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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q


þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended October 31, 2012


o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                          to

 

Commission file number: 333-137920

BIOCUBE, INC.

(Exact name of Company as specified in its charter)

 

Delaware

20-3547389

 

(State or other jurisdiction of incorporation or organization)



1365 N. Courtenay Parkway, Suite A

Merritt Island, FL 32953

(Address of Companys principal executive offices)


(I.R.S. Employer Identification No.)





(Zip Code)


 




 

 (201) 750-2001

(Companys telephone number, including area code)


Indicate by check mark whether the Company: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   

Yes þ    No o


Indicate by check mark whether the Company 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 (Sec. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Company was required to submit and post such files).   

Yes þ    No o


Large accelerated filer                                       o

Accelerated filer                                o

Non-accelerated filer                                         o

(Do not check if a smaller reporting company)

Smaller reporting company              x

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 December 17, 2012, there were 35,141,544 Common Shares, $.001 par value per share, outstanding.



TABLE OF CONTENTS

PART I

 FINANCIAL INFORMATION


 

 

 

Item 1.

Financial Statements

1

 

 

 

 

Balance Sheets at October 31, 2012 (unaudited) and January 31, 2012

1

 

 

 

 

Statements of Operations for the three and nine months ended October 31, 2012 and 2011 and from inception (April 20, 2009) to October 31, 2012 (unaudited)

2

 

 

 

 

Statement of Stockholders Equity (Deficit) from inception (April 20, 2009) to October 31, 2012 (unaudited)

3

 

 

 

 

Statements of Cash Flows for the nine months ended October 31, 2012 and 2011, and from inception (April 20, 2009) to October 31, 2012 (unaudited)

4

 

 

 

 

Notes to Financial Statements (unaudited)

5

 

 

 

Item 2.

Managements Discussion and Analysis of Financial Condition and Results of Operations

18

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

19

 

 

 

Item 4.

Controls and Procedures

20

 

 

 

PART II

 OTHER INFORMATION


 

 

 

Item 1.

Legal Proceedings

20

 

 

 

Item 1A.

Risk Factors

21




Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

21

 

 

 

Item 3.

Defaults Upon Senior Securities

21

 

 


Item 4.

Removed and Reserved

21

 

 


Item 5.

Other Information

22

 

 


Item 6.

Exhibits

22

 

 

 

 Signatures

 

22

 

 

 










i



PART I FINANCIAL INFORMATION


Item 1.    FINANCIAL STATEMENTS

BIOCUBE, INC.

(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEETS





October 31, 2012 (unaudited)


January 31, 2012




Assets




Current Assets





Cash

 $                      153


 $                     1,419


Deferred loan costs, net of accumulated amortization of $3,043

     and $0, respectively

1,957


-

Total Current Assets

                      2,110


                 1,419








Total Assets

 $                   2,110


 $                     1,419




Liabilities & Stockholders' Equity (Deficit)











Current Liabilities





Accounts payable and accrued liabilities

 $                 72,608


 $                   97,582


Due to related party - current

                     -


                  34,500


Convertible notes payable-current, net of debt discount

    of $58,334 and $0, respectively

              105,966


                       -


Accrued interest payable-related party

                        -


               11,279


Accrued interest payable

                 7,410


                     -


Accrued salaries

          678,387


              543,387


Derivative liability

275,713


-

Total Current Liabilities

     1,140,084


               686,748









Due to related party - non-current

                    -


                152,554


Convertible notes payable-non-current, net of debt discount

     of $39,659 and $0, respectively

206,668


             137,600


Accrued interest payable - non-current

                    16,638


              18,641

Total Liabilities

        1,363,390


              995,543








Stockholders' Equity (Deficit)





Preferred stock - A - $.001 par value, 21,000 shares authorized, issued and outstanding

                    21


                       21


Common Stock, $0.001 par value, 300,000,000 authorized, 32,091,630 and 29,180,953






shares issued and outstanding at October 31, 2012 and January 31, 2012

              32,092


                29,181


Additional paid in capital

             338,587


                224,182


Deficit accumulated during the development stage

       (1,731,980)


           (1,247,508)

Total Stockholders' Equity (Deficit)

       (1,361,280)


            (994,124)








Total Liabilities and Stockholders' Equity (Deficit)

 $                   2,110


 $                     1,419


The accompanying footnotes are an integral part of these financial statements.

1

BIOCUBE, INC.

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF OPERATIONS

(UNAUDITED)




Three Months Ended October 31, 2012

Three Months Ended October 31, 2011

Nine Months Ended October 31, 2012

Nine Months Ended October 31, 2011

For the Period from April 20, 2009 (Inception) to October 31, 2012








Revenues

 $                    -

 $                        -

 $                        -

 $                        -

 $                   -








General & Administrative







Consulting  

           30,000

           15,000

       90,000

     45,000

    240,000


Professional fees

              -

                  -

        16,046

       22,400

   82,646


Officer salaries

        45,000

       45,000

        135,000

     135,000

       405,000


Impairment loss

                     -

         24,000

                   -

           24,000

335,304


General and administrative

               9,517

         2,843

        10,245

           7,873

158,128








Total Expenses

      84,517

       86,843

      251,291

      234,273

      1,221,078








Loss from operations

         (84,517)

    (86,843)

   (251,291)

   (234,273)

    (1,221,078)








Other income (expense)







Finance cost

               -

               -

                   -

 (101,475)

    (123,010)


Gain (loss) on conversion feature liability

               -

                  -

                  -

     344,549

(101,916)


Gain  on extinguishment of debt

                -

              -

        76,420

                 -

    76,420


Gain (loss) on derivatives

(184,130)

-

(184,130)

-

(184,130)


Interest, net

(105,322)

     (6,807)

        (125,471)

       (18,320)

     (178,266)

Income (loss) before income taxes

         (373,969)

      (93,650)

(484,472)

        (9,519)

 (1,731,980)

Income taxes

            -

                  -

                -

                -

                     -

Net income (loss)

 $     (373,969)

 $           (93,650)

 $         (484,472)

 $             (9,519)

 $  (1,731,980)

Net loss per common share (basic and diluted)

 $           (0.01)

 $               (0.00)

 $               (0.02)

 $              (0.00)


Weighted average number of shares outstanding during the period - basic and diluted

                                 32,091,630

                                 28,727,778

                                 30,901,708

                                 28,727,778



The accompanying footnotes are an integral part of these financial statements.


