SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
____________________________________________________
FORM
10-Q
þ
QUARTERLY REPORT UNDER
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the
quarterly period ended January 31, 2010
o
TRANSITION REPORT UNDER
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the
transition period from ______ to ______
Commission
File Number 0-02555
Exobox
Technologies Corp.
(Name
of Small Business Issuer in its charter)
|
Nevada
|
88-0456274
|
|
(State
or other jurisdiction of incorporation)
|
(I.R.S.
Employer Identification No.)
|
|
|
|
|
2121
Sage Road, Suite 200, Houston, Texas
|
77056
|
|
(Address
of principal executive offices)
|
(Zip
code)
|
Securities
registered under Section 12(g) of the Exchange Act:
Common
Stock
(Title of
class)
(Title of
class)
Indicate
by check mark whether the registrant (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirement for the
past 90 days. Yes
þ
No
o
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files)
þ
Yes
o
No
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.
|
Large
accelerated filer
o
|
Accelerated
filer
o
|
|
Non-accelerated
filer
o
|
Smaller
reporting Company
þ
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
Yes
o
No
þ
As of
March 17, 2010, 392,635,544 of the registrant's common stock were
outstanding.
EXOBOX
TECHNOLOGIES CORP.
FORM
10-Q FOR THE QUARTER ENDED JANUARY 31, 2010
INDEX
|
PART
I. FINANCIAL INFORMATION
|
Page
|
|
|
No.
|
|
Item
1. Financial Statements
|
|
|
|
|
|
Balance
Sheets as of January 31, 2010 and July 31, 2009
(Unaudited).
|
3
|
|
|
|
|
Statements
of Operations for the three months ended January 31, 2010 and 2009, for
the six months ended January 31, 2010 and 2009 and for the period from
October 21, 2002 (Inception) to January 31, 2010
(Unaudited).
|
4
|
|
|
|
|
Statements
of Cash Flows for the six months ended January 31, 2010 and
2009 and for the period from October 21, 2002 (Inception) to
January 31, 2010 (Unaudited).
|
5
|
|
|
|
|
Notes
to the Financial Statements (Unaudited)
|
6
|
|
|
|
|
Item
2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
|
10
|
|
|
|
|
Item
3. Quantitative and Qualitative Disclosures about Market
Risk
|
12
|
|
|
|
|
Item
4. Controls and Procedures
|
12
|
|
|
|
|
PART
II. OTHER INFORMATION
|
|
|
|
|
|
Item
1. Legal Proceedings
|
12
|
|
|
|
|
Item
2. Recent Sales of Unregistered Securities
|
13
|
|
|
|
|
Item
3. Defaults Upon Senior Securities
|
13
|
|
|
|
|
Item
4. Submission of Matters to a Vote of Security Holders
|
13
|
|
|
|
|
Item
5. Other Information
|
13
|
|
|
|
|
Item
6. Exhibits
|
14
|
|
|
|
|
Signatures
|
15
|
EXOBOX
TECHNOLOGIES CORP.
(A
DEVELOPMENT STAGE COMPANY)
BALANCE
SHEETS
(Unaudited)
|
|
|
January
31, 2010
|
|
|
July
31, 2009
|
|
|
ASSETS
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
Cash
|
|
|
1,321
|
|
|
|
3
|
|
|
Accounts
Receivable
|
|
|
13,144
|
|
|
|
-
|
|
|
Other
Current Assets
|
|
|
11,194
|
|
|
|
8,561
|
|
|
Total
Current Assets
|
|
|
25,659
|
|
|
|
8,564
|
|
|
|
|
|
|
|
|
|
|
|
|
Furniture,
fixtures and equipment, net
|
|
|
343,707
|
|
|
|
395,338
|
|
|
Other
Assets:
|
|
|
|
|
|
|
|
|
|
Patents,
net
|
|
|
-
|
|
|
|
1
|
|
|
Intangibles,
net
|
|
|
13,452
|
|
|
|
6,568
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
|
382,818
|
|
|
|
410,471
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts
Payable
|
|
|
516,993
|
|
|
|
432,621
|
|
|
Accounts
Payable-Stockholders
|
|
|
65
|
|
|
|
2,594
|
|
|
Accrued
Liabilities
|
|
|
1,951,923
|
|
|
|
314,964
|
|
|
Advances
from Stockholders
|
|
|
700,437
|
|
|
|
875,081
|
|
|
Note
Payable
|
|
|
50,000
|
|
|
|
30,000
|
|
|
Secured
Notes Payable
|
|
|
90,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
Income
|
|
|
-
|
|
|
|
1,400
|
|
|
Total
Current Liabilities
|
|
|
3,309,418
|
|
|
|
1,656,660
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES
|
|
|
3,309,418
|
|
|
|
1,656,660
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS'
DEFICIT
|
|
|
|
|
|
|
|
|
|
Preferred
stock:
|
|
|
|
|
|
|
|
|
|
Series
A convertible preferred stock, $0.001 par, 2,500,000 shares authorized,
1,378 and 1,378 shares issued and outstanding as of January 31, 2010 and
July 31, 2009, respectively
|
|
|
1
|
|
|
|
1
|
|
|
Series
E convertible preferred stock, $0.001 par, 0 and 0 shares
issued and outstanding as of January 31, 2010 and July 31, 2009,
respectively
|
|
|
-
|
|
|
|
--
|
|
|
Common
stock, $0.001 par value, 500,000,000 shares authorized,
392,635,554
and
460,664,395 shares issued and outstanding at January 31, 2010 and July 31
2009, respectively
|
|
|
392,635
|
|
|
|
460,664
|
|
|
Additional
paid-in capital
|
|
|
16,693,377
|
|
|
|
14,481,168
|
|
|
Deficit
accumulated during development stage
|
|
|
(20,012,613
|
)
|
|
|
(16,188,022
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total
stockholders' deficit
|
|
|
(2,926,600
|
)
|
|
|
(1,246,189
|
)
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
|
|
382,818
|
|
|
|
410,471
|
|
See
accompanying notes to the financial statements
EXOBOX
TECHNOLOGIES CORP.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENTS
OF OPERATIONS
For the
Quarters Ended January 31, 2010 and 2009,
and the
period from October 21, 2002 (Inception) to January 31, 2010
(Unaudited)
|
|
|
Three
Months
Ended
January
31,
2010
|
|
|
Three
Months
Ended
January
31,
2009
|
|
|
Six
Months
Ended
January
31,
2010
|
|
|
Six
Months
Ended
January
31,
2009
|
|
|
Inception
(October
21,
2002)
to January
31,
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
10,520
|
|
|
|
-
|
|
|
|
14,420
|
|
|
|
-
|
|
|
|
14,420
|
|
|
Cost
Of Revenues
|
|
|
6,162
|
|
|
|
-
|
|
|
|
15,219
|
|
|
|
-
|
|
|
|
29,876
|
|
|
Net
Revenue/Gross Loss
|
|
|
4,358
|
|
|
|
-
|
|
|
|
(799
|
)
|
|
|
|
|
|
|
(15,456
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
& Administrative
|
|
$
|
698,907
|
|
|
$
|
179,816
|
|
|
$
|
1,852,263
|
|
|
$
|
338,562
|
|
|
$
|
6,530,440
|
|
|
Depreciation
and amortization
|
|
|
30,468
|
|
|
|
26,431
|
|
|
|
59,248
|
|
|
|
47,216
|
|
|
|
187,584
|
|
|
Professional
Fees
|
|
|
63,066
|
|
|
|
552,079
|
|
|
|
198,135
|
|
|
|
955,575
|
|
|
|
4,410,472
|
|
|
Payroll
Expenses
|
|
|
1,429,763
|
|
|
|
482,694
|
|
|
|
1,703,057
|
|
|
|
794,164
|
|
|
|
7,583,205
|
|
|
Loss
on Disposal of Assets
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,855
|
|
|
Loss
on Impairment of Assets
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
50,591
|
|
|
Research
and Development
|
|
|
14,580
|
|
|
|
11,110
|
|
|
|
35,674
|
|
|
|
11,110
|
|
|
|
1,226,757
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Operating Expenses
|
|
|
2,236,784
|
|
|
|
1,252,130
|
|
|
|
3,848,377,
|
|
|
|
2,146,627
|
|
|
|
19,998,904
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from Operations
|
|
|
(2,232,426
|
)
|
|
|
(1,252,130
|
)
|
|
|
(3,849,176
|
)
|
|
|
(2,146,627
|
)
|
|
|
(20,014,360
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain
on Derivatives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
100,000
|
|
|
Gain on
sale of patent and impairment of patent
|
|
|
(56,250
|
)
|
|
|
|
|
|
|
38,750
|
|
|
|
|
|
|
|
38,750
|
|
|
Gain
on Extinguishment of AP
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
84,065
|
|
|
Gain
on Extinguishment of Note
|
|
|
3,000
|
|
|
|
|
|
|
|
3,000
|
|
|
|
-
|
|
|
|
10,137
|
|
|
Discontinued
Operations-Net Loss on Oil and Gas Wells
|
|
|
(22,009
|
)
|
|
|
|
|
|
|
(22,009
|
)
|
|
|
|
|
|
|
(22,009
|
)
|
|
Discontinued
Operations-Gain on Disposition
|
|
|
22,009
|
|
|
|
|
|
|
|
22,009
|
|
|
|
|
|
|
|
22,009
|
|
|
Interest
Income
|
|
|
-
|
|
|
|
129
|
|
|
|
-
|
|
|
|
1,452
|
|
|
|
3,578
|
|
|
Interest
Expense
|
|
|
(16,301
|
|
|
|
(412
|
)
|
|
|
(17,165
|
)
|
|
|
(1,037
|
)
|
|
|
(234,783
|
)
|
|
Total
Other Income (Expenses)
|
|
|
(69,578
|
)
|
|
|
(283
|
|
|
|
24,585
|
|
|
|
415
|
|
|
|
1,747
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
Before Income Taxes
|
|
|
(2,302,004
|
)
|
|
|
(1,252,413
|
)
|
|
|
(3,824,591
|
)
|
|
|
(2,146,212
|
)
|
|
|
(20,012,613
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for Income Taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
$
|
(2,302,004
|
)
|
|
$
|
(1,252,413
|
)
|
|
$
|
(3,824,591
|
|
|
$
|
(2,146,212
|
)
|
|
$
|
(20,012,613
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss per common share-basic and diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding-basic and diluted
|
|
|
471,229,176
|
|
|
|
402,447,715
|
|
|
|
421,239,740
|
|
|
|
400,646,350
|
|
|
|
|
|
See
accompanying notes to the financial statements
EXOBOX
TECHNOLOGIES CORP.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENTS
OF CASH FLOWS
For the
six months Ended January 31, 2010 and 2009,
and
period from October 21, 2002 (Inception) to January 31, 2010
(Unaudited)
|
|
|
Six
Months Ended January 31,
|
|
Six
Months Ended January 31,
|
|
October 21,
2002 (Inception) to January 31,
|
|
|
|
2010
|
|
2009
|
|
2010
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
Net
Loss
|
|
$
|
(3,824,591)
|
|
$
|
(2,146,212)
|
|
$
|
(20,012,613)
|
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for services
|
|
|
1,688,368
|
|
|
549,307
|
|
|
5,390,622
|
|
Warrant
issued for consulting services
|
|
|
-
|
|
|
-
|
|
|
446,660
|
|
Loss
on disposal of assets
|
|
|
-
|
|
|
-
|
|
|
9,856
|
|
Loss
on impairment of assets
|
|
|
-
|
|
|
-
|
|
|
50,591
|
|
Depreciation
and amortization
|
|
|
59,248
|
|
|
47,216
|
|
|
187,585
|
|
Share-based
compensation
|
|
|
6,112
|
|
|
13,192
|
|
|
2,902,889
|
|
(Gain)
Loss on derivative
|
|
|
-
|
|
|
-
|
|
|
5,000
|
|
Gain
on debt conversion
|
|
|
(3,000)
|
|
|
-
|
|
|
(10,137)
|
|
(Gain)Loss
on accounts payable
|
|
|
-
|
|
|
-
|
|
|
(84,065)
|
|
(Gain)Loss
on sale of patent
|
|
|
(38,750)
|
|
|
-
|
|
|
(38,750)
|
|
Contributed
capital
|
|
|
12,911
|
|
|
-
|
|
|
75,433
|
|
Amortization
of debt discount
|
|
|
-
|
|
|
-
|
|
|
80,000
|
|
Changes
in operating assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
Prepaid
and other current assets
|
|
|
(2,633)
|
|
|
53,420
|
|
|
(11,194)
|
|
Accounts
payable
|
|
|
84,372
|
|
|
309,945
|
|
|
636,916
|
|
Accounts
receivable
|
|
|
(13,144)
|
|
|
-
|
|
|
(13,144)
|
|
Accrued
expenses
|
|
|
1,636,959
|
|
|
72,785
|
|
|
3,705,090
|
|
Deferred
income
|
|
|
(1,400)
|
|
|
-
|
|
|
-
|
|
Accounts
payables to stockholders
|
|
|
11
|
|
|
-
|
|
|
2,605
|
|
NET
CASH USED IN OPERATING ACTIVITIES
|
|
|
(395,537)
|
|
|
(1,100,347
|
)
|
|
(6,676,656
)
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOW FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from sale of patents
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Proceeds
from sale of property
|
|
|
-
|
|
|
|
|
|
-
|
|
Investment
in patents
|
|
|
95,000
|
|
|
-
|
|
|
27,767
|
|
Investment
in intangible assets
|
|
|
(6,283)
|
|
|
-
|
|
|
(22,283)
|
|
Investment
in property and equipment
|
|
|
(8,217)
|
|
|
(206,159)
|
|
|
(466,715)
|
|
NET
CASH USED IN INVESTING ACTIVITIES
|
|
|
80,500
|
|
|
(206,159)
|
|
|
(461,231)
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from sale of stock
|
|
|
142,000
|
|
|
-
|
|
|
5,425,200
|
|
Advances
from stockholders
|
|
|
115,355
|
|
|
543,000
|
|
|
1,543,936
|
|
Proceeds
from warrants exercised
|
|
|
9,000
|
|
|
-
|
|
|
546,502
|
|
Repayment
of advances from stockholders
|
|
|
-
|
|
|
-
|
|
|
(501,430)
|
|
Convertible
Promissory Notes proceeds
|
|
|
30,000
|
|
|
-
|
|
|
210,000
|
|
Proceeds
from third party debt, net
|
|
|
20,000
|
|
|
-
|
|
|
(85,000)
|
|
NET
CASH PROVIDED BY FINANCING ACTIVITIES
|
|
|
316,355
|
|
|
533,000
|
|
|
7,139,208
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
CHANGE IN CASH AND CASH EQUIVALENTS
|
|
|
1,318
|
|
|
(763,506)
|
|
|
1,321
|
|
Cash
and cash equivalents at beginning of period
|
|
|
3
|
|
|
767,338
|
|
|
-
|
|
Cash
and cash equivalents at end of period
|
|
$
|
1,321
|
|
$
|
3,832
|
|
$
|
1,321
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURES
|
|
|
|
|
|
|
|
|
|
|
Cash
paid for interest
|
|
$
|
1,695
|
|
$
|
1,037
|
|
|
|
|
Cash
paid for income taxes
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CASH
TRANSACTIONS
|
|
|
|
|
|
|
|
|
|
|
Conversion
of Preferred Shares to Common Shares
|
|
|
-
|
|
|
2,078
|
|
|
|
|
Shares
Returned and Cancelled
|
|
$
|
128,069
|
|
$
|
-
|
|
|
|
|
Acquisition
of oil & gas wells – debt and stock issued
|
|
$
|
5,867,361
|
|
|
|
|
|
|
|
Disposition
of oil & gas wells – debt and stock canceled
|
|
$
|
5,867,361
|
|
|
|
|
|
|
|
Debt
Forgiveness
|
|
$
|
202,539
|
|
|
|
|
|
|
|
Stock
issued for patent buyback
|
|
$
|
56,250
|
|
|
|
|
|
|
|
Conversion
of Note Payable to stock
|
|
$
|
27,000
|
|
|
|
|
|
|
See
accompanying notes to the financial statement
s
EXOBOX
TECHNOLOGIES CORP.
(A
DEVELOPMENT STAGE COMPANY)
NOTES TO
THE FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 –
NATURE OF BUSINESS AND SUMMARY OF ACCOUNTING POLICIES
The
accompanying unaudited interim financial statements of Exobox Technologies
Corp., a Nevada corporation, have been prepared in accordance with accounting
principles generally accepted in the United States of America and the rules of
the Securities and Exchange Commission and should be read in conjunction with
the audited financial statements and notes thereto contained in our latest
Annual Report filed with the SEC on Form 10-K. In the opinion of management, all
adjustments, consisting of normal recurring adjustments, necessary for a fair
presentation of financial position and the results of operations for the interim
periods presented have been reflected herein. The results of operations for
interim periods are not necessarily indicative of the results to be expected for
the full year.
Notes to
the financial statements which would substantially duplicate the disclosure
contained in the audited financial statements for the most recent fiscal year,
July 31, 2009, as reported in Form 10-K, have been omitted.
Certain
prior quarter amounts have been reclassified to conform with the current quarter
presentation.
Exobox is
an enterprise and home user network and data security development company formed
to capitalize upon the growing need for a modern, reliable, efficient, effective
and proactive network and data security solutions. Exobox is the
parent company to its wholly-owned subsidiary, Exbx Energy, Inc., a Texas
corporation (“Exbx Energy”) since its formation in October, 2009.
NOTE 2 -
GOING CONCERN
From Inception to January 31, 2010,
Exobox has accumulated losses of $20,012,613. The ability of Exobox to emerge
from the development stage with respect to any planned principal business
activity is dependent upon its success in raising additional equity or debt
financing and/or attaining profitable operations. Management has plans to seek
additional capital. There is no guarantee that Exobox will be able to complete
any of the above objectives. These factors raise substantial doubt regarding
Exobox's ability to continue as a going concern. Management has had difficulties
in raising capital because of legacy issued which include past debt and current
equity structure.
NOTE 3 –
PATENTS
Patents
are mainly comprised of legal services paid to a shareholder and patent
application fees. Exobox began amortizing these costs since the
patents have been granted. Patents were impaired as of July 31, 2009 for
$50,591.
On
September 15, 2009, Exobox sold its SOS Patents to Scott Copeland for
$95,000. On November 1, 2009, Copeland sold these SOS patents back to
Exobox for 1,250,000 common shares valued at $56,250 and also a royalty of 3% of
any net proceeds derived from the SOS technology. Exobox recorded
gain on sale of patent of $38,750.
NOTE 4 –
DEBT
In June
2009, Exobox issued an unsecured promissory note to RSA Corp by converting the
$35,000 previously outstanding accounts payable balance. The note bears
interest of 0% per year and matured December 1, 2009. The loans
totaled to $31,400 which includes $1,400 in interest as of January 31,
2010. On November 3, 2009, the Company received a demand for
payment. To date, no suit has been filed.
In
September 2009, Exobox borrowed $30,000 under convertible notes payable to two
individuals. These notes were paid on January 31, 2010 through the
issuance of 1,000,000 common shares and warrants to purchase 990,000 common
shares at $0.03 per share for a term of three years. Exobox evaluated
the terms of the notes in accordance w
ith FASC 815 (formerly SFAS No. 133, “
Accounting for Derivative
Instruments and Hedging Activities
”, and EITF Issue 00-19, “
Accounting for Derivative Financial
Instruments to and Potentially Settled in a Company’s Own
Stock”)
. Exobox determined that the convertible notes are not
derivative instruments. Exobox evaluated the conversion feature under
FASC 470 (formerly EITF 98-5 and EITF 00-27) and determined that a beneficial
conversion feature should be recognized and gave rise to a debt discount of
$28,410. There was a gain on the retirement of the note of $3,000 and
the debt discount was eliminated.
In
November, 2009, Mr. Scott Copeland agreed to forgive a $200,000 note and its
related accrued interest which we recorded as $202,540 to additional paid in
capital since Mr. Scott Copeland is a related party.
In
December 2009 and January 2010, four individuals, including two members of
management, loaned the company a total of $90,000 in exchange for 10% notes with
a nine month maturity. The notes are secured by the Company’s
technology. Upon payment of the notes, the security interest of the
debtor in the technology will be released back to the Company.
On
December 8, 2009, the company received a demand to repay Reginald Goodman $227,
301 ($210,400 principal and $16,970 in accrued interest). To date, no
suit has been filed.
On
December 8, 2009, Mr. Kampa loaned the company $3,000 through a non-interest
bearing promissory note which was due on January 31, 2010. As of
March 25, 2010, the note has not been paid. The company intends to
negotiate an extension on the note.
On
December 9, 2009, an entity 25% owned by Mr. Wirtz and 50% owned by former
management or board members loaned the company $20,000 through a 12% promissory
note due on May 31, 2010.
NOTE 5 –
STOCKHOLDERS’ EQUITY
Stock
Issued for Services
During
the six months ended January 31, 2010, we issued 47,189,752 common shares to
consultants and employees pursuant to consulting and employment agreements with
a value of $1,688,368.
Stock
Issued for Cash
During
the six months ended January 31, 2010, we issued 10,450,000 common shares for
$142,000 in cash.
Stock
Issued for Warrants Exercised
During
the six months ended January 31, 2010, we issued 150,000 common shares in
relation to warrants exercised for $9,000.
Stock
Issued for Debt
During
the six months ended January 31, 2010, we issued 1,000,000 common shares in
relation to convertible note. (see Note 4 above)
Stock
Issued for Patents
During the six months
ended January 31, 2010, we issued 1,250,000 common shares valued at $56,250.
(see Note 3 above)
Stock
Option, Stock Warrant and Stock Award Plan
OPTIONS
In the
six months ended January 31, 2010, Exobox granted an employee an option to
purchase 25,000 shares with exercise price of $0.25 a share. The shares were
vested immediately. During the six months ended January 31, 2010,
12,650,000 shares expired due to 90 days passing of the termination of
employment of several option holders as call for in the 2007 Stock Option
Plan.
The
following assumptions were applied to value the options:
|
Expected
volatility
|
|
|
174%-
243%
|
|
|
Term
(years)
|
|
|
1.5
– 3
|
|
|
Risk-free
interest rate
|
|
|
1.16%
- 3.01%
|
|
|
Expected
dividend yield
|
|
|
0%
|
|
Black-Scholes
was applied to value the options and Exobox recognized $6,112 of stock based
compensation expense for the six months ended January 31, 2010. The
remaining 75,000 unvested shares have an unrecognized value of
$6,065. The options intrinsic value is $0 as of January 31,
2010.
The
status of the options as of January 31, 2010, is as follows:
|
|
|
Options
|
|
|
Weighted
Average Exercise Price
|
|
|
Outstanding
July 31, 2009
|
|
|
20,225,000
|
|
|
|
0.28
|
|
|
Granted
|
|
|
25,000
|
|
|
|
-
|
|
|
Expired
|
|
|
12,650,000
|
|
|
|
0.25
|
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
Outstanding,
January 31, 2010
|
|
|
7,600,000
|
|
|
$
|
0.35
|
|
Following
is the details of options outstanding as of January 31, 2010:
|
Number
of Common Stock Equivalents
|
|
Expiration
Date
|
|
Remaining
Contracted Life (Years)
|
|
|
Exercise
Price
|
|
|
|
25,000
|
|
4/1/2012
|
|
|
2.17
|
|
|
|
0.25
|
|
|
|
25,000
|
|
4/1/2013
|
|
|
3.17
|
|
|
|
0.25
|
|
|
|
25,000
|
|
4/1/2014
|
|
|
4.17
|
|
|
|
0.25
|
|
|
|
25,000
|
|
4/1/2015
|
|
|
5.17
|
|
|
|
0.25
|
|
|
|
2,500,000
|
|
12/1/2013
|
|
|
3.83
|
|
|
|
0.15
|
|
|
|
1,500,000
|
|
12/1/2013
|
|
|
3.83
|
|
|
|
0.25
|
|
|
|
1,500,000
|
|
12/1/2013
|
|
|
3.83
|
|
|
|
0.40
|
|
|
|
1,000,000
|
|
12/1/2013
|
|
|
3.83
|
|
|
|
0.50
|
|
|
|
1,000,000
|
|
12/1/2013
|
|
|
3.83
|
|
|
|
0.75
|
|
|
|
7,600,000
|
|
|
|
|
3.82
|
|
|
|
0.35
|
|
The
following is a summary of non-vested shares:
|
|
|
OPTIONS
|
|
|
Non-vested
shares at July 31, 2009
|
|
|
278,385
|
|
|
Granted
|
|
|
0
|
|
|
Vested
|
|
|
-
|
|
|
Expired
|
|
|
(203,385
|
)
|
|
Exercised
|
|
|
-
|
|
|
Non-vested
shares at January 31, 2010
|
|
|
75,000
|
|
WARRANTS
At
January 31, 2010, we had outstanding and exercisable warrants to purchase an
aggregate of 15,844,284 shares of common stock with an intrinsic value of
$0. The weighted average remaining life is 1.73 years and the
weighted average price per share is $0.42 per share.
The
status of the warrants as of January 31, 2010, is as follows:
|
Warrants
Outstanding and Exercisable
|
|
Warrants
|
|
|
Weighted
Average Exercise Price
|
|
|
Outstanding,
July 31, 2009
|
|
|
15,994,284
|
|
|
$
|
0.47
|
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
|
Expired
|
|
|
-
|
|
|
|
-
|
|
|
Exercised
|
|
|
(150,000)
|
|
|
|
(0.06)
|
|
|
Outstanding,
January 31, 2010
|
|
|
15,844,284
|
|
|
$
|
0.41
|
|
Following
is the details of warrants outstanding as of January 31, 2010:
|
Number
of Common Stock Equivalents
|
|
Expiration
Date
|
|
Remaining
Contracted Life (Years)
|
|
|
Exercise
Price
|
|
|
|
2,902,500
|
|
10/31/2010
|
|
|
0.75
|
|
|
$
|
0.20
|
|
|
|
50,000
|
|
7/31/2011
|
|
|
1.50
|
|
|
$
|
0.25
|
|
|
|
5,400,000
|
|
12/31/2011
|
|
|
1.67
|
|
|
$
|
1.00
|
|
|
|
1,600,000
|
|
4/30/2012
|
|
|
2.00
|
|
|
$
|
0.03
|
|
|
|
825,000
|
|
6/1/2012
|
|
|
2.08
|
|
|
$
|
0.03
|
|
|
|
2,075,000
|
|
6/4/2012
|
|
|
2.08
|
|
|
$
|
0.03
|
|
|
|
83,333
|
|
6/12/2012
|
|
|
2.08
|
|
|
$
|
0.03
|
|
|
|
1,408,451
|
|
6/29/2012
|
|
|
2.17
|
|
|
$
|
0.03
|
|
|
|
1,500,000
|
|
9/24/2012
|
|
|
2.42
|
|
|
$
|
0.30
|
|
NOTE 6 –
COMMITMENTS AND CONTINGENCIES
On
January 22, 2010, an attorney representing former employee Gary Leibowitz sent
the Company a demand letter asking the company pay him $640,000 in termination
damages as called for in his employment agreement, $56,532.47 in compensation
not paid and $1,079.37 in reimbursable expenses. In addition, a Notice of
Default and demand letter was received demanding payment of a total of
$16,551.13 ($15,987.63 promissory note and $563.50 of accrued interest) be made
or Mr. Leibowitz would file suit. The company intends to negotiate a
settlement with Mr. Leibowitz on these demands. As of January 31, 2010, the past
due loan and accrued interest were included part of the advances from
stockholder.
On
November 25, 2009, former employee Theodore Ernst filed suit in the 434
th
District Court of Fort Bend County, Texas claiming unspecified
damages. On January 11, 2010, Exobox through its attorneys filed a
motion to transfer venue, an application to compel arbitration and answered the
Plaintiff’s petition. The company intends to vigorously pursue
defense of this action.
The
company has yet accrued for any loss associated with these lawsuits due to too
early to access the outcome.
NOTE 7 –
OIL AND GAS PROPERTIES
On
October 22, 2009, Exobox Technologies Corp. purchased 17 oil & gas wells
located in Ohio from a private company for $5.9 million, which
includes:
|
|
·
|
$3.0
million in total existing debt.
|
|
|
·
|
$1.5
million 5-year, 7.5% convertible
note.
|
|
|
·
|
1,163,000
shares of Series E Convertible Preferred Stock, valued at
$974,286.
|
|
|
·
|
3,000,000
common shares valued at $120,000.
|
|
|
·
|
$273,075
assumed asset retirement obligation
|
On
January 13, 2010, Exobox and the seller mutually agreed to rescind the
transaction, with cancelation of all obligations and securities
issued.
A summary
of the well income and expenses during the ownership period is as
follows:
|
10/22/2009
to 1/13/2010
|
|
|
|
|
|
|
|
|
|
Revenue
– sales of oil & gas
|
|
$
|
81,031
|
|
|
EXPENSES
|
|
|
|
|
|
Depletion
Expense
|
|
|
21,282
|
|
|
Expenses
of Wells
|
|
|
53,633
|
|
|
Interest
on $1.5m Note
|
|
|
28,125
|
|
|
Total
Expenses
|
|
|
103,040
|
|
|
|
|
|
|
|
|
Net
Income on Wells
|
|
$
|
(22,009
|
)
|
NOTE 8-
SUBSEQUENT
EVENTS
On March
19, 2010, two of the four individuals who had previously loaned the company a
total of $90,000 in exchange for a 10% promissory note with a nine month
maturity, loaned the company an additional $25,000 and $4,000 in exchange for a
10% promissory notes with a nine month maturity. These notes are
secured by the Company’s technology. Upon payment of the notes, the
security interest of the debtor in the technology is released back to the
Company. The notes now total $119,000.
ITEM
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This
report on Form 10-Q contains forward-looking statements that relate to the
Company's expectations regarding future events or future financial performance.
Any statements contained in this report that are not statements of historical
fact may be deemed forward-looking statements. In some cases, forward-looking
statements can be identified by terminology such as "may," "will," "should,"
"expect," "plan," "anticipate," "intend", "believe," "estimate," "predict,"
"potential" or "continue," or the negative of such terms or other comparable
terminology. These statements are only predictions. Actual events or results may
differ materially.
Although
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. Moreover, neither we, nor any other entity, assume
responsibility for the accuracy and completeness of the forward-looking
statements. We are under no obligation to update any of the forward-looking
statements after the filing of this Form 10-Q to conform such statements to
actual results or to changes in our expectations.
The
following discussion should be read in conjunction with our condensed
consolidated financial statements, related notes and the other financial
information appearing elsewhere in this Form 10-Q. Readers are also urged to
carefully review and consider the various disclosures made by us, which attempt
to advise interested parties of the factors which affect our business, including
without limitation, the disclosures made under Item 1A. Risk
Factors. The risk factors below supplement and should be read in
conjunction with “ Risk Factors” under Item I in our Annual Report on Form 10-K
for the fiscal year ended July 31, 2009.
Overview
Exobox
Technologies Corp. develops and delivers information risk management and
security software solutions that help organizations protect and recover their
most valuable information assets. We are committed to our vision of creating a
more secure environment for the information-centric community through the
development of new technologies and security services. This
information-centric community is primarily comprised of companies that must
abide by Governance, Risk and Compliance (GRC) policies - Fortune 500 public
companies; the secondary target audience are those companies with valuable
at-risk information, which includes financial services providers, healthcare
providers and high-technology providers.
Information
follows a typical path, or lifecycle: creation, distribution,
storage, copying, transformation, and disposal. Throughout this data
lifecycle, an organization’s information or intellectual property is at risk to
exposure of being in the wrong hands or in the wrong place. Nearly
every organization has been exploited through data leaks. Intellectual property,
financial information, confidential client lists, customer, patient and employee
data . . . it is all at risk of exposure from both internal and external
threats. The biggest contributors to information security risks are the open
exchange of information through the Internet, especially via web 2.0
applications such as social-networking sites, video-sharing sites and blogs, the
rapid growth of a mobile workforce, the termination of employment, the lack of
understanding that information is confidential – just to name a
few. In fact, the market is so concerned about these issues that
security software revenue is expected to exceed $13.1 billion by 2012 or a
compound average growth rate (CAGR) of 10.5% by 2012 according to
Gartner.
Recently,
we have achieved several key milestones:
|
|
·
|
We
released ExoDetect™ at the end of June 2009. This first product
is an affordable, software-as-a-service (SaaS) data leak detection (DLD)
software solution that discovers and rates the risk of unauthorized “data
in the wild.” ExoDetect™ reports on the knowledge needed to
tighten an organization’s data leak prevention (DLP) controls, while
providing the first step in mitigating the financial and legal risks
associated with stolen or misappropriated confidential
information. ExoDetect ™ performs scans for compromised data on
any exposed area in the Internet Cloud; classifies the discovered
information according to confidence and severity ratings; and captures the
forensic evidence needed to address the breach, including litigation or
prosecution. We have an ongoing process of updating and refining the
ExoDetect™ product and have released the latest version 1.8 during the
quarter.
|
|
|
·
|
The
Company is focused on marketing to its clients its current products,
ExoDetect™ and ExoWatch™ and developing its other proprietary
technology.
|
The
purchase of the oil & gas assets occurred under the prior CEO of the
company. Exobox’s current management believes that these assets
had limited value and were not a good fit for the company as current
management’s priority is software development. Therefore, on January
13, 2010, Exobox and SPQR entered into a rescission agreement to unwind the
October 22, 2009 agreement. In addition, Exobox and SPQR have agreed that
both have no further rights, entitlements, liabilities or obligations with
respect to the purchase and sale agreement and each party expressly releases the
other with respect to any claims.
Exobox
was founded in 2002 and, in conjunction with becoming a publicly-traded company
in September 2005, merged with a successor Nevada corporation which was
originally incorporated in 1999.
Results
of Operations
Three
Months Ended January 31, 2010 Compared to Three Months Ended January
31, 2009
Net Sales
. Sales during the
quarter ended January 31, 2010, were $10,520 compared to $0 for the quarter
ended January 31, 2009. These are some of the first sales for
the company as the company brought its first product, ExoDetect™ to market
earlier this year.
Research
and Software Development
Expenses
. Research and software development expenses consist primarily of
compensation and related costs for personnel responsible for the research and
development of new products and services, and in the future will include those
costs and expenses related to significant improvements to existing products and
services. We have expensed research and development costs as they have been
incurred. We had research and development expenses of $14,580 for the three
months ended January 31, 2010 as compared to $0 incurred in the same period
of 2009. The increased research and development expenses in 2010 relate to the
costs of developing and maintaining ExoDetect™.
Sales and Marketing Expenses
.
Sales and marketing expenses consist primarily of compensation and related costs
for personnel engaged in customer service, sales, and sales support functions,
as well as advertising and promotional expenditures. We had sales and marketing
expenses of $0 for the three months ended January 31, 2010 as compared to $
0 incurred in the same period of 2009. We expect to incur costs in
the third quarter of 2010 as we are currently marketing the ExoDetect™
product.
General
and Administrative Expenses
(“G&A”)
. General
and administrative expenses consist primarily of compensation and related costs
for personnel and facilities related to our finance, human resources,
facilities, information technology and legal organizations, and fees for
professional services. Professional services are principally comprised of
outside legal, audit, information technology consulting, general business
consulting and outsourcing services. G&A expenses for the three months ended
January 31, 2010 as compared to 2009 increased from $179,816 to $698,907. The
increase was primarily due to increased services contracted for outside the
company.
Payroll epxense
. Payroll expenses consist primarily of compensation and
related costs for our current officiers and ex-emploees. Payroll expense for the
three months ended January 31, 2010 as compared to 2009 increased from $482,694
to $1,429,763. The increase was primarily due to termination of several key
employees and the termination payments due them under their employment
agreements.
Net Loss
. Net loss for
the three months ended January 31, 2010 and 2009 was $2,302,004 and $1,252,413,
respectively. The increased loss
was
primarily due to termination of several key employees and the termination
payments due them under their employment agreements and additional consulting
fees.
Six
Months Ended January 31, 2010 Compared to Six Months Ended January
31, 2009
Net Sales
. Sales during the
six months ended January 31, 2010, were $14,420 compared to $0 for the quarter
ended January 31, 2009. These are some of the first sales for
the company as the company brought its first product, ExoDetect™ to market
earlier this year.
Research
and Software Development
Expenses
. Research and development expenses consist primarily of
compensation and related costs for personnel responsible for the research and
development of new products and services, and in the future will include those
costs and expenses related to significant improvements to existing products and
services. We have expensed research and development costs as they have been
incurred. We had research and development expenses of $35,674 for the six months
ended January 31, 2010 as compared to $11,110 incurred in the same period
of 2009. The increased research and development expenses in 2009 relate to the
costs of developing and maintaining ExoDetect™.
Sales and Marketing Expenses
.
Sales and marketing expenses consist primarily of compensation and related costs
for personnel engaged in customer service, sales, and sales support functions,
as well as advertising and promotional expenditures. In preparation for the
upcoming release of our first product, ExoDetect™, we had sales and marketing
expenses of $0 for the six months ended January 31, 2010 as compared to $ 0
incurred in the same period of 2009. We expect to incur costs in the third
quarter of 2010 as we are currently marketing the ExoDetect™
product.
General
and Administrative Expenses
(“G&A”)
. General
and administrative expenses consist primarily of compensation and related costs
for personnel and facilities related to our finance, human resources,
facilities, information technology and legal organizations, and fees for
professional services. Professional services are principally comprised of
outside legal, audit, information technology consulting, general business
consulting and outsourcing services. G&A expenses for the six months ended
January 31, 2010 as compared to 2009 increased to $1,852,263 from $338,562. The
decrease was primarily due to increased services contracted outside the
company.
Payroll expense
. Payroll expenses consist primarily of compensation and
related costs for our current officiers and ex-emploees. Payroll expense for the
six months ended January 31, 2010 as compared to 2009 increased from $794,164 to
$1,703,057. The increase was primarily due to termination of several key
employees and the termination payments due them under their employment
agreements.
Net Loss
. Net loss for
the six months ended January 31, 2010 and 2009 was $3,824,591 and $2,146,647,
respectively. The increased loss
was
primarily due to termination of several key employees and the termination
payments due them under their employment agreements.
Liquidity
and Capital Resources
As of
January 31, 2010, we had a working capital deficit of $3,283,759. Our
current liquidity position does not allow us to meet our nominal working capital
need which has required us to leverage off our vendors and seek loans from
certain shareholders. Historically, our working capital resulted from best
efforts equity financing and shareholder loans. During the six months ended
January 31, 2010, we borrowed $110,000 from certain shareholders on a short
term basis. To date, we have repaid $531,430 of the Company's
total indebtedness, although it should be expected that we will borrow
additional amounts in the future. It is likely we will have to
issue additional shares of our common stock in the future in an attempt to
conserve cash. We will need to obtain working capital of at least $3,000,000 to
fund our minimum operating expenses for the twelve months. In order
to fund our full product development, including marketing and testing, we will
need to raise at least an additional $3,000,000 to $6,000,000. We
have no external credit or debt facilities in place to provide financing. We
will be reliant upon best efforts debt or equity financing to provide necessary
working capital. Accordingly, there can be no assurance we will be
able obtain necessary funding to meet working capital requirements, the failure
of which will result in our curtailing operations and/or selling assets.
Management has had difficulties in raising capital because of legacy issues
which include past debt and current equity structure.
Off-Balance
Sheet Arrangements
None.
Contractual
Commitments
None.
|
ITEM 3.
|
QUALITATIVE AND QUANTITATIVE
DISCLOSURES ABOUT MARKET RISK
|
Not
applicable.
ITEM
4. CONTROLS AND PROCEDURES
We have
carried out an evaluation, under the supervision and with the participation of
our management, including our Chief Executive Officer (the "CEO") and our Chief
Financial Officer (the "CFO"), of the effectiveness of the design and operation
of our disclosure controls and procedures (as defined in Rule 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Act")) as
of the end of the fiscal quarter covered by this report. Based upon that
evaluation, our CEO and CFO concluded that our disclosure controls and
procedures are not effective in providing reasonable assurance that (a) the
information required to be disclosed by us in the reports that we file or submit
under the Act is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and forms,
and (b) such information is accumulated and communicated to our management,
including our CEO and CFO, as appropriate to allow timely decisions regarding
required disclosure. Specifically, our independent auditor identified weaknesses
in our disclosure controls related to valuing and accounting for share-based
payments, derivative financial instruments and accrued expenses. We plan to
remediate this deficiency in disclosure controls by increasing the supervision
and training of accounting employees.
There has
been no change in our internal control over financial reporting during the
quarter ended January 31, 2010, covered by this report that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting
PART II – OTHER INFORMATION
|
ITEM 1.
|
LEGAL
PROCEEDINGS
|
On
November 25, 2009, former employee Theodore Ernst filed suit in the 434
th
District Court of Fort Bend County, Texas claiming unspecified
damages. On January 11, 2010, Exobox through its attorneys filed a
motion to transfer venue, an application to compel arbitration and answered the
Plaintiff’s petition. The company intends to vigorously pursue
defense of this action.
On
January 22, 2010, an attorney representing former employee Gary Leibowitz sent
the Company a demand letter asking the company pay him $640,000 in termination
damages as called for in his employment agreement, $56,532.47 in compensation
not paid and $1,079.37 in reimbursable expenses. In addition, a Notice of
Default and demand letter was received demanding payment of a total of
$16,551.13 ($15,987.63 promissory note and $563.50 of accrued interest) be made
or Mr. Leibowitz would file suit. The company intends to negotiate a
settlement with Mr. Leibowitz on these demands.
We know
of no other material, active or pending legal proceedings against our company,
nor are we involved as a plaintiff in any material proceeding or pending
litigation. There are no proceedings in which any of our directors, officers or
affiliates, or any registered or beneficial shareholder, is an adverse party or
has a material interest adverse to our interest.
We will
vigorously defend ourselves in these lawsuits. We believe that any of
these matters could, individually or in the aggregate, have a material adverse
effect on our business or financial condition. We cannot give
assurance, however, that one or more of these lawsuits will not have a material
adverse effect on our results of operations for the period in which they are
resolved.
Certain
Factors that May Affect Future Performance
The risk
factors below supplement and should be read in conjunction with “ Risk Factors”
under Item I in our Annual Report on Form 10-K for the fiscal year ended July
31, 2009.
We
have a limited operating history with significant losses and expect losses to
continue for the foreseeable future.
We have
incurred annual operating losses since our inception. As a result, at January
31, 2010, we had an accumulated deficit of $20,012,613 We had gross revenues of
$14,420 for the six months ended January 31, 2010, and a loss from operations of
$3,824,591. As we pursue our business plan, we expect our operating expenses to
increase significantly, especially in the areas of sales and marketing. As a
result, we expect continued losses in fiscal 2010 and thereafter.
We may not be able to meet our
current and future liabilities and remain in operation until we receive
additional capital
.
As of
January 31, 2010, we have current assets of $25,659 and current liabilities of
$3,309,418. Our current liquidity position only allows us to meet
nominal working capital needs. We will need $3,000,000 to meet our
working capital needs through fiscal 2010. Any failure to obtain such
financing could force us to abandon or curtail our operations.
Our
auditor has substantial doubts as to our ability to continue as a going
concern.
Our
auditor's quarterly report as of January 31, 2010 expresses an opinion that
substantial doubt exists as to whether we can continue as an ongoing
business. Because we do not have sufficient capital, we may be
required to suspend or cease the implementation of our business plans within 12
months. Because we have been issued an opinion by its auditors that substantial
doubt exists as to whether we can continue as a going concern, it may be more
difficult for us to attract investors. Our future is dependent upon
our ability to obtain financing and upon future profitable operations from the
sale of our products.
ITEM 2. RECENT SALES OF
UNREGISTERED SECURITIES
Set forth
below is certain information concerning issuances of common stock that were not
registered under the Securities Act of 1933 (“Securities Act”) that occurred in
the second quarter of fiscal 2010.
On
November 15, 2009, December 15, 2009 and January 15, 2010 we issued a total of
1,385,251 shares of common stock to Mr. Dillon (1,154,376 shares) and Mr.
Wirtz (230,875, shares) in accordance with the terms of their separation
agreements. As part of his employment agreement Mr. Wirtz agreed to
forego the December 2009 through April 2010 payments called for in his May 6,
2009 Termination Agreement as long as he is an employee of the
Company.
In
November 2009, 1,000,000 common shares were issued to Mr. Kampa as part of his
employment agreement. The shares were valued at $45,000 on the date
of issuance.
In
November 2009, December 2009 and January 2010, the Company granted 15,250,000
shares of common stock to consultants for services performed . The
shares were valued at $533,000 on the date of issuance.
In
November 2009, 1,500,000 common shares were sold to an entity 25% owned by
Mr. Wirtz and 50% owned by former management or board members for $30,000 in
cash proceeds to the company.
In
November , 2009, 1,250,000 common shares were issued to Mr. Copeland to buy
back patents that the Company had previously sold. The shares were
valued at $56,250 on the date of issuance.
In
January 2010, 1,000,000 common shares were issued to two unaffiliated third
parties to pay off $30,000 in convertible debt.
The
issuances referenced above were consummated pursuant to Section 4(2) of the
Securities Act and the rules and regulations promulgated thereunder on the basis
that such transactions did not involve a public offering and the offerees were
sophisticated, accredited investors with access to the kind of information that
registration would provide. The recipients of these securities represented their
intention to acquire the securities for investment only and not with a view to
or for sale in connection with any distribution thereof and appropriate legends
were affixed to the share certificates and other instruments issued in such
transactions. No sales commissions were paid in connection with these issuances
listed above.
|
ITEM
3.
|
DEFAULTS
UPON SENIOR SECURITIES
|
None.
|
ITEM 4.
|
SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS
|
None.
|
ITEM
5.
|
OTHER
INFORMATION
|
On March 30, 2010, Exobox was granted
its first patent relating to its Secure Environmentalization
software.
ITEM
6. EXHIBITS
|
EXHIBIT
NUMBER
|
DESCRIPTION
OF EXHIBIT
|
|
31.1
|
Certification
of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
|
31.2
|
Certification
of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
|
32.1
|
Certification
of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
|
32.2
|
Certification
of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
EXOBOX
TECHNOLOGIES CORP.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf of the undersigned thereunto
duly authorized.
EXOBOX
TECHNOLOGIES CORP.
|
Dated:
March 30, 2010
|
By: /s/
Richard J. Kampa
|
|
|
Richard
J. Kampa
|
|
|
Chief
Executive Officer and Director
|
|
|
(Principal
Executive Officer)
|
|
Dated:
March 30, 2010
|
By:
/s/ Michael G. Wirtz
|
|
|
Michael
G. Wirtz
|
|
|
Chief
Financial Officer
|
|
|
(Principal
Financial and Accounting Officer)
|
Exobox Technologies (CE) (USOTC:EXBX)
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