**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**FORM      10-QSB**

**PHLO      CORPORATION**

| Delaware                                                | 11-3314168                         |
|---------------------------------------------------------|------------------------------------|
| (State                or other jurisdiction             | (I.R.S.                Employer    |
| of                incorporation or organization)        | Identification                No.) |
|                                                    |                               |
| 6001-21                Argyle Forest Blvd.              |                               |
| PMB                #117                                 |                               |
| Jacksonville,                Florida                    | 32244-5705                         |
| (Address                of principal executive offices) | (Zip                code)          |

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**PHLO      CORPORATION AND SUBSIDIARIES **

**Quarterly      Report on Form 10-QSB for the**

**Quarterly      Period Ending September 30, 2007**

|                                           |                                                                                                                                                                          | Page to Page |
|------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------|
| PART                  I. FINANCIAL INFORMATION |                                                                                                                                                                          |                   |
|                                           |                                                                                                                                                                          |                   |
| Item 1.                                   | Financial                  Statements                                                                                                                                         |                   |   |
|                                           |                                                                                                                                                                          |                   |
|                                           | Condensed                  Consolidated Balance Sheet as of September 30, 2007                  (Unaudited)                                                                   |                   | 3 |
|                                           |                                                                                                                                                                          |                   |   |
|                                           | Condensed                  Consolidated Statements of Operations for the three and six months                  ended                  September 30, 2007 and 2006 (Unaudited) |                   | 4 |
|                                           |                                                                                                                                                                          |                   |   |
|                                           | Condensed                  Consolidated Statements of Cash Flows for the six months ended                  September                  30, 2007 and 2006 (Unaudited)           |                   | 5 |
|                                           |                                                                                                                                                                          |                   |   |
|                                           | Notes                  to Condensed Consolidated Financial Statements (Unaudited)                                                                                             |                   | 6 |
|                                           |                                                                                                                                                                          |                   |   |
| Item 2.                                   | Managements'                  Discussion and Analysis or Plan of Operation                                                                                                    |                   | 10 |
|                                           |                                                                                                                                                                          |                   |   |
| Item 3.                                   | Controls                  and Procedures                                                                                                                                      |                   | 12 |
|                                           |                                                                                                                                                                          |                   |   |
| PART II.                                  | OTHER                  INFORMATION                                                                                                                                            |                   | 12 |
|                                           |                                                                                                                                                                          |                   |   |
| Item 1.                                   | Legal                  Proceedings                                                                                                                                            |                   | 12 |
|                                           |                                                                                                                                                                          |                   |   |
| Item 2.                                   | Unregistered                  Sale of Equity Securities and Use of Proceeds                                                                                                   |                   | 12 |
|                                           |                                                                                                                                                                          |                   |   |
| Item 3.                                   | Exhibits                                                                                                                                                                      |                   | 13 |
|                                           |                                                                                                                                                                          |                   |
| Signature                                      |                                                                                                                                                                          | 13                     |
|                                           |                                                                                                                                                                          |                   |
| Certifications                                 |                                                                                                                                                                          | 14                     |

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PHLO      CORPORATION AND SUBSIDARIES

| ASSETS                                                                                                                                                                                   |   |   |        |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------|
| CURRENT                ASSETS                                                                                                                                                            |   |   |        |
| Cash                                                                                                                                                                                     |   | $      | 148,831     |   |
| Inventory                                                                                                                                                                                |   |   | 137,034     |   |
| Accounts                Receivable                                                                                                                                                       |   |   | 91,132      |   |
| Total                Current Assets                                                                                                                                                      |   |   | 376,997     |   |
|                                                                                                                                                                                     |   |   |        |   |
| PROPERTY                PLANT AND EQUIPMENT, Net                                                                                                                                         |   |   | 3,745       |   |
|                                                                                                                                                                                     |   |   |        |   |
| SECURITY                DEPOSITS                                                                                                                                                         |   |   | 8,486       |   |
|                                                                                                                                                                                     |   |   |        |   |
| TOTAL                ASSETS                                                                                                                                                              |   | $      | 389,228     |   |
| LIABILITIES                AND DEFICIENCY IN STOCKHOLDERS' EQUITY                                                                                                                        |   |   |        |   |
|                                                                                                                                                                                     |   |   |        |   |
| CURRENT                LIABILITIES                                                                                                                                                       |   |   |        |   |
|                                                                                                                                                                                     |   |   |        |   |
| Accounts                payable                                                                                                                                                          |   | $      | 1,903,291   |   |
| Accrued                expenses and taxes                                                                                                                                                |   |   | 3,358,597   |   |
| Notes                payable, current portion                                                                                                                                            |   |   | 626,500     |   |
|                                                                                                                                                                                     |   |   |        |   |
| Total                Current Liabilities                                                                                                                                                 |   |   | 5,888,388   |   |
| Total                liabilities                                                                                                                                                         |   |   | 5,888,388   |   |
|                                                                                                                                                                                     |   |   |        |   |
| COMMITMENTS                AND CONTINGENCIES                                                                                                                                             |   |   | —     |   |
|                                                                                                                                                                                     |   |   |        |   |
| DEFICIENCY                IN STOCKHOLDERS' EQUITY (Note C)                                                                                                                               |   |   |        |   |
|                                                                                                                                                                                     |   |   |        |   |
| Preferred                stock, 15,000,000 shares authorized:                                                                                                                            |   |   |        |   |
| Series                A convertible stock, $0.0001 par value, 500,000 shares authorized,                issued                and outstanding (Liquidation preferences $100,000)         |   |   | 50          |   |
| Series                B non-convertible stock, 500,000 shares authorized, none issued and                outstanding                                                                     |   |   | —     |   |
| Series                C preferred convertible stock, $0.0001 par value 3,000,000 authorized,                1,488,456 shares outstanding (Liquidation preference                $14,885) |   |   | 149         |   |
| Series                C preferred convertible stock, 15,298 shares subscribed                                                                                                            |   |   | 1           |   |
| Common                stock, $0.0001 par value, 250,000,000 shares authorized 661,393,776                shares                issued and outstanding                                    |   |   | 66,139      |   |
| Common                stock, $0.0001 par value, 11,940,989 shares subscribed                                                                                                             |   |   | 1,194       |   |
| Additional                paid-in capital                                                                                                                                                |   |   | 22,097,367  |   |
| Accumulated                deficit                                                                                                                                                       |   |   | (27,664,060 | ) |
| Total                Deficiency in Stockholders' Equity                                                                                                                                  |   |   | (5,499,160  | ) |
| TOTAL                LIABILITIES AND DEFICIENCY IN STOCKHOLDERS' EQUITY                                                                                                                  |   | $      | 389,228     |   |

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PHLO      CORPORATION AND SUBSIDARIES

|                                                      |   | Three months ended September 30, |        | Six months ended September 30, |   |
|-----------------------------------------------------------|--------|------------------------------------------------------|-------------|----------------------------------------------------|--------|
|                                                      |   | 2007                                                 |        | 2006                                               |   | 2007 |   | 2006 |   |
|                                                      |   |                                                 |        |                                               |   |   |   |   |   |
| REVENUES                                                  |   | $                                                    | 116,560     |                                               |   | 748 |   | $ | 130,184 |   |   | 1,623 |   |
|                                                      |   |                                                 |        |                                               |   |   |   |   |   |   |   |   |   |
| COST                OF REVENUES                           |   |                                                 | 27,931      |                                               |   | 168 |   |   | 32,522 |   |   | 168 |   |
| GROSS                PROFIT                               |   |                                                 | 88,629      |                                               |   | 580 |   |   | 97,662 |   |   | 1,455 |   |
|                                                      |   |                                                 |        |                                               |   |   |   |   |   |   |   |   |   |
| OPERATING                COSTS AND EXPENSES               |   |                                                 |        |                                               |   |   |   |   |   |   |   |   |   |
| General                and Administrative                 |   |                                                 | 547,303     |                                               |   | 289,450 |   |   | 1,157,997 |   |   | 709,560 |   |
| Research                and development                   |   |                                                 | 149,130     |                                               |   | 30,000 |   |   | 209,130 |   |   | 55,000 |   |
|                                                      |   |                                                 |        |                                               |   |   |   |   |   |   |   |   |   |
| LOSS                FROM OPERATIONS                       |   |                                                 | (607,804    | )                                                  |   | (318,870 | ) |   | (1,269,465 | ) |   | (763,105 | ) |
|                                                      |   |                                                 |        |                                               |   |   |   |   |   |   |   |   |   |
| OTHER                (EXPENSES)                           |   |                                                 |        |                                               |   |   |   |   |   |   |   |   |   |
|                                                      |   |                                                 |        |                                               |   |   |   |   |   |   |   |   |   |
| Other                Financing Cost                       |   |                                                 | (1,582,288  | )                                                  |   | (213,412 | ) |   | (2,216,916 | ) |   | (246,808 | ) |
| Interest                expense, net                      |   |                                                 | (16,837     | )                                                  |   | (16,837 | ) |   | (33,675 | ) |   | (33,675 | ) |
|                                                      |   |                                                 |        |                                               |   |   |   |   |   |   |   |   |   |
| TOTAL                OTHER (EXPENSES)                     |   |                                                 | (1,599,125  | )                                                  |   | (230,249 | ) |   | (2,250,591 | ) |   | (280,483 | ) |
|                                                      |   |                                                 |        |                                               |   |   |   |   |   |   |   |   |   |
| LOSS                BEFORE INCOME TAXES                   |   |                                                 | (2,206,929  | )                                                  |   | (549,119 | ) |   | (3,520,056 | ) |   |  (1,043,588 | ) |
|                                                      |   |                                                 |        |                                               |   |   |   |   |   |   |   |   |   |
| INCOME                TAXES                               |   |                                                 | —     |                                               |   | — |   |   | — |   |   | — |   |
|                                                      |   |                                                 |        |                                               |   |   |   |   |   |   |   |   |   |
| NET                LOSS                                   |   | $                                                    | (2,206,929  | )                                                  | $      | (549,119 | ) | $ | (3,520,056 | ) | $ | (1,043,588 | ) |
|                                                      |   |                                                 |        |                                               |   |   |   |   |   |   |   |   |   |
| WEIGHTED                AVERAGE COMMON SHARES OUTSTANDING |   |                                                 | 673,334,765 |                                               |   | 455,951,670 |   |   | 659,958,876 |   |   | 433,108,584 |   |
|                                                      |   |                                                 |        |                                               |   |   |   |   |   |   |   |   |   |
| NET                (LOSS) PER SHARE (BASIC AND DILUTED)   |   | $                                                    | (0.00       | )                                                  | $      | (0.00 | ) | $ | (0.01 | ) | $ | (0.00 | ) |

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|                                                                                                      |   | 2007   |       | 2006   |   |
|-----------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|
| CASH                FLOWS FROM OPERATING ACTIVITIES                                                       |   |   |       |   |   |
| Net                loss                                                                                   |   | $      | (3,520,056 | )      | $      | (1,043,588 | ) |
|                                                                                                      |   |   |       |   |   |   |   |
| Adjustments                to reconcile net loss to net cash used in operating                activities: |   |   |       |   |   |   |   |
| Common                stock reimbursement to shareholder                                                  |   |   | 2,216,916  |   |   | 246,808 |   |
| Common                stock issued for services                                                           |   |   | 527,443    |   |   | 103,150 |   |
| Warrants                issued for services                                                               |   |   | 200,077    |   |   | 7,922 |   |
| Depreciation                and amortization                                                              |   |   | 1,233      |   |   | 1,232 |   |
| Deposit                applied to rent                                                                    |   |   | 4,100      |   |   | — |   |
| Bad                debts                                                                                  |   |   | 655        |   |   | — |   |
|                                                                                                      |   |   |       |   |   |   |   |
| Changes                in operating assets and liabilities:                                               |   |   |       |   |   |   |   |
| Inventory                                                                                                 |   |   | (98,617    | )      |   | (36,343 | ) |
| Accounts                receivable                                                                        |   |   | (90,556    | )      |   | 156 |   |
| Settlement                receivable                                                                      |   |   | —    |   |   | 55,000 |   |
| Other                receivable                                                                           |   |   | —    |   |   | 6,964 |   |
| Accounts                payable                                                                           |   |   | 30,297     |   |   | 394,111 |   |
| Accrued                expenses and taxes                                                                 |   |   | 113,119    |   |   | 92,588 |   |
| NET                  CASH USED IN OPERATING ACTIVITIES                                                    |   |   | (615,389   | )      |   | (172,000 | ) |
|                                                                                                      |   |   |       |   |   |   |   |
| CASH                FLOW FROM INVESTING ACTIVITIES                                                        |   |   |       |   |   |   |   |
| Purchase                of equipment                                                                      |   |   | —    |   |   | — |   |
| NET                CASH USED IN INVESTING ACTIVITIES                                                      |   |   | —    |   |   | — |   |
| CASH                FLOW FROM FINANCING ACTIVITIES                                                        |   |   |       |   |   |   |   |
| Proceeds                from revolving credit line                                                        |   |   | —    |   |   | — |   |
| Proceeds                from sale and subscription of equity securities                                   |   |   | 721,500    |   |   | 172,000 |   |
| NET                CASH PROVIDED BY FINANCING ACTIVITIES                                                  |   |   | 721,500    |   |   | 172,000 |   |
|                                                                                                      |   |   |       |   |   |   |   |
| NET                INCREASE IN CASH                                                                       |   | $      | 106,111    |   | $      | — |   |
|                                                                                                      |   |   |       |   |   |   |   |
| Cash                and cash equivalents, beginning of the period                                         |   |   | 42,720     |   |   | — |   |
| Cash                and cash equivalents, end of the period                                               |   | $      | 148,831    |   | $      | — |   |
| Supplemental                Disclosures of Cash Flow Information:                                         |   |   |       |   |   |   |   |
| Cash                paid during the period for interest                                                   |   | $      | —    |   | $      | — |   |
| Income                taxes paid                                                                          |   | $      | —    |   |   | — |   |

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**PHLO      CORPORATION AND SUBSIDARIES **

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**SEPTEMBER      30, 2007**

**(Unaudited)**

**NOTE      A - SUMMARY OF ACCOUNTING POLICIES**

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**PHLO      CORPORATION AND SUBSIDARIES**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**SEPTEMBER      30, 2007**

**(Unaudited)**

**NOTE      B - CAPITAL STOCK**

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**PHLO      CORPORATION AND SUBSIDARIES**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**SEPTEMBER      30, 2007 (Unaudited)**

**NOTE      B – CAPITAL STOCK (Continued)**

**NOTE      C - COMMITMENTS AND CONTINGENCIES **

**NOTE      D - NOTES PAYABLE**

| Note                payable to a related party with interest rate of 15% per annum. The                note                matured on May, 2003. The holder has agreed to extend the maturity                date of                the note to June 30, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                |   | $      | 80,000  |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   |         |   |
| Note                payable to a related party with interest at a rate of 10%. The note                matured on December 31, 2000, when principal and unpaid interest                were due.                In consideration of this loan and two prior bridge loans, the Company                agreed to issue shares of the Company's common and convertible preferred                stock to the holder representing approximately 200,000 shares of                common                stock on a fully converted basis. The holder has agreed to extend                the                maturity date of the note to June 30, 2008.                            |   |   | 104,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   |         |   |
| Note                payable in the original principal amount of $25,000 with interest                at a                rate of 10% per annum. The Note matured on July 2, 1999, when principal                and unpaid interest was due. The note is currently in default, although                partial payment has been made subsequent to the maturity date. No                action                has been taken against the Company to enforce the note. In connection                with                the note, the Company issued a warrant to purchase 5,000 shares of                common                stock at an exercise price of $0.04 per share. |   |   | 17,500  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   |         |   |
| Note                payable to a related party with interest accruing at a rate of 10%.                Principal and interest were due in February 2001. In conjunction                with this                financing, the Company issued a warrant to purchase 200,000 shares                of                common stock at an exercise price of $0.50 per share. The holder                agreed to                extend the maturity date of the note to June 30, 2008.                                                                                                                                                                                           |   |   | 100,000 |   |

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**PHLO      CORPORATION AND SUBSIDARIES**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**SEPTEMBER      30, 2007 (Unaudited)**

**NOTE      D – NOTES PAYABLE (Continued)**

| Note                payable with interest at a rate of 10% per annum. Principal and interest                were due in November 2000. In conjunction with this financing, the                Company                issued a warrant to purchase 300,000 shares of common stock at an                exercise                price of $0.50 per share. The notes provides that the Company, at                its                option, may pay the Note in common stock or equivalent. The Company                has                notified the holder that it has elected to pay the principal and                interest                due under the note by the issuance of 136,612 shares of common                stock.                                                                                                               |   |   | 150,000 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |         |   |
| Note                payable to a related party with interest accruing at a rate of 10%                per                annum. Principal and interest were due in June 2001. In conjunction                with                this financing, a warrant to purchase 50,000 shares of common stock                at an                exercise price of $0.50 per share is issuable to this holder. The                note                holder has agreed to extend the maturity date of the note to June                30,                2008. In connection with a prior extension of the maturity date,                the                Company has agreed to issue (but has not yet issued) a warrant to                purchase                25,000 shares of common stock at an exercise price of $0.50 per                share. |   |   | 50,000  |   |

| Note                payable to a related party in the original principal amount of $100,000,                with an interest rate of 10% per annum. Principal and interest were                due in                July 2001. $50,000 of the loan was repaid in May, 2001. In conjunction                with this financing, a warrant to purchase 100,000 shares of common                stock                at an exercise price of $0.50 per share is issuable to the holder.                An                additional warrant to purchase 12,500 shares of the Common Stock                at the                same exercise price is issuable as a result of the Company's exercising                its option to extend to October 2001 the maturity date of the note                with                respect to $50,000 of principal and all of the interest payable pursuant                to the note. The holder has agreed to extend the maturity date of                the note                to June 30, 2008. |   |   | 50,000   |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|----------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |          |   |
| In                April, 2001, the Company was loaned $40,000. A promissory note has                not yet                been issued, as that amount was only a partial funding of the transaction.                The note will provide an interest rate of 10% and a term of 120 days.                A                warrant will be issuable in conjunction with this financing, however,                the                amount of shares of common stock purchasable pursuant to the warrant                will                be determined once the full amount of the financing is established.                The                debt is currently in default.                                                                                                                                                                                                                                                                                                                                                               |   |   | 40,000   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |          |   |
| Note                payable to a related party in the original principal amount of $35,000,                with an interest rate of 12% per annum. Principal and interest were                due in                February, 2006. The holder has agreed to extend the maturity date                of the                note to June 30, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   | 35,000   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |          |   |
| Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | $      | 626,500  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |          |   |
| Less:                current portion                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   | (626,500 | )      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |          |   |
| Long-term                portion                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | $      |     |   |

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**Item      2.**

**PHLO      CORPORATION **

**MANAGEMENT'S      DISCUSSION AND ANALYSIS OR PLAN OF OPERATION **

**SAFE      HARBOR STATEMENT **

**OVERVIEW      **

**RECENT      DEVELOPMENTS **

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**RESULTS      OF OPERATIONS**

**LIQUIDITY      AND CAPITAL RESOURCES**

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**Impact      of Inflation**

**Off-Balance      Sheet Arrangements**

**Item      3.**

**CONTROLS      AND PROCEDURES **

*Evaluation      of Disclosure and Controls and Procedures.*

*Changes      in Internal Controls Over Financial Reporting.*

**PART      II**

**ITEM      1. LEGAL PROCEEDINGS **

**ITEM      2.**
**UNREGISTERED      SALE OF EQUITY SECURITIES AND USE OF PROCEEDS**

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**ITEM      3.**
**EXHIBITS**

**Signatures      **

|                               |  **Phlo                Corporation**              |
|------------------------------------|--------------------------------------------------------|
|                               |                                                   |
| *November                16, 2007* | *By:                      /s/ James B. Hovis*          |
|                               | *James                B. Hovis*                        |
|                               | *President                and Chief Executive Officer* |

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