XOTC:RBCC Quarterly Report 10-Q/A Filing - 6/30/2012

Effective Date 6/30/2012

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-Q/A

Amendment No. 1


(MARK ONE)


[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934


FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2012


OR


[   ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934


FOR THE TRANSITION PERIOD FROM _________ TO _________


COMMISSION FILE NUMBER: 333-169554


RAINBOW CORAL CORP.

(Exact name of registrant as specified in its charter)


Florida

 

27-3247562

(State or other jurisdiction of

 

(I.R.S. Employer

Incorporation or organization)

 

Identification Number)

 

 

 

495 Grand Blvd., Suite 206

 

 

Miramar Beach, Florida

 

32550

(Address of principal executive offices)

 

(Zip Code)


Registrant’s telephone number, including area code: (850) 269-7230


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 [X]  No [   ]


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes [X]  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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


 

Large accelerated filer

[   ]

Accelerated filer

[   ]

 

Non-accelerated filer

[   ]

Smaller reporting company

[X]

 

(Do not check if smaller reporting company)

 

 


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)  Yes [   ]  No [X]


Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. 7,613,682 shares of common stock are issued and outstanding as of August 7, 2012.




EXPLANATORY NOTE


The purpose of this Amendment No. 1 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2012 (“Form 10-Q”) is to submit Exhibit 101 to the Form 10-Q in accordance with Rule 405 of Regulation S-T. Exhibit 101 consists of the Interactive Data Files from the Registrant’s Form 10-Q for the quarterly period ended June 30, 2012, filed with the Securities and Exchange Commission on August 14, 2012.


Additionally, we corrected two typographical errors. (1) On the Balance Sheets on page 3, in the STOCKHOLDERS’ (DEFICIT) section, the Common Stock shares issued and outstanding for the respective periods were inadvertently reversed. It is now correctly stated as “... 655,000 shares and 575,000 shares issued and outstanding at June 30, 2012 and March 31, 2012, respectively.”  (2) On the Statement of Cash Flows on page 6, the column heading has been corrected from “Six months ended June 30,” to “Three months ended June 30,”


TABLE OF CONTENTS


 

 

Page

PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements

 

 

Balance Sheets (Unaudited)

3

 

Statement of Operations (Unaudited)

4

 

Statement of Stockholders’ Equity (Unaudited)

5

 

Statement of Cash Flows (Unaudited)

6

 

Notes to Financial Statements (Unaudited)

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

9

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

10

Item 4.

Controls and Procedures

10

 

 

 

PART II – OTHER INFORMATION

Item 1.

Legal Proceedings

11

Item 1A.

Risk Factors

11

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

11

Item 3.

Defaults Upon Senior Securities

12

Item 4.

Mine Safety Disclosures

12

Item 5.

Other Information

12

Item 6.

Exhibits

12


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION


Certain statements in this report contain or may contain forward-looking statements. These statements, identified by words such as “plan”, “anticipate”, “believe”, “estimate”, “should”, “expect” and similar expressions include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements are subject to known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward - looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, our ability to secure suitable financing to continue with our existing business or change our business and conclude a merger, acquisition or combination with a business prospect, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Readers should carefully review this report in its entirety, including but not limited to our financial statements and the notes thereto and the risks described in our Annual Report on Form 10-K for the fiscal year ended August 31, 2010. We advise you to carefully review the reports and documents we file from time to time with the Securities and Exchange Commission (the “SEC”), particularly our quarterly reports on Form 10-Q and our current reports on Form 8-K. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.


OTHER PERTINENT INFORMATION


When used in this report, the terms, “we,” the “Company,” “our,” and “us” refers to Rainbow Coral Corp. a Florida corporation.


- 2 -



RAINBOW CORAL CORP.

Balance Sheets

(Unaudited)


 

 

June 30,
2012

 

March 31,
2012

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

24,765

 

$

20,219

 

Prepaid expenses

 

 

350

 

 

350

 

Inventory

 

 

35,071

 

 

28,253

 

Total current assets

 

 

60,186

 

 

48,822

 

 

 

 

 

 

 

 

 

Fixed assets, net of accumulated depreciation

 

 

7,188

 

 

6,460

 

Goodwill

 

 

27,868

 

 

27,868

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

$

95,242

 

$

83,150

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

33,604

 

$

30,848

 

Advances payable

 

 

300,526

 

 

182,751

 

Total current liabilities

 

 

334,130

 

 

213,599

 

 

 

 

 

 

 

 

 

Note payable

 

 

59,379

 

 

52,775

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

 

393,509

 

 

266,374

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ (DEFICIT)

 

 

 

 

 

 

 

