BICB BioCube Inc (CE)

______________________________________________________________

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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FORM 10-K

(Mark One)

þ  Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended January 31, 2012

or

¨  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 registrant as specified in charter)

Delaware				20-3547389
(State or other jurisdiction of incorporation or organization)				(I.R.S. Employer Identification No.)
1365 N. Courtenay Parkway, Suite A Merritt Island, FL		32953		(321) 452-9091
(Address of principal executive offices)		(Zip Code)		(Telephone No.)
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class		Name of each exchange on which registered
Common Stock, par value $0.001 per share		OTC BB

Securities Registered Pursuant to Section 12(g) of the Act:

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

            Yes  ¨ No  þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

            Yes  ¨ No  þ

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

Yes þ No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant ’ s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.       ¨

Indicate by check mark whether the registrant has submitted electronically and posted on our 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 month (or for such shorter period that the registrant was required to submit and post such files).                                                                                                             Yes □    No □

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “ large accelerated filer, ” “ accelerated filer ” and “ smaller reporting company ” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer  ¨	Accelerated filer  ¨
Non-accelerated filer  ¨	Smaller reporting company  þ

 

  Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

            Yes  ¨ No  þ

 

The aggregate market value of the outstanding common equity of the registrant as of the last business day of the registrant ’ s most recently completed fiscal year was $291,810.

 

There were 29,180,953 shares of voting common stock with a par value of $0.001 outstanding at April 30, 2012.

   

BIOCUBE, INC.

FORM 10-K

INDEX

 

i

BIOCUBE, INC.

ANNUAL REPORT ON FORM 10-K

YEAR ENDED JANUARY 31, 2012

PART I

FORWARD-LOOKING STATEMENTS

 

This annual report on Form 10-K contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause the results of the Company to differ materially from those expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including any projections of revenue, expenses, earnings or losses from operations or investments, or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. The risks, uncertainties and assumptions referred to above include risks that are described from time to time in our Securities and Exchange Commission, or the SEC, reports filed before this report.

The forward-looking statements included in this annual report represent our estimates as of the date of this annual report. We specifically disclaim any obligation to update these forward-looking statements in the future. Some of the statements in this annual report constitute forward-looking statements, which relate to future events or our future performance or financial condition. Such forward-looking statements contained in this annual report involve risks and uncertainties.

 

We use words such as anticipates, believes, expects, future, intends and similar expressions to identify forward-looking statements. Our actual results could differ materially from those projected in the forward-looking statements for any reason. We caution you that forward-looking statements of this type are subject to uncertainties and risks, many of which cannot be predicted or quantified.

The following analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes thereto contained elsewhere in this Form 10-K, as well as the risk factors included in this Form 10-K under Item 1A.

 

ITEM 1: BUSINESS

Corporate Background - Reverse Merger - Acquisition

 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. Its prior business of developing and marketing surge protectors and other electrical devices was abandoned in the quarter ended April 30, 2011.  There were no related costs associated with the abandonment of that business.

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.

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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 which plans to research, design, manufacture, market and distribute an environmentally safe decontamination system, utilizing an aerosol-based delivery method.  We are collaborating with our Russian research partners to complete the development and commercialization of an environmentally safe decontamination system, utilizing an aerosol-based delivery method. BioCube has also entered into a licensing agreement with Battelle Memorial Institute of Richland, Washington, to sub-license technology contained in certain rights of Batelle in patents relating to micro-aerosol based decontamination methods, which are complimentary to the technology of BioCube. This system has demonstrated effective results in  handling of microbial and fungal cells, spores, and viruses that are the core of such infections as MRSA, Avian Flu, Swine Flu and common molds.

Hospitals struggle with the control of infectious diseases and continue to look for effective, environmentally friendly and cost-effective means of dealing with this pervasive problem. BioCube intends to focus on this existing market need for decontamination of patient rooms, operating theaters, medical equipment and furniture, which exists in over 5,000 hospitals and nearly 1 million beds in the U.S. healthcare system, as well as the many other uses of a similar decontamination solution.

BioCube will focus on the following target markets:

-- Healthcare (hospital, nursing homes)

-- Travel (airplanes, cruise ships, mobile homes)

-- Mold remediation

-- Schools

-- Animal farming

-- Agriculture

On October 14, 2011, we were notified that the license arrangement for the technology underlying the decontamination unit had been terminated for non-payment, a result which has disrupted our business plan. While we are in discussions with the licensor to reinstate the license, there is no assurance that we will be able to do so.  As a result of the termination, we recorded an impairment loss of $24,000, representing the remaining unamortized acquisition cost for the technology license.

BioCube believes that its decontamination technology holds significant promise as a long-term solution to a global problem. BioCube's objective is to help create an effective technology that will allow for rapid, inexpensive and environmentally safe remediation of buildings that have been contaminated by a biological agent, thus allowing a speedy return to a state of normalcy.

 

ITEM 1A. RISK FACTORS

There are numerous and varied risks, known and unknown, that may prevent us from achieving our goals. If any of these risks actually occur, our business, financial condition or results of operation may be materially adversely affected. In such case, the trading price of our common stock could decline and investors could lose all or part of their investment.

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Risks Relating to Our Business

 

We can provide no assurance that our business plan will materialize.

 

We are a development stage company that has not produced product revenue to date and does not expect to do so in the immediate future. There can be no assurance that we will be able to successfully introduce our products, which are primarily only in the development stage, or achieve or sustain significant commercial revenue or profitability in the future.  The development of our products will require the commitment of substantial resources to conduct the research and development necessary to bring any products to market, and the rate at which we incur development expenses is expected to increase.   We will require additional financing in order to fulfill our objectives.

Our independent registered public accounting firm has expressed doubt about our ability to continue as a going concern.  This could make it more difficult for us to raise funds and adversely affect our relationships with lenders, investors and suppliers

 

Our independent registered public accounting firm has expressed doubt about our ability to continue as a going concern. This indicates that our auditors believe that substantial doubt exists regarding our ability to continue to remain in business. We cannot provide any assurance that we will in fact operate our business profitably or obtain sufficient financing to sustain our business in the event we are not successful in our efforts to generate sufficient revenue and operating cash flow. The expression of such doubt by our independent registered public accounting firm or our inability to overcome the factors leading to such doubt could have a material adverse effect on our relationships.

