** **

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**FORM 10-QSB**

 

**(Mark One)**

 

**x****                             ****QUARTERLY REPORT UNDER SECTION 13 OR15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

 

**For the quarterly period endedJanuary 31, 2008**

** **

**OR**

 

**o****        TRANSITIONREPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT**

 

**For the transition period from                     to                     **

** **

**Commission file number 000-52152**

 

**EXPLORTEX ENERGY INC.**

(Exact name of small business issuer as specified in its charter)

 

| **Nevada**                                                       | ** ** | **98-0489027**                      |
|------------------------------------------------------------------|------------|-------------------------------------|
| (State or other jurisdiction 

of incorporation or organization) |       | (IRS Employer 

Identification No.) |

 

**1694Falmouth Road #143**

**Centerville,MA 02632**

 (Address of principal executive offices)

 

**(206)202-4741**

 (Issuer’s telephone number)

 

Check whether theissuer (1) filed all reports required to be filed by Section 13 or 15(d) ofthe Exchange Act during the past 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject tosuch filing requirements for the past 90 days.  Yes x  Noo

 

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

 

State the numberof shares outstanding of each of the issuer’s classes of equity stock, as ofthe latest practicable date:  

3,100,000 sharesof common stock issued and outstanding as of March 7, 2008.

 

Transitional SmallBusiness Disclosure Format (Check one):  Yeso  Nox

 

 

 

**PART 1 — FINANCIAL INFORMATION**

 
| **Item 1.** | ** ** | **Financial Statements** |
|-------------|------------|--------------------------|

# ** **

Theaccompanying unaudited financial statements of Explortex Energy Inc. (the“Company”) have been prepared in accordance with the instruction from Form 10-QSBpursuant to the rules and regulations of the Securities and ExchangeCommission and, therefore, do not include all information and notes normallyprovided in audited financial statements and should be read in conjunction withthe Company’s audited financial statements for the year ended April 30,2007.  In the opinion of management, theaccompanying statements contain all adjustments necessary to present fairly thefinancial position of the Company as of January 31, 2008, and its resultsof operations, stockholders’ equity, and its cash flows for the three andnine-month periods ended January 31, 2008 and 2007.  The results for these interim periods are notnecessarily indicative of the results for the entire year.

 

 

 

2

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| **EXPLORTEX ENERGY INC.**          |
|------------------------------------|
| (An  exploration stage enterprise) |
| Balance  Sheet                     |
| (Unaudited)                        |

 
| **(Expressed in U.S. Dollars)** |   |   |   |   |
|---------------------------------|--------|--------|--------|--------|

 
| ** **                                                    | ** ** | ** ** | ** ** | **January 31, 2008** | ** ** |
|---------------------------------------------------------------|------------|------------|------------|---------------------------|------------|
|                                                          |       |       |       |                      |       |
| **ASSETS**                                                    | ** ** | ** ** | ** ** | ** **                | ** ** |
|                                                          |       |       |       |                      |       |
| **Current assets**                                            | ** ** | ** ** | ** ** | ** **                | ** ** |
| Cash and cash euivalents                                      |       |       |       | $                         | 4,802      |   |
|                                                          |       |       |       |                      |       |
| **Oil and gas property, unproven  (Note 3)**                  |       |       |       | 44,003                    |       |
|                                                          |       |       |       |                      |       |
| **Total assets**                                              |       |       |       | $                         | 48,805     |   |
|                                                          |       |       |       |                      |       |
| ** **                                                    | ** ** | ** ** | ** ** | ** **                | ** ** |
| ** **                                                    | ** ** | ** ** | ** ** | ** **                | ** ** |
| **LIABILITIES**                                               | ** ** | ** ** | ** ** | ** **                | ** ** |
|                                                          |       |       |       |                      |       |
| **Current liabilities**                                       | ** ** | ** ** | ** ** | ** **                | ** ** |
| Accounts payable and accrued expenses                         |       |       |       | $                         | 12,469     |   |
| Related party loan (Note 4)                                   |       |       |       | 30,138                    |       |
|                                                          |       |       |       |                      |       |
| **Total current liabilities**                                 |       |       |       | 42,607                    |       |
|                                                          |       |       |       |                      |       |
| **STOCKHOLDERS’ EQUITY**                                 | ** ** | ** ** | ** ** | ** **                | ** ** |
|                                                          |       |       |       |                      |       |
| **Share capital**                                             | ** ** | ** ** | ** ** | ** **                | ** ** |
| Common stock, $0.001 par value, 75,000,000 shares authorized, |       |       |       |                      |       |
| 3,100,000 issued and outstanding                              |       |       |       | 3,100                     |       |
|                                                          |       |       |       |                      |       |
| **Additional paid-in capital**                                |       |       |       | 81,400                    |       |
| **Deficit accumulated during the exploration  stage**         |       |       |       | (78,302                   | )          |
|                                                          |       |       |       |                      |       |
| **Total stockholders’ equity**                           |       |       |       | 6,198                     |       |
|                                                          |       |       |       |                      |       |
| **Total liabilities and  stockholders’ equity**          |       |       |       | $                         | 48,805     |   |

 
| **The accompanying notes are an integral part of these  financial statements** |
|--------------------------------------------------------------------------------|

 

 

 

3

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| **EXPLORTEX ENERGY INC.**          |
|------------------------------------|
| (An  exploration stage enterprise) |
| Statements  of Operations          |
| (Unaudited)                        |

