Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
FORWARD LOOKING STATEMENTS
Rainbow Coral Corporation (referred to in this Current Report on Form 8-K as “we” or the “Company”) desires to take advantage of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. This report contains a number of forward-looking statements that reflect management’s current views and expectations with respect to our business, strategies, future results and events and financial performance. All statements made in this report other than statements of historical fact, including statements that address operating performance, events or developments that management expects or anticipates will or may occur in the future, including statements related to future cash flows, revenues, profitability, adequacy of funds from operations, statements expressing general optimism about future operating results and non-historical information, are forward-looking statements. In particular, the words “believe,” “expect,” “intend,” “ anticipate,” “estimate,” “may,” “will,” and variations of such words and similar expressions identify forward-looking statements, but are not the exclusive means of identifying such statements and their absence does not mean that a statement is not forward-looking. These forward-looking statements are subject to certain risks and uncertainties, including those discussed below. Our actual results, performance or achievements could differ materially from historical results as well as those expressed in, anticipated, or implied by the forward-looking statements contained herein. We do not undertake any obligation to revise these forward-looking statements to reflect any future events or circumstances.
Readers should not place undue reliance on forward-looking statements, which are based on management’s current expectations and projections about future events, are not guarantees of future performance, are subject to risks, uncertainties and assumptions (including those described below) and apply only as of the date of this report. Our actual results, performance or achievements could differ materially from the results expressed in, or implied by, the forward-looking statements contained herein. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in “Risk Factors” below as well as those discussed elsewhere in this report, and other communications to shareholders issued by us from time to time, which attempt to advise interested parties of the risks and factors that may affect our business. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
EXPLANATORY NOTE
On June 13, 2011, Rainbow Coral Corporation (“RCC”) acquired 100% of the common stock of Father Fish Aquarium, a Florida Corporation (“FFAI”). FFAI also owns 100% of the ownership interest of Father Fish Aquarium, LLC, a Florida Limited Liability Company (“FFAL”). FFAI and FFAL will be held by RCC as wholly owned subsidiaries pursuant to the purchase agreement (attached herein as Exhibit 2.1) and the consolidated businesses will continue the business operations of FFAI and FFAL as a publicly-traded company under the same name of Rainbow Coral Corporation (the “Company”).
The terms “the Company,” “we,” “us,” and “our” refer to RCC and, its subsidiaries FFAI and FFAL. This Current Report on Form 8-K contains summaries of the material terms of various agreements executed in connection with the transactions described herein. The summaries of these agreements are subject to, and qualified in their entirety by, reference to these agreements, all of which are incorporated herein by reference.
Section 1 – Registrant’s Business and Operations
Item 1.01. Entry into a Material Definitive Agreement
Definitive Acquisition Agreement
On June 13, 2011, RCC entered into a Definitive Acquisition Agreement with FFAI, and purchased the business to continue as a going concern. As of the date on which the agreement was entered into, because Louis Foxwell is the sole officer and director of RCC and FFAI, and is also the managing member of FFAL, a material relationship existed between the parties.
Brief Description of the Definitive Acquisition Agreement
Some of the significant terms contained in the Agreement are as follows and the entire Agreement is included as an exhibit to this Report on Form 8-K.
2
Acquisition of Ownership and Business of FFAI and FFAL
The Definitive Acquisition Agreement conveyed 100% of the common stock of FFAI to RCC. As consideration for the acquisition, RCC agreed to pay fifty thousand ($50,000) to Louis Foxwell; $10,000 cash at closing and $40,000 in a fully amortizing note with 6% interest. Monthly installments of $2,500 will be paid to Louis Foxwell for 16 months with a final payment for the remaining balance due at the end of the 17th month. The note may be prepaid at any time without penalty.
Surviving Entities
In accordance with and subject to the provisions of the Agreement and the Florida Corporations Code (“FCC”), upon Closing of the acquisition of FFAI (the “Acquisition”), the Company shall continue its corporate existence under the laws of the State of Florida. Upon Closing, each FFAI and FFAL will be wholly owned subsidiaries of RCC. All properties, franchises and rights belonging to FFAI and FFAL, by virtue of the Acquisition and without further act or deed, shall be vested in the Company, which shall thenceforth be responsible for all the liabilities and obligations of each of FFAI and FFAL.
Closing
The Acquisition became effective at the time and date of the execution and delivery of consideration under the terms and conditions set forth in the Acquisition Agreement.
Common Stock and Ownership Interest Acquired
RCC acquired all of the common stock and business of FFAI, and all of the ownership interest in FFAL. In doing so, RCC now owns all of the assets and liabilities of both companies including: bank accounts, accounts receivable, notes payable, accounts payable, good will, business contracts or agreements, equipment, inventory of goods, and all other movable property and all assets of the business known as FFAI or FFAL, owned and operated by Louis Foxwell.
Default Provision
The $40,000 note due to Louis Foxwell is collateralized by the common stock of FFAI. Default shall, at the option of the holder, without notice of default, mature the entire obligation. RCC and Mr. Foxwell agree that in the event of default, the only remedy available to Mr. Foxwell shall be the delivery to Mr. Foxwell of Certificate #1001 of FFAI representing 100% of the issued and outstanding shares of FFAI.
Section 2 – Financial Information
Item 2.01. Completion of Acquisition or Disposition of Assets.
Acquisition of the Common Stock and Business of Father Fish Aquarium, Inc.