Preferred Stock, $0.0001 par value; 10,000,000 shares authorized;
no shares issued and outstanding at December 31, 2011 and March 31, 2011

 

 

 

 

 

Common Stock, $0.0001 par value; 250,000,000 authorized; 655,000 shares and 575,000 shares issued and outstanding at June 30, 2012 and
March 31, 2012, respectively

 

 

66

 

 

58

 

Additional paid-in capital

 

 

930,934

 

 

388,942

 

Accumulated Deficit

 

 

(1,229,267

)

 

(572,224

)

Total stockholders’ equity (deficit)

 

 

(298,267

)

 

(183,224

)

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

 

$

95,242

 

$

83,150

 


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


- 3 -



RAINBOW CORAL CORP.

Statement of Operations

(Unaudited)


 

 

Three months ended
June 30,

 

 

 

2012

 

2011

 

 

 

 

 

 

 

 

 

REVENUE

 

$

24,388

 

$

3,670

 

COST OF GOODS SOLD

 

 

13,873

 

 

465

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

 

10,515

 

 

3,205

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

Sales, general and administrative expenses

 

 

667,347

 

 

31,841

 

 

 

 

 

 

 

 

 

LOSS FROM OPERATIONS

 

 

(656,832

)

 

(28,636

)

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

Interest expense

 

 

(211

)

 

 

 

 

 

 

 

 

 

 

NET LOSS

 

$

(657,043

)

$

(28,636

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS PER COMMON SHARE –
Basic and fully diluted

 

$

(1.06

)

$

(0.05

)

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

 

 

622,143

 

 

550,000

 


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


- 4 -



RAINBOW CORAL CORP.

Statement of Stockholders’ Equity (Deficit)

(Unaudited)


 

 

 

 

Additional

 

 

 

 

 

 

 

Common Stock

 

Paid-In

 

Accumulated

 

 

 

 

 

Shares

 

Amount

 

Capital

 

Deficit

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, MARCH 31, 2012

 

575,000

 

$

58

 

$

388,942

 

$

(572,224

)

$

(183,224

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued for services

 

80,000

 

 

8

 

 

541,992

 

 

 

 

542,000

 

Net loss

 

 

 

 

 

 

 

(657,043

)

 

(657,043

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, JUNE 30, 2012

 

655,000

 

$

66

 

$

930,934

 

$

(1,229,267

)

$

(298,267

)


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


- 5 -



RAINBOW CORAL CORP.

Statement of Cash Flows

(Unaudited)


 

Three months ended June 30,

 

 

2012

 

2011

 

 

 

 

 

 

 

 

CASH (USED IN) OPERATING ACTIVITIES:

 

 

 

 

 

 

Net loss

$

(657,043

)

$

(28,636

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Stock based compensation

 

542,000

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Inventory

 

(6,818

)

 

(3,320

)

Accounts payable and accrued liabilities

 

2,756

 

 

(1,944

)

NET CASH (USED IN) OPERATING ACTIVITIES

 

(119,105

)

 

(33,900

)

 

 

 

 

 

 

 

CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

 

 

 

 

 

 

Acquisition of Father Fish, net of cash acquired

 

 

 

6,229

 

Purchase of fixed assets

 

(728

)

 

 

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

 

(728

)

 

6,229

 

 

 

 

 

 

 

 

CASH PROVIDED BY FINANCING ACTIVITIES:

 

 

 

 

 

 

Proceeds from advances

 

117,775

 

 

35,000

 

Proceeds from issuance of notes payable

 

13,894

 

 

 

Repayments of notes payable

 

(7,290

)

 

 

NET CASH PROVIDED BY FINANCING ACTIVITIES

 

124,379

 

 

35,000

 

 

 

 

 

 

 

 

NET (DECREASE) INCREASE IN CASH

 

4,546

 

 

7,329

 

CASH, at the beginning of the period

 

20,219

 

 

20,019

 

 

 

 

 

 

 

 

CASH, at the end of the period

$

24,765

 

$

27,348

 

 

 

 

 

 

 

 

Supplemental Disclosures of Cash Flow Information:

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

Interest

$

 

$

 

Taxes

$

 

$

 

 

 

 

 

 

 

 

Noncash investing and financing transactions:

 

 

 

 

 

 

Acquisition of Father Fish for note payable

$

 

$

40,000

 


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


- 6 -



RAINBOW CORAL CORP.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

June 30, 2011


NOTE 1. GENERAL ORGANIZATION AND BUSINESS


RAINBOW CORAL CORP. (the “Company”), a Florida corporation, was formed to build a coral farm facility to develop and propagate (or grow) live coral, independent of the oceans, as a future farm reserve against the decline of natural wild reefs. We intend to grow, harvest and distribute as many varieties of hard and soft sizes as possible of captive-bred corals that are attractive, to as many consumers as possible who can maintain them in a healthy ecosystem aquarium. We believe that coral and other marine aquarium livestock should be supplied by farms or captive breeders, rather than removed from the natural reefs. The additional uses for coral as a source of potential leading edge medical discoveries are an attractive opportunity for the Company’s coral farming activity. We believe that the world of bio-research is a natural continuation of our core coral propagation business. Accordingly on October 23, 2011, the Company formed a subsidiary, Rainbow Biosciences, LLC to look into the opportunities within the bioscience market. Rainbow Biosciences, LLC will continue to research opportunities into the bioscience markets.


The Company was incorporated on August 13, 2010 with its corporate headquarters located in Nokomis, Florida.  Through Board resolution, the Company’s fiscal year has been changed from August 31 to March 31.


NOTE 2. GOING CONCERN


The Company incurred a net loss of $657,043 during the three months ended June 30, 2012 and had net cash used in operating activities of $119,105 for the same period.  The Company does not expect to generate positive net income or generate positive cash flow from operating activities in the coming year.  The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. These matters, among others, raise substantial doubt about the ability of the Company to continue as a going concern. These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern.


NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES


Interim Financial Statements


The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, the financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and such adjustments are of a normal recurring nature. These financial statements should be read in conjunction with the financial statements for the year ended March 31, 2012and notes thereto and other pertinent information contained in our Form 10-K the Company has filed with the Securities and Exchange Commission (the “SEC”).


The results of operations for the three month period ended June 30, 2012 are not necessarily indicative of the results for the full fiscal year ending March 31, 2013.


Cash and Cash Equivalents


For the purpose of the financial statements cash equivalents include all highly liquid investments with maturity of three months or less.


Earnings (Loss) per Share


The basic earnings (loss) per share are calculated by dividing the Company’s net income available to common shareholders by the weighted average number of common shares outstanding during the year. The diluted earnings (loss) per share are calculated by dividing the Company’s net income (loss) available to common Shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted as of the first of the year for any potentially dilutive debt or equity. There are no diluted shares outstanding for any periods reported.


- 7 -



Use of Estimates


The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.


Goodwill


Goodwill represents the excess of purchase price and related costs over the value assigned to the net tangible and intangible assets of businesses acquired. We evaluate goodwill for impairment utilizing undiscounted projected cash flows in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 350, “Intangibles — Goodwill and Other” (“ASC Topic 350”). The Company has determined that there was no impairment of goodwill during the three months ended June 30, 2012.


Revenue and Cost Recognition


The Company recognizes revenue when persuasive evidence of an arrangement exists, product delivery has occurred or the services have been rendered, the price is fixed or determinable and collectability is reasonably assured. Revenue is recognized net of sales returns and allowances.


Recently Issued Accounting Pronouncements


The Company has adopted all recently issued accounting pronouncements. The adoption of the accounting pronouncements, including those not yet effective, is not anticipated to have a material effect on the financial position or results of operations of the Company.


NOTE 4. STOCKHOLDERS’ EQUITY


On April 13, 2012, the Company issued 20,000 shares of common stock to a third party for services. The shares were valued at $200,000 based on the market value of the stock on the date of issuance.


On April 30, 2012, the Company issued 30,000 shares of common stock to a third party for services. The shares were valued at $216,000 based on the market value of the stock on the date of issuance.


On May 31, 2012, the Company issued 30,000 shares of common stock to a third party for services. The shares were valued at $126,000 based on the market value of the stock on the date of issuance.


On June 13, 2011, Rainbow Coral Corp. entered into an agreement to purchase all of the assets and the business of Father Fish Aquarium, Inc. (“Father Fish”) for $50,000. Father Fish was owned and operated by Lou Foxwell, the Company’s CEO and sole director. Rainbow Coral, as the surviving entity, will continue the business operations as a publicly-traded business under the same name of Rainbow Coral Corp. In the Agreement, the parties agreed that Rainbow Coral Corp would convey to Lou Foxwell at closing $10,000 cash and a note payable in the amount of $40,000.  The note bears interest at 6% per year and is payable in 16 monthly installments of $2,500 with a final balloon payment due in the 17 th month.


NOTE 5. SUBSEQUENT EVENTS


On July 20, 2012, the Company signed a Convertible Promissory Note which refinanced non-interest bearing advances in the amount of $69,586 into a convertible note payable. The Convertible Promissory Note bears interest at 10% per annum and is payable along with accrued interest on July 20, 2013.  The Convertible Promissory Note is convertible into common stock at the option of the holder at the rate of $0.01 per share. On August 1, 2012, the holder of the Convertible Promissory Note elected to the convert the note into 6,958,598 shares of common stock. These shares were issued to Glendive Investments, a significant shareholder of the Company.


- 8 -



ITEM 2.  MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION


Overview


Rainbow Coral Corp. (“we”, “us”, “our”, “RBCC”, or the “Company”) was incorporated in the State of Florida on August 13, 2010. On June 13, 2011 we acquired all of the assets and the business of Father Fish Aquarium, Inc, (“Father Fish”) for $50,000. We plan to continue the business of Father Fish under the name of Rainbow Coral Corp. The Company was formed to build a coral farm facility to develop and propagate (or grow) live coral, independent of oceans, as a future farm reserve against the decline of natural wild reefs. We intend to grow, harvest and distribute as many varieties of hard and soft sizes as possible for use by consumers and as a source for advances in bio-research. The uses for coral as a source of potential leading edge medical discoveries are an attractive opportunity for the Company’s coral farming activity. We believe that the world of bio-research is a natural continuation of our core coral propagation business. Accordingly on October 23, 2011, the Company formed a subsidiary, Rainbow Biosciences, LLC to look into the opportunities within the bioscience market. On March 13, 2012, we entered into a stock purchase agreement (“N3D Stock Purchase Agreement”) with Nano3D Biosciences, Inc. (“N3D”), a Texas corporation that has developed a unique concept in three dimensional cell research tools. Under the terms of the N3D Stock Purchase Agreement, we have agreed to acquire 604 shares of common stock of N3D, representing approximately 5% of the outstanding shares on the date of the agreement, for a price of $413.62. The total purchase price of $249,826 will be paid by making weekly payments of $5,000 until fully paid. We may discontinue payment of the purchase price at any time by providing written notice to N3D. This would result in our owning fewer than 604 shares. Rainbow Biosciences, LLC will continue to research opportunities into the bioscience markets.


The Company was incorporated on August 13, 2010 with its corporate headquarters located in Nokomis, Florida.  Through Board resolution, the Company’s fiscal year has been changed from August 31 to March 31.


We were a development stage entity until June 13, 2011 when we acquired Father Fish Aquarium, Inc.


Results of Operations


The following discussion should be read in conjunction with the consolidated financial statements for the year ended June 30, 2012 included in the Company’s Form 10-K filed with the Securities and Exchange Commission (“SEC”). Results of interim periods may not be indicative of results for the full year.


Three months ended June 30, 2012 compared to the three months ended June 30, 2011


Revenue


Revenue increased to $24,388 for the three months ended June 30, 2012 compared to $3,670 for the three months ended June 30, 2011. The Company has been able to increase sales due to increased marketing efforts.


Cost of Goods Sold


Cost of goods sold increased to $13,873 for the three months ended June 30, 2012 compared to $465 for the comparable period of 2011. The increase in cost of goods sold was a result of the increase in revenue discussed above.


Gross Profit


Gross profit increased from $3,205 for the three months ended June 30, 2011 to $10,515 for the three months ended June 30, 2012. The increase in gross profit was a result of increased revenues as discussed above partially offset by a lower profitability rate on sales during the three months ended June 30, 2012.


General and administrative expenses


We recognized general and administrative expenses in the amount of $667,347 and $31,841 for the three months ended June 30, 2012 and for the three months ended June 30, 2011, respectively. During the three months ended June 30, 2012, we issued stock for services resulting in general and administrative expense of $542,000. The remaining increase in general and administrative expenses was the result of the increased operations of the Company as a result of the acquisition of Father Fish and exploring other business opportunities.


- 9 -



Going Concern


We incurred a net loss of $657,043 for the three months ended June 30, 2012. Net cash used by operations for the three months ended June 30, 2012 was $119,105. We do not anticipate having positive net income in the immediate future. These conditions create an uncertainty as to our ability to continue as a going concern.


We will need to obtain loans or other financing in order to fund operating shortfalls and do not foresee a change in this situation in the immediate future. There can be no assurance that we will be able to obtain these loans or that they will be available to us on terms that are acceptable to the Company. We will not be able to continue operations without them. We are pursuing alternate sources of financing, but there is no assurance that additional capital will be available to the Company when needed or on acceptable terms.


Liquidity and Capital Resources


At June 30, 2012, we had cash on hand of $24,765 and negative working capital of $273,944.


Net cash used in operating activities for the three months ended June 30, 2012 was $119,105.  We do not expect to achieve positive cash flow from operating activities in the near future.  We will require additional cash in order to fully implement our business plan.  There is no guarantee that we will be able funds when we need them or that funds will be available on terms that are acceptable to the Company.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.


As smaller reporting company, this information is not applicable.


ITEM 4.  CONTROLS AND PROCEDURES


Management’s Report On Internal Control Over Financial Reporting


Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the company’s principal executive and principal financial officers and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that:


 

·

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;

 

 

 

 

·

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and

 

 

 

 

·

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 financial statements.


Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. 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 the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.


- 10 -



As of June 30, 2012, management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.


The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) inadequate segregation of duties consistent with control objectives; and (3) ineffective controls over period end financial disclosure and reporting processes. The aforementioned material weaknesses were identified by our Chief Executive Officer in connection with the review of our financial statements as of June 30, 2012.


Management believes that the material weaknesses set forth in items (2) and (3) above did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.


Management’s Remediation Initiatives


In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have initiated, or plan to initiate, the following series of measures:


We will create a position to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to us. And, we plan to appoint one or more outside directors to our board of directors who shall be appointed to an audit committee resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures such as reviewing and approving estimates and assumptions made by management when funds are available to us.


Management believes that the appointment of one or more outside directors, who shall be appointed to a fully functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on our Board.


We will work as quickly as possible to implement these initiatives; however, the lack of adequate working capital and positive cash flow from operations will likely slow this implementation.


Changes in internal controls over financial reporting


There was no change in our internal controls over financial reporting that occurred during the period covered by this report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.


PART II - OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS.


None.


ITEM 1A.  RISK FACTORS.


Not applicable to a smaller reporting company.


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


None.


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ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.


None.


ITEM 4.  MINE SAFETY DISCLOSURES


Not applicable.


ITEM 5.  OTHER INFORMATION.


None.


ITEM 6.  EXHIBITS.


2.1

Stock Purchase Agreement, dated as of June 13, 2011, by and among Rainbow Coral Corporation and Father Fish Aquarium, Inc. (1)

 

 

2.2

Membership Interest Purchase Agreement, dated as of June 13, 2011 by and among Father Fish Aquarium, Inc. and Father Fish Aquarium, LLC. (1)

 

 

3.1

Articles of Incorporation of Rainbow Coral Corp. (2)

 

 

3.2

Articles of Amendment of Rainbow Coral Corp. (1)

 

 

3.3

Articles of Amendment of Rainbow Coral Corp. (3)

 

 

3.4

Bylaws of Rainbow Coral Corp. (2)

 

 

3.5

Articles of Incorporation of Father Fish Aquarium, Inc. (1)

 

 

3.6

Articles of Amendment of Father Fish Aquarium, Inc. (1)

 

 

3.7

Bylaws of Father Fish Aquarium, Inc. (1)

 

 

3.8

Articles of Organization of Father Fish Aquarium, LLC (1)

 

 

3.9

Articles of Amendment of Father Fish Aquarium, LLC (1)

 

 

3.10

Bylaws of Father Fish Aquarium, LLC (1)

 

 

10.1

Note from Rainbow Coral Corp. to Louis Foxwell (1)

 

 

31.1 *

Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive officer

 

 

31.2 *

Rule 13(a)-14(a)/15(d)-14(a) Certification of principal financial and accounting officer

 

 

32.1 *

Section 1350 Certification of principal executive officer and principal financial and accounting officer

 

 

101 **

XBRL Interactive Data


* Filed or furnished herewith


** In accordance with Regulation S-T, the Interactive Data Files in Exhibit 101 to the Quarterly Report on Form 10-Q shall be deemed “furnished” and not “filed”.


(1) Incorporated by reference to the comparable exhibit filed with our Form 8-K filed on June 13, 2011

(2) Incorporated by reference to the comparable exhibit filed with our Registration Statement on Form S-1

(3) Incorporated by reference to the Registrant’s Form 10-K for the year ended March 31, 2012.


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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.


 

RAINBOW CORAL CORP.

 

 

 

 

BY:

/s/ Patrick Brown

 

 

Patrick Brown

 

 

President, Secretary, Treasurer,

 

 

Principal Executive Officer,

 

 

Principal Financial and Accounting

 

 

Officer and Sole Director

 

 

 

 

Dated: September 12 , 2012


- 13 -


XOTC:RBCC Quarterly Report 10-Q/A Filling

XOTC:RBCC Stock - Get Quarterly Report SEC Filing of XOTC:RBCC stocks, including company profile, shares outstanding, strategy, business segments, operations, officers, consolidated financial statements, financial notes and ownership information.

XOTC:RBCC Quarterly Report 10-Q/A Filing - 6/30/2012
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