 

  We will need financing to execute our business plan and fund operations, which financing may not be available.

 

We may not be able to execute our current business plan and fund business operations long enough to achieve profitability without obtaining financing. Our ultimate success may depend upon our ability to raise capital. There can be no assurance that funds will be available when needed from any source or, if available, will be available on terms that are acceptable to us.

 

We may be required to pursue sources of capital through various means, including joint venture projects and debt or equity financings. Future financings through equity investments are likely to be dilutive to existing stockholders. Also, the terms of securities we may issue in future capital transactions may be more favorable for our new investors. Newly issued securities may include preferences, superior voting rights, the issuance of warrants or other derivative securities, and the issuances of incentive awards under equity employee incentive plans, which may have additional dilutive effects. Further, we may incur substantial costs in pursuing future capital and/or financing, including investment banking fees, legal fees, accounting fees, printing and distribution expenses and other costs. We may also be required to recognize non-cash expenses in connection with certain securities we may issue, such as convertible notes and warrants, which will adversely impact our financial condition.

 

Our ability to obtain needed financing may be impaired by such factors as the capital markets, both generally and specifically in our industry, and the fact that we are not profitable, which could impact the availability and cost of future financings. If the amount of capital we are able to raise from financing activities, together with our revenues from operations, is not sufficient to satisfy our capital needs, even to the extent that we reduce our operations accordingly, we may be required to cease operations.

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We will be dependent upon the acceptance of our products in the marketplace.

 

The commercial success of any products that we develop will depend upon acceptance of these products by the business community as safe, useful and cost-effective. While we believe the benefits of our prospective products will be able to be demonstrated, there can be no assurance that the benefits will be considered sufficient by the business community to enable any such products to gain market acceptance.

 

The market for our decontamination products is highly competitive and there is no assurance that we will be able to develop a marketable product or that we will be able to compete effectively in this market.

We will need to protect our intellectual property in order to achieve and maintain a competitive position.

 

Our success depends significantly on our ability to protect our proprietary rights to technologies used in our prospective products.  We may rely on patent protection, as well as a combination of non-disclosure, confidentiality and other contractual arrangements to protect our proprietary technology. However, these legal means afford only limited protection and may not adequately protect our rights or permit us to obtain or keep any competitive advantage.  Our success will depend upon our ability to protect our proprietary rights in our technology, and the failure to obtain patent protection could severely limit our ability to grow and be successful. There can be substantial delays in obtaining patent approval, and it may take up to two years or more to complete that process.  Any delays in obtaining a patent, as well as the inability to obtain a patent at all, could have a material adverse effect on our business.

 

We will encounter manufacturing risks and may face product liability claims.

 

Our manufacture and sale of environmentally safe decontamination systems  may expose us to significant risk of product liability claims. We intend to obtain product liability insurance but such coverage may be inadequate to protect us from any liabilities we may incur, or we may not be able to maintain adequate product liability insurance at acceptable rates. If a product liability claim or series of claims were brought against us for uninsured liabilities or for amounts in excess of insurance coverage, and it is ultimately determined that we are liable, our business could suffer. In addition, we could experience some material design or manufacturing failure, a quality system failure, other safety issues or heightened regulatory scrutiny that would warrant a recall of our products. A recall of any of our products could also result in increased product liability claims.

 

  We may be negatively affected by the changing economic conditions including the current economic downturn.

 

A general downturn in economic, business and financial conditions, including recession, inflation and higher interest rates, could have an adverse effect on our business.

Since we lack a meaningful operating history, it is difficult for potential investors to evaluate our business.

 

Our limited operating history makes it difficult for potential investors to evaluate our business or prospective operations. We are subject to all the risks inherent in the initial organization, financing, expenditures, complications and delays inherent in a new business. Investors should evaluate an investment in us in light of the uncertainties encountered by new companies in an intensely competitive industry. Our business is dependent upon the implementation of our business plan, as well as our ability to enter into agreements with third parties for, among other things, for the manufacturing of our products on commercially favorable terms. There can be no assurance that our efforts will be successful or that we will be able to attain profitability.  

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We will be dependent upon key personnel whose loss may adversely impact our business.

 

We will be relying heavily on the expertise, experience and the services of our senior management and sales personnel once engaged. The loss, or any inability to attract or retain key individuals, could materially adversely affect us. We will seek to compensate and motivate our executives, as well as other employees and independent contractors, through competitive salaries, commissions and bonus plans, but there can be no assurance that these programs will allow us to retain key employees and contractors or hire or attract new key employees and contractors. As a result, if we are not able to engage key personnel or once retained were to leave or cease to be available or our ability to utilize their skills, contacts and other resources impeded, we could face substantial difficulty in finding qualified successors and could experience a loss in productivity while any such successors obtain the necessary training and experience

  The decontamination markets are extremely competitive.

 

We will compete with a number of companies that are engaged in business similar to ours.  Our competitors have been in business far longer than we have and they may have significantly greater financial stability, access to capital markets and name recognition. Unanticipated shortfalls in expected revenues due to price competition or inadequate supply of raw materials would negatively impact our financial results and harm our business. There is no assurance that we will be able to successfully compete in these industries.

  We may not be able to effectively control and manage our growth.

 

Our strategy envisions a period of potentially rapid growth. We currently maintain nominal administrative and personnel capacity due to the startup nature of our business, and our expected growth may impose a significant burden on our future planned administrative and operational resources. The growth of our business may require significant investments of capital and increased demands on our management, workforce and facilities. We will be required to substantially expand our administrative and operational resources and attract, train, manage and retain qualified management and other personnel. Failure to do so or satisfy such increased demands would interrupt or would have a material adverse effect on our business and results of operations.