2

BIOCUBE, INC.

(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)

From Inception (April 20, 2009) to October 31,2012

(Unaudited)


Preferred Stock

Common Stock

Paid In Capital

Deficit Accumulated During Development  Stage

Total Stockholders' Equity (Deficit)








Shares

Amount

Shares

Amount




Balances at April 20, 2009

-

 $          -

            -

 $           -

 $             -

 $                   -

 $                        -

Common stock issued to founders for cash

-

                 -

        1,000,000

             100

                   -

                         -

                         100

Effect of recapitalization-reverse acquisition

        21,000

               21

      18,977,778

        19,878

         80,101

                         -

                  100,000

Issuance of warrants in connection with financing-related party

                 -

                 -

                       -

                 -

           7,517

                         -

                      7,517

Financing cost-related party

                 -

                 -

                       -

                 -

           6,750

                         -

                      6,750

Net (loss) for period ended January 31, 2010

                 -

                 -

                       -

                 -

                   -

           (123,990)

                (123,990)

Balance, January 31, 2010

        21,000

               21

      19,977,778

        19,978

         94,368

           (123,990)

                    (9,623)

Stock issued for acquisition

                 -

                 -

        8,750,000

          8,750

                   -

                         -

                      8,750

Net (loss) for period ended January 31, 2011

                 -

                 -

                       -

                 -

                   -

        (1,031,968)

             (1,031,968)

Balance, January 31, 2011

        21,000

               21

      28,727,778

        28,728

         94,368

        (1,155,958)

             (1,032,841)

Beneficial conversion feature-notes payable

                 -

                 -

                       -

                 -

       101,475

                         -

                  101,475

Expenses paid by shareholder

                 -

                 -

                       -

                 -

           5,000

                         -

                      5,000

Conversion of notes payable , related party

                 -

                 -

           453,175

             453

         23,339

                         -

                    23,792

Net (loss) for period ended January 31, 2012

                 -

                 -

                       -

                 -

                   -

             (91,550)

                  (91,550)

Balance, January 31, 2012

21,000

   21

  29,180,953

   29,181

 224,182

   (1,247,508)

           (994,124)

Conversion of notes payable , related party

                 -

                 -

        2,910,677

          2,911

         13,026

                         -

                    15,937

Issuance of notes payable with beneficial conversion features

-

-

-

-

70,462

-

70,462

Settlement of derivative liabilities on conversion of notes payable

-

-

-

-

30,917

-

30,917

Net (loss) for period ended October 31, 2012

                 -

                 -

                       -

                 -

                   -

             (484,472)

                  (484,472)

Balance, October 31, 2012 (unaudited)

21,000

 $        21

   32,091,630

 $ 32,092

 $338,587

 $  (1,731,980)

 $       (1,361,280)


The accompanying footnotes are an integral part of these financial statements.


3

BIOCUBE, INC.

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CASH FLOWS

(Unaudited)





Nine Months Ended October 31, 2012

Nine Months Ended October 31, 2011

For the Period from April 20, 2009 (Inception) to October 31, 2012

CASH FLOWS USED IN OPERATING ACTIVITIES:




Net loss

 $                 (484,472)

 $                          (9,519)

 $          (1,731,980)

Adjustments to reconcile net loss




to net cash used in operating activities:





Amortization

                        98,012

102,975

           222,754


Impairment loss

                                -

24,000

                437,220


(Gain) loss on extinguishment of debt

(76,420)

-

(76,420)


(Gain) loss on conversion feature liability

                        -

                    (344,549)

                            -


(Gain) loss on derivatives

184,130

-

184,130


Expenses paid by shareholder

                         -

                                       -

                  5,000

Changes in operating assets and liabilities:






Accrued interest receivable

                                -

                                       -

          (1,917)



Accounts payable and accrued expenses

50,253

                             67,354

246,442



Accrued salaries

135,000

                           135,000

                  414,194



Accrued interest payable

                     32,231

                          18,318

             84,463

NET CASH USED IN OPERATING ACTIVITIES

                      (61,266)

              (6,421)

      (216,114)

CASH FLOWS FROM INVESTING ACTIVITIES:




Acquisition of BioCube, Inc.

                                  -

                                       -

               3,287

NET CASH PROVIDED BY INVESTING ACTIVITIES

                            -

                                       -

                      3,287

CASH FLOWS FROM FINANCING ACTIVITIES:




Due to related party

-

5,000

-

Issuance of common stock

                                -

                                       -

                         100

Proceeds from notes

60,000

                                       -

212,880

NET CASH PROVIDED BY FINANCING ACTIVITIES

                            60,000

                              5,000

212,980

NET CHANGE IN CASH

                   (1,266)

                           (1,421)

                     153

CASH - BEGINNING OF THE PERIOD

                         1,419

                               2,987

-

CASH - END OF THE PERIOD

 $                           153

 $                            1,566

 $                       153

Supplemental cash flow information





Cash payments for:






Interest

 $                                -

 $                                    -

 $                            -



Income taxes

 $                                -

 $                                    -

 $                            -

Supplemental disclosure of non-cash investing and





 financing activities:





Acquisition of BioCube, Inc. for common stock

 $                                -

 $                                    -

 $                    8,750


Conversion of accrued interest to notes payable

 $                        8,451

 $                          22,961

 $                  31,412


Conversion of accounts payable to notes payable

 $                      16,500

 $                          22,505

 $                180,605


Conversion of related party notes to Notes payable

 $                    187,054

$                                   -

$                187,054               


Conversion of interest due related party to notes payable

 $                      11,959

$                                   -

 $                  11,959


Beneficial conversion feature - notes payable

 $                      70,462

 $                        101,475

 $                191,937


Warrants issued in connection with funding fees related party

 $                                -

$                            6,750

 $                    6,750


Conversion of notes payable, related party to common stock

 $                      15,937

 $                                    -

 $                  39,729


Conversion of notes payable, long-term to current

$                      90,000     

$                                    -    

$                  90,000


Reclassification of derivative liability to APIC

$                      30,917   

$                                    -

$                  30,917


Debt discount on notes payable from derivative liability

$                    122,500

$                                    -

$                122,500



The accompanying footnotes are an integral part of these financial statements.