 
| **(Expressed in U.S. Dollars)**          |       |                                                                    |       |                                         |       |
|------------------------------------------|------------|-------------------------------------------------------------------------|------------|----------------------------------------------|------------|
| ** **                               | ** ** | **Cumulative March 25, 2004 (inception) to January 31, 2008** | ** ** | **Three months ended January 31, 2008** | ** ** | **Three months ended January 31, 2007** | ** ** | **Nine months ended January 31, 2008** | ** ** | **Nine months ended January 31, 2007** | ** ** |   |
|                                     |       |                                                                    |       |                                         |       |   |   |   |   |   |   |   |
| **Revenues**                             | ** ** | ** **                                                              | ** ** | ** **                                   | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |   |
| Oil and natural gas sales                |       | $                                                                       | 862        |                                         | $          | 126 |   | $ | — |   | $ | 862 |   | $ | — |   |   |
| Interest income                          |       | 116                                                                     |       | —                                       |       | — |   | — |   | 116 |   |   |
|                                     |       |                                                                    |       |                                         |       |   |   |   |   |   |   |   |
| ** **                               |       | 978                                                                     |       | 126                                          |       | — |   | 862 |   | 116 |   |   |
|                                     |       |                                                                    |       |                                         |       |   |   |   |   |   |   |   |
| **General and administrative  expenses** | ** ** | ** **                                                              | ** ** | ** **                                   | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |   |
| Bank and interest charges                |       | 871                                                                     |       | 133                                          |       | 21 |   | 313 |   | 388 |   |   |
| Depletion expense                        |       | 4,896                                                                   |       | 2,448                                        |       | — |   | 4,896 |   | — |   |   |
| Management fees                          |       | 1,500                                                                   |       | —                                       |       | — |   | — |   | — |   |   |
| Office expenses                          |       | 1,218                                                                   |       | —                                       |       | — |   | 801 |   | 312 |   |   |
| Operating costs                          |       | 762                                                                     |       | —                                       |       | — |   | 762 |   | — |   |   |
| Professional fees                        |       | 58,994                                                                  |       | 4,799                                        |       | 3,000 |   | 26,644 |   | 27,179 |   |   |
| Transfer agent and filing fees           |       | 8,316                                                                   |       | 35                                           |       | 534 |   | 2,183 |   | 4,641 |   |   |
| Travel and entertainment                 |       | 2,723                                                                   |       | —                                       |       | 2,723 |   | — |   | 2,723 |   |   |
|                                     |       |                                                                    |       |                                         |       |   |   |   |   |   |   |   |
| ** **                               |       | 79,280                                                                  |       | 7,415                                        |       | 6,278 |   | 35,599 |   | 35,243 |   |   |
|                                     |       |                                                                    |       |                                         |       |   |   |   |   |   |   |   |
| **Net loss**                             |       | $                                                                       | (78,302    | )                                            | $          | (7,289 | ) | $ | (6,278 | ) | $ | (34,737 | ) | $ | (35,127 | ) |   |
|                                     |       |                                                                    |       |                                         |       |   |   |   |   |   |   |   |
| **Basic and diluted loss per  share**    | ** ** | ** **                                                              | ** ** | ** **                                   | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |   |
| Net loss per share                       |       | —                                                                  |       | $                                            | (0.00      | ) | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.01 | ) |   |
|                                     |       |                                                                    |       |                                         |       |   |   |   |   |   |   |   |
| **Weighted average number of**           | ** ** | ** **                                                              | ** ** | ** **                                   | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |   |
| **common shares outstanding**            |       | —                                                                  |       | 3,100,000                                    |       | 3,100,000 |   | 3,100,000 |   | 3,093,478 |   |   |
|                                          |            |                                                                         |            |                                              |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 
| **The accompanying notes are an integral part of these  financial statements** |
|--------------------------------------------------------------------------------|

 

 

 

4

----

 

 

 

 
| **EXPLORTEX ENERGY INC.**                                                     |
|-------------------------------------------------------------------------------|
| (An  exploration stage enterprise)                                            |
| Statements  of Stockholders’ Equity                                      |
| For  the period from inception (March 25, 2004) to January 31, 2008 |
| (Unaudited)                                                                   |

 
| **(Expressed in U.S. Dollars)**                        | ** ** | ** **        | ** ** | ** ** | ** ** | ** **                      | ** ** | ** **                                        | ** ** | ** **                           | ** ** |
|--------------------------------------------------------|------------|-------------------|------------|------------|------------|---------------------------------|------------|---------------------------------------------------|------------|--------------------------------------|------------|
|                                                   |       | ** **        | ** ** | ** ** | ** ** | **Additional  paid-in capital** | ** ** | **Deficit  accumulated during exploration stage** | ** ** | **Total  stockholders’ equity** |       |
|                                                   |       | **Common  Stock** | ** ** | ** ** | ** ** |                            |
|                                                   |       | **Shares**        | ** ** | **Amount** | ** ** |                            |       |                                              |
|                                                   |       |              |       |       |       |                            |       |                                              |       |                                 |       |
| **Balance, March 25, 2004  (inception)**          |       | —            |       | $          | —     |                            | $          | —                                            |       | $                                    | —     |   | $ | — |   |
| ** **                                             | ** ** | ** **        | ** ** | ** ** | ** ** | ** **                      | ** ** | ** **                                        | ** ** | ** **                           | ** ** |
| Net loss for the period                                |       | —            |       | —     |       | —                          |       | (2,000                                            | )          | (2,000                               | )          |
|                                                   |       |              |       |       |       |                            |       |                                              |       |                                 |       |
| Balance, April 30,  2004                          |       | —            |       | —     |       | —                          |       | (2,000                                            | )          | (2,000                               | )          |
|                                                   |       |              |       |       |       |                            |       |                                              |       |                                 |       |
| Stock issued at $0.001 per  share in May 2004     |       | 2,000,000         |       | 2,000      |       | —                          |       | —                                            |       | 2,000                                |       |
|                                                   |       |              |       |       |       |                            |       |                                              |       |                                 |       |
| Net loss for the period                                |       | —            |       | —     |       | —                          |       | (269                                              | )          | (269                                 | )          |
|                                                   |       |              |       |       |       |                            |       |                                              |       |                                 |       |
| Balance, April 30, 2005                           |       | 2,000,000         |       | 2,000      |       | —                          |       | (2,269                                            | )          | (269                                 | )          |
|                                                   |       |              |       |       |       |                            |       |                                              |       |                                 |       |
| Stock issued at $0.075 per  share in January 2006 |       | 500,000           |       | 500        |       | 37,000                          |       | —                                            |       | 37,500                               |       |
|                                                   |       |              |       |       |       |                            |       |                                              |       |                                 |       |
| Stock issued at $0.075 per  share in April 2006   |       | 500,000           |       | 500        |       | 37,000                          |       | —                                            |       | 37,500                               |       |
|                                                   |       |              |       |       |       |                            |       |                                              |       |                                 |       |
| Net loss for the period                                |       | —            |       | —     |       | —                          |       | (5,220                                            | )          | (5,220                               | )          |
| ** **                                             | ** ** | ** **        | ** ** | ** ** | ** ** | ** **                      | ** ** | ** **                                        | ** ** | ** **                           | ** ** |
| Balance, April 30,  2006                          |       | 3,000,000         |       | 3,000      |       | 74,000                          |       | (7,489                                            | )          | 69,511                               |       |
|                                                   |       |              |       |       |       |                            |       |                                              |       |                                 |       |
| Stock issued at $0.075 per  share in May 2006     |       | 100,000           |       | 100        |       | 7,400                           |       | —                                            |       | 7,500                                |       |
|                                                   |       |              |       |       |       |                            |       |                                              |       |                                 |       |
| Net loss for the period                                |       | —            |       | —     |       | —                          |       | (36,076                                           | )          | (36,076                              | )          |
|                                                   |       |              |       |       |       |                            |       |                                              |       |                                 |       |
| Balance, April 30,  2007                          |       | 3,100,000         |       | 3,100      |       | 81,400                          |       | (43,565                                           | )          | 40,935                               |       |
|                                                   |       |              |       |       |       |                            |       |                                              |       |                                 |       |
| Net loss for the period                                |       | —            |       | —     |       | —                          |       | (34,737                                           | )          | (34,737                              | )          |
|                                                   |       |              |       |       |       |                            |       |                                              |       |                                 |       |
| Balance, January 31,  2008                        |       | 3,100,000         |       | $          | 3,100      |                            | $          | 81,400                                            |       | $                                    | (78,302    | ) | $ | 6,198 |   |
|                                                        |            |                   |            |            |            |                                 |            |                                                   |            |                                      |            |  |  |  |  |  |

 
| **The accompanying notes are an integral part of these  financial statements** |
|--------------------------------------------------------------------------------|

