BICB BioCube Inc (CE)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A Amendment 1

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

For the quarterly period ended April 30, 2013

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

For the transition period from                          to

  

Commission file number: 333-137920

BIOCUBE, INC.

(Exact name of Company as specified in its charter)

  

	Delaware	20-3547389
	(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
25B Hanover Road Suite 150 Florham Park, NJ		07932
(Address of Company’s principal executive offices)		(Zip Code)

(626) 644-9113

(Company’s telephone number, including area code)

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

Yes þ    No o

Indicate by check mark whether the Company has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Company was required to submit and post such files).   

Yes þ    No o

Large accelerated filer                                       o	Accelerated filer                                o
Non-accelerated filer                                         o (Do not check if a smaller reporting company)	Smaller reporting company              x

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

  Yes o   No þ

As of June 14, 2013, there were 44,842,758 Common Shares, $.001 par value per share, outstanding.

EXPLANATORY STATEMENT

We are filing this amendment to provide amended financial statements as a result of recalculation of derivative liability from $41,864 loss to $32,462 gain. Net loss per common share (diluted and basic) changed from (0.01) to (0.00) as a result of the calculation. The accompanying consolidated financial statements as of April 30 2013, have been reviewed by an independent public accountant in accordance with Statement of Auditing Standards No. 100, Interim Financial Information (“SAS100”).  

TABLE OF CONTENTS

PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Balance Sheets at April 30, 2013 (unaudited) and January 31, 2013	1
	Statements of Operations for the three months ended April 30, 2013 and 2012 and from inception (April 20, 2009) to April 30, 2013 (unaudited)	2
	Statement of Stockholders’ Equity (Deficit) from inception (April 20, 2009) to April 30, 2013 (unaudited)	3-4
	Statements of Cash Flows for the three months ended April 30, 2013 and 2012, and from inception (April 20, 2009) to April 30, 2013 (unaudited)	5
	Notes to Financial Statements (unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	17
Item 4.	Controls and Procedures	18
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	18
Item 1A.	Risk Factors	19
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19
Item 3.	Defaults Upon Senior Securities	19
Item 4.	Removed and Reserved	19
Item 5.	Other Information	19
Item 6.	Exhibits	19
Signatures		19

i

PART I — FINANCIAL INFORMATION

Item 1.    FINANCIAL STATEMENTS

BIOCUBE, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
				April 30, 2013 (Unaudited)		January 31, 2013
			Assets
Current Assets
	Cash			$                                      -		$                                    39
	Deferred loan costs, net of accumulated amortization of $5,000 and $4,710, respectively			-		290
Total Current Assets				-		329
Total Assets				$                                      -		$                                  329
			Liabilities & Stockholders' Equity (Deficit)
Current Liabilities
	Accounts payable and accrued liabilities			$                             92,651		$                             92,651
	Bank overdraft			15
	Convertible notes payable-current, net of debt discount of $24,766 and $170,141, respectively			1,023,989		839,358
	Accrued interest payable			50,747		27,189
	Accrued salaries			140,456		95,456
	Derivative liability			99,000		134,479
Total Current Liabilities				1,406,858		1,189,133
	Convertible notes payable non-current, net of debt discount of $10,593 and $12,433, respectively			9,407		7,567
	Accrued interest payable - non-current			2,800		2,117
Total Liabilities				1,419,065		1,198,817
Stockholders' Equity (Deficit)
	Preferred stock - A - $.001 par value, 21,000 shares authorized, issued and outstanding			21		21
	Common Stock, $0.001 par value, 300,000,000 authorized , 44,842,700 and 50,271,270
		shares issued and outstanding at April 30, 2013 and January 31, 2013		44,843		50,271
	Additional paid in capital			732,412		763,223
	Deficit accumulated during the development stage			(2,196,341)		(2,012,003)
Total Stockholders' Equity (Deficit)				(1,419,065)		(1,198,488)
Total Liabilities and Stockholders' Equity (Deficit)				$                                      -		$                                  329