Definitive Acquisition Agreement
On June 13, 2011, Rainbow Coral Corporation (“RCC”) acquired 100% of the common stock of Father Fish Aquarium, Inc., a Florida Corporation (“FFAI”) and 100% of the ownership interest of Father Fish Aquarium, LLC, a Florida Limited Liability Company (“FFAL”). FFAI and FFAL will be held by RCC as wholly owned subsidiaries pursuant to the purchase agreement and the consolidated businesses will continue the business operations of FFAI and FFAL as a publicly-traded company under the same name of Rainbow Coral Corporation (the “Company”). As of the date on which the agreement was entered into, because Louis Foxwell is the sole officer and director of both RCC and FFAI, and is the managing member of FFAL, a material relationship existed between the parties. The amount of consideration exchanged for the companies was $50,000. The purchase price was determined by using market multiples of projected EBITDA.
3
Business
Rainbow Coral Corporation is an operating company, incorporated in the State of Florida on August 13, 2010, as a for-profit company, and electing a fiscal year end of March 31. Our business and registered office is located at 291 LaCosta Rd., Nokomis, FL 34275. Our telephone number is 941-480-1230.We commenced operations on June 13, 2011, contemporaneously with the Acquisition of FFAI and FFAL. As of March 31, 2011, we had cash and cash equivalents of $20,019 and for the twelve months ended March 31, 2011, we had no revenues and incurred a net loss of $17,013. Prior to the Acquisition, the development of our business was limited to organizational matters, the preparation of our business plan and financial statements, and formation of capital.
We intend to raise additional capital to fund continuing operations and growth. We expect to secure sufficient financing; however there is no guarantee that we will be successful in this regard. In order to implement our business plan and fund the anticipated growth of our continuing operations, we anticipate that we will require $100,000. We have not taken steps to secure the $100,000 in additional financing.
In their audit report dated May 31, 2011; our auditors have expressed an opinion that substantial doubt exists as to whether we can continue as an ongoing business. Because our officers may be unwilling or unable to loan or advance any additional capital to us, we believe that if we do not raise additional capital within 12 months of disclosure, we may be required to suspend or cease operations.
We currently own and operate a business that sells saltwater and freshwater fish, live coral, equipment, supplies, and services under the trade name “Rainbow Coral Corporation.” Our services include the sale, consultation, and servicing of saltwater and freshwater fish and equipment for residential and commercial clients. Roughly half of our sales are generated by the sale of salt water fish, and the remainder is generated from the sale of freshwater fish and equipment.
We generally provide free consultations to new and repeat clients related to the initial setup and maintenance of saltwater and freshwater aquarium environments. In doing this, we are able to offer a high quality of service by educating our client base which generally leads to repeat business from those customers. We maintain inventory of fresh water and salt water fish, as well as aquariums, live coral and plants, submersible pumps, and related chemicals and testing equipment to maintain ideal aquatic environments.
We provide our services on-site at our retail location to business representatives and individuals. Mr. Louis Foxwell, our President, Chief Executive Officer and Director, applies his over 50 years of industry knowledge and experience to consult with our future clients to select the configuration best suited to their specific requirements and budgets. Our registered office is in the city of Nakomis, Florida and we primarily market our services in and around Venice, Florida. We expect to implement a sales and marketing effort to increase demand for our products and services. In addition, we expect to grow our business to adjacent cities and states and also offer our products via mail order.
Summary of our Financial Information
The following table sets forth selected financial information, which should be read in conjunction with the information set forth in the accompanying financial statements and related notes included elsewhere in this disclosure.
| | | | |
| PERIOD FROM INCEPTION ON
AUGUST 13, 2010 TO
MARCH 31, 2011 |
Revenue | | $ | — | |
Expenses | | $ | 17,013 | |
Net Profit (Loss) | | $ | (17,013 | ) |
Net Profit (Loss) per share | | $ | 0.00 | |
| | | | |
| AS OF
MARCH 31, 2011 |
Working Capital | | $ | 16,987 | |
Total Assets | | $ | 20,019 | |
Total Current Liabilities | | $ | 3,032 | |
4
As indicated in the financial statements the predecessor entity RCC did not have meaningful operations and revenues prior to the acquisition. However, after completing the acquisition of the businesses of FFAI and FFAL, the successor business reflects the continuing operations that were anticipated in our registration statement on Form S-1. Although we have commenced operations, our auditor has issued a “going concern” opinion, based upon our reliance on future capitalization to fund continuing operations.
Risk Factors
Please consider the following risk factors and other information in this disclosure relating to our business before deciding to invest in our common stock. Any investment in our common stock involves a high degree of risk. You should carefully consider the risks described below and all of the information contained herein before deciding whether to purchase our common stock. If any of the following risks actually occur, our business, financial condition and results of operations could be harmed. The trading price of our common stock could decline due to any of these risks, and you may lose all or part of your investment. We consider the following to be the material risks for our investors. Our company should be viewed as a high-risk investment and speculative in nature. An investment in our common stock may result in a complete loss of the invested amount. Please consider the following risk factors before deciding to invest in our common stock.
Risks Related to our Business
WE ARE AN EARLY-STAGE COMPANY WITH LIMITED OPERATING HISTORY AND WE FACE A HIGH RISK OF BUSINESS FAILURE WHICH WOULD RESULT IN THE LOSS OF YOUR INVESTMENT.