4



BioCube, Inc.   

(A Development Stage Company)

Notes to the Financial Statements

October 31, 2012

(Unaudited)


Note 1.  Description of Business

 

BioCube, Inc. (formerly Alliance Network Communications Holdings, Inc.) (The Company) is a development stage company.  The Company was incorporated in Delaware. The Company plans to research, design, manufacture, market and distribute an environmentally safe aerosol-based decontamination system.


On October 12, 2010, the Company acquired all of the issued and outstanding common stock of BioCube, Inc., a Nevada corporation, from its shareholders in exchange for 8,750,000 shares of the common stock of the Company valued at par of $0.001 per share.  As a result of the transaction, BioCube, Inc. became a wholly-owned subsidiary of the Company and the Company then operated through two wholly-owned subsidiaries, Alliance Network Communications, Inc., which was engaged in the business of developing and marketing surge protectors and other electronic products, and BioCube. The allocation of the net purchase consideration of $8,750 was as follows:

Cash

 $      3,287

Decontamination system

       27,000

Goodwill

     311,304

Accounts Payable

      (56,498)

Accrued interest

           (649)

Due to related parties-current

        (1,500)

Notes payable

      (10,000)

Accrued salaries

    (264,194)


 $      8,750


On December 20, 2010, the Company filed a Certificate of Ownership with the Delaware Secretary of State under Section 267 of the Delaware General Corporation Law, to merge its two wholly-owned subsidiaries, Alliance Network Communications, Inc. and BioCube, Inc., into it, with the Company as the surviving entity.  As part of the filing, the corporate name was changed to BioCube, Inc., and its stock trading symbol became BICB.  


The surge protection business formerly operated by Alliance Network Communications, Inc. was terminated in the quarter ended October 31, 2011 and the Company now is engaged solely in the business of developing and marketing an environmentally safe aerosol based decontamination system.  There were no additional expenses or charges recorded as a result of the termination of the surge protection business.


 Note 2.  Significant Accounting Policies


Basis of Preparation

 

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which assume the continuation of the Company as a going concern.  This basis of accounting contemplates the recovery of the Companys assets and the satisfaction of liabilities in the normal course of business. Since its formation, BioCube has been a development stage company and has not begun its efforts to produce and market electrical surge protection devices or the aerosol based decontamination system, and its activities, to date, have been organizational in nature, and have been directed towards the raising of capital and initiating its business plan.


5




BioCube, Inc.   

(A Development Stage Company)

Notes to the Financial Statements

October 31, 2012

 (Unaudited)


Note 2.  Significant Accounting Policies (continued)


The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results of operations for interim periods are not necessarily indicative of results to be expected for the entire fiscal year or any other period.


The balance sheet at October 31, 2012 has been derived from the unaudited financial statements at that date but does not include all the information and footnotes required by generally accepted accounting principles for complete financial statements.


These interim financial statements should be read in conjunction with the Company' s audited financial statements and notes for the year ended January 31, 2012 filed with the Securities and Exchange Commission on Form 10-K on April 30, 2012.


Going Concern


The Company may not be able to execute its current business plan and fund business operations long enough to achieve profitability without obtaining financing. The Company's ultimate success depends upon its ability to raise capital. There can be no assurance that funds will be available to the Company when needed from any source or; if available, on terms that are favorable to the Company.  These conditions raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of these uncertainties.


Use of Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles requires the Companys management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reported period. Changes in the economic environment, financial markets, as well as in the healthcare industry and any other parameters used in determining these estimates could cause actual results to differ. 


Concentration of Credit Risk


The Company may place its cash with various financial institutions and, at times, cash held in depository accounts at such institutions may exceed the Federal Deposit Insurance Corporation insured limit.


Revenue Recognition

 

Upon initiation of active operations, the Company will recognize revenues when persuasive evidence of an arrangement exists, product has been delivered or services have been rendered, the price is fixed or determinable and collectability is reasonably assured. Revenue will be recognized net of estimated sales returns and allowances.

 

 

6




BioCube, Inc.   

(A Development Stage Company)

Notes to the Financial Statements

October 31, 2012

 (Unaudited)


Note 2.  Significant Accounting Policies (continued)


Income Taxes

 

The Company accounts for income taxes using a method that requires recognition of deferred tax assets and liabilities for expected future tax consequences of temporary differences that currently exist between tax bases and financial reporting bases of the Companys assets and liabilities (commonly known as the asset and liability method). In assessing the ability to realize deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.


The Company evaluates its tax positions taken or expected to be taken in the course of preparing the Companys tax returns to determine whether the tax positions are more-likely-than-not of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold are recorded as an expense in the applicable year.   The Company does not have a liability for any unrecognized tax benefits. Managements evaluation of uncertain tax positions may be subject to review and adjustment at a later date based upon factors including, but not limited to, an on-going analysis of tax laws, regulations and interpretations thereof.


As of October 31, 2012 and January 31, 2012, the Company has approximately $1,732,000 and $1,248,000 of net operating loss carry forwards and other taxable temporary differences available to affect future taxable income. The Company has established a valuation allowance equal to the tax benefit of the net operating loss carry forwards and other taxable temporary differences as realization of the asset is not assured of $588,000 and $424,000 respectively at October 31, 2012 and January 31, 2012.


Utilization of net operating loss carry-forwards arising from our predecessor company are subject to a substantial annual limitation due to the change in ownership provisions of the Internal Revenue Code. The annual limitation may result in the expiration of net operating loss carry-forwards before utilization.


 Income (loss) per share

 

Loss per common share is based upon the weighted average number of common shares outstanding during the periods.  Diluted loss per common share is the same as basic loss per share, as the effect of potentially dilutive securities are anti-dilutive.