 

Risks Relating to Our Organization

 

Failure to achieve and maintain effective disclosure controls or internal controls could have a material adverse effect on our ability to report our financial results timely and accurately.

 

We are a public reporting company and, accordingly, subject to the information and reporting requirements of the Exchange Act and other federal and state securities laws, including compliance with the Sarbanes-Oxley Act of 2002. The costs of preparing and filing annual and quarterly reports, proxy statements and other information with the SEC and furnishing audited reports to stockholders will cause our expenses to be higher than they would have been if we were privately-held. In addition, we have identified that we have a material weakness in our system of internal accounting controls and accounting and financial reporting processes as a result of a lack of sufficient resources with SEC, generally accepted accounting principles (GAAP) and tax accounting expertise.

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It may be time consuming, difficult and costly for us to develop and implement the internal controls and reporting procedures required by the Sarbanes-Oxley Act. We need to hire financial reporting, internal controls and other finance personnel in order to develop and implement appropriate internal controls and reporting procedures. If we are unable to comply with the internal controls requirements of the Sarbanes-Oxley Act, we may not be able to obtain the independent accountant certifications required by that Act.  In addition, effective internal controls and procedures are necessary for us to provide reliable financial reports. If we continue to have material weaknesses in our internal controls and procedures, we may not be able to provide reliable financial reports and our business and operating results could be harmed.  

 

  Public company compliance requirements may make it more difficult to attract and retain officers and directors.

 

The Sarbanes-Oxley Act and rules subsequently implemented by the SEC have required changes in corporate governance practices of public companies. Compliance with the new rules and regulations increases our operating costs and makes certain activities more time consuming and costly than if we were not a public company. As a public company, these new rules and regulations make it more difficult and expensive for us to obtain director and officer liability insurance. As a result, it may be more difficult for us to attract and retain qualified persons to serve on our Board of Directors or as executive officers.

  Because we became public by means of a reverse acquisition, we may not be able to attract the attention of major brokerage firms.

 

There may be risks associated with our company becoming public through a “ reverse acquisition ” . Securities analysts of major brokerage firms may not provide coverage of us since there is no incentive to brokerage firms to recommend the purchase of our common stock. No assurance can be given that brokerage firms will, in the future, want to conduct any secondary offerings on behalf of our Company.

 

  Risks Relating to our Common Stock

 

Our stock price may be volatile.

 

The market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including the following:

 

	·	changes in our industry;
	·	competitive pricing pressures;
	·	our ability to obtain working capital financing;
	·	additions or departures of key personnel;
	·	limited “ public float ” , in the hands of a small number of persons whose sales or lack of sales, could result in positive or negative pricing pressure on the market price for our common stock;
	·	our ability to execute our business plan;
	·	operating results that fall below expectations;
	·	loss of any strategic relationship;
	·	regulatory developments;
	·	economic and other external factors; and
	·	period-to-period fluctuations in our financial results.

 

In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock.

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  We do not expect to pay dividends in the future. Any return on investment may be limited to the value of our common stock.

 

We do not anticipate paying cash dividends on our common stock in the foreseeable future. The payment of dividends on our common stock will depend on earnings, financial condition and other business and economic factors affecting us at such time as our board of directors may consider relevant. If we do not pay dividends, our common stock may be less valuable because a return on investment will only occur if our stock price appreciates.

 

  There is currently no liquid trading market for our common stock and we cannot ensure that one will ever develop or be sustained.

 

To date there has been no liquid trading market for our common stock. We cannot predict how liquid the market for our common stock might become. Our common stock is quoted on the automated quotation service known as the OTC Bulletin Board and although we are not presently eligible, we intend to apply for listing of our common stock on either The NASDAQ Capital Market or other national securities exchanges if and when we meet the requirements for listing. We cannot ensure that we will be able to satisfy such listing standards or that our common stock will be accepted for listing on any of these exchanges. Should our company fail to satisfy the initial listing standards of the exchanges, or our common stock is otherwise rejected for listing and remain listed on the OTC Bulletin Board or suspended from the OTC Bulletin Board, the trading price of our common stock could suffer and the trading market for our common stock may be less liquid and our common stock price may be subject to increased volatility.

  Our common stock is deemed a “ penny stock ” , which may make it more difficult for our investors to sell their shares.

 

Our common stock is subject to the “ penny stock ” rules adopted under Section 15(g) of the Securities Exchange Act of 1934. The penny stock rules apply to companies whose common stock is not listed on a national securities exchange and trades at less than $5.00 per share or that have tangible net worth of less than $5,000,000 ($2,000,000 if the company has been operating for three or more years). These rules require, among other things, that brokers who trade penny stock to persons other than “ established customers ” complete certain documentation, make suitability inquiries of investors and provide investors with certain information concerning trading in the security, including a risk disclosure document and quote information under certain circumstances. Many brokers have decided not to trade penny stocks because of the requirements of the penny stock rules and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited. If we remain subject to the penny stock rules for any significant period, it could have an adverse effect on the market, if any, for our securities. Insofar as many of our shares are subject to the penny stock rules, investors will find it more difficult to dispose of those shares.

 

  Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.

 

If our stockholders sell substantial amounts of our common stock in the public market, or upon the expiration of any holding period under Rule 144 it could create a circumstance commonly referred to as an “ overhang ” and in anticipation of which the market price of our common stock could fall. The existence of an overhang, whether or not sales have occurred or are occurring, also could make more difficult our ability to raise additional financing through the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate. The shares of common stock issued to the former shareholders of Alliance, upon the expiration of the applicable holding period under Rule 144, will become freely tradable, subject to securities laws and SEC regulations regarding sales by insiders. Recent revisions to Rule 144 shortened the holding period under Rule 144, as a result of which the overhang period arises earlier than would previously have been the case.

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ITEM 2. PROPERTIES

The Company does not own any properties at this time.  It sub-leases its headquarters in Merritt Island, Florida for $550 per month on a month to month basis.

ITEM 3. LEGAL PROCEDINGS

In September 2008, Jet One Group, Inc. ("Jet One") commenced an action against Halcyon Jets Holdings, Inc., the Company ’ s 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 Company ’ s 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.

 

On or about October 28, 2009, Jet One Group filed a new action against the Company ’ s 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 One ’ s 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 Company ’ s 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 One ’ s 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 Company ’ s Halcyon Jet subsidiary to the Company ’ s former Chief Executive Officer the Company was indemnified by the buyer against any liability which may arise from the above litigation.  

ITEM 4. REMOVED AND RESERVED

Not Applicable

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PART II

ITEM 5. MARKET FOR REGISTRANTS ’ COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 

Our common stock is quoted on the ‘ ‘ Over the Counter Bulletin Board ’ ’ trades under the symbol ‘ ‘ BICB ’ ’ .  The market for our common stock has often been sporadic, volatile and limited.

The following table sets forth the high and low sale price of the common stock on a quarterly basis, as reported by Over the Counter Bulletin Board from February 1, 2010 through January 31, 2012.

		Fiscal 2012			Fiscal 2011
		High			Low			High			Low
First Quarter		$	0.12			$	.02			$	0.17			$	.04
Second Quarter			.11				.02				.20				.04
Third Quarter			.03				.01				.17				.04
Fourth Quarter			.03				.01				.11				.02

The per share closing sales price of the common stock as reported by the Over the Counter Bulletin Board on April 30, 2012, was $.01.   As of this date there were approximately 85 holders of record of common stock and 28,727,778 shares of common stock outstanding. We have not paid dividends on our common stock outstanding in the past. There are no contractual or legal restrictions that limit our ability to pay dividends in the future; however, there are no expectations that we will pay dividends in the near future.

 

ITEM 6. SELECTED FINANCIAL DATA

Not required for smaller reporting companies

ITEM 7. MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

INTRODUCTION AND CERTAIN CAUTIONARY STATEMENTS    

The following discussion includes certain forward-looking statements within the meaning of the safe harbor protections of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements that include words such as “ believe, ” “ expect, ” “ should, ” “ intend, ”   “ may, ” “ anticipate, ” “ likely, ” “ contingent, ” “ could, ” “ may, ” or other future-oriented statements, are forward-looking statements. Such forward-looking statements include, but are not limited to, statements regarding our business plans, strategies and objectives, and, in particular, statements referring to our expectations regarding our ability to continue as a going concern, generate increased market awareness of, and demand for, our current products, realize profitability and positive cash flow, and timely obtain required financing. These forward-looking statements involve risks and uncertainties that could cause actual results to differ from anticipated results. The forward-looking statements are based on our current expectations and what we believe are reasonable assumptions given our knowledge of the markets; however, our actual performance, results and achievements could differ materially from those expressed in, or implied by, these forward-looking statements.

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Factors within and beyond our control that could cause or contribute to such differences include, among others, our critical capital raising efforts in an uncertain and volatile economical environment, our ability to maintain relationship with strategic companies, our cash preservation and cost containment efforts, our ability to retain key management personnel, our relative inexperience with advertising, our competition and the potential impact of technological advancements thereon, the impact of changing economic, political, and geo-political environments on our business, as well as those factors discussed elsewhere in this Form 10-K and in  “ Item 1 - Our Business ” .

Readers are urged to carefully review and consider the various disclosures made by us in this report and those detailed from time to time in our reports and filings with the United States Securities and Exchange Commission that attempt to advise interested parties of the risks and factors that are likely to affect our business.

OVERVIEW

Our discussion and analysis of operations is based upon our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ materially from these estimates under different assumptions or conditions.

Critical Accounting Policies

As the Company has not begun to execute its business plan we have identified only the following policies as critical to understanding of our financial results for the periods presented.

As a result of the transactions described in Note 1 – to the Financial Statements, the former stockholders of ANC were the controlling stockholders of the Company and the Company discontinued its former business. Accordingly, the transactions were treated for accounting purposes as a reverse acquisition, and the transactions have been accounted for as a recapitalization of the Company, rather than a business combination. Therefore, the historical financial statements of ANC are the historical financial statements of the Company and historical stockholders' equity of ANC has been restated to reflect the recapitalization. Pro forma information commencing on April 2009, has not been presented since the transaction is not a business combination.

The 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 Company ’ s assets and the satisfaction of liabilities in the normal course of business. Since the Company ‘ s formation in April 2009, the Company has not begun its efforts to produce and market contamination products and its activities, to date, have been organizational in nature, and have been directed towards the raising of capital and to discussions of additional potential business combinations.

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 may depend on 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.

Please see Note 2 to the financial statements for significant accounting policies.

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Business Plan

 

We are a development stage company which plans to research, design, manufacture, market and distribute an environmentally safe decontamination system, utilizing an aerosol-based delivery method.  We are collaborating with our Russian research partners to complete the development and commercialization of an environmentally safe decontamination system, utilizing an aerosol-based delivery method. BioCube has also entered into a licensing agreement with Battelle Memorial Institute of Richland, Washington, to sub-license technology contained in certain rights of Batelle in patents relating to micro-aerosol based decontamination methods, which are complimentary to the technology of BioCube. This system has demonstrated effective results in  handling of microbial and fungal cells, spores, and viruses that are the core of such infections as MRSA, Avian Flu, Swine Flu and common molds.

We plan to develop the ability to quickly research, design, and produce specialty products to allow us to develop a market niche to supply both generic and custom built products to a number of industry players in both the United States and Canada to complete the development and then commercialization of an environmentally safe decontamination system, utilizing an aerosol-based delivery method. This system has demonstrated effective handling of microbial and fungal cells, spores, and viruses that are the core of such infections as MRSA, Avian Flu, Swine Flu and common molds.

Results of Operations

From inception (April 20, 2009) to January 31, 2012

During these periods the Company had no revenues as its activities principally involved its formation and negotiation of the reverse acquisition and the acquisition of BioCube. Expenses incurred are general and administrative principally staff costs and professional fees.  The interest cost relates to notes payable and includes amortization of debt discount and finance costs charges as described below.

Year ended January 31, 2012 compared to year ended January 31, 2011.

For the year ended January 31, 2012, we had an operating loss of $305,350 compared to an operating loss of $570,374 for the year ended January 31, 2011. The decrease in operating loss from 2010 to 2011 is primarily due to a $311,304 goodwill impairment charge in 2010. We had a total loss for the year ended January 31, 2012 of $91,548 compared to $1,031,968 for the year ended January 31, 2011.  The significant decrease in total net loss is in direct relation to goodwill impairment charge in 2010 and $344,549 gain on debt conversion features as a result of debt charges in 2011.

Liquidity and Capital Resources

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.

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Legal matters

 

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 Company ’ s Halcyon Jet subsidiary to the Company ’ s 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.

7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Not applicable.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

BIOCUBE, INC.

(A Development Stage Company) 

FINANCIAL STATEMENTS

CONTENTS

	Page(s)
Report of Independent Registered Certified Public Accounting Firm	15
Consolidated Balance Sheets - As of January 31, 2012 and 2011	16
Consolidated Statements of Operations	17
For the years ended January 31, 2012 and 2011
and the period from April 20, 2009 (inception)
through January 31, 2012
Consolidated Statement of  Stockholders ’ Equity (Deficit)	18
For the years ended January 31, 2012 and 2011
and the period from April 20, 2009 (inception)
through January 31, 2012
Consolidated Statements of Cash Flows	19
For the years ended January 31, 2012 and 2011
and the period from April 20, 2009 (inception)
through January 31, 2012
Notes to Consolidated Financial Statements	20

14

REPORT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of  BioCube, Inc.

We have audited the accompanying balance sheets of BioCube, Inc. (a development stage company) formerly known as Alliance Network Communications Holdings, Inc. as of January 31, 2012 and 2011 and the related statements of operations, stockholders ’ equity (deficit), and cash flows for the years then ended and for the period from inception (April 20, 2009) through January 31, 2012. BioCube ’ s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company ’ s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of BioCube, Inc. as of January 31, 2012, and the results of its operations and its cash flows for the years then ended and for the period from inception (April 20, 2009) through January 31, 2012 in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring operating losses and has working capital and stockholders ’ deficits which raise substantial doubt about its ability to continue as a going concern. Management ’ s plans regarding these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Moss, Krusick & Associates, LLC

Winter Park, Florida

April 30, 2012

15

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

16

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

17

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

18

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

19

BioCube, Inc.

(A Development Stage Company)

Notes to the Financial Statements

January 31, 2012

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 April 30, 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 Company ’ s assets and the satisfaction of liabilities in the normal course of business. Since its formation in April 2009, BioCube, the Company ’ s principal subsidiary, has been a development stage company and had 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.

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BioCube, Inc.

(A Development Stage Company)

Notes to the Financial Statements

January 31, 2012

Note 2.  Significant Accounting Policies (continued)

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 Company ’ s 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. 

Cash and Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Goodwill

The Company recorded goodwill as the excess of the consideration paid over the estimated fair values of the assets acquired and liabilities assumed in a business combination. The goodwill is not amortized, but is subject to an annual impairment test in accordance with FASB ASC Topic 350-20. The two step test first determines whether the carrying amount of the reporting unit exceeds the fair value of the reporting unit. If so, the next step is to measure the impairment loss as the difference between the implied fair value of the goodwill and the carrying amount of the reporting unit, at January 31, 2011, the Company determined its carrying amount in goodwill was not recoverable and recorded an impairment loss of $311,304 during the year ended January 31, 2011.

Impairment of Long-Lived Assets

The Company reviews and evaluates long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The assets are subject to impairment consideration under ASC 360-10-35-17 if events or circumstances indicate that their carrying amounts might not be recoverable. The Company performed impairment analyses using rules of ASC 930-360-35, Asset Impairment, and 360-10-15-3 through 15-5, Impairment or Disposal of Long-Lived Assets and has determined the license asset  related to the decontamination unit was impaired due to termination of the license for non-payment to licensor and recorded a $24,000 charge to impairment loss on the accompanying statement of operation for the year ended January 31, 2012. The Company also determined that a promissory note issued during the initial reverse merger was fully impaired and recorded a charge of $101,916 in other expense on the accompanying statement of operation for the year ended January 31, 2011.

21

BioCube, Inc.

(A Development Stage Company)

Notes to the Financial Statements

January 31, 2012

Note 2.  Significant Accounting Policies (continued)

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.

 

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 Company ’ s 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 Company ’ s 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. Management ’ s 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 January 31, 2012 and 2011, the Company has approximately $1,422,000 and $1,332,000 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 of $404,000 and $452,000 respectively at January 31, 2012 and 2011as realization of the asset is not assured.

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 (options  – 21,667; warrants – 457,111; and convertible debentures – 2,438,933) are anti-dilutive.

 

Outstanding options were issued by the Company ’ s 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).

22

BioCube, Inc.

(A Development Stage Company)

Notes to the Financial Statements

January 31, 2012

Note 2.  Significant Accounting Policies (continued)

Reclassifications

Certain prior period amounts were reclassified to conform to the current period classifications.

New Accounting Pronouncements

 

In September 2011, the FASB issued an amendment to Topic 350, Intangibles — Goodwill and Other, which simplifies how entities test goodwill for impairment. Previous guidance under Topic 350 required an entity to test goodwill for impairment using a two-step process on at least an annual basis. First, the fair value of a reporting unit was calculated and compared to its carrying amount, including goodwill. Second, if the fair value of a reporting unit was less than its carrying amount, the amount of impairment loss, if any, was required to be measured. Under the amendments in this update, an entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads the entity to determine that it is more likely than not that its fair value is less than its carrying amount. If after assessing the totality of events or circumstances, an entity determines that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, then the two-step impairment test is unnecessary. If the entity concludes otherwise, then it is required to test goodwill for impairment under the two-step process as described under paragraphs 350-20-35-4 and 350-20-35-9 under Topic 350. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011 and early adoption is permitted. The new pronouncement will not impact the Company ’ s current financial statements.