We are an early stage company and have only a limited operating history upon which an investment evaluation can be made. We were incorporated on August 13, 2010 and commenced operations with the acquisitions of FFAI and FFAL. We have inherited the business operations of FFAI and FFAL. Thus, attention should be directed to the financial statements of all entities for historical financial data upon which to evaluate.
We expect that our results of operations may also fluctuate significantly in the future as a result of a variety of market factors including, among others, the entry of new competitors offering a similar service; the availability of motivated and qualified personnel; the initiation, renewal or expiration of our customer base; pricing changes by us or our competitors, specific economic conditions in our industry and general economic conditions. Accordingly, our future sales and operating results are difficult to forecast. As of the date of this disclosure, we have realized negative cash flow from operations. Failure to generate positive cash flow from operations will cause us to go out of business, which could result in the complete loss of your investment.
BECAUSE OUR CURRENT SOLE CHIEF EXECUTIVE OFFICER AND DIRECTOR DOES NOT HAVE SIGNIFICANT EXPERIENCE IN MANAGING A PUBLIC COMPANY, OUR BUSINESS HAS A HIGHER RISK OF FAILURE.
Although our sole Officer and Director has business experience in the retail sales of marine animals and equipment, he does not have experience in managing a public company. Without this experience, our management's business expertise may not be enough to effectively maintain our company. As a result, our financial and operations performance could be negatively affected.
BECAUSE WE ARE SMALL AND DO NOT HAVE MUCH CAPITAL, WE MUST LIMIT OUR MARKETING ACTIVITIES. AS A RESULT, OUR FUTURE SALES MAY NOT BE ENOUGH TO OPERATE PROFITABLY. IF WE DO NOT MAKE A PROFIT, WE MAY HAVE TO SUSPEND OR CEASE OPERATIONS.
Due to the fact we are small and do not have much capital, we must limit our marketing activities to potential customers having the likelihood of purchasing our products. Because we will be limiting the scope of our marketing activities, we may not be able to generate enough sales to operate profitably. If we cannot operate profitably, we may have to suspend or cease operations.
OUR OPERATING RESULTS MAY PROVE UNPREDICTABLE WHICH COULD NEGATIVELY AFFECT OUR PROFIT.
5
Our operating results are likely to fluctuate significantly in the future due to a variety of factors, many of which we have no control. Factors that may cause our operating results to fluctuate significantly include: our inability to generate enough working capital from future financings; fluctuations in the demand for our products; the amount and timing of operating costs and capital expenditures relating to expansion of our business, operations and infrastructure and general economic conditions. If realized, any of these risks could have a material adverse effect on our business, financial condition and operating results.
KEY MANAGEMENT PERSONNEL MAY LEAVE THE COMPANY WHICH COULD ADVERSELY AFFECT THE ABILITY OF THE COMPANY TO CONTINUE OPERATIONS.
Because we are entirely dependent on the efforts of our sole Officer and Director, his departure or the loss of other key personnel in the future, could have a material adverse effect on our business. We do not maintain key person life insurance on our sole Officer and Director.
IF OUR COMPANY IS DISSOLVED, IT IS UNLIKELY THAT THERE WILL BE SUFFICIENT ASSETS REMAINING TO DISTRIBUTE TO OUR SHAREHOLDERS.
In the event of the dissolution of our company, the proceeds realized from the liquidation of our assets, if any, will be used primarily to pay the claims of our creditors, if any, before there can be any distribution to the shareholders. In that case, the ability of equity investors to recover all or any portion of their investment will depend on the amount of funds realized and the claims to be satisfied therefrom.
IF WE ARE UNABLE TO GROW OUR MARKET SHARE FOR OUR PRODUCTS AND SERVICES, WE MAY BE UNABLE TO GENERATE SUSTAINED REVENUE TO CONTINUE OUR BUSINESS.
Our growth strategy is substantially dependent upon our ability to market our services successfully to prospective buyers. However, our products may not sustain market acceptance for any significant period of time. Failure of our products to sustain market acceptance could have a material adverse effect on our business, financial conditions and the results of our operations.
MANAGEMENT'S ABILITY TO IMPLEMENT OUR BUSINESS STRATEGY MAY BE SLOWER THAN EXPECTED AND WE MAY BE UNABLE TO GENERATE A PROFIT.
Our sales and marketing plan includes broadening the reach of our customer base in order to expand sales which may not occur. Our growth strategy is subject to significant risks which you should carefully consider before purchasing our Common Stock. Although we plan on executing our plan carefully, the implementation may be slow to achieve profitability, or may not become profitable at all, which will result in losses. There can be no assurance that we will succeed.
We may be unable to enter into new markets successfully. The factors that could affect our growth strategy include our success in (a) obtaining new orders from consumers (individual consumers and through our anticipated E-commerce website), (b) obtaining adequate financing on acceptable terms, and (c) adapting our internal controls and operating procedures to accommodate our future growth. Our systems, procedures and controls may not be adequate to support the expansion of our business operations. Significant growth will place managerial demands on all aspects of our operations. Our future operating results will depend substantially upon our ability to manage changing business conditions and to implement and improve our technical, administrative and financial controls and reporting systems.
IF WE ARE UNABLE TO MANAGE OUR FUTURE GROWTH OUR BUSINESS COULD BE HARMED.