 

 

 

5

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| **EXPLORTEX ENERGY INC.**          |
|------------------------------------|
| (An  exploration stage enterprise) |
| Statements  of Cash Flows          |
| (Unaudited)                        |

 
| **(Expressed in U.S. Dollars)**                     | ** ** | ** **                                                                                | ** ** | ** **                                              | ** ** | ** **                                              | ** ** |
|-----------------------------------------------------|------------|-------------------------------------------------------------------------------------------|------------|---------------------------------------------------------|------------|---------------------------------------------------------|------------|
|                                                |       | **Cumulative**

**March 25,  2004**

**(inception)  to**

**January 31,  2008** | ** ** | **Nine  months**

**ended**

**January 31,  2008** | ** ** | **Nine  months**

**ended**

**January 31,  2007** |       |
|                                                |       |                                                                                      |       |                                                    |       |                                                    |       |
| **Cash flows from (used in)  operating activities** | ** ** | ** **                                                                                | ** ** | ** **                                              | ** ** | ** **                                              | ** ** |
|                                                |       |                                                                                      |       |                                                    |       |                                                    |       |
| Net loss for the period                             |       | $                                                                                         | (78,302    | )                                                       | $          | (34,737                                                 | )          | $ | (35,127 | ) |
| Items not involving cash:                           |       |                                                                                      |       |                                                    |       |                                                    |       |
| -depletion and amortization                         |       | 4,896                                                                                     |       | 4,896                                                   |       | —                                                  |       |
| -accrued interest payable                           |       | 240                                                                                       |       | 240                                                     |       | —                                                  |       |
| Changes in non-cash  working capital items:         |       |                                                                                      |       |                                                    |       |                                                    |       |
| -accounts payable and accrued expenses              |       | 12,357                                                                                    |       | 2,204                                                   |       | 9,708                                                   |       |
|                                                |       |                                                                                      |       |                                                    |       |                                                    |       |
| **Net cash used in operating  activities**          |       | (60,809                                                                                   | )          | (27,397                                                 | )          | (25,419                                                 | )          |
|                                                |       |                                                                                      |       |                                                    |       |                                                    |       |
| **Cash flows used in investing  activities**        | ** ** | ** **                                                                                | ** ** | ** **                                              | ** ** | ** **                                              | ** ** |
|                                                |       |                                                                                      |       |                                                    |       |                                                    |       |
| Oil and gas properties                              |       | (48,899                                                                                   | )          | (6,832                                                  | )          | (47,402                                                 | )          |
| ** **                                          | ** ** | ** **                                                                                | ** ** | ** **                                              | ** ** | ** **                                              | ** ** |
| **Net cash used in investing activities**           |       | (48,899                                                                                   | )          | (6,832                                                  | )          | (47,402                                                 | )          |
|                                                |       |                                                                                      |       |                                                    |       |                                                    |       |
| **Cash flows from financing  activities**           | ** ** | ** **                                                                                | ** ** | ** **                                              | ** ** | ** **                                              | ** ** |
| ** **                                          | ** ** | ** **                                                                                | ** ** | ** **                                              | ** ** | ** **                                              | ** ** |
| Proceeds from issuance of  common stock             |       | 84,500                                                                                    |       |                                                    |       | 7,500                                                   |       |
| Proceeds from related  party loan                   |       | 30,010                                                                                    |       | 30,010                                                  |       | —                                                  |       |
| ** **                                          | ** ** | ** **                                                                                | ** ** | ** **                                              | ** ** | ** **                                              | ** ** |
| **Net cash from financing activities**              |       | 114,510                                                                                   |       | 30,010                                                  |       | 7,500                                                   |       |
|                                                |       |                                                                                      |       |                                                    |       |                                                    |       |
| Increase (decrease) in  cash and cash equivalents   |       | (4,802                                                                                    | )          | (4,219                                                  | )          | (65,321                                                 | )          |
|                                                |       |                                                                                      |       |                                                    |       |                                                    |       |
| Cash and cash equivalents,  beginning of period     |       | —                                                                                    |       | 9,021                                                   |       | 70,861                                                  |       |
|                                                |       |                                                                                      |       |                                                    |       |                                                    |       |
| Cash and cash equivalents,  end of period           |       | $                                                                                         | 4,802      |                                                    | $          | 4,802                                                   |       | $ | 5,540 |   |

 
| **The accompanying notes are an integral part of these  financial statements** |
|--------------------------------------------------------------------------------|

 

 

 

6

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**EXPLORTEXENERGY INC.**

(Anexploration stage enterprise)

Notesto Financial Statements

January 31,2008

(Unaudited)

**(Expressedin U.S. Dollars)**

 

**1.****                                     ****Basisof Presentation**

 

Theaccompanying unaudited interim balance sheet, statements of operations,statements of shareholders’ equity and cash flows reflected all adjustments,consisting of normal recurring adjustments that are, in the opinion ofmanagements, necessary for a fair presentation of the financial position of theCompany, at January 31, 2008 and the results of operations, shareholders’equity and cash flows for the interim period ended January 31, 2008.  The accompanying unaudited financialstatements have been prepared in accordance with the instruction from Form 10-QSBpursuant to the rules and regulations of the Securities and ExchangeCommission and, therefore, do not include all information and notes normallyprovided in audited financial statements and should be read in conjunction withthe Company’s audited financial statements for the fiscal year ended April 30,2007.  The result of operations for theinterim periods presented in not necessarily indicative of the results to beexpected for the full year.

 

Theaccompanying financial statements have been prepared in conformity withgenerally accepted accounting principles in the United States of America, whichcontemplates continuation of the Company as a going concern.  However, the Company has sustainedsubstantial operating losses in recent years resulting in a substantialaccumulated deficit.  As of January 31,2008, the Company had a total of $4,802 in cash and working capital deficit of$37,805.  These factors raise substantialdoubt about the Company’s ability to continue as a going concern.  The ability of the Company to meet itscommitments as they become payable is dependent on the ability of the Companyto obtain necessary financing or achieving a profitable level ofoperations.  To meet these objectives,the Company plans to seek additional equity and expects to raise funds throughprivate or public equity investment in order to support existing operations andexpand the range and scope of its business. There is no assurance that such additional funds will be available forthe Company on acceptable terms, if at all. Management believes that actions presently taken to revise the Company’soperating and financial requirements provide the opportunity for the Company tocontinue as a going concern.  TheCompany’s ability to achieve these objectives cannot be determined at thistime.  There are no assurances that theCompany will be successful in achieving these goals.

 

a)                                                              Organization

 

ExplortexEnergy Inc. (the “Company”) was formed on March 25, 2004 under the laws ofthe State of Nevada.  On November 9,2005, the Company changed its name from Anacot Technologies to Explortex EnergyInc.

 

TheCompany is in the business of exploring for oil and gas.  The Company has not yet determined whether itsproperties contain resources that may be economically recoverable.

 

 

 

7

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** **

**EXPLORTEXENERGY INC.**

(Anexploration stage enterprise)

Notesto Financial Statements

January 31,2008

(Unaudited)

**(Expressedin U.S. Dollars)**

 

 

TheCompany therefore has not reached the operation stage and is considered to bean exploration stage company.

 

Therecoverability of resource property costs is dependent upon the existence ofeconomically recoverable reserves, confirmation of the Company’s interest inthe underlying properties, the ability of the Company to obtain necessaryfinancing to complete the exploration and upon future profitable production.

 

b)                                                             Going Concern

 

Thesefinancial statements have been prepared in accordance with generally acceptedaccounting principles applicable to a going concern, which contemplates therealization of assets and the satisfaction of liabilities and commitments inthe normal course of business.

 

TheCompany has not generated any material revenue and requires additional funds tomaintain its operations.  Management’splans in this regard is to participate in a one percent interest in the Malcolm—Star well to ascertain whether the well possesses commercial quantities ofnatural gas.  Management must raiseadditional capital to drill additional wells and for general working capital.

 

Theseconditions raise substantial doubt about the Company’s ability to continue as agoing concern.  These financial statementsdo not include any adjustments that might result from this uncertainty.

 

TheCompany has not generated any material operating revenues to date.

 

**2.****                                     ****SignificantAccounting Policies**

 

a)                                                              Cash and CashEquivalents

 

Cashequivalents comprise certain highly liquid instruments with a maturity of threemonths or less when purchased.  As at January 31,2008 cash and cash equivalents consist of cash only.

 

b)                                                             AccountingEstimates

 

Thepreparation of the financial statements in conformity with generally acceptedaccounting principles in the United States of America requires management tomake estimates and

 

 

 

8

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** **

**EXPLORTEXENERGY INC.**

(Anexploration stage enterprise)

Notesto Financial Statements

January 31,2008

(Unaudited)

**(Expressed in U.S. Dollars)**

 

 

assumptionsthat affect the reported amounts of assets and liabilities at the date of thefinancial statements and the reported amounts of revenues and expenses duringthe reporting period.  Actual resultscould differ from those estimates and assumptions.

 

c)                                                              Concentrationof Credit Risk

 

TheCompany places its cash and cash equivalents with high credit quality financialinstitutions.  As of January 31,2008 the Company had no balance in a bank beyond insured limits.

 

d)                                                             Oil and GasProperties

 

TheCompany utilizes the full-cost method of accounting for petroleum and naturalgas properties.  Under this method, theCompany capitalizes all costs associated with acquisition, exploration anddevelopment of oil and natural gas reserves, including leasehold acquisitioncosts, geological and geophysical expenditures, lease rentals on undevelopedproperties and costs of drilling of productive and non-productive wells intothe full cost pool on a country by country basis.  As of January 31, 2008 the Company had noproperties with proven reserves.  Whenthe Company obtains proven oil and gas reserves, capitalized costs, includingestimated future costs to develop the reserves proved and estimated abandonmentcosts, net of salvage, will be depleted on the units-of-production method usingestimates of proved reserves.  The costof unproved properties is not amortized until it is determined whether or notproved reserves can be assigned to the properties.  Until such determination is made the Companyassesses annually whether impairment has occurred, and includes in theamortization base drilling exploration dry holes associated with unprovedproperties.

 

TheCompany applies a ceiling test to the capitalized cost in the full costpool.  The ceiling test limited such costto the estimated present value, using a ten percent discount rate, of thefuture net revenue from proved reserves, based on current economic andoperating conditions.  Specifically, theCompany computes the ceiling test so that capitalized costs, less accumulateddepletion and related deferred income tax, do no exceed an amount (the ceiling)equal to the sum of: (A) The present value of estimated future net revenuecomputed by applying current prices of oil and gas reserves (with considerationof price changes only to the extent provided by contractual arrangements) toestimated future production of proved oil and gas reserves as of the date ofthe latest balance sheet presented, less estimated future expenditures  (based on current cost) to be incurred indeveloping and producing the proved reserves computed using a discount factorof ten percent and assuming continuation of existing economic conditions; plus (B) thecost of property not being amortized; plus (C) the lower of  cost or estimated fair value

 

 

 

 

9

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**EXPLORTEXENERGY INC.**

(Anexploration stage enterprise)

Notesto Financial Statements

January 31,2008

(Unaudited)

**(Expressedin U.S. Dollars)**

 

 

ofunproven properties included in the costs being amortized; less (D) incometax effects related to differences between the book and tax basis of theproperty.

 

Forunproven properties, the Company excluded from capitalized costs subject todepletion, all costs directly associated with the acquisition and evaluation ofthe unproved property until it is determined whether or not proved reserves canbe assigned to the property. Until such a determination is made the Companyassesses the property at least annually to ascertain whether impairment hasoccurred. In assessing impairment the Company considers factors such ashistorical experience and other data such as primary lease terms of theproperty, average holding periods of unproved property, and geographic andgeologic data.  The Company adds theamount of impairment assessed to the cost to be amortized subject to theceiling test.  As of January 31,2008 none of the Company’s oil and gas properties were considered impaired.

 

e)                                                              AssetRetirement Obligations

 

TheCompany recognized a liability for future retirement obligations associatedwith the Company’s oil and gas properties. The estimated fair value of the asset retirement obligation is based onthe current cost escalated at an inflation rate and discounted at a creditadjusted risk-free rate.  This liabilityis capitalized as part of the cost of the related asset and amortized over itsuseful life.  This liability accretesuntil the Company settles the obligation. At January 31, 2008 the future asset retirement of the Company isconsidered immaterial.

 

f)                                                                ForeignCurrency Transactions

 

The Company maintains its accounting records in U.S. Dollars, asfollows:

 

At the transaction date, each asset, liability, revenue and expense istranslated into U.S. dollars by the use of the exchange rate in effect at thatdate.  At the period end, monetary assetsand liabilities are remeasured by using the exchange rate in effect at thatdate.  The resulting foreign exchangegains and losses are included in operations and have not been material to date.

 

g)                                                             Fair Value ofFinancial Instruments

 

The Company’s financial instruments consist of cash and cashequivalents and accounts payable and accrued expenses and related partyloans.  The carrying amounts of thesefinancial instruments approximate fair value due to the short-term nature ofthese items.  Management is of theopinion that the Company is not exposed to significant interest, currency orcredit risks arising from these financial instruments.

 

 

 

10

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**EXPLORTEXENERGY INC.**

(Anexploration stage enterprise)

Notesto Financial Statements

January 31,2008

(Unaudited)

**(Expressedin U.S. Dollars)**

 
| h)     | Income  Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | The  Company has adopted Statement of Financial Accounting Standards (SFAS”)  No. 109, “Accounting for Income Taxes”, which requires the Company to  recognize deferred tax liabilities and assets for the expected future tax  consequences of events that have been recognized in the Company’s financial  statements or tax returns using the liability method. Under this method,  deferred tax liabilities and assets are determined based on the temporary  differences between the financial statements and tax bases of assets and  liabilities using enacted tax rated in effect in the periods in which the  differences are expected to reverse. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| i)     | Comprehensive  Income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | The  Company adopted SFAS No. 130, “Reporting Comprehensive Income” which  requires such things as the inclusion of foreign currency translation  adjustments to be reported separately in its Statement of Stockholders’  Equity as part of other comprehensive income.   The Company has no other comprehensive income for the periods  presented.                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| j)     | Loss  Per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | Loss  per share is computed by dividing the net loss attributable to common  stockholders by the weighted average number of common shares outstanding  during the period.  The Company has  adopted SFAS No. 128, “Earnings Per Share”.  Diluted loss per share is equivalent to  basic loss per share as there are no dilutive securities outstanding.                                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| k)     | Stock-based  Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | Prior  to May 1, 2006, the Company accounted for stock-based awards under the  intrinsic value method, which followed the recognition and measurement  principles of APB Opinion No. 25, *“Accounting for Stock  Issued to Employees”*, and related interpretations.  The intrinsic value method of accounting  resulted in compensation expense for stock options to the extent that the  exercise prices were set below the fair market price of the Company’s stock  at the date of grant.                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | As  of May 1, 2006, the Company adopted SFAS No. 123(R) using the  modified prospective method, which requires measurement of compensation cost  for all stock-based awards at fair value on the date of grant and recognition  of compensation over the service period for awards expected to vest.  The fair value of stock options is  determined using the Black-Scholes valuation model, which is consistent with  the Company’s valuation techniques previously utilized for options in  footnote disclosure required under SFAS No. 123, *“Accounting  for Stock*                                                                          |

 

 

 

11

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**EXPLORTEX ENERGY INC.**

(Anexploration stage enterprise)

Notesto Financial Statements

January 31,2008

(Unaudited)

**(Expressedin U.S. Dollars)**

 
|   | *Based  Compensation”,*as amended by SFAS No. 148, *“Accounting for Stock Based Compensation Transition and Disclosure”.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | Since  the Company did not issue stock options to its employees during the nine  months ended January 31, 2008 or 2007, there is no effect on net loss or  earnings per share had the Company applied the fair value recognition  provisions of SFAS No. 123(R) to stock based employee  compensation.  When the Company issues  shares of common stock to employees and others, the shares of common stock  are valued based on the market price at the date of common stock are approved  for issuance.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| l)     | New  Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | In  July 2006, the Financial Accounting Standards Board (FASB) issued FASB  Interpretation (FIN) No. 48, *“Accounting for  Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109”.* This interpretation  provides guidance for recognizing and measuring uncertain tax positions, as  defined in Statement of Financial Accounting Standards (SFAS) No. 109*“Accounting for Income Taxes”. *FIN No. 48 prescribes a threshold condition that a tax  position must meet for any of the benefit of an uncertain tax position to be  recognized in the financial statements.   Guidance is also provided regarding derecognition, classification and  disclosure of uncertain tax positions.   FIN No. 48 is effective for fiscal years beginning after December 15,  2006.  The Company does not expect that  this interpretation will have a material impact on their financial position,  results of operations or cash flows. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | In  December 2007, the FASB issued SFAS 141(R), “Business Combinations”  which replaces SFAS 141, and SFAS 160,   “Noncontrolling Interests in Consolidated Financial Statements-an  amendment of Accounting Research Bulletin 51” (SFAS 160”), which are  effective for fiscal years beginning after December 15, 2008. The  adoption of SFAS 141(R) will have an impact on accounting for business  combinations once adopted, but the effect is dependent upon acquisitions at  that time, while the company does not expect the application of SFAS 160 to  have a material impact on its financial statements.                                                                                                                                                                                                                                                                                                                                                                 |

 

**3.****                                     ****Oil andGas Property, Unproven**

 

In December of 2005, the Company entered into a participationagreement with PB Energy USA Ltd. (“PB”), for the right to participate up to a25% working interest in twenty-four wells by paying up to 33% of the leasing,drilling, completing and pipeline costs. The wells will target the Barnett Shale formation and will be locatedgenerally in the Dallas-Fort Worth area of North Texas.

 

 

 

12

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In May 2006, the Company elected to participate in a 1% workinginterest in an exploration well in the Barnett Shale, which represented 1.33%of the estimated leasing, drilling, completing and pipeline costs.  During the nine months ended January 31,2007, the operator voluntarily relinquished one-fifth of its 25% carriedinterest in the well due to cost overruns. The Company now has a 1.07% working interest in the well.

 

During the year ended April 30, 2007, the operator voluntarilyrelinquished one-fifth of its 25% carried interest in the well due to costoverruns.  The Company now has a 1.07%working interest in the well.

 

 

13

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**EXPLORTEXENERGY INC.**

(Anexploration stage enterprise)

Notesto Financial Statements

January 31,2008

(Unaudited)

**(Expressedin U.S. Dollars)**

 

As of January 31, 2008, $48,899 has been spent on drilling,gathering and tie-in activities.  Thetotal Costs incurred and depletion of the Company’s oil and gas properties aresummarized as follows:

 
| ** **                                          | ** ** | **Drilling  and  Gathering** | ** ** | **Accumulated**

**depletion  and  amortization** | ** ** | **Total**  | ** ** |
|-----------------------------------------------------|------------|------------------------------|------------|---------------------------------------------------|------------|------------|------------|
|                                                |       |                         |       |                                              |       |       |       |
| **Malcolm-Starr, Barnett Shale**                    | ** ** | ** **                   | ** ** | ** **                                        | ** ** | ** ** | ** ** |
| ** **                                          | ** ** | ** **                   | ** ** | ** **                                        | ** ** | ** ** | ** ** |
| Year ended April 30,  2007                     |       | $                            | 42,067     |                                              | —     |       | $          | 42,067 |   |
| ** **                                          | ** ** | ** **                   | ** ** | ** **                                        | ** ** | ** ** | ** ** |
| Nine months ended  January 31, 2008            |       | 6,832                        |       | (4,896                                            | )          | 1,936      |       |
|                                                |       |                         |       |                                              |       |       |       |
| Total oil and gas  properties January 31, 2008 |       | $                            | 48,899     |                                              | (4,896     | )          | $          | 44,003 |   |

 

Based on the status of the Company’s exploration activities, managementhas determined that no impairment has occurred.

 

**4.****                                     ****RelatedParty Transactions**

 

a)              The Company’s sole officerand director acquired 2,000,000 of the Company’s common stock at a price of$0.001 per share for gross proceeds of $2,000 during the year ended April 30,2005.

 

b)             On October 5, 2007, theCompany entered into a loan agreement with the sole officer and director of theCompany, whereby the Company borrowed $30,000 for a six month term expiring April 5,2008.  The loan is secured against theassets of the Company.  Pursuant to theloan agreement the Company has agreed to pay interest at the rate of 1⁄2% permonth payable together with the repayment of the loan on the maturitydate.  At January 31, 2008, theCompany accrued $128 of interest towards the loan.

 

**5.****                                     ****Subsequent Event**

 

****On February 5th, 2008 the company dida Regulation S transaction, with 3 shareholders, selling 500,000 shares of thecompany’s stock for $25,000.

 

 

14

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**Item 2. Management’s Discussion and Analysis or Plan ofOperation.**

 

FORWARD LOOKINGSTATEMENTS

 

This Quarterly Report may contain forward-looking statements within themeaning of Section 27A of the Securities Act of 1933 that involve risksand uncertainties. In particular such forward-looking statements may be foundin this section. The following discussion and analysis of the financialcondition and results of operations should be read in conjunction with thefinancial statements and related notes included elsewhere in this QuarterlyReport. Words or phrases such as “hope”, “expect”, “intend”, “plan” or similarexpressions are generally intended to identify forward-looking statements.Those statements involve risks and uncertainties that could cause actual resultsto differ materially from the results discussed herein. The principal risks anduncertainties that may affect our actual performance and results of operationsinclude the following: general economic conditions; exploration successes, theacquisition of oil and gas assets, continued availability of capital andfinancing; adverse weather; governmental regulations; changes in governmentaland public policy; changes in economic conditions specific to our business;competition; availability of equipment and qualified personnel and unexpectedoperational difficulties. Other risks and uncertainties may also affect theoutcome of our actual performance and results of operations. You are cautionednot to place undue reliance on the forward-looking statements made in thisManagement’s Discussion and Analysis or Plan of Operations.

 

**Overview**

 

We are a natural resource exploration stage company engaged in the participation in the drilling of oil and gas properties in the United States.

 

On December 1, 2005, we entered into a non-exclusive participation agreement (the “PB Energy Participation Agreement”) with PB Energy USA Ltd. (“PB Energy”).  PB Energy has the right to participate in certain wells to be drilled by Star of Texas Energy Services, Inc. (“Star of Texas Energy Services”).  Star of Texas Energy Services has arranged with land owners and leaseholders for the rights to drill exploration wells targeting the Barnett Shale formation in North Texas and has proposed to drill, as operator, one exploration well a month for twenty-four months.   As operator, Star of Texas Energy Services retains a 25% working interest in each well that is to be drilled by it as operator.  These rights are defined in the participation agreement to be entered into for each individual well drilled by Star of Texas Energy Services. Star of Texas Energy Services has the right to assign part or all of its 25% working interest to third parties.

 

The PB Energy Participation Agreement gives us the right, but not the obligation, to participate up to a maximum 25% working interest, subject to availability, in each exploration well to be drilled by Star of Texas Energy Services.  In order to purchase each 1% working interest in a well, we are required to pay a project payment of approximately $35,000 per 1% working participation interest.  This amount is based on an estimated gross cost for the horizontal drilling and completion attempt per well of $2,700,000 and the requirement under the individual well participation agreement that the 75% working interest participants are obligated to pay 100% of the actual drilling and completion costs.  In aggregate, we have the option to acquire up to a 25% working interest in each well by paying up to 33.33% of all costs and expenses incurred for the joint account under the operating agreement respecting the drilling and completion of each well.

 

In May 2006, we electedto participate in our first exploration well with Star of Texas Energy Servicespursuant to the PB Energy Participation Agreement. To date, we have made cashcall payments of $42,067 and accrued a further $5,335 for a 1% working interestin the Malcolm-Star #1H natural gas horizontal well (“Malcolm-Star”). Based onour 1% working interest, we are obliged to pay for 1.333% of the costs for drillingand completion of the well, but 

 

 

 

15

----

 

will only be entitled toreceive a 1% revenue interest in the well. Due to cost overruns in the currentperiod, the operator voluntarily relinquished one-fifth of their 25% carriedinterest. As a result, the Company is now entitled to a 1.07% working interestin the Malcolm-Star well.

 

The Malcolm-Star prospectconsists of 211.8 acres in Wise County, Texas, a core gas area of the BarnettShale play of North Texas. Star of Texas Energy Services has access to seismicgeological data, which shows the area to be favorable for the drilling of ahorizontal well. Star of Texas Energy Services commenced drilling theMalcolm-Star well on May 22, 2006. The well was drilled to a depth of10,500 feet to test the Barnett Shale formation, which was approximately 2,000feet farther than expected. The estimated cost of our proportionate share ofthe drilling and completion of this well was $35,532. During the nine monthsended January 31, 2007, we advanced Star of Texas Energy Services $42,067and accrued a further $5,335. The well experienced cost overruns because theoperator needed to twin the hole due to lost equipment. At January 31,2007, Star of Texas Energy Services had expended approximately $47,402 on thedrilling, completion and tie-in of the well. Star of Texas Energy Services hasadvised the well will be subject to a fracture stimulation program in the nextthree to four weeks. We believe the results of the Malcolm-Star well will beavailable in the winter of 2007.  We planto continue to participate in future exploration wells, subject to ourachieving additional financing and subject to our determination to proceedbased on the results of the Malcolm-Star well. There is no assurance that the Malcolm-Star well will be successful indiscovering commercial quantities of gas from which production can beobtained.  Gas pipeline infrastructure isapproximately one mile from the well.

** **

**PLAN OF OPERATIONS**

 

Our plan of operations for the next twelve months is to complete thefollowing objectives within the time periods specified, subject to ourobtaining the funding necessary for continued exploration:

 

1.             We are participating in a 1.07%working interest in the Malcolm-Star well in the Barnett Shale.  We have advanced $42,067 and accrued afurther $5,335 to the operator of the well which is estimated to cover our1.07% working interest in the costs to lease, drill, complete and tie-in the well.The total cost of the well was estimated at $2,665,000 but has since risen toapproximately $3,500,000 due to the twining of the hole as a result of lostequipment. The drilling of the Malcolm-Star well was completed in earlySeptember 2006 and tied-in in October 2006.

 

2.             If warranted by the results of theMalcolm-Star well, but not conditional, we intend to participate in workinginterests in further Barnett Shale exploration wells as proposed under the PBEnergy Participation Agreement.  We wouldlikely proceed with a further 1% working interest in a Barnett Shale well asevaluated by Star of Texas Energy Services, subject to us having sufficientfinancing. We expect the costs of the 1% working interest in the well to beapproximately $45,000. We anticipate that we will have to raise additionalfunding in order to participation in new exploration wells.

 

3.             We anticipate spendingapproximately $1,500 in ongoing general and administrative expenses per monthfor the next twelve months, for a total anticipated expenditure of $18,000 overthe next twelve months. The general and administrative expenses will consistprimarily of professional fees for the audit and legal work relating to ourregulatory filings throughout the year, as well as transfer agent fees andgeneral office expenses.

 

As at January 31,2008, we had cash reserves of $4,802 and a working capital deficit of $37,805.We anticipate that our cash will be sufficient to enable us to pay for ourgeneral and administrative expenses for the next six months. 

 

 

16

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However, ourability to pay our obligations for the Malcolm-Star well and participate infurther exploration wells will be subject to us obtaining additional financingas these expenditures will exceed our cash and working capital reserves.

 

During thetwelve-month period, we may or may not generate any revenue dependent on thesuccess of our 1.07% working interest in the Malcolm-Star well. Accordingly, wewill be required to obtain additional financing in order to continue our planof operations.  We believe that debtfinancing will likely not be an alternative for funding additional explorationwells, as we do not have tangible assets to secure any debt financing. Weanticipate that additional funding will be in the form of equity financing fromthe sale of our common stock. However, we do not have any financing arrangedand we cannot provide investors with any assurance that we will be able toraise sufficient funding from the sale of our common stock to fundparticipation in additional exploration wells. In the absence of such financing, we will not be able to continueexploration and our business plan will fail. Even if we are successful in obtaining equity financing to fundadditional exploration wells, there is no assurance that we will obtain thefunding necessary to pursue any further exploration or have the funds tocomplete the Malcolm-Star well.  If we donot continue to obtain additional financing, we will not be able to continue withour exploration plan.

** **

**RESULTS OF OPERATIONS**

** **

**Revenues**

** **

We have had nomaterial operating revenues since our inception on March 25, 2004 throughto the nine months ended January 31, 2008. We anticipate that we will not generate any material revenues unless ourparticipation in the Malcolm-Star well is successful and production of naturalgas is achieved.

 

**General and Administrative Expenses**

** **

Our general and administrative expenses for three and nine months endedJanuary 31, 2008 and 2007 are summarized below:

 
| ** **                                     | ** ** | **Three  Months  Ended  January 31,  2008** | ** ** | **Three  Months  Ended  January 31,  2007** | ** ** | **Nine  Months  Ended  January 31,  2008** | ** ** | **Nine  Months  Ended  January 31,  2007** | ** ** |
|------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|-------------------------------------------------|------------|-------------------------------------------------|------------|
| **General and administrative  expenses**       | ** ** | ** **                                       | ** ** | ** **                                       | ** ** | ** **                                      | ** ** | ** **                                      | ** ** |
| Bank Charges                                   |       | $                                                | 133        |                                             | $          | 21                                              |       | $                                               | 313        |   | $ | 388 |   |
| Office expenses                                |       | —                                           |       | —                                           |       | 801                                             |       | 312                                             |       |
| Professional Fees                              |       | 4,799                                            |       | 3,000                                            |       | 26,644                                          |       | 27,179                                          |       |
| Transfer agent and filing  Fees                |       | 35                                               |       | 534                                              |       | 2,183                                           |       | 4,641                                           |       |
| Travel and entertainment                       |       | —                                           |       | 2,723                                            |       | —                                          |       | 2,723                                           |       |
| **Total general and  administrative expenses** | ** ** | **$**                                            | **7,415**  | ** **                                       | **$**      | **6,278**                                       | ** ** | **$**                                           | **29,941** | ** ** | **$** | **35,234** | ** ** |

 

 

 

17

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Professional feesof $26,644 incurred during the nine months ended January 31, 2008 relatedto the completion of our financing in May 2006, the filing of our SB-2registration statement with the Securities and Exchange Commission and expensesassociated with being a reporting company under the Securities Exchange Act of1934. During 2006 we incurred $3,321 in professional fees for our financing inJanuary 2006.

 

Transfer agent andfiling fees represented amounts paid to keep our corporation in good standingwith State regulators and with the establishment of our transfer agent.

 

During the nine months ended January 31, 2007, we incurred traveland entertainment costs of $2,723 related to property investigation of oil andgas properties in Texas.

 

**LIQUIDITY AND CAPITAL RESOURCES**

 

We had cash of $4,802 and a working capital deficit of $37,805 atJanuary 31, 2008, compared to cash of $9,021 and a working capital deficitof $21,132 at April 30, 2007.

 

**Plan of Operations**

 

We anticipate raising additional funding over the next several monthsin order to close the working capital deficit, as well as to provide fundingfor the acquisition of additional properties. We anticipate that our cash will be sufficient to enable us to pay forour general and administrative expenses for the next six months. However, ourability to pay our obligations for the Malcolm-Star well and participate infurther exploration wells will be subject to us obtaining additional financingas these expenditures will exceed our cash and working capital reserves. Weanticipate that our cash and working capital will be sufficient to enable us tosustain our operations for the next six months, provided that we do notparticipate in any additional exploration wells during this period.  If we determine to proceed with participationin any additional exploration wells during this period, then we will requireadditional financing.

 

**Cash Used in Operating Activities**

 

Cash used in operating activities was $27,397 for the nine months endedJanuary 31, 2008, compared with cash used in operating activities of$25,419 for the nine months ended January 31, 2007.  We anticipate that cash used in operatingactivities will increase during the next year, as discussed under “Plan ofOperations”.

 

**Cash Used in Investing Activities**

 

Cash used in investing activities was $6,832 for the nine months endedJanuary 31, 2008, compared with $47,402 used in investing activities forthe nine months ended January 31, 2007. The decrease in cash used in investing activities is a result of reduceddrilling, completion and tie-in costs of the Malcolm Star well during theperiod. Although we have accrued $5,335 for future cash calls for the MalcolmStar well, further cost overruns could occur and the Company would be committedto fund 1.33% of any such additional costs.

 

**Cash from Financing Activities**

** **

We have funded our business to date primarily from sales of our commonstock. From our inception, on March 25, 2004, to January 31, 2008, wehave raised a total of $84,500 from private offerings of our securities. Therewere no 

 

 

18

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gross proceeds from the sale of shares of our common stock during thenine months ended January 31, 2008, compared to $7,500 in such proceedsthe nine months ended January 31, 2007.

 

There are no assurances that we will be able to achieve further salesof our common stock or any other form of additional financing. If we are unableto achieve the financing necessary to continue our plan of operations, then wewill not be able to continue our exploration of additional wells and ourventure will fail.

 

**Going Concern**

 

We have not attained profitable operations and are dependent uponobtaining financing to pursue any extensive exploration activities. For thesereasons our auditors stated in their report dated June 6, 2007 that theyhave substantial doubt we will be able to continue as a going concern.

 

**Future Financings**

 

We anticipate continuing to rely on equity sales of our common sharesin order to continue to fund our business operations. Issuances of additionalshares will result in dilution to our existing shareholders. There is noassurance that we will achieve any additional sales of our equity securities orarrange for debt or other financing to fund our planned exploration activities.

 

**Off-Balance Sheet Arrangements**

 

We have no significant off-balance sheet arrangements that have or arereasonably likely to have a current or future effect on our financialcondition, changes in financial condition, revenues or expenses, results ofoperations, liquidity, capital expenditures or capital resources that is materialto stockholders.

 

**Investment in Oil and Gas Properties**

 

Weutilize the full cost method to account for our investment in oil and gasproperties. Accordingly, all costs associated with acquisition and explorationof oil and gas reserves, including such costs as leasehold acquisition costs,interest costs relating to unproved properties, geological expenditures anddirect internal costs are capitalized into the full cost pool. As of January 31,2008, we had no proven oil and gas properties. When we obtain proven oil andgas reserves, capitalized costs, including estimated future costs to developthe reserves and estimated abandonment costs, net of salvage, will be depletedon the units-of-production method using estimates of proved reserves.Investments in unproved properties and major development projects includingcapitalized interest, if any, are not amortized until proved reservesassociated with the projects can be determined. If the future exploration ofunproved properties is determined uneconomical, the amounts of such propertiesare added to the capitalized cost to be amortized.

 

Thecapitalized costs included in the full cost pool are subject to a “ceilingtest”, which limits such costs to the aggregate of the estimated present value,using an estimated discount rate, of the future net revenues from provedreserves, based on current economic and operating conditions and the estimatedvalue of unproven properties.

 

**Item 8A.         Controlsand Procedures.**

 

As required by Rule 13a-15 under the Exchange Act, we carried outan evaluation of the effectiveness of the design and operation of ourdisclosure controls and procedures as of January 31, 2008, being the endof the period covered by this quarterly report. This evaluation was carried outunder the supervision and with the participation of our Chief 

 

 

19

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Executive Officer and Chief Financial Officer, Mr.John Lennon. Basedupon that evaluation, our Chief Executive Officer and Chief Financial Officerconcluded that our disclosure controls and procedures are effective in timelyalerting management to material information relating to us required to beincluded in our periodic SEC filings as at the end of the period covered bythis report. There have been no changes in our internal controls or in otherfactors that could significantly affect internal controls subsequent to thedate we carried out our evaluation.

 

Disclosure controls and procedures are controls and other proceduresthat are designed to ensure that information required to be disclosed in ourreports filed or submitted under the Exchange Act is recorded, processed,summarized and reported, within the time periods specified in the SEC’s rules andforms. Disclosure controls and procedures include, without limitation, controlsand procedures designed to ensure that information required to be disclosed inour reports filed under the Exchange Act is accumulated and communicated tomanagement, including our Chief Executive Officer and our Chief FinancialOfficer, to allow timely decisions regarding required disclosure.

 

During our most recently completed fiscal quarter ended January 31,2008 there were no changes in our internal control over financial reportingthat have materially affected, or are reasonably likely to affect, our internalcontrol over financial reporting.

 

The term “internal control over financial reporting” is defined as aprocess designed by, or under the supervision of, our principal executive andprincipal financial officers, or persons performing similar functions, andeffected by our board of directors, management and other personnel, to providereasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance withgenerally accepted accounting principles and includes those policies andprocedures that:

 

(a)                                  Pertain to the maintenance of recordsthat in reasonable detail accurately and fairly reflect the transactions anddispositions of our assets;

 

(b)                                 Provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles, andthat receipts and expenditures of our company are being made only in accordancewith authorizations of our management and directors; and

 

(c)                                  Provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition, use or dispositionof our assets that could have a material effect on the financial statements.

 

**PART II — Other Information**

 

**Item 1.            LegalProceedings.**

 

We are not party to any legal proceedings.

 

**Item 2.            UnregisteredSales of Equity Securities and Use of Proceeds.**

 

None.

 

**Item 3.            Defaultupon Senior Securities.**

 

None.

 

 

 

20

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**Item 4.            Submissionof Matters to a Vote of Security Holders.**

 

No matters were submitted to our security holders for a vote during thefirst, second and third quarter of our fiscal year ending April 30, 2008.

 

**Item 5.            OtherInformation.**

 

None.

 

**Item 6.            Exhibits.**

 
| **Exhibit  Number** | ** ** | **Description of Exhibit**                                                                                                                                                                                                                |
|---------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1(1)              |       | Articles of Incorporation                                                                                                                                                                                                                 |
| 3.2(1)              |       | By-Laws                                                                                                                                                                                                                                   |
| 3.3(1)              |       | Certificate of Amendment, as filed with the Nevada  Secretary of State                                                                                                                                                                    |
| 10.1(1)             |       | Participation Agreement between Explortex Energy  Inc. and PB Energy USA Ltd. dated December 1, 2005                                                                                                                                 |
| 10.2(1)             |       | Participation Agreement between Explortex Energy  Inc. and Star of Texas Energy Services, Inc. dated December 1, 2005                                                                                                           |
| 31.1(2)             |       | Certification of Chief Executive Officer and Chief Financial Officer  pursuant to Rule 13a-14(b) of the Exchange Act.                                                                                                           |
| 32.1(2)             |       | Certification of Chief Executive Officer and Chief Financial Officer  pursuant Rule 13a-14(b) of the Exchange Act and 18 U.S.C.  Section 1350, as adopted pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002. |

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*(1) Filed as an exhibit to our registration statement on Form SB-2 filed withthe Commission on July 10, 2006.*

*(2)  Filed as an exhibit to this Form 10-QSB*

 

**SIGNATURES**

 

Inaccordance with the requirements of the Exchange Act, the registrant causedthis report to be signed on its behalf by the undersigned, thereunto dulyauthorized.

 

**EXPLORTEX ENEGRY INC.**

** **
| **Signature**            | ** ** | **Title**                                                                                                                                     | ** ** | **Date**               |
|--------------------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------|
| ***/s/ John J. Lennon*** | ** ** | **President, Chief Executive Officer, Chief  Financial Officer and Director (Principal Executive Officer and Principal  Accounting Officer)** | ** ** | **March 7, 2008** |
| **John J. Lennon**       | ** ** | ** **                                                                                                                                    | ** ** | ** **             |

 

 

 

 

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