 

Outstanding options were issued by the Companys predecessor and are exercisable through 2018 with an exercise price of $5.70. Warrants for 322,111 shares of common stock were issued by our predecessor with weighted average exercise price of $11.21 and are exercisable through 2014. The balance of the outstanding warrants was issued in connection with the notes payable to a related party (see Note 4).



7




BioCube, Inc.   

(A Development Stage Company)

Notes to the Financial Statements

October 31, 2012

 (Unaudited)


Note 2.  Significant Accounting Policies (continued)


New Accounting Pronouncements

 

Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2011-5, Presentation of Comprehensive Income, was effective for the current year, but the guidance, which required companies to present net income and comprehensive income in one continuous statement or two consecutive statements, had no impact on the Companys financial statements.


The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.


Fair Value Measurements


All financial instruments, including derivatives, are to be recognized on the balance sheet initially at fair value. Subsequent measurement of all financial assets and liabilities except those held-for-trading and available for sale are measured at amortized cost determined using the effective interest rate method. Held-for-trading financial assets are measured at fair value with changes in fair value recognized in earnings. Available-for-sale financial assets are measured at fair value with changes in fair value recognized in comprehensive income and reclassified to earnings when derecognized or impaired.

 

The carrying amounts of the Companys other short-term financial instruments, including accounts payable and accrued liabilities, approximate fair value due to the relatively short period to maturity for these instruments. The Company does not utilize financial derivatives or other contracts to manage commodity price risks. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price).

 

The fair value of the Company's financial assets and liabilities reflects the Company's estimate of amounts that it would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from sources independent from the Company) and to minimize the use of unobservable inputs (the Company's assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:

8




BioCube, Inc.   

(A Development Stage Company)

Notes to the Financial Statements

October 31, 2012

 (Unaudited)


Fair Value Measurements (continued)


Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. 

Level 2 - Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date and includes those financial instruments that are valued using models or other valuation methodologies. 

Level 3 - Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in managements best estimate of fair value.

Derivatives


The Company evaluates embedded conversion features within convertible debt under ASC 815 Derivatives and Hedging to determine whether the embedded conversion feature should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. The Company uses a Binomial pricing model to estimate the fair value of convertible debt conversion features at the end of each applicable reporting period. Changes in the fair value of these derivatives during each reporting period are included in the consolidated statement of operation. Inputs into the Binomial pricing model require estimates, including such items as estimated volatility of the Companys stock, risk-free interest rate and the estimated life of the financial instruments being fair valued.


If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 Debt with Conversion and Other Options for consideration of any beneficial conversion feature.


Note 3. Decontamination Unit


In connection with the acquisition of BioCube in October 2010, the Company recorded an intangible asset related to the decontamination unit at its estimated fair value of $27,000. This asset was being amortized over its useful life of nine years on a straight-line basis.


By letter dated October 14, 2011, the licensor of the decontamination unit technology notified the Company that the license was terminated for non-payment on that date.  An impairment loss of $24,000 was recorded as a result. Amortization for the quarter ended October 31, 2011 was $750.


9




BioCube, Inc.   

(A Development Stage Company)

Notes to the Financial Statements

October 31, 2012

 (Unaudited)


Note 4.  Related Party Transactions


Due to Related Parties current portion includes the following:


October 31, 2012


January 31, 2012

Notes payable - net of discount(1) 

 $        -


 $              17,000

Notes payable BioCube acquisition

-


                 11,500

Financing fees(2)

-


                   6,000


 $        -


 $              34,500


(1)During the year ended January 31, 2010, the Company borrowed an aggregate of $17,000 from LeadDog Capital LP through the issuance of notes payable for periods of 1 year each with interest payable at 16% per year.  In connection with the issuance of these notes the Company granted the lender warrants for the purchase of 90,000 shares of the Companys common stock at $.001.  In addition, the Company issued warrants to purchase 45,000 shares of the Companys common stock at $.001 to LeadDog Capital Markets LLC (the general partner) for due diligence services. LeadDog Capital LP and its affiliates are shareholders and warrant holders; however the group is restricted from becoming a beneficial owner (as such term is defined under Section 13(d) and Rule 13d-3 of the Securities Exchange Act of 1934, as amended, (the 1934 Act)), of the Companys common stock which would exceed 4.9% of the number of shares of common stock outstanding.

The proceeds from issuance of the promissory notes were allocated to the notes and the warrants based upon their relative fair values. This allocation resulted in allocating $9,500 to the notes and $7,500 to the warrants. The warrants issued for services were recorded as prepaid financing fees of $6,750 and will be amortized to interest expense over the related loan periods.  During the year ended January 31, 2011, the Company recorded expense of $4,800 for the amortization of the debt discount and prepaid financing fees.  The fair value of the warrants was determined using the Black-Scholes option pricing model using the following weighted-average assumptions: volatility of 452 % and 457 %; risk-free interest rate of .87% and .94%; expected life of 3 years and estimated dividend yield of 0%.

(2)LeadDog Capital Markets LLC, the general partner of LeadDog Capital LP, was due a fee for due diligence related to the convertible debenture arrangement discussed below.  The total fee was $10,000 and would have been owed based on a formula related to the amount of the borrowings incurred.

All of the notes payable to Leaddog Capital were consolidated into a single convertible note payable in the amount of $204,601 during the quarter ended April 30, 2012, that consolidated note was sold to Crystal Falls Investments, LLC, an unrelated third party during the current quarter, and the note is now reported as Notes payable-non-current.  The financing fee related to the former notes also has been terminated with the sale of the notes.

10



BioCube, Inc.   

(A Development Stage Company)

Notes to the Financial Statements

October 31, 2012

 (Unaudited)


Note 4. Related Party Transactions (continued)


Previously  Due to Related Party non-current

 

Previously Due to Related Parties non-current consisted of borrowings under a convertible debenture arrangement.  In November 2009, the Company entered into an arrangement with LeadDog Capital LP in which the Company may borrow an aggregate of $500,000 with interest payable at 14% per annum three years from the date of any borrowings.  The indebtedness including interest was convertible into common stock at the lesser of $.10 or 75% of the lowest closing bid price during the 15 day period prior to the conversion date but in no event can the conversion price be less than $0.005 The Company accounted for the borrowings under this arrangement in accordance with ASC 480 - Distinguishing Liabilities from Equity, as the conversion feature embedded in the debentures could result in the principal being converted to a variable number of the Company's common shares.   The fair value of the conversion feature is calculated at the time of issuance and the Company records a conversion liability for the calculated value. The conversion liability is revalued at the end of each reporting period which results in a gain or loss for the change in fair value.


Effective June 1, 2011, the Company and the LeadDog group agreed to restate and consolidate all of the outstanding debentures notes and interest accrued to that date, a total of $ 142,554, into a Consolidated Debenture. The new Debenture was for a three year term ending June 1, 2014 and allowed the holder to convert all or part of the amount due at $0.03 per share, which was the closing market price of the common shares at June 1, 2011.  In addition, the Company agreed to issue a warrant to the holder to purchase 1,500,000 shares of common stock for a three year period at $0.03 per share.  The warrant was issued as of September 2, 2011.  Accordingly, the Company recorded a gain on the previous conversion liability of $344,549 as the terms of convertibility changed to a fixed price. A debt discount in the amount of $101,475 was recorded and amortized fully to finance cost during the year ended January 31, 2012.


On both June 20, 2011 and September 20, 2011, the Company received $5,000 of additional funding from LeadDog Group which increased the total due to LeadDog Group (non-current) to $152,554 at January 31, 2012. The Company also accrued additional interest to LeadDog Group of $6,807 during the quarter ended October 31, 2011 which increased accrued interest due to LeadDog Group to $20,699 at January 31, 2012. The new debentures have three year terms ending June 20, 2014 and September 20, 2014 and allow the holder to convert all or part of the amount due at closing market price of the common shares at the issue dates, $0.02 and $0.03 per share respectively. No conversion liability or debt discount was recorded on new debt as the conversion features were not in the money on issuance.


On February 17, 2012, LeadDog Capital, LP consolidated all of the debts due from the Company into a fourteen percent (14%) convertible note for $204,601 due February 1, 2013.


On March 9, 2012, LeadDog Capital, LP sold the $204,601 convertible note to Crystal Falls Investments, LLC, an unrelated party, for $206,170 representing the original principal plus accrued interest through March 8, 2012.  During the quarter ended October 31, 2012, Crystal Falls transferred $20,000 of the principal of the note to Lotus Capital Investments, an unrelated party.  Interest of $6,514 was accrued on the Crystal Falls note during the quarter ended October 31, 2012 and total interest on the note accrued at October 31, 2012 was $14,597.    Interest on the portion of the note sold to Lotus Capital accrued at October 31, 2012 was $1,412


11




BioCube, Inc.   

(A Development Stage Company)

Notes to the Financial Statements

October 31, 2012

 (Unaudited)


Note 5. Notes Payable


The following details the significant terms and balances of notes payable, net of debt discounts:


October 31, 2012 (unaudited)


January 31,2012

Asher Enterprises:

On April 23, 2012, the Company issued its promissory note in the amount of $32,500 to an unrelated third party for additional working capital.  The note is due January 25, 2013 and carries interest at 8 percent per annum, payable at maturity.  The note is convertible into common stock of the Company after 180 days, at the election of the Holder, at 55 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The Company analyzed the conversion option for derivative accounting consideration under ASC 815-15 Derivatives and Hedging and determined that the instrument should be classified as liabilities once the conversion option became effective after 180 days due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options. As of October 31, 2012, a derivative liability associated with the note totaled $86,641 and accrued interest was $1,361. The carrying amount of the debt discount was $28,814 and $0, respectively.

 $        3,686


 $        -


On June 11, 2012, the Company issued its promissory note in the amount of $32,500 to an unrelated third party for additional working capital.  The note is due March 7, 2013 and carries interest at 8 percent per annum, payable at maturity.  The note is convertible into common stock of the Company after 180 days, at the election of the Holder, at 55 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The Company analyzed the conversion option for derivative accounting consideration under ASC 815-15 Derivatives and Hedging and determined that the instrument should be classified as liabilities once the conversion option became effective after 180 days due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options. As of October 31, 2012, no derivative liability or debt discount has been recorded as instrument is not yet convertible. Interest of $1,012 was accrued on this note as of October 31, 2012.

                           32,500


                     -



12



BioCube, Inc.   

(A Development Stage Company)

Notes to the Financial Statements

October 31, 2012

 (Unaudited)


Note 5. Notes Payable (continued)


October 31, 2012 (unaudited)


January 31, 2012

Crystal Falls Investments:

On March 9, 2012, one of the Companys related parties sold its $204,601 convertible note to an unrelated party for $206,170, representing the original principal plus accrued interest through March 8, 2012. The original effective issuance date of the promissory note was February 17, 2012. During the nine months ended October 31, 2012, the unrelated party transferred $20,000 of the principal of the note to another unrelated party.  The note is due February 17, 2015 and carries interest at 14 percent per annum, payable at maturity.  The note is convertible into common stock of the Company at any time after issuance of the note, at the election of the Holder, at $0.007 per share.  Interest of $14,597 was accrued on this note as of October 31, 2012.

184,601


                        -

On October 1, 2011, the Company converted $137,600 of accounts payable due to CF Consulting, LLC into a 5% convertible note. On March 1, 2012, the Company replaced the $137,600 convertible note to CF Consulting, LLC with a 5% convertible note for $140,463 due March 1, 2013, representing the original principal plus accrued interest of $2,863 through February 29, 2012. $90,000 of this new note balance was then assigned to an unrelated party and the remaining balance of $50,463 was assigned to another unrelated party. The note balance of $50,463 is due December 1, 2013 and carries interest at 5 percent per annum, payable at maturity. The note is convertible into common stock of the Company at any time after issuance of the note, at the election of the Holder, at $0.006 per share. The Company converted $8,737 of this note into 1,456,132 shares during the nine months ended October 31, 2012, leaving $41,726 as the remaining loan balance. The carrying amount of the debt discount was $22,502 and $0, respectively. Interest of $629 was accrued on this note as of October 31, 2012.