If we experience significant growth in the foreseeable future, our growth may place a significant strain on management, financial, operating and technical resources. Failure to manage growth effectively could have a material adverse effect on our financial condition or the results of our operations.
IF WE ARE FORCED TO INCUR UNANTICIPATED COSTS OR EXPENSES, WE MAY HAVE TO SUSPEND OR CEASE OPERATIONS ENTIRELY WHICH COULD RESULT IN A TOTAL LOSS OF YOUR INVESTMENT.
6
Because we are a small business, with limited assets, we are not in a position to bear unanticipated costs and expenses. If we have to make changes in our structure or are faced with circumstances that are beyond our ability to afford, we may have to suspend operations or cease operations entirely which could result in a total loss of your investment.
COMPETITORS MAY ENTER THIS SECTOR WITH SUPERIOR PRODUCTS OR SERVICES, INFRINGING UPON OUR CUSTOMER BASE, AND ADVERSELY AFFECTING OUR BUSINESS.
We have identified a market opportunity for our products and services. Competitors may enter this sector with superior services, conditions and/or benefits. This would infringe on our customer base, and may have an adverse affect upon our business and the results of our operations.
OUR SOLE OFFICER AND DIRECTOR HAS SUBSTANTIAL CONTROL OVER BUSINESS DECISIONS. INVESTORS MAY FIND THAT HIS DECISIONS ARE CONTRARY TO THEIR INTERESTS. YOU SHOULD NOT PURCHASE OUR COMMON STOCK UNLESS YOU ARE WILLING TO ENTRUST ALL ASPECTS OF MANAGEMENT TO OUR SOLE OFFICER AND DIRECTOR, OR HIS SUCCESSORS.
Our sole Officer and Director, Louis Foxwell, has the ability to make most business decisions without approval from shareholders. You should carefully consider his business acumen and background when evaluating our business and understand that his authority provides him with ample latitude to operate our business. His interests may differ from the ones of the stockholders.
All decisions regarding the management of our affairs will be made exclusively by him. Holders of our Common Stock may not participate in our management and, therefore, are dependent upon his management abilities. The only assurance that our shareholders have that our sole Officer and Director will not abuse his discretion in executing our business affairs, is his fiduciary obligation and business integrity. Such discretionary powers include, but are not limited to, decisions regarding all aspects of business operations, corporate transactions and financing.
OUR SOLE OFFICER AND DIRECTOR HAS THE POWER TO DETERMINE HIS OWN COMPENSATION, WHICH MEANS HE MAY PROVIDE COMPENSATION FOR HIMSELF THAT EXCEEDS THE VALUE OF HIS CONTRIBUTION OR THAT IS CONTRARY TO THE INTERESTS OF THE COMPANY OR ITS SHAREHOLDERS.
Our sole Officer and Director, Louis Foxwell, will be able to set his own salary. For the period ended March 31, 2011, Mr. Foxwell did not receive compensation for his services to the Company, although he expects to draw a salary in the future if and when our business becomes more established. Mr. Foxwell anticipates that a number of factors will influence his compensation at any given time, including the financing available to us, the size of our operations, the availability of affordable and qualified labor, and Mr. Foxwell’s own personal availability and employment status.
Mr. Foxwell expects to receive compensation that is in keeping with the size of the Company and the market value of any services he may provide to the Company from time to time, such as day to day management of the Company’s business, technical consulting or otherwise. Such compensation may range in value from $35,000 per year to $100,000 dollars per year or more. Nevertheless, because all decisions regarding the determination of Mr. Foxwell’s compensation will be made exclusively by him, there is no assurance that his compensation will be in keeping with the market value of his services, or in keeping with the best interests or the Company or its shareholders.
WE ARE UNABLE TO IDENTIFY IN ANY DETAIL THE STEPS THAT WE WILL TAKE TO OBTAIN THE FINANCING REQUIRED TO EXECUTE OUR BUSINESS PLAN, WHICH CASTS SUBSTANTIAL DOUBT ON THE ABILITY OF OUR MANAGEMENT TO EXECUTE OUR BUSINESS PLAN AND ON OUR ABILITY TO CONTINUE AS A GOING CONCERN.
7
As of March 31, 2011 we had cash resources of $20,019 and we anticipate that we will require an additional $100,000 in order to finance the projected growth in our business plan. Our sole officer and director has no experience in capital raising or identifying potential sources of financing for our business. Because our sole officer and director has no experience in capital raising or identifying potential sources of financing we are unable to identify in any detail the steps that we will take to obtain the financing required to execute our business plan. Our inability to identify the steps that we will take to obtain the financing that we require casts substantial doubt on the ability of our management to execute our business plan and on our ability to continue as a going concern. If we are unable to identify and access sources of financing our business will fail and you will lose your investment.
Risks Related To Our Financial Condition
THERE IS SUBSTANTIAL UNCERTAINTY ABOUT OUR ABILITY TO CONTINUE OUR OPERATIONS AS A GOING CONCERN.
In their audit report dated May 31, 2011; our auditors have expressed an opinion that substantial doubt exists as to whether we can continue as an ongoing business. Because our officers may be unwilling or unable to loan or advance any additional capital to us, we believe that if we do not raise additional capital within 12 months of this disclosure, we may be required to suspend or cease operations. As such we may have to cease operations and you could lose your entire investment. Because we have been issued an opinion by our auditor that substantial doubt exists as to whether we can continue as a going concern it may be more difficult to attract investors.