Management does not believe there would have been a material effect on the accompanying financial statements had any recently issued, but not yet effective, accounting standards been adopted in the current period.

Fair Value Measurements

 

Accounting principles generally accepted in the United States define fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Additionally, the inputs used to measure fair value are prioritized based on a three-level hierarchy. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

·	Level 1  — Quoted prices in active markets for identical assets or liabilities.
·	Level 2  — Observable inputs other than quoted prices included in Level 1. We value assets and liabilities included in this level using dealer and broker quotations, bid prices, quoted prices for similar assets and liabilities in active markets, or other inputs that are observable or can be corroborated by observable market data.

·	Level 3  — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

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BioCube, Inc.

(A Development Stage Company)

Notes to the Financial Statements

January 31, 2012

Note 2.  Significant Accounting Policies (continued)

Recurring Fair Value Measurements

In accordance with accounting principles generally accepted in the United States, certain assets and liabilities are required to be recorded at fair value on a recurring basis. For the Company, the only assets and liabilities that are adjusted to fair value on a recurring basis are derivative instruments which were fair valued using Level 2 inputs (see Note 4).

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. As of January 31, 2012 and 2011, the balances were as follows:

	January 31, 2012		January 31, 2011
Decontamination unit	$                              -		$                 27,000
Accumulated Amortization	-		(1,500)
	$                              -		$                 25,500

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.

Note 4.  Related Party Transactions

Due to Related Parties – current portion includes the following:

	January 31, 2012		January 31, 2011
Notes payable - net of discount (1)	$        17,000		$              17,000
Notes payable – BioCube acquisition	11,500		11,500
Financing fees (2)	6,000		6,000
	$        34,500		$              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 Company ’ s common stock at $.001.  In addition, the Company issued warrants to purchase 45,000 shares of the Company ’ s 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 Company ’ s common stock which would exceed 4.9% of the number of shares of common stock outstanding.

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BioCube, Inc.

(A Development Stage Company)

Notes to the Financial Statements

January 31, 2012

Note 4. Related Party Transactions (continued)

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, is due a fee for due diligence related to the convertible debenture arrangement discussed below.  The total fee will be $10,000 and is earned based upon a formula related to the amount of the borrowings incurred.

Due to Related Party – non-current

 

Due to Related Parties – non-current consists 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 is 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.

During the years ended January 31, 2011 and 2010, the Company borrowed $66,880 and $64,000, respectively, under this agreement, for a total borrowed of $130,880. As of January 31, 2011, the fair value of the liability, including a conversion feature liability of $344,549 was recorded on the accompanying balance sheet at $475,429.

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 into a Consolidated and Amended Debenture.  The previous debentures which were re-paid and replaced with the Consolidated and Amended Debenture were as follows:

25

BioCube, Inc.

(A Development Stage Company)

Notes to the Financial Statements

January 31, 2012

Note 4. Related Party Transactions (continued)

DATE	PRINCIPAL	ACCRUED INTEREST	TOTAL PRINCIPAL AND INTEREST
11/16/2009	$       12,000	$               2,925	$                    14,925
11/20/2009	10,000	2,206	12,206
1/4/2010	10,000	1,964	11,964
1/7/2010	5,000	976	5,976
1/15/2010	7,000	1,345	8,345
2/1/2010	5,000	928	5,928
2/4/2010	1,860	343	2,203
2/23/2010	6,000	1,063	7,063
3/8/2010	6,200	1,068	7,268
3/22/2010	5,000	834	5,834
4/19/2010	5,000	781	5,781
5/5/2010	12,000	1,777	13,777
5/12/2010	2,200	326	2,526
5/19/2010	5,000	723	5,723
6/4/2010	5,000	692	5,692
6/15/2010	5,000	671	5,671
12/16/2010	3,500	224	3,724
1/24/2011	5,120	251	5,371
5/16/2011	12,500	77	12,577
	$      123,380	$             19,174	$                  142,554

The new Debenture is for a three year term ending June 1, 2014 and allows the holder to convert all of 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 features were not in the money on issuance.

On October 1, 2011, the Company converted $137,600 of accounts payable due to CF Consulting, LLC into a five percent (5%) convertible note. This note allows the holder to convert all or part of the amount due at closing market price of the common shares at the issue date ($0.02 per share). No conversion liability or debt discount was recorded on new debt as features were not in the money on issuance.

26  

BioCube, Inc.

(A Development Stage Company)

Notes to the Financial Statements

January 31, 2012

Note 5.  Litigation

In September 2008, Jet One Group, Inc. ("Jet One") commenced an action against Halcyon Jets Holdings, Inc., the Company ’ s 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 Company ’ s 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 One ’ s 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.

In October and December 2008, Blue Star Jets, LLC  ( “ Blue Star ” ) filed a complaint against the Company and certain former employees, including our former President, who were former employees of Blue Star ( “ former Blue Star employee ” ) in the Supreme Court of New York, New York County alleging, among other matters, that the Blue Star ’ s former employees stole confidential information belonging to Blue Star prior to joining the Company and that one or more of such former employees violated post-employment restrictive covenants by joining the  Company. The complaint seeks $7 million in damages.  This action is a revival of an earlier action that was voluntarily discontinued by Blue Star in 2007. In January 2011, the Company was dismissed from the case.

All other pending litigation against the Company was terminated during the year ended January 31, 2011, with no liability of any kind assessed against the Company.

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 Company ’ s Halcyon Jet subsidiary to the Company ’ s former Chief Executive Officer the Company was indemnified by the buyer against any liability which may arise from the above litigation.

27

Note 6.  Subsequent Events

On March 1, 2012, the Company replaced the $137,600 convertible note to CF Consulting, LLC into a five percent (5%) convertible note for $140,463 representing the original principal plus accrued interest through February 29, 2012. This note was then assigned to Crystal Falls Investment, LLC on March 1, 2012 for $140,463.

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.

On March 9, 2012, LeadDog Capital, LP sold the $204,601 convertible note to Crystal Falls for $206,170 representing the original principal plus accrued interest through March 8, 2012.

As previously reported on the form 8-K dated April 12, 2012, the Company transferred and conveyed all of the operating assets relating to the development and marketing of an environmentally safe aerosol based decontamination system, together with certain related operating liabilities, to BioCube, Inc., a Nevada corporation, in exchange for shares of common stock of BioCube Nevada, as a result of which BioCube Nevada will become a wholly-owned subsidiary of the Company.

The Company then transferred and conveyed all of the stock of BioCube Nevada to Élan Health Services, Inc., an unrelated Nevada corporation, in exchange for 28,727,778 shares of Allezoe Medical Holdings, Inc., a publicly traded (ALZM) Delaware corporation held by Élan Health services, Inc. pursuant to an Acquisition Agreement dated December 19, 2011. Common shares of ALZM closed on December 16, 2011 at $0.012 per share, resulting in an indicated value for the acquisition of $344,733.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

None.

ITEM 9 A 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 Company ’ s 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 January 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 Company ’ s disclosure controls and procedures were not effective as of January 31, 2012, because of the material weakness described below.

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 Annual Report on Form 10-K, to ensure that the Company ’ s Annual 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 Company ’ s financial condition, results of operations, and cash flows for the periods presented.

Management ’ s Report on Internal Control over Financial Reporting

 

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company ’ s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States of America. Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company ’ s assets that could have a material effect on the interim or annual financial statements.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.

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The Chief Executive and Financial Officer assessed the effectiveness of our internal control over financial reporting as of January 31, 2012. In performing its assessment of the effectiveness of our internal control over financial reporting, management applied the criteria described in the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ( ‘ ‘ COSO ’ ’ ).

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 Company ’ s annual or interim financial statements will not be prevented or detected on a timely basis.

The material weaknesses 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 could result in a material misstatement of significant accounts or disclosures that would result in a material misstatement to our interim or annual financial statements that would not be prevented or detected. Accordingly, management has determined that this control deficiency constitutes a material weakness.

 

Because of the material weaknesses, management concluded that the Company did not maintain effective internal control over financial reporting as of January 31, 2012, based on the criteria in Internal Control-Integrated Framework issued by COSO. Control deficiencies that constituted material weaknesses, are described below.

Material Weaknesses

Lack of Effective Policies Regarding the General Accounting System . We do not have any documented processes for the input, accumulation, or testing of financial data that would provide assurance that all transactions are accurately and timely recorded or that the financial reports will be prepared on a periodic basis.

Lack of Effective Control over Financial Statement Disclosure . We do not maintain effective controls over financial statement disclosure. Specifically, controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements.

Management, including our CEO and contract CFO, has determined that the financial resources and personnel needed to address the material weaknesses identified or conduct a more robust evaluation of its controls would be overly costly and burdensome and is currently not warranted. As the Company grows and resources become available, management will develop and implement remedial actions to address the material weaknesses it has identified.  

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management ’ s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management ’ s report in this annual report.

Changes in Internal Control over Financial Reporting

There were no changes in internal control over financial reporting during the fourth quarter ended January 31, 2012.

ITEM 9 B. OTHER INFORMATION

 

None.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

 

Directors and Executive Officers

Our directors, executive officers and key executives of our operating groups during fiscal year ended January 31, 2012 are as follows:

Name		Age		Position with Company
Boris Rubizhevsky		61		Director, Chairman and Chief Executive Officer
Jan E. Chason		65		Former Chief Financial Officer
Winston ( “ Buzz ” ) Willis		64		Former Director
Paul Lisak		65		Former Director

                                                                                                                                                                                                                                                  

BORIS RUBISHEVSKY has served as a Director of the Company since August 2009. He was a Director of United EcoEnergy Corp. from June 2008 until April 16, 2010, serves as a director of TheraBiogen, Inc. ( “ TRAB ” ), and is Chairman, sole director and chief executive officer of EcoReady Corporation ( “ ECRD ” ).  Mr. Rubizhevsky founded NexGen Security Corporation, a consulting firm specializing in homeland security, biological and environmental products and technologies. In 1992 Mr. Rubizhevsky co-founded Isonics Corporation a diversified international company in life science, semi-conductor wafer services and homeland security products.  Before founding Isonics, Mr. Rubizhevsky spent more than ten years with General Electric Company in a number of international sales and marketing managerial positions. Mr. Rubizhevsky holds a B.S. degree in engineering from the Stevens Institute of Technology.

 

Boris Rubizhevsky has over thirty years of business experience ranging from corporate management and mergers and acquisitions, to business development, sales and marketing and has held officer positions in public companies since 1997.  The companies have been as large as $150 million in market value and have grossed up to $30 million in revenue. Boris provides relevant Chief Executive Officer as well technology experience.

 

JAN E. CHASON was appointed the Company ’ s Chief Financial Officer in September 2009.  He is also the Chief Financial Officer of Spring Creek Capital Corp. and United EcoEnergy Corp. since November 20, 2009 and October 7, 2009 respectively.    Mr. Chason has also served as the Chief Financial Officer of several other publicly-owned companies including Halcyon Jets Holdings, Inc. (the Company ’ s predecessor from August 2007 to August 2009), Ckrush Inc. (February 2006 to September 2008) and Majesco Entertainment Company (January 2003 to January 2006). Mr. Chason was also formerly a partner at Ernst & Young.  Mr. Chason is a certified public accountant and has a Bachelor of Business Administration from City College of New York.

Since 1994, Mr. Chason has been a senior financial officer of ten public companies which ranged from development stage to mature operating companies with revenues ranging from $10 million to $1.6 billion.  During his 25 year career in public accounting he provided assurance services to both publicly-owned as well as privately-own enterprises.  Mr. Chason provides a high level of financial literacy as well a broad exposure to various industries.

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  WINSTON ‘ BUZZ ’ WILLIS   has been a Director of the Company since August 2009 and is also a Director of Paradise Music & Entertainment, Inc.  Mr. Willis is acknowledged as a true pioneer and marketing innovator in the music industry.   Since 1996 he has provided services such as artist management, tour direction, record production and concert tour promotion.  Buzz is a member of the R&B Hall of Fame.  He has a B.S. degree from Case Weston University in Business Administration.

In addition to being a member of the Rhythm & Blues Hall of Fame and at the time the youngest Vice-President of a public music company Mr. Willis has been a member of the Board of Directors of a public company for many years. His addition to the Board provides diversity as well as marketing experience to our Board.

 

PAUL LISAK   has been a member of the Board of Directors since August 2009 and Director of Paradise Music & Entertainment, Inc. since 2007.  Mr. Lisak retired in 2002 as Los Angeles County ’ s Hazardous Materials Control Manager, and has over 30 years service devoted to the administration and management of public health and management of hundreds of millions of dollars in public funds. Mr. Lisak has a Bachelor ’ s Degree in Biology and another in Environmental Science, from Indiana State University. He also has a Master ’ s Degree in Environmental Science and Occupational Health from California State University at Northridge. Mr. Lisak provides governmental and political expertise to our Board.

ITEM 11. EXECUTIVE COMPENSATION

 

Summary Compensation Table

 

The following table sets forth certain information regarding compensation paid or accrued during each of the last two fiscal years to our Chief Executive Officers for each of those years and any officer who earned in excess of $100,000 during the year ended January 31, 2012.

                                         

Name and Principal Position		Year		Salary $		Option/ Warrant Awards $ (1)			All Other Compensation $			Total $
Boris Rubishevsky		2012		180,000		-0-			180,000			180,000
Chief Executive Officer		2011		90,000		-0-			90,000			180,000

 

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT RELATED STOCKHOLDER MATTERS

 

The following table is based on 28,727,778 shares of Common Stock issued and outstanding on January 31, 2012 plus 1,470,000 equivalent voting rights applicable to issued and outstanding 21,000 shares of Series A Preferred and sets forth based upon our knowledge of securities issued by us, certain information regarding the ownership of our common stock, by (i) each person or entity who, to our knowledge, owns more than 5% of our voting power; (ii) each executive officer; (iii) each director; and (iv) all of our executive officers and directors as a group. Unless otherwise indicated in the footnotes to the following table, each of the stockholders named in the table has sole voting and investment power with respect to such shares of common stock. The address of each of the stockholders listed below except as noted is c/o BioCube, Inc., 1365 N. Courtenay Parkway, Suite A, Merritt Island, FL 32953.

 

Name of Beneficial Owner			Number of Equivalent Shares Beneficially Owned				Voting Power (%)
Boris Rubizhevsky			6,000,000				20.9
All executive officer and directors as a group (4 persons)			6,000,000				20.9
Leaddog Capital LP (1)			2,388,300				8.3
Leaddog Capital Markets, LLC (1)			431,667				1.5
Lawler & Associates, LLP (2)			7,496,667				26.1
Spring Creek Healthcare, Inc. (3)			2,000,000				6.7
Totals			18,313,634				63.7

 

(1)	Leaddog Capital LP and Leaddog Capital Markets, LLC are entities related to each other and collectively hold 9.9 percent of the outstanding shares as well as warrants and options to acquire additional shares; however, under no circumstances can they hold collectively more than 9.9 percent of the issued and outstanding shares.
(2)	Lawler & Associates disclaims beneficial ownership of these shares as it is holding them in trust for certain clients
(3)	Spring Creek Healthcare (SCRK) is an unrelated company whose common shares are traded on the OTB BB.

 

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None.

 

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

 

In September, 2010, we retained Moss, Krusick & Associates, LLC ( “ Moss, Krusick ” ) to audit our financial statements for fiscal 2011. We understand the need for Moss, Krusick to maintain objectivity and independence in its audit of our financial statements and our internal control over financial reporting. To minimize relationships that could appear to impair the objectivity of Moss, Krusick, we have restricted the non-audit services that Moss, Krusick may provide to us primarily to tax services and merger and acquisition due diligence services. The Company has also adopted policies and procedures for pre-approving all non-audit work performed by Moss, Krusick. The Chairman of the Board is authorized to pre-approve any audit or non-audit service on behalf of the Board, provided such decisions are presented to the full Board at its next regularly scheduled meeting.

The aggregate fees billed by Moss, Krusick in fiscal 2012 and 2011for these various services were:

 

Type of Fees		2012	2011
Audit fees		$    30,600	$    13,000
Audit-Related fees
Tax Fees
Total		$    30,600	$    13,000

In the above table, in accordance with the SEC ’ s rules, “ audit fees ” are fees that we paid to Moss, Krusick for the audit of our annual financial statements included in the Form 10-K and review of financial statements included in the Form 10-Qs. “ Audit-related fees ” are merger and acquisition due diligence services. “ Tax fees ” are fees for tax compliance.  

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PART IV

ITEM 15. EXHIBITS

 

(a)   Exhibits    

Exhibit Number		Description
31.1		Certification by Chief Executive and Financial Officer pursuant to Sarbanes-Oxley Section 302.
32.1		Certification by Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350

(1)    Incorporated by reference from the Company ’ s Definitive Information Statement filed July 30, 2009

(2)    Incorporated by reference from the Company's Current Report on Form 8-K filed August 27, 2009

(3)    Incorporated herein by reference from the Company ’ s Current Report on Form 8-K filed July 19, 2December 20, 2010. August 23, 2007.

(b) Reports on Form 8-K

Form 8-K report filed December 20, 2010 reporting merger of wholly-owned subsidiaries Alliance Network Communications, Inc. and BioCube, Inc. into the Company by the filing of a Statement of Ownership

SIGNATURES

 

In accordance with Section 13 or 15 (d) 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.
Dated April 30, 2012	By:	/s/  Boris Rubizhevsky
		Boris Rubizhevsky

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