19,224


                                137,600

13



BioCube, Inc.   

(A Development Stage Company)

Notes to the Financial Statements

October 31, 2012

 (Unaudited)


Note 5. Notes Payable (continued)


October 31, 2012 (unaudited)


Januaryy 31, 2012

During the nine months ended October 31, 2012, the Company issued four (4) promissory notes totaling $16,500 to an unrelated third party for additional working capital advances.  The notes are due April 30, 2013 and bear interest at 8 percent per annum, payable at maturity.  Interest of $491 was accrued on these notes as of October 31, 2012.

                16,500


                                -

Lotus Capital Investments:

On April 12, 2012, the Company issued its promissory note in the amount of $90,000 to an unrelated third party for additional working capital. The note is due April 12, 2013 and carries interest at 5 percent per annum, payable at maturity. The note is convertible into common stock of the Company at any time after issuance of the note, at the election of the Holder, at the lesser of 50 percent of the average of the ten lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert or $0.05 per share. The Company analyzed the conversion option for derivative accounting consideration under ASC 815-15 Derivatives and Hedging and determined that the instrument should be classified as liabilities once the conversion option became effective due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options. The Company converted $7,200 of this note into 1,454,545 shares during the nine months ended October 31, 2012, leaving $82,800 as the remaining loan balance. As of October 31, 2012, a derivative liability associated with the note totaled $189,072 and accrued interest was $2,291. The carrying amount of the debt discount was $29,520 and $0, respectively.

53,280


                                -

14



BioCube, Inc.   

(A Development Stage Company)

Notes to the Financial Statements

October 31, 2012

 (Unaudited)


Note 5. Notes Payable (continued)


October 31, 2012 (unaudited)


January 31, 2012

On June 14, 2012, the Company issued its promissory note in the amount of $20,000 (with original issue date of February 15, 2012) to an unrelated third party for additional working capital. The note is due February 15, 2015 and carries interest at 14 percent per annum, payable at maturity. The note is convertible into common stock of the Company at any time after issuance of the note, at the election of the Holder, at $0.007 per share. Interest of $1,412 was accrued on this note as of October 31, 2012. The carrying amount of the debt discount was $17,157 and $0, respectively.

2,843


                        -

Total notes payable

312,634


137,600

Less current portion

(105,966)


-

Long-term notes payable

$         206,668


$        137,600





Note 6.  Litigation


In September 2008, Jet One Group, Inc. ("Jet One") commenced an action against Halcyon Jets Holdings, Inc., the Companys predecessor, and several of our former officers, directors and employees in the United States District Court for the southern district of New York, alleging, among other matters, that the Companys predecessor fraudulently induced Jet One to enter into a Letter of Intent to acquire Jet One's business. The Complaint alleged that the Company violated the federal Racketeering Influenced Corrupt Organizations Act, the federal Computer Fraud and Abuse Act, the New York consumer fraud and Business law statutes and committed various common law torts, and sought compensatory damages of $15 million and treble or punitive damages of $45 million. On August 14, 2009, the Court dismissed the complaint without prejudice to Jet One's right to re-file the lawsuit.


The Company and the other defendants, in February 2009, filed a motion to dismiss the counts of the complaint for violation of the federal Computer Fraud and Abuse Act and for civil conspiracy for failure to state a claim upon which relief may be granted. On March 22, 2010, all the defendants in the Nassau County Action filed a Verified Answer, Counterclaims and Third-Party Complaint denying any liability to Jet One.  In addition, the Company and the former subsidiary re-asserted the defamation claims that had previously been asserted against Jet One and its principals in the discontinued case described above; and the Company asserted a breach of contract claim against Jet One and its principals relating to a $150,000 promissory note executed in favor of its predecessor by Jet One and personally guaranteed by Jet Ones principals. There has been no action in the matter since the filings in March 2010 and Management does not believe that there is any risk of material liability from the action.


15



BioCube, Inc.   

(A Development Stage Company)

Notes to the Financial Statements

October 31, 2012

 (Unaudited)


Note 6  Litigation (continued)


Except as set forth above, there are no other pending or threatened legal proceedings against the Company.  Based on the advice of counsel, it is management's opinion that we have made adequate provision for potential liabilities, if any, arising from potential claims arising from litigation, governmental investigations, legal and administrative cases and proceedings. In connection with the sale of the Companys Halcyon Jet subsidiary to the Companys former Chief Executive Officer the Company was indemnified by the buyer against any liability which may arise from the above litigation.


Note 7 Derivative Liabilities


The Company has various convertible instruments outstanding more fully described in Note 5. Because the number of shares to be issued upon settlement cannot be determined under these instruments, the Company cannot determine whether it will have sufficient authorized shares at a given date to settle any other of its share-settleable instruments. As a result, under ASC 815-15 Derivatives and Hedging, all other share-settleable instruments must be classified as liabilities.


Embedded Derivative Liabilities in Convertible Notes

During the nine months ended October 31, 2012, the Company recognized new derivative liabilities of $373,721 as a result of convertible debt instruments having embedded conversion options. The fair value of these derivative liabilities exceeded the principal balance of the related notes payable by $251,221, and was recorded as a loss on derivatives for the three and nine months ended October 31, 2012.


As a result of conversion of notes payable described in Note 5, the Company reclassified $30,917 of derivative liabilities to equity and the change in fair value of derivatives was $67,091.


As of October 31, 2012, the fair value of the Companys derivative liabilities was $275,713 and $67,091 was recognized as a gain on derivatives due to change in fair value of the liability during the nine months ended October 31, 2012.


The following table summarizes the derivative liabilities included in the consolidated balance sheet:

 

  

Fair Value

Measurements Using Significant

Unobservable

Inputs (Level 3)

Derivative Liabilities:

  

 

 

Balance at January 31, 2012

  

$

ASC 815-15 additions

  

 

373,721

Change in fair value

  

 

(67,091)

ASC 815-15 deletions

  

 

(30,917)

Balance at October 31, 2012

  

275,713


16



BioCube, Inc.   

(A Development Stage Company)

Notes to the Financial Statements

October 31, 2012

 (Unaudited)


Note 7 Derivative Liabilities  (continued)

 

  

Included in Other Income (Expense) on Consolidated Statement of Operations

Gain/(Loss) on Derivative Liability:

  

 

 

Change in fair value of derivatives

  

$

67,091

Derivative expense

  

 

 (251,221)

Balance for three and nine months ended October 31, 2012

  

 (184,130)


The fair values of derivative instruments were estimated using the Binomial pricing model based on the following weighted-average assumptions:

 

  

Convertible Debt Instruments

Risk-free rate

  

 

0.21% - 0.25% 

Expected volatility

  

 

100% - 500%

Expected life

  

 

 9-12 months  


Note 8.  Subsequent Events


On   November 2, 2012, Asher Enterprises elected to convert $10,000 in principal of the $32,500 note dated   April 23, 2012 into 1,492,537 common shares at an exercise price of $0.0067 per share.  On December 3, 2012, Asher elected to convert another $9,500 in principal on the same note into 1,557,377 shares of common stock, at an exercise price of $0.0061 per share.  As a result of the conversions, there are 35,141,544 shares of common stock issued and outstanding at December 17, 2012 and a balance of $13,000 in principal due on the note.  The principal balance on the second Asher note dated June 22, 2012 remains at $32,500.






17

Item 2.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION


INTRODUCTION AND CERTAIN CAUTIONARY STATEMENTS

FORWARD-LOOKING STATEMENTS

 

Statements in this annual report that are not historical facts constitute forward-looking statements. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as may, will, should, expects, plans, anticipates, believes, estimates, predicts, potential or continue or the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of these statements. We are under no duty to update any of the forward-looking statements after the date of this information statement to conform these statements to actual results.


OVERVIEW


Corporate Background

 

BioCube, Inc. (the Company) is a development stage company. The Company was incorporated in Delaware. The Company plans to research, design, manufacture, market and distribute an environmentally safe aerosol based decontamination system.


On October 12, 2010, the Company acquired all of the issued and outstanding common stock of BioCube, Inc., a Nevada corporation, from its shareholders in exchange for 8,750,000 shares of the common stock of the Company valued at par of $0.001 per share. As a result of the transaction, BioCube, Inc. became a wholly-owned subsidiary of the Company. The acquisition was closed based upon a Share Acquisition Agreement dated June 24, 2010 between the Company and BioCube, Inc., filed as Exhibit 10 to the Current Report for the Company filed on Form 8-K on October12, 2010.

 

As a result of the acquisition of BioCube, Inc. the Company operated through two wholly-owned subsidiaries, ANC and BioCube.  On December 20, 2010, the Company filed a Certificate of Ownership with the Delaware Secretary of State under Section 267 of the Delaware General Corporation Law, to merge its two wholly-owned subsidiaries, Alliance Network Communications, Inc. and BioCube, Inc., into it, with the Company as the surviving entity. As part of the filing, the corporate name was changed to BioCube, Inc. and its stock trading symbol became BICB.


Business Plan


  

We are a development stage company. On September 6, 2012, announced the expansion of its business model, to be followed by a corporate name change to GreenSync Solutions.  As part of the new business model, the Company also has agreed to acquire the domain name and website www.greensync.co.in and related assets Under the updated business plan, BioCube will offer the following to its partner companies:


·

Assistance in financing and commercialization of green technologies

·

Management and technology expertise specific to green industries

·

Infrastructure offering legal, administrative and accounting services

·

Access to technology and product integration options with other companies under the BioCube umbrella

·

Business planning and board development

·

Domestic and international licensing

·

Mergers and acquisitions of related companies and technologies

18



Results of Operations


Three months ended October 31, 2012 and 2011

 

During the quarters ended October 31, 2012 and 2011, the Company had no revenues as its activities principally involved its planning for the execution of its business plan.  Expenses incurred in the three months ended October 31, 2012 were consulting expense of $30,000, general and administrative of $9,517, officers salaries of $45,000, loss on derivatives of $184,130, and net interest expense of $105,322 resulting in a net loss of $373,969 compared to October 31, 2011 expenses relating to consulting expenses of $15,000, officer salaries of $45,000, general and administrative of $2,843, impairment loss of $24,000, and interest expense, net of $6,807, resulting in a net loss of $93,650.  


Nine months ended October 31, 2012 and 2011

 

During the nine months ended October 31, 2012 and 2011, the Company had no revenues as its activities principally involved its planning for the execution of its business plan.  Expenses incurred in the nine months ended October 31, 2012 were consulting expense of $90,000, officers salaries of $135,000, general and administrative of $10,245, professional fees of $16,046, loss on derivatives of $184,130, net interest expense of $125,471, and gain on extinguishment of debt of $76,420, resulting in a net loss of $484,472 compared to October 31, 2011 expenses relating to consulting expenses of $45,000, officer salaries of $135,000, professional fees of $22,400, general and administrative of $7,873, impairment loss of $24,000, finance costs of $101,475, interest expense, net of $18,320, and gain on conversion of $344,549, resulting in net loss of $9,519.  


Liquidity and Capital Resources


During the nine months ended October 31, 2012, we received additional convertible note financing of $77,500, of which $17,500 was paid directly to creditors on our behalf. In total, we received cash proceeds of $60,000 during the nine months ended October 31, 2012.


The Company may not be able to execute its current business plan and fund business operations long enough to achieve profitability without obtaining financing. The Company has received interim financing from a related party.  The Company's ultimate success may depend upon its ability to raise capital. There can be no assurance that funds will be available to the Company when needed from any source or; if available, on terms that are favorable to the Company.   The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of these uncertainties.

  

Except as set forth under Part II Item 1  Legal Proceedings, there are no pending or threatened legal proceedings against the Company.  In the opinion of management, on the advice of counsel, we have made adequate provision for potential liabilities, if any, arising from potential claims arising from litigation, governmental investigations, legal and administrative cases and proceedings. In connection with the sale of the Companys Halcyon Jet subsidiary to the Companys former Chief Executive Officer the Company was indemnified by the buyer against any liability which may arise from the above litigation.


Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements.

 

Item 3.   QUALITITATIVE AND QUALITIATIVE DISCLOSURES ABOUT MARKET RISK


Not applicable

19




Item 4.   CONTROLS AND PROCEDURES


Evaluation of Disclosure Controls and Procedures

The Company is in the process of implementing disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the Exchange Act), that are designed to ensure that information required to be disclosed in the Companys Exchange Act reports are recorded, processed, summarized, and reported within the time periods specified in rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to our Chief Executive Officer to allow timely decisions regarding required disclosure.


As of October 31, 2012, the Chief Executive Officer and Chief Financial Officer carried out an assessment, of the effectiveness of the design and operation of our disclosure controls and procedure and concluded that the Companys disclosure controls and procedures were not effective as of October 31, 2012, because of the material weakness described below.  A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Companys annual or interim financial statements will not be prevented or detected on a timely basis.


The material weakness identified during management's assessment was the lack of sufficient resources with SEC, generally accepted accounting principles (GAAP) and tax accounting expertise. This control deficiency did not result in adjustments to the Companys interim financial statements. However, this control deficiency could result in a material misstatement of significant accounts or disclosures that would result in a material misstatement to the Companys interim or annual financial statements that would not be prevented or detected. Accordingly, management has determined that this control deficiency constitutes a material weakness.


The Chief Executive Officer and Chief Financial Officer performed additional accounting and financial analyses and other post-closing procedures including detailed validation work with regard to balance sheet account balances, additional analysis on income statement amounts and managerial review of all significant account balances and disclosures in the Quarterly Report on Form 10-Q, to ensure that the Companys Quarterly Report and the financial statements forming part thereof are in accordance with accounting principles generally accepted in the United States of America. Accordingly, management believes that the financial statements included in this Quarterly Report fairly present, in all material respects, the Companys financial condition, results of operations, and cash flows for the periods presented.


Changes in Internal Control over Financial Reporting


During the three months ended October 31, 2012, there were no changes in our system of internal controls over financial reporting.


PART II OTHER INFORMATION


Item 1.   LEGAL PROCEEDINGS


In September 2008, Jet One Group, Inc. ("Jet One") commenced an action against Halcyon Jets Holdings, Inc., the Companys predecessor, and several of our former officers, directors and employees in the United States District Court for the southern district of New York, alleging, among other matters, that the Companys predecessor  fraudulently induced Jet One to enter into a Letter of Intent to acquire Jet One's business. The Complaint alleged that the Company violated the federal Racketeering Influenced Corrupt Organizations Act, the federal Computer Fraud and Abuse Act, the New York consumer fraud and Business law statutes and committed various common law torts, and sought compensatory damages of $15 million and treble or punitive damages of $45 million. On August 14, 2009, the Court dismissed the complaint without prejudice to Jet One's right to re-file the lawsuit.

 


20




On or about October 28, 2009, Jet One Group filed a new action against the Companys predecessor, its former subsidiary and the other defendants in the matter discussed above, in the Supreme Court of New York (Nassau County Action), which repeats the factual allegations of the dismissed federal court complaint and asserts claims for conversion, fraud, tortious interference with contract and violation of the state consumer fraud statute.  The new complaint seeks compensatory damages of $15 million, attorneys fees of $100,000 and punitive damages against each of the defendants in the amount of $45 million.


Separately, the former subsidiary filed an action against Jet One and its principals in the Supreme Court of New York in which the former subsidiary alleges that the Complaint in Jet Ones Federal Court Action contains false and defamatory statements regarding the former subsidiary and that Jet One filed its suit for the sole purpose of circulating a press release publicizing the false and defamatory allegations.  Jet One moved to dismiss the suit for failure to state a claim upon which relief may be granted, but this motion was denied by the court and the denial was affirmed by the Appellate Division of the Supreme Court of New York in February 2010.  On March 19, 2010, the Companys former subsidiary dismissed its complaint without prejudice.


On March 22, 2010, all the defendants in the Nassau County Action filed a Verified Answer, Counterclaims and Third-Party Complaint denying any liability to Jet One.  In addition, the Company and the former subsidiary re-asserted the defamation claims that had previously been asserted against Jet One and its principals in the discontinued case described above; and the Company asserted a breach of contract claim against Jet One and its principals relating to a $150,000 promissory note executed in favor of its predecessor by Jet One and personally guaranteed by Jet Ones principals.


There has been no action in the matter since the filings in March 2010 and Management does not believe that there is any risk of material liability from the action.


Except as set forth above, there are no other pending or threatened legal proceedings against the Company.  Based on the advice of counsel, it is management's opinion that we have made adequate provision for potential liabilities, if any, arising from potential claims arising from litigation, governmental investigations, legal and administrative cases and proceedings. In connection with the sale of the Companys Halcyon Jet subsidiary to the Companys former Chief Executive Officer the Company was indemnified by the buyer against any liability which may arise from the above litigation.  


Item 1A.

Risk Factors


In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended January 31, 2012, which could materially affect our business, financial condition and/or operating results. The risks described in our Annual Report on Form 10-K is not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.   


Item 2.      UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


    None during the quarter ended October 31, 2012.

 

Item 3.      DEFAULTS UPON SENIOR SECURITIES


     None.


Item 4.      REMOVED AND RESERVED


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Item 5.      OTHER INFORMATION

 

     On November 1, 2012, the Company converted $663,387 of unpaid salary due to Boris Rubizhevsky, President and CEO, under Accrued salaries, into an eight percent (8%) convertible note. This note allows the holder to convert all or part of the amount due at the closing market price of the common shares at the issue date ($0.015 per share). No conversion liability or debt discount was recorded on the convertible note as the conversion price was equal to the market price at the date of issue.

ITEM 6.   EXHIBITS

 

(a) Exhibits

 

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Certification of Chief Executive and Financial Officer

 


32

Section 1350 Certification of Chief Executive Officer and Chief Financial Officer

 


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 by the undersigned thereunto duly authorized.

 


BIOCUBE, INC.


 

Date: December 21,  2012

/s/ Boris Rubizhevsky    


Boris Rubizhevsky    

Chief Executive and Financial Officer


 











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