THE ENACTMENT OF THE SARBANES-OXLEY ACT MAY MAKE IT MORE DIFFICULT FOR US TO RETAIN OR ATTRACT OFFICERS AND DIRECTORS, WHICH COULD INCREASE OUR OPERATING COSTS OR PREVENT US FROM BECOMING PROFITABLE.
The Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) was enacted in response to public concern regarding corporate accountability in the wake of a number of accounting scandals. The stated goals of the Sarbanes-Oxley Act are to increase corporate responsibility, provide enhanced penalties for accounting and auditing improprieties at publicly traded companies and protect investors by improving the accuracy and reliability of corporate disclosure pursuant to applicable securities laws. The Sarbanes-Oxley Act applies to all companies that file or are required to file periodic reports with the SEC under the Securities Exchange Act of 1934 (the “Exchange Act”).
As a public company, we are required to comply with the Sarbanes-Oxley Act. Since the enactment of the Sarbanes-Oxley Act has resulted in the imposition of a series of rules and regulations by the SEC that increase the responsibilities and liabilities of directors and executive officers, the perceived increased personal risk associated with these changes may deter qualified individuals from accepting such roles. Consequently, it may be more difficult for us to attract and retain qualified persons to serve as our directors or executive officers, and we may need to incur additional operating costs. This could prevent us from becoming profitable.
IF WE CANNOT SECURE ADDITIONAL CAPITAL, OR IF AVAILABLE CAPITAL IS TOO EXPENSIVE, OUR BUSINESS WILL FAIL.
We estimate that we will require $100,000 of additional capital to fully execute our business plan and fund the growth of our products in the marketplace. However, no assurance can be given that we will obtain access to capital in the future or that adequate financing to satisfy our requirements of $100,000 will be available on acceptable terms. Our inability to gain access to capital or obtain acceptable financing could have a material adverse effect upon our results of operations and our financial condition.
Currently, we do not have any arrangements for financing and can provide no assurances to investors that we will be able to obtain any when required. Obtaining additional financing would be subject to a number of factors, including our sales results. These factors may have an effect on the timing, amount, terms or conditions of additional financing and make such additional financing unavailable to us.
WE MAY NOT HAVE SUFFICIENT CAPITAL IN THE FUTURE TO CONTINUE MAINTAINING OUR REPORTING STATUS.
8
The cost of maintaining our reporting status with the SEC, which consists of ongoing accounting, legal, and filing fees and expenses, may vary substantially in correlation with our level of activity from time to time. Nevertheless, we estimate that we will require between $25,000 and $50,000 annually to maintain our reporting status with the SEC based on a moderate level of activity. Our management believes that if we cannot maintain our reporting status with the SEC we may have to cease all efforts directed toward developing our company. As such, any investment in our Company may be lost in its entirety.
ADVERSE DEVELOPMENTS IN THE GLOBAL ECONOMY RESTRICTING THE CREDIT MARKETS MAY MATERIALLY AND NEGATIVELY IMPACT OUR BUSINESS.
The recent downturn in the world's major economies and the constraints in the credit markets have heightened or could continue to heighten a number of material risks to our business, cash flows and financial condition, as well as our future prospects. Continued issues involving liquidity and capital adequacy affecting lenders could affect our ability to access credit facilities or obtain debt financing and could affect the ability of lenders to meet their funding requirements when we need to borrow. If we are unable to obtain credit or access capital markets, our business could be negatively impacted.
Risks Related to Investment in Our Common Stock
BECAUSE THERE IS NO PUBLIC TRADING MARKET FOR OUR COMMON STOCK, YOU MAY NOT BE ABLE TO RESELL YOUR STOCK.
Our common stock is available for limited quotation at this time on the OTCQB under the symbol RBCC; however, as of the date of this filing, there is currently no public trading market for our common stock. If you wish to resell your shares, you will have to locate a buyer and negotiate your own sale. As a result, you may be unable to sell your shares, or you may be forced to sell them at a loss.
Although there are limited quotations of our common stock on the OTCQB, we cannot assure you that there will be a market in the future for our common stock. The trading of securities on the OTC Bulletin Board is often sporadic and investors may have difficulty buying and selling our shares or obtaining market quotations for them, which may have a negative effect on the market price of our common stock. You may not be able to sell your shares at their purchase price or at any price at all. Accordingly, you may have difficulty reselling any shares you purchase in the Company.
INVESTING IN OUR COMPANY IS HIGHLY SPECULATIVE AND COULD RESULT IN THE ENTIRE LOSS OF YOUR INVESTMENT.
Investing in our common stock is highly speculative and involves significant risk. Our common stock should not be purchased by any person who cannot afford to lose their entire investment. Our business objectives are also speculative, and it is possible that we would be unable to accomplish them. Our shareholders may be unable to realize a substantial or any return on the purchase of our common stock and may lose their entire investment. For this reason, each prospective purchaser of our common stock should reference all of our public filings with the Securities and Exchange Commission and consult with their attorney, business and/or investment advisor.
INVESTING IN OUR COMPANY MAY RESULT IN AN IMMEDIATE LOSS BECAUSE BUYERS MAY PAY MORE FOR OUR COMMON STOCK THAN THE PRO RATA PORTION OF OUR NET ASSET VALUE.