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

1

BIOCUBE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(Unaudited)
		Three Months Ended April 30, 2013	Three Months Ended April 30, 2012	For the Period from April 20, 2009 (Inception) to April 30, 2013
Revenues		$                                      -	$                                       -	$                                  -
General & Administrative
	Consulting	-	30,000	260,000
	Professional fees	-	7,046	87,646
	Officer salaries	45,000	-	495,000
	Impairment loss	-	-	335,304
	General and administrative	344	168	216,351
Total Expenses		45,344	37,214	1,394,301
Loss from operations		(45,344)	(37,214)	(1,394,301)
Other income (expense)
	Finance cost	-	-	(123,010)
	Gain (loss) on conversion feature liability	-	-	(101,916)
	Gain  on extinguishment of debt	-	-	76,419
	Gain (loss) on derivatives	32,462	-	(73,143)
	Interest, net	(171,456)	(8,183)	(580,390)
Loss before income taxes		(184,338)	(45,397)	(2,196,341)
Income taxes		-	-	-
Net loss		$                        (184,338)	$                          (45,397)	$                 (2,196,341)
Net loss per common share (basic and diluted)		$                              (0.00)	$                              (0.00)
Weighted average number of shares outstanding during the period - basic and diluted		48,776,090	29,422,248

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

2

BIOCUBE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
From Inception (April 20, 2009) to October 31, 2012
	Preferred Stock		Common Stock		Paid In Capital	Deficit Accumulated During Development  Stage	Total Stockholders' Equity (Deficit)
	Shares	Amount	Shares	Amount
Balances at April 20, 2009	-	$                -	-	$                 -	$                 -	$                     -	$                     -
Common stock issued to founders for cash	-	-	1,000,000	100	-	-	100
Effect of recapitalization-reverse acquisition	21,000	21	18,977,778	19,878	80,101	-	100,000
Issuance of warrants in connection with financing-related party	-	-	-	-	7,517	-	7,517
Financing cost-related party	-	-	-	-	6,750	-	6,750
Net (loss) for period ended January 31, 2010	-	-	-	-	-	(123,990)	(123,990)
Balance, January 31, 2010	21,000	21	19,977,778	19,978	94,368	(123,990)	(9,623)
Stock issued for acquisition	-	-	8,750,000	8,750	-	-	8,750
Net (loss) for period ended January 31, 2011	-	-	-	-	-	(1,031,968)	(1,031,968)
Balance, January 31, 2011	21,000	21	28,727,778	28,728	94,368	(1,155,958)	(1,032,841)
Beneficial conversion feature-notes payable	-	-	-	-	101,475	-	101,475
Expenses paid by shareholder	-	-	-	-	5,000	-	5,000
Conversion of notes payable , related party	-	-	453,175	453	23,339	-	23,792
Net (loss) for period ended January 31, 2012	-	-	-	-	-	(91,550)	(91,550)
Balance, January 31, 2012	21,000	21	29,180,953	29,181	224,182	(1,247,508)	(994,124)
Conversion of notes payable , related party	-	-	21,090,317	21,090	100,731	-	121,821
Issuance of notes payable with beneficial conversion features	-	-	-	-	312,184	-	312,184
Settlement of derivative liabilities on conversion of notes payable	-	-	-	-	126,126	-	126,126
Net (loss) for period ended January 31, 2013	-	-	-	-	-	(764,495)	(764,495)
Balance, January 31, 2013	21,000	21	50,271,270	50,271	763,223	(2,012,003)	(1,198,488)

3

Conversion of notes payable , related party	-	-	1,714,286	1,714	1,886	-	3,600
Cancellation of notes and conversion of notes payable, related party	-	-	(7,142,856)	(7,142)	(35,714)	-	(42,856)
Settlement of derivative liabilities on conversion of notes payable	-	-	-	-	3,017	-	3,017
Net (loss) for period ended April 30, 2013	-	-	-	-	-	(184,338)	(184,338)
Balance, April 30, 2013	21,000	21	44,842,700	44,843	732,412	(2,196,341)	(1,419,065)

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

4

BIOCUBE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(Unaudited)
				Three Months Ended April 30, 2013	Three Months Ended April 30, 2012	For the Period from April 20, 2009 (Inception) to April 30, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss				$                       (184,338)	$                         (45,397)	$              (2,196,341)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
	Amortization			147,505	-	561,567
	Impairment loss			-	-	437,220
	(Gain) loss on extinguishment of debt			-	-	(76,419)
	(Gain) loss on derivatives			(32,462)	-	73,143
	Expenses paid by shareholder			-	5,000	5,000
Changes in operating assets and liabilities:
		Accrued interest receivable		-	-	(1,917)
		Accounts payable and accrued expenses		-	32,046	272,984
		Bank overdraft		15	-	15
		Accrued salaries		45,000	-	539,650
		Accrued interest payable		24,241	8,183	168,831
NET CASH USED IN OPERATING ACTIVITIES				(39)	(168)	(216,267)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of BioCube, Inc.				-	-	3,287
NET CASH PROVIDED BY INVESTING ACTIVITIES				-	-	3,287
CASH FLOWS FROM FINANCING ACTIVITIES:
Due to related party				-	-	152,880
Issuance of common stock				-	-	100
Proceeds from notes				-	-	60,000
NET CASH PROVIDED BY FINANCING ACTIVITIES				-	-	212,980
NET CHANGE IN CASH				(39)	(168)	-
CASH - BEGINNING OF THE PERIOD				39	1,419	-
CASH - END OF THE PERIOD				$                                    -	$                           1,251	$                              -
Supplemental cash flow information
	Cash payments for:
		Interest		$                                    -	$                                    -	$                               -
		Income taxes		$                                    -	$                                    -	$                               -
Supplemental disclosure of non-cash investing and
	financing activities:
	Acquisition of BioCube, Inc. for common stock			$                                    -	$                                    -	$                       8,750
	Conversion of accrued interest to notes payable			$                                    -	$                            2,863	$                     86,281
	Conversion of accounts payable to notes payable			$                                    -	$                                    -	$                   183,105
	Conversion of related party notes  to notes payable			$                                    -	$                                    -	$                   187,054
	Conversion of interest due to related party to notes payable			$                                    -	$                                    -	$                     11,959
	Beneficial conversion feature - notes payable			$                                    -	$                                    -	$                   413,659
	Warrants issued in connection with funding fees – related party			$                                    -	$                                    -	$                       6,750
	Conversion of notes payable to common stock			$                            3,600	$                          15,937	$                   149,213

	Conversion of notes payable, long-term to current			$                                    -	$                                    -	$                   117,600
	Reclassification of derivative liability to APIC			$                            3,017	$                                    -	$                   129,143
	Debt discount on notes payable from derivative liability			$                                    -	$                                    -	$                   155,000
	Cancellation of notes and conversion of notes payable			$                          42,856	$                                    -	$                     42,856
	Conversion of accrued salary to notes payable			$                                    -	$                                    -	$                   663,387

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

5

BioCube, Inc.    

(A Development Stage Company)

Notes to the Financial Statements

April 30, 2013

(Unaudited)

Note 1.  Description of Business

  

BioCube, Inc. (formerly Alliance Network Communications Holdings, Inc.) (the “Company”) is a development stage company.  The Company was incorporated in Delaware. The Company plans to market and distribute Li-ion batteries in North America. The aerosol based decontamination system business formerly operated by the Company was terminated in the quarter ended January 31, 2013 and the Company now is engaged solely in the business of developing and marketing Li-ion batteries in North America.  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, BioCube has been a development stage company and has not begun its efforts to produce and market electrical surge protection devices or the aerosol based decontamination system, and its activities, to date, have been organizational in nature, and have been directed towards the raising of capital and initiating its business plan.

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

The balance sheet at April 30, 2013 has been derived from the unaudited financial statements at that date but does not include all the information and footnotes required by generally accepted accounting principles for complete financial statements.

These interim financial statements should be read in conjunction with the Company's audited financial statements and notes for the year ended January 31, 2013 filed with the Securities and Exchange Commission on Form 10-K on April 30, 2013.

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.

6

BioCube, Inc.    

(A Development Stage Company)

Notes to the Financial Statements

April 30, 2013

 (Unaudited)

Note 2.  Significant Accounting Policies (continued)

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. 

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 April 30, 2013 and January 31, 2013, the Company has approximately $2,196,341 and $2,012,003 of net operating loss carry forwards and other taxable temporary differences available to affect future taxable income. The Company has established a valuation allowance equal to the tax benefit of the net operating loss carry forwards and other taxable temporary differences as realization of the asset is not assured of $746,756 and $684,081 respectively at April 30, 2013 and January 31, 2013.

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.

 

7

BioCube, Inc.    

(A Development Stage Company)

Notes to the Financial Statements

April 30, 2013

 (Unaudited)

Note 2.  Significant Accounting Policies (continued)

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 at April 30, 2013 (options – 21,667; warrants – 457,111; and convertible debentures – 142,543,738) 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 3).

New Accounting Pronouncements

  

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

Fair Value Measurements

  

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

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

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

8

BioCube, Inc.    

(A Development Stage Company)

Notes to the Financial Statements

April 30, 2013

 (Unaudited)

Note 2.  Significant Accounting Policies (continued)

·	Level 1 — Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.
·	Level 2 — Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly observable as of the reported date and includes those financial instruments that are valued using models or other valuation methodologies.
·	Level 3 — pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

Derivatives

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

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

Note 3. Related Party Transactions

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.

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%.

9

BioCube, Inc.    

(A Development Stage Company)

Notes to the Financial Statements

April 30, 2013

 (Unaudited)

Note 3.  Related Party Transactions (continued)

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

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

In November 2012, the Company agreed with Crystal Falls Investments, LLC to consolidate all existing debt, and accrued interest as of November 14, 2012, into a single convertible promissory note in the principal amount of $292,298, due in May 2013 with interest at 14 percent and convertible into common stock at $0.006 per share.  No beneficial conversion feature has been calculated on this note as the conversion price is below the current trading price.

Also in November, 2012, Crystal Falls assigned $10,714 in principal on the note to each of 6 different parties and replacement notes were issued to each of the parties, on the same terms as the original note.  Subsequently, in January 2013, the six assignees each converted the replacement notes into 1,785,714 shares of common stock; however, four of the six assignees failed to pay the agreed consideration for the note assignments and the assignments have been rescinded as of April 3, 2013.  The shares issued in January 2013 as a result of the conversion of these 4 notes, a total of 7,142,856 common shares, have now been returned for cancellation and are no longer issued and outstanding.  The principal balance of the notes previously converted, a total of $42,856, has been restored to the Crystal Falls note balance.

Note 4. Convertible Notes

The Company has issued a number of convertible promissory notes to various parties, which allow the holder to convert the notes into common stock of the Company, at a discount to the current market price of the common stock at the time of conversion.  The following details the significant terms of these convertible notes payable, and the balances due at April 30, 2013, net of debt discounts related to the beneficial conversion features of the notes:

10

BioCube, Inc.    

(A Development Stage Company)

Notes to the Financial Statements

April 30, 2013

 (Unaudited)

Note 4. Convertible Notes  (continued)

	April 30, 2013 (Unaudited)		January 31, 2013
Asher Enterprises/Walter D. Whitt On June 11, 2012, the Company issued its promissory note in the amount of $32,500 to an unrelated third party for additional working capital.  The note is due March 7, 2013 and carries interest at 8 percent per annum, payable at maturity.  The note is convertible into common stock of the Company after 180 days, at the election of the Holder, at 55 percent of the average of the three lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert. The Company analyzed the conversion option for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the instrument should be classified as liabilities once the conversion option became effective after 180 days due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options. As of January 31, 2013, $7,800 of the note had been converted. On March 27, 2013, Asher Enterprises converted an additional $3,600 in principal on its remaining promissory note into 1,714,286 shares of common stock, leaving a balance due of $21,100.  On April 11, 2013, Asher Enterprises sold the note to Walter D. Whitt, an unaffiliated party.  There were no changes to the note terms. As of April 30, 2013, a derivative liability associated with the note totaled $36,278, and accrued interest was $1,012. The carrying amount of the debt discount was $0 and $12,781, respectively.	$                    21,100		$                11,919
Loan to Officer: On November 1, 2012, the Company converted $663,387 of accrued salaries due to Boris Rubizhevsky into a convertible note. The note is due April 1, 2013 and carries interest at 8 percent per annum, payable at maturity. The note is convertible into common stock of the Company immediately upon issuance, at the election of the Holder, at $0.015, which is closing market price at issue date. As of April 30, 2013, no amounts had been converted and no conversion liability or debt discount was recorded as features were not in the money upon issuance. As of April 30, 2013, accrued interest was $26,317.	663,387		663,387

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BioCube, Inc.

(A Development Stage Company)

Notes to the Financial Statements

April 30, 2013

 (Unaudited)

Note 4. Convertible Notes  (continued)

Crystal Falls Investments, LLC

On November 14, 2012, the Company consolidated several notes held by Crystal Falls Investments, LLC into one Consolidated and Amended convertible promissory note totaling $292,298 (of which a total of $64,285 was assigned and transferred to six other parties, with each party subsequently converting their note into 1,785,714 shares of common stock). In April, 2013, Crystal Falls Investments, LLC rescinded the assignment of 4 promissory notes made in November 2012.  As a result, the conversion of the 4 notes into 1,785,714 shares of common stock each in January 2013 also has been rescinded and 7,142,856 common shares have been canceled and returned to the treasury. The remaining note balance of $270,868 is due May 17, 2013 and carries interest at 14 percent per annum, payable at maturity.  The note is convertible into common stock of the Company at any time after issuance of the note, at the election of the Holder, at $0.006 per share. No additional amounts had been converted as of April 30, 2013. The carrying amount of the debt discount was $18,688 and $130,827, respectively. Interest of $17,992 was accrued on this note as of April 30, 2013.	252,180	97,186
On December 14, 2012, the Company issued a promissory note totaling $4,099 to Crystal Falls Investments for additional working capital advances.  The note is due September 14, 2013 and bears interest at 14 percent per annum, payable at maturity. The note is convertible into common stock of the Company at any time after issuance of the note, at the election of the Holder, at par value. No amounts had been converted as of April 30, 2013. The carrying amount of the debt discount was $2,035 and $3,381, respectively. Interest of $215 was accrued on this note as of April 30, 2013.	2,064	718

Blue Shoes Investments:

On December 14, 2012, the Company issued a promissory note totaling $6,500 to an unrelated third party for additional working capital advances.  The note is due December 14, 2013 and bears interest at 14 percent per annum, payable at maturity. The note is convertible into common stock of the Company at any time after issuance of the note, at the election of the Holder, at par value. No amounts had been converted as of April 30, 2013. The carrying amount of the debt discount was $4,042 and $5,645, respectively. Interest of $342 was accrued on this note as of April 30, 2013.	2,458	855

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BioCube, Inc.    

(A Development Stage Company)

Notes to the Financial Statements

April 30, 2013

 (Unaudited)

Note 4. Convertible Notes  (continued)

Other:
On June 14, 2012, the Company issued its promissory note in the amount of $20,000 (with original issue date of February 15, 2012) to an unrelated third party for additional working capital. The note is due February 15, 2015 and carries interest at 14 percent per annum, payable at maturity. The note is convertible into common stock of the Company at any time after issuance of the note, at the election of the Holder, at $0.007 per share. Interest of $2,800 was accrued on this note as of April 30, 2013. The carrying amount of the debt discount was $10,593 and $12,433, respectively.	9,407	7,567

Lotus Capital Investments:
On April 12, 2012, the Company issued its promissory note in the amount of $90,000 to an unrelated third party for additional working capital. The note is due April 12, 2013 and carries interest at 5 percent per annum, payable at maturity. The note is convertible into common stock of the Company at any time after issuance of the note, at the election of the Holder, at the lesser of 50 percent of the average of the ten lowest closing bid prices of the common stock for the ten trading days prior to the date of the election to convert or $0.05 per share. The Company analyzed the conversion option for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the instrument should be classified as liabilities once the conversion option became effective due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options. The Company converted $7,200 of this note into 1,454,545 shares during the year ended January 31, 2013, leaving $82,800 as the remaining loan balance. As of April 30, 2013, a derivative liability associated with the note totaled $134,346 and accrued interest was $4,870. The carrying amount of the debt discount was $0 and $17,507, respectively.	82,800		65,293
Total debt	1,033,396		846,925
Current portion of long-term debt	(1,023,989)		(839,358)
Long-term debt	$         9,407	$          7,567

The convertible notes contain limitations on conversion such that note holders and affiliates generally cannot beneficially own more than 4.99% of the outstanding shares of common stock of the Company

Note 5 Derivative Liabilities

The Company has various convertible instruments outstanding more fully described in Note 4. Because the number of shares to be issued upon settlement cannot be determined under these instruments, the Company cannot determine whether it will have sufficient authorized shares at a given date to settle any other of its share-settleable instruments. As a result, under ASC 815-15 “Derivatives and Hedging”, all other share-settleable instruments must be classified as liabilities.

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BioCube, Inc.    

(A Development Stage Company)

Notes to the Financial Statements

April 30, 2013

 (Unaudited)

Note 5 Derivative Liabilities   (continued)

Embedded Derivative Liabilities in Convertible Notes

During the three months ended April 30, 2013 and as a result of conversion of notes payable described in Note 4, the Company reclassified $3,017 of derivative liabilities to equity and the change in fair value of derivatives was ($32,462).

As of April 30, 2013, the fair value of the Company’s derivative liabilities was $99,000, and $32,462 was recognized as a gain on derivatives due to change in fair value of the liability during the quarter ended April 30, 2013.

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

		Fair Value  Measurements Using Significant  Unobservable  Inputs (Level 3)
Derivative Liabilities:
Balance at January 31, 2013		$	134,479
ASC 815-15 additions			-
Change in fair value			(32,462)
ASC 815-15 deletions			(3,017)
Balance at April 30, 2013		$	99,000

The following table summarizes the derivative gain or loss recorded as a result of the derivative liabilities above:

		Included in Other Income (Expense) on Statement of Operations
Gain/(Loss) on Derivative Liability:
Change in fair value of derivatives		$	32,462
Derivative expense			-
Balance quarter ended April 30, 2013		$	32,462

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

		Convertible Debt Instruments
Risk-free rate			0.21% - 0.25%
Expected volatility			100% - 500%
Expected life			9-12 months

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BioCube, Inc.    

(A Development Stage Company)

Notes to the Financial Statements

April 30, 2013

 (Unaudited)

Note 6.  Litigation

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 and the Company has no claims or other potential matters that could be the subject of legal proceedings by 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.

Note 7.  Subsequent Events

None

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Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

INTRODUCTION AND CERTAIN CAUTIONARY STATEMENTS

FORWARD-LOOKING STATEMENTS

  

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

Corporate Background

  

BioCube, Inc. (The “Company”) is a development stage company. The Company was incorporated in Delaware. On December 17, 2012, Registrant entered into an agreement with Li-Ion Technologies Limited, a Russian limited liability company(“Liotech”) with its principal office located in Moscow and production facilities located in Novosibirsk, Russia, granting BioCube the right to market and distribute batteries in the North American market utilizing the Liotech proprietary and patented process.  The Company’s prior business of researching, designing, manufacturing, and distributing an environmentally safe aerosol based decontamination system, was abandoned in December 2012.  There were no related costs associated with the abandonment of that business.

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.

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 had not begun its efforts to produce and market contamination products or to develop and market batteries, 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.

Business Plan

 

  We are a development stage company which plans to develop and market the Liotech batteries in North

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America.  Liotech is a manufacturer of advanced lithium ion battery for use in conventional power plants, renewable energy systems, industrial uninterruptable power supply devices, network energy storage and other commercial and household energy storage related uses.  Liotech, one of the largest Li-Ion batteries manufacturers in the world with total annual production capacity of 1.4GWh, was created in 2010 to further the development of lithium-ion battery technologies for use as energy storage in conventional and solar or wind power applications, electrical vehicles and uninterrupted power supplies. BioCube will distribute Liotech batteries and battery management systems in North America, initially to companies in the solar and wind power generation markets, followed by marine equipment and electrical vehicles producers.

  

Results of Operations

Three months ended April 30, 2013 and 2012

  

During the quarters ended April 30, 2013 and 2012, the Company had no revenues as its activities principally involved its planning for the execution of its business plan.  Expenses incurred in the three months ended April 30, 2013 were accrued salary expense of $45,000, general and administrative of $344 derivative gain of $32,462 and net interest expense of $171,456 resulting in a net loss of $184,338 compared to April 30, 2012 expenses relating to consulting expenses of $30,000, professional expenses of $7,046, general and administrative of $168, and interest expense, net of $8,183, resulting in net loss of $45,397.  

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.

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.

  

Item 3.   QUALITITATIVE AND QUALITIATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable

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Item 4.   CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company is in the process of implementing disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the ‘‘Exchange Act’’), that are designed to ensure that information required to be disclosed in the 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 April 30, 2013, 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 procedures and concluded that the Company’s disclosure controls and procedures were not effective as of April 30, 2013, because of the material weakness described below.  A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

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

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

Changes in Internal Control over Financial Reporting

During the three months ended April 30, 2013, there were no changes in our system of internal controls over financial reporting.

PART II — OTHER INFORMATION

Item 1.   LEGAL PROCEEDINGS

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.

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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 1A.	Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended January 31, 2013, which could materially affect our business, financial condition and/or operating results. The risks described in our Annual Report on Form 10-K is not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.    

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

    None during the quarter ended April 30, 2013.

  

Item 3.      DEFAULTS UPON SENIOR SECURITIES

     None.

Item 4.      REMOVED AND RESERVED

Item 5.      OTHER INFORMATION

  

     None.

ITEM 6.   EXHIBITS

  

(a) Exhibits

  

31	Certification of Chief Executive and Financial Officer
32	Section 1350 Certification of Chief Executive Officer and Chief Financial Officer

  

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

  

	BIOCUBE, INC.
Date: February 11, 2015	/s/ Paul Lisak
	Paul Lisak Chief Executive and Financial Officer

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