for our
solutions include the increasing number of Internet users, PDA’s, computing
devices, and companies conducting business online, and the increasing importance
of document retention and regulatory compliance solutions.





Over the
last three years, we have developed proprietary, patented and patent-pending
software technologies that we believe meet this need by providing computers and
data such protection while differentiating ourselves from our
competitors.





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.





To date,
all of our efforts have been to develop our product and our loss from inception
is $11,853,558, which includes approximately $ 4,678,727 in non-cash,
stock-based compensation to employees, consultants and vendors for services
rendered.  We believe that we will continue to incur additional losses
in attempting to bring our first product to market.  We plan to bring
additional products to market which will also result in increased operating
expenses.  While there is no assurance that our product will be
accepted by the market, we believe that our product addresses a market
need.  We believe that the biggest risk currently facing the Company
is its lack of adequate funding.  We are attempting to address this
need on an immediate basis.





We were
originally incorporated in December 1999 in the State of Nevada and we changed
our name to Exobox Technologies Corp. in September 2005. On September 15, 2005,
TMI Acquisition Corp., a newly formed, wholly-owned subsidiary of Exobox Nevada,
merged into Exobox Technologies Corp., a Delaware corporation, and the
shareholders of Exobox Delaware received 3,513,845 shares of Exobox Nevada
convertible preferred stock.





Results
of Operations





Three
Months Ended January 31, 2009 Compared to Three Months Ended January
31, 2008





Net Sales. We have had
no sales since inception.





Researchand Development Expenses. We
had no research and development expenses for the three months ended January 31,
2009 and 2008. The Company incurred $288,259 in research and development
expenses since inception.





Generaland Administrative
Expenses("G&A"). G&A expenses for the three months ended January 31, 2009
and 2008 decreased from $338,562 to $179,816, respectively. The decrease was
primarily due to a reduction in other expenses. Company income (loss) before
income taxes for the three months ended January 31, 2009 and 2008 decreased from
$2,400,427 to $1,252,413. The change was primarily due to a reduction in
non-cash compensation expense.  A significant portion of the Company’s
G&A, professional fees and payroll expenses are related to the development
of the Company’s software.





Professional
Fees.  Professional fees decreased from $618,103 for the three
months ended January 31, 2008 to $552,079 for the three months ended January 31,
2009, primarily resulting from the expiration of a number of consulting
agreements.





Payroll
Expenses.  Payroll expenses decreased from $1,705,800 for the
three months ended January 31, 2008 to $482,694 for the three months ended
January 31, 2009.  The decrease was primarily due to a reduction in
non-cash compensation expense.





Net Loss.  Net loss for
the three months ended January 31, 2009 and 2008 was $1,252,413 and $2,400,427,
respectively.





10
 Index





Six
Months Ended January 31, 2009 Compared to Six Months Ended January 31,
2008





Net Sales. We have had no
sales since inception.





Research and Development
Expenses. We had no research and development expenses for the six months
ended January 31, 2009 and 2008.





G&A Expenses. G&A
expenses for the six months ended January 31, 2009 and 2008 increased from
$111,636 to $338,562, respectively. The increase was primarily due to a
reduction in other expenses.





Professional
Fees.  Professional fees decreased from $1,344,700 for the six
months ended January 31, 2008 to $955,575 for the six months ended January 31,
2009, primarily resulting from the expiration of a number of consulting
agreements..





Payroll
Expenses.  Payroll expenses decreased from $1,993,800 for the
six months ended January 31, 2008 to $794,164 for the six months ended January
31, 2009.  The decrease was primarily due to a reduction in non-cash
compensation expense





Net Loss. Net loss for the
six months ended January 31, 2009 and 2008 was $2,146,212 and $1,828,433,
respectively.





Liquidity
and Capital Resources





As of
January 31, 2009, we had a working capital deficit of $1,363,719. During the
second quarter ended January 31, 2009 our working capital deficit increased by
$851,592, primarily due to incurring short-term debt and delaying the payment of
our accounts payable.  Our current liquidity position does not allow
us to meet our nominal working capital needs which has required us to leverage
off our vendors and seek loans from certain shareholders. Historically, our
working capital resulted from best efforts equity financing and shareholder
loans. We will need to obtain working capital of at least $3,900,000 to fund our
minimum operating expenses for the twelve months. We expect that we will need to
raise at least $7,500,000 to fund our minimum operating expenses for the next
twenty-four months, which amount assumes incurring expenses for future product
developments. We have no external credit or debt facilities in place to provide
financing. We will be reliant upon best efforts debt or equity financing,
including possible shareholder loans, to provide necessary working
capital.  Accordingly, there can be no assurance we will be able
obtain necessary funding to meet working capital requirements, the failure of
which will result in our curtailing operations and/or selling
assets.





Off-Balance
Sheet Arrangements





None.





Contractual
Commitments





None.





ITEM 3.
            QUALITATIVE
      AND QUANTITATIVE DISCLOSURES ABOUT MARKET
RISK





Not
applicable.





ITEM 4.
            CONTROLS
      AND PROCEDURES





(a) 
Evaluation of disclosure controls and procedures.





We
maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our Exchange Act reports is recorded,
processed, summarized and reported within the time periods specified in the
SEC’s rules and forms, and that such information is accumulated and communicated
to our management, including our Chief Executive Officer and Chief Financial
Officer, as appropriate, to allow timely decisions regarding required disclosure
based closely on the definition of “disclosure controls and procedures” in Rule
13a-15(e). In designing and evaluating the disclosure controls and procedures,
management recognized that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of achieving the
desired control objectives, and management necessarily was required to apply its
judgment in evaluating the cost-benefit relationship of possible controls and
procedures.





11
 Index





As of the
end of the period covered by this report, we carried out an evaluation, under
the supervision and with the participation of our management, including our
Chief Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of our disclosure controls and procedures. Based upon that
evaluation, our Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures were not effective, as a result of
the material weakness in internal control over financial reporting for the
period ending January 31, 2009, as described below.





In our
annual report on Form 10-K, we reported that we conducted an evaluation of the
effectiveness of our internal control over financial reporting as of July 31,
2008, based on the framework in Internal Control-Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Based on that evaluation, we concluded that, as of July 31, 2008, we had the
following material weakness:





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.





Management
concluded that, as a result of the material weaknesses noted above, the Company
did not maintain effective internal control over financial reporting as July 31,
2008 based on criteria set forth in the COSO framework.  While we have
taken remedial actions, as described below, and believe that the material
weakness of Deficiency in the Company’s Entity Level Controls has been
remediated, the material weakness of Deficiency in Segregation of Duties
continued for the period ending January 31, 2009.


Management’s
Remedial Actions





1.
            Deficiency
      in the Company’s Entity Level Controls.  During the quarter
      ended January 31, 2009, we began taking steps to restructure the
      management and certain operations of the company in part to strengthen our
      internal control over financial reporting.  On December 9, 2009,
      Mr. Charles Turner was elected to our Board, as an independent
      director, and was appointed as a member of the Audit Committee, as
      disclosed in our Form 8-K, dated December 11,
      2008.  Additionally, as disclosed in our proxy statement, filed
      on December 11, 2008, the Board determined that Mr. Turner qualified as an
      “audit committee financial expert” as defined by Item 407(d)(5)(ii) of
      Regulation S-K of the Exchange Act.  On January 27, 2009,
      Mr. Turner resigned from the Board, as disclosed in our Form 8-K,
      dated January 30, 2009, thereby vacating his position on the Audit
      Committee as a “financial expert”.  Also on January 27, 2009,
      and disclosed in the same Form 8-K, dated January 30, 2009, the Company
      appointed Mr. Kevin P. Regan on January 27, 2009, as President and Chief
      Operating Officer, as disclosed in our Form 8-K, dated January 30,
      2009.  Mr. Regan served as a founder and Managing Director
      of Genesis Financial Group, LLC, a boutique investment banking firm,
      serves on the boards of various privately-held corporations, and received
      his B.S of Economics from the University of Houston.  In lieu of
      a “financial expert” on the Audit Committee providing sufficient financial
      expert oversight, the Company has included in its internal controls over
      financial reporting an independent review of the financial statements and
      related footnotes by Mr. Regan.  While we do not have a
      “financial expert” on the Audit Committee as of January 31, 2009 and
      continue our efforts to attract such an individual to our Board,
      management believes the review of the financial statements and related
      footnotes by Mr. Regan mitigates the 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.  This estimated cost of this remediation effort is
      negligible as Mr. Regan is an employee of the Company and this review
      is part of his on-going job
responsibilities.





12
 Index





2.
            Deficiency
      in Segregation of Duties.  During the quarter ended April 30,
      2009, we plan the 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 processes in order to
      streamline and improve the effectiveness of these processes.  We
      believe that the Company will be able to reorganize certain accounting
      processes in order to improve and maintain appropriate segregation of
      duties between the custody of assets and the recording of
      transactions.  The cost of this remediation effort, including
      the retention of the outside consulting firm is estimated at
      $65,000.  This cost is included in the amount to needed to fund
      our operations as discussed in ITEM 2, MANAGEMENT'S DISCUSSION ANDANALYSIS
      OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, noted under the caption
      “Certain Factors that may Affect Future
  Performance.”





(b) 
Changes in internal control over financial reporting.




Except as
noted under the caption “Management’s Remedial Action” above, there was no
change in our internal control over financial reporting (as such term is defined
in Exchange Act Rule 13a-15(f)) that occurred during the quarter ended January
31, 2009, that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.


.





PART
II – 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
      1A.
            RISK
      FACTORS





Certain
Factors that May Affect Future Performance





The risk
factors below supplement and should be read in conjunction with “Item 1A. Risk
Factors” in our Annual Report on Form 10-K for the fiscal year ended July 31,
2008.





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, 2009, we have current assets of $35,013 and current liabilities of
$1,398,732.  Our current liquidity position does not allow us to meet
our nominal working capital needs which has required us to leverage off our
vendors and seek loans from certain shareholders.  We will need to
obtain working capital of at least $3,000,000 to fund our minimum operating
expenses for the next twelve months.  We expect that we will need to
raise at least $9,000,000 to fund our minimum operating expenses for the next
twenty-four months, which working capital requirements assume incurring expenses
for future product developments.  We have no external credit or debt
facilities in place to provide financing.  We will be reliant upon
best efforts debt or equity financing, including possible shareholder loans, to
raise necessary working capital.  Accordingly, there can be no
assurance that we will be able to obtain necessary funding to meet working
capital requirements, the failure of which will result in our curtailing
operations and/or selling assets.





13
 Index





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, 2009, we had an accumulated deficit of $11,853,558. We had no gross revenues
for the quarter ended January 31, 2009, and a loss from operations of
$1,252,413.  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 2009 and likely
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.  Thus, there can be no assurance that we will be able to raise
required financing to continue operations.





There
can be no assurance that we will be able to deliver a product to
market.





While we
anticipate the release of our first product to market in the second calendar
quarter of 2009, it is possible that we may experience delays, technical or
otherwise, that will not allow us to meet our expectations.  Moreover,
there can be no assurance that we will be successful in delivering our first
product to market.  Acceptance of our products by the market may not
occur at all, or at the rate less than what we expect.  Accordingly,
there can be no assurance that we will ever generate sufficient revenue, if any,
to allow us to become cash flow positive.





ITEM 2.
            RECENT
      SALES OF UNREGISTERED 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 second quarter of fiscal 2009.





None





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. Sales commissions of $0 were paid to register brokers in
connection with these issuances listed above.





ITEM 3.
            DEFAULTS
      UPON SENIOR SECURITIES





None.




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





(a)  Annual
Meeting of Shareholders.





On
January 15, 2009, the Company held its annual meeting of shareholders and the
shareholders approved several items detailed in the proxy statement previously
filed with the Commission.





(b)  Election
of Board of Directors.





The
following nominees were elected as directors by the shareholders at the January
15, 2009 Annual Meeting:




Robert Dillon
                          
                          Michael StuddardScott R. Copeland
                          
                          Jonathan KimRichard A. Evans
                          
                          Stephen R. Lesem*Charles Turner**
      Subsequently resigned in February
2009.




14
 Index





(c)  Proposals
Voted Upon and Shareholder Vote.





The
shareholders voted to (i) elect seven (7) Directors to the Company’s Board of
Directors to hold office until the next annual meeting of shareholders or until
their respective successors are duly elected and qualified, and (ii) ratify the
selection by the Audit Committee of Malone & Bailey, PC as the independent
auditors of the Company for the fiscal year ending July 31, 2009.  A
total of 300,377,272 shares were voted representing 74.61% of the outstanding
shares.  The votes cast for and against each of the above-described
two proposals are listed in the tables below.





Proposal
#1 – Election of Each of the Nominated Directors:





Directors:
                  For
                  Against
                  Abstain
                  TotalsRobert Dillon
                  294,599,947
                  2,484,899
                  3,292,423
                  300,377,269Scott R. Copeland
                  296,961,441
                  234,799
                  3,181,030
                  300,377,270Richard A. Evans
                  294,173,997
                  1,357,781
                  4,845,493
                  300,377,271Michael Studdard
                  295,429,161
                  102,616
                  4,845,493
                  300,377,270Jonathan Kim
                  295,126,237
                  405,540
                  4,845,493
                  300,377,270Charles Turner
                  297,009,309
                  95,459
                  3,272,502
                  300,377,270Stephen R. Lesem
                  295,429,161
                  102,616
                  4,845,493
                  300,377,270





Proposal
#2 – Ratification of Appointment of Auditor:





For
                Against
                Abstain
                Totals297,080,668
                100,416
                3,196,167
                300,377,251








ITEM5.
            OTHER
      INFORMATION





None.





ITEM 6.
            EXHIBITS





(a)
Exhibits




31.1 Certification of CEO, Pursuant to Section 302 of
      the Sarbanes-Oxley Act of 200231.2 Certification of CFO, Pursuant to Section 302 of
      the Sarbanes-Oxley Act of 200232.1 Certification of CEO, Pursuant to Section 906 of
      the Sarbanes-Oxley Act of 200232.2 Certification of CFO, Pursuant to Section 906 of
      the Sarbanes-Oxley Act of
2002




15
 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 23, 2009
              By:
      /s/ Robert B. DillonRobert B. DillonChief
      Executive Officer(Principal
      Executive Officer)Dated:
      March 23, 2009
              By:
      /s/ Michael G. WirtzMichael G. WirtzChief
      Financial Officer(Principal
      Financial and Accounting Officer)
   16