We are an early stage company and have only a limited operating history. Therefore, any future quoted price of our common stock may not bear any relationship to assets, earnings, book value or any other objective criteria of value. Our net tangible book value per share of common stock as of March 31, 2011 was $0.002.
BECAUSE WE HAVE 250,000,000 AUTHORIZED SHARES, MANAGEMENT COULD ISSUE ADDITIONAL SHARES, DILUTING THE CURRENT SHARE HOLDERS' EQUITY.
We have 250,000,000 authorized shares, of which only 11,000,000 is currently issued and outstanding. Our management could, without the consent of the existing shareholders, issue substantially more shares, causing a large dilution in the equity position of our current shareholders. Additionally, large share issuances would generally have a negative impact on our share price. It is possible that, due to additional share issuance, you could lose a substantial amount, or all, of your investment.
9
BECAUSE WE PLAN TO OBTAIN $100,000 IN ADDITIONAL FINANCING, MANAGEMENT MAY ISSUE ADDITIONAL SHARES OF OUR COMMON STOCK, DILUTING THE CURRENT SHARE HOLDERS’ EQUITY.
We require a minimum of $100,000 in addition to our existing working capital in order to implement our business plan. Accordingly, it is very likely that we will be required to issue or pledge shares of our common stock or other securities of our own issue in order to secure such financing. Any shares of common stock that we issue in this regard will cause immediate and potentially large dilution in the equity position of purchasers of securities in this offering.
WE DO NOT ANTICIPATE PAYING DIVIDENDS IN THE FORESEEABLE FUTURE, SO THERE WILL BE FEWER WAYS IN WHICH YOU CAN MAKE A GAIN ON ANY INVESTMENT IN US.
We have never paid dividends and do not intend to pay any dividends for the foreseeable future. To the extent that we may require additional funding currently not provided for in our financing plan, our funding sources may prohibit the declaration of dividends. Because we do not intend to pay dividends, any gain on your investment will need to result from an appreciation in the price of our common stock. There will therefore be fewer ways in which you are able to make a gain on your investment.
IN THE EVENT THAT OUR SHARES ARE TRADED, THEY MAY TRADE UNDER $5.00 PER SHARE AND THUS WILL BE A PENNY STOCK. TRADING IN PENNY STOCKS HAS MANY RESTRICTIONS AND THESE RESTRICTIONS COULD SEVERELY AFFECT THE PRICE AND LIQUIDITY OF OUR SHARES.
In the event that our shares are traded, and our stock trades below $5.00 per share, our stock would be known as a “penny stock”, which is subject to various regulations involving disclosures to be given to you prior to the purchase of any penny stock. The U.S. Securities and Exchange Commission (the “SEC”) has adopted regulations which generally define a “penny stock” to be any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. Depending on market fluctuations, our common stock could be considered to be a “penny stock”. A penny stock is subject to rules that impose additional sales practice requirements on broker/dealers who sell these securities to persons other than established customers and accredited investors. For transactions covered by these rules, the broker/dealer must make a special suitability determination for the purchase of these securities. In addition, he must receive the purchaser's written consent to the transaction prior to the purchase. He must also provide certain written disclosures to the purchaser. Consequently, the “penny stock” rules may restrict the ability of broker/dealers to sell our securities, and may negatively affect the ability of holders of shares of our common stock to resell them. These disclosures require you to acknowledge that you understand the risks associated with buying penny stocks and that you can absorb the loss of your entire investment. Penny stocks are low priced securities that do not have a very high trading volume. Consequently, the price of the stock is often volatile and you may not be able to buy or sell the stock when you want to.
FINANCIAL INDUSTRY REGULATORY AUTHORITY (“FINRA”) SALES PRACTICE REQUIREMENTS MAY ALSO LIMIT YOUR ABILITY TO BUY AND SELL OUR COMMON STOCK, WHICH COULD DEPRESS THE PRICE OF OUR SHARES.
FINRA rules require broker-dealers to have reasonable grounds for believing that an investment is suitable for a customer before recommending that investment to the customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status and investment objectives, among other things. Under interpretations of these rules, FINRA believes that there is a high probability such speculative low-priced securities will not be suitable for at least some customers. Thus, FINRA requirements may make it more difficult for broker-dealers to recommend that their customers trade our common stock, which may limit your ability to buy and sell our shares, have an adverse effect on the market for our shares, and thereby depress our share price.
YOU MAY FACE SIGNIFICANT RESTRICTIONS ON THE RESALE OF YOUR SHARES DUE TO STATE “BLUE SKY” LAWS.
10
Each state has its own securities laws, often called “blue sky” laws, which (1) limit sales of securities to a state's residents unless the securities are registered in that state or qualify for an exemption from registration, and (2) govern the reporting requirements for broker-dealers doing business directly or indirectly in the state. Before a security is sold in a state, there must be a registration in place to cover the transaction, or it must be exempt from registration. The applicable broker-dealer must also be registered in that state.
We do not know whether our securities will be registered or exempt from registration under the laws of any state. A determination regarding registration will be made by those broker-dealers, if any, who agree to serve as market makers for our common stock. We have not yet applied to have our securities registered in any state. There may be significant state blue sky law restrictions on the ability of investors to sell, and on purchasers to buy, our securities. You should therefore consider the resale market for our common stock to be limited, as you may be unable to resell your shares without the significant expense of state registration or qualification.
Properties
We maintain our statutory registered agent's office and business office at 291 La Costa Rd., Nakomis, FL 34275. Our telephone number is (941) 480-1230. At the present we have a retail location in Venice, Florida that is leased for $1,500 per month.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of the date of this disclosure, the total number of shares owned beneficially by our sole Officer and Director, and key employees, individually and as a group, and the present owners of 5% or more of our total outstanding shares. The stockholder listed below has direct ownership of his shares and possesses sole voting and dispositive power with respect to the shares.
| | | | | | |
Title of Class | | Name and Address of
Beneficial Owner [1] | | Amount and Nature of
Beneficial Ownership | | Percent of
Class [2] |
| | | | | | |
Common Stock | | Louis Foxwell
291 La Costa Rd.,
Nakomis, FL 34275 | | 9,000,000 | | 82% |
| | | | | | |
| | All Officers and Directors as a Group (1 person) | | 9,000,000 | | 82% |
[1] The person named above may be deemed to be a “parent” and “promoter” of our company, within the meaning of such terms under the Securities Act of 1933, as amended, by virtue of his direct and indirect stock holdings. Mr. Louis Foxwell is the only “promoter” of our company. Mr. Louis Foxwell is also our sole Officer and Director.
[2] Based on 11,000,000 shares issued and outstanding as of the date of this disclosure.
Directors and Executive Officers
Officers and Directors
Our sole Officer and Director will serve until his successor is elected and qualified. Our officers are elected by the board of directors to a term of one (1) year and serve until his successor(s) is duly elected and qualified, or until he is removed from office. The board of directors has no nominating, auditing or compensation committees.
The name, address, age and position of our president, secretary/treasurer, and director is set forth below:
| | | | |
Name and Address | | Age | | Position(s) |
| | | | |
Louis Foxwell
291 La Costa Rd.,
Nakomis, FL 34275 | | 70 | | President, Secretary/Treasurer
Chief Executive Officer
Principal Financial Officer and Sole member of the Board of Directors |
11
The person named above has held his offices/positions since the inception of our company and is expected to hold his offices/positions until the next annual meeting of our stockholders.
Business Experience
LOUIS W. FOXWELL, SOLE OFFICER AND DIRECTOR
2005-PRESENT
OWNER of Father Fish Aquarium, Venice Florida
2004-2005
CORAL FARM CONSULTANT
Consultant to DOMINICA, West Indies. Consultant on the development of a CORAL FARM for the government of Dominica. This privately owned installation was the first attempt to develop corals in captivity.
2002-2004
MARKETING DIRECTOR
C&S TROPICALS- TROPICAL FISH FARM- Ruskin,FL
1995-2002
EXECUTIVE DIRECTOR
TROPICAL FISH WHOLESALE NETWORK
Represented 50 of the top tropical fish suppliers in the United States
1989-1995
PUBLISHER
Published a series of magazines featuring local community news and information
1986-1989
DEVELOPMENTAL SCIENCES
Worked in the environmental science department of the CATOCTIN ZOOLOGICAL PARK Thurmont, MD. My efforts culminated in the development of a Community College Environmental sciences center on the grounds of the ZOOLOGICAL PARK.
1978-1986
BOARD OF DIRECTOR NATIONAL AQUARIUM
Appointed by the Mayor of Baltimore (Mr. William Donald Schaefer)
Member Architectural Review Committee
Member of the search Committee
Chairman of the Community Relations Committee
Developed Engineering staff for the NATIONAL AQUARIUM of MD
Member of the American Littoral Society in support of the flora and fauna
Of the Chesapeake Bay and of the bays, inlets, streams and rivers
CHAIRMAN of the C.R.C arranged for shipments of fresh water animals for initial Displays in Baltimore
1956-1978
SUPPLIER OF TROPICAL FISH
TROPICAL FISH HOBBYIST, COLLECTOR AND SUPPLIER of Farmed FISH to Aquarium, Inc. in MD
PAST PRESIDENT of the GULF COAST TROPICAL FISH, INC.
Member of The TAMPA BAY TROPICAL FISH SOCIETY
Member of The FLORIDA TROPICAL FISH FARMS ASSOCIATION
Member of the AMERICAN LITTORAL SOCIETY
12
Currently, Mr. Foxwell serves as the Chairman and CEO of Rainbow Coral Corp., based in Nakomis, Florida, a position he has held since inception on August 13, 2010. Mr. Foxwell also serves as the sole director and officer of our wholly owned subsidiary, Father Fish Aquarium, Inc and the Managing Member of Father Fish Aquarium, LLC.
Mr. Crawford devotes at least 40 hours per week to the combined businesses.
Mr. Foxwell does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to section 12 of the Exchange Act or subject to the requirements of section 15(d) of such Act or any company registered as an investment company under the Investment Company Act of 1940.
Executive Compensation
No salaries are being paid at the present time, and no salaries or other compensation were paid in cash, or otherwise, for services performed prior to March 31, 2011. However, we are in the process of making provisions for compensating our sole Officer and Director, Louis Foxwell, with $2,500 per month for providing his services to the Company. Mr. Foxwell did receive $10,000 cash and a $40,000 note for selling FFAI and FFAL to Rainbow Coral Corporation pursuant to the acquisition agreement signed on June 13, 2011.
The table below summarizes all compensation awarded to, earned by, or paid to our named sole Officer and Director for all services rendered in all capacities to us for the period from inception (August 13, 2010) through March 31, 2011.
SUMMARY COMPENSATION TABLE
| | | | | | | | | | | | | | | | | | |
Name | | | | | | | | | | | | Non-Equity | | Nonqualified | | | | |
and | | | | | | | | Stock | | Option | | Incentive Plan | | Deferred | | | | |
principal | | FYE | | Salary | | Bonus | | Awards | | Awards | | Compensation | | Compensation | | All Other | | Total |
position | | March 31 | | ($) | | ($) | | ($) | | ($) | | ($) | | Earnings ($) | | Compensation | | ($) |
| | | | | | | | | | | | | | | | | | |
Louis Foxwell CEO | | 2011 | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 |
We have not paid any salaries to our sole Officer and Director as of the date of this disclosure. However, we anticipate paying Mr. Foxwell a salary of $2,500 per month. There are no other stock option plans, retirement, pension, or profit sharing plans for the benefit of our Officers and Director other than as described herein.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The table below summarizes all unexercised options, stock that has not vested, and equity incentive plan awards for each named executive officer as of March 31, 2011.
| | | | | | | | | | | |
| OPTION AWARDS | | STOCK AWARDS |
Name | Number of Securities Underlying Unexercised Option (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (#) |
| | | | | | | | | |
Louis Foxwell | — | — | — | — | — | — | — | — | — |
13
There were no grants of stock options since inception to the date of this disclosure.
We do not have any long-term incentive plans that provide compensation intended to serve as incentive for performance.
Our sole Officer and Director has not adopted a stock option plan. We have no plans to adopt a stock option plan, but may choose to do so in the future. If such a plan is adopted, this may be administered by the board or a committee appointed by the board (the “Committee”). The committee would have the power to modify, extend or renew outstanding options and to authorize the grant of new options in substitution therefore, provided that any such action may not impair any rights under any option previously granted.
OPTIONS GRANTS DURING THE LAST FISCAL YEAR / STOCK OPTION PLANS
We do not currently have a stock option plan in favor of any director, officer, consultant or employee of our company. No individual grants of stock options, whether or not in tandem with stock appreciation rights known as SARs or freestanding SARs have been made to our Sole Director and Officer since our inception; accordingly, no stock options have been granted or exercised by our Sole Director and Officer since we were founded.
AGGREGATED OPTIONS EXERCISES IN LAST FISCAL YEAR
No individual grants of stock options, whether or not in tandem with stock appreciation rights known as SARs or freestanding SARs have been made to our sole Officer and Director since our inception; accordingly, no stock options have been granted or exercised by our sole Officer and Director since we were founded.
LONG-TERM INCENTIVE PLANS AND AWARDS
We do not have any long-term incentive plans that provide compensation intended to serve as incentive for performance. No individual grants or agreements regarding future payouts under non-stock price-based plans have been made to our sole Officer and Director or any employee or consultant since our inception; accordingly, no future payouts under non-stock price-based plans or agreements have been granted or entered into or exercised by our Sole Director and Officer or employees or consultants since we were founded.
COMPENSATION OF DIRECTORS
Our sole Officer and Director has not been compensated by us for acting as such. He is reimbursed for reasonable out-of-pocket expenses incurred.
There are no arrangements pursuant to which our sole Officer and Director is or will be compensated in the future for any services provided as a Director. However, we are working toward an employment agreement that will provide him with $2,500 per month for providing services as an Officer of the Company.
We do not have any agreements for compensating our Directors for their services in their capacity as Directors, although such Directors are expected in the future to receive compensation for their services.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT, CHANGE-IN-CONTROL ARRANGEMENTS
There are no employment contracts or other contracts or arrangements with our Officers or Directors other than those disclosed in this report. There are no compensation plans or arrangements, including payments to be made by us, with respect to Mr. Foxwell that would result from his resignation, retirement or any other termination. There are no arrangements for Directors, Officers or Employees that would result from a change-in-control.
INDEBTEDNESS OF DIRECTORS, SENIOR OFFICERS, EXECUTIVE OFFICERS AND OTHER MANAGEMENT
Neither our sole Officer and Director nor any associate or affiliate of our company during the last two fiscal years is or has been indebted to our company by way of guarantee, support agreement, letter of credit or other similar agreement or understanding currently outstanding.
14
DIRECTOR COMPENSATION
The table below summarizes all compensation awarded to, earned by, or paid to our sole Officer and Director for all services rendered in all capacities to us for the period from inception (August 13, 2010) through March 31, 2011.
DIRECTOR COMPENSATION
| | | | | | | |
Name | Fees
Earned
or Paid
in Cash
($) | Stock
Awards
($) | Option
Awards
($) | Non-Equity
Incentive Plan
Compensation
($) | Non-Qualified
Deferred
Compensation
Earnings
($) | All Other
Compensation
($) | Total
($) |
| | | | | | | |
Louis Foxwell | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
At this time, we have not entered into any employment agreements with our sole Officer and Director. may enter into employment agreements with our sole Officer and Director or future key staff members.
Certain Relationships and Related Transactions, and Director Independence
On August 13, 2010 we issued 9,000,000 shares of our common stock to our sole director and officer at $0.001 per share for aggregate proceeds of $9,000.
On June 13, 2011, RCC entered into a Definitive Acquisition Agreement with FFAI, and purchased the business to continue as a going concern. As of the date on which the agreement was entered into, because Louis Foxwell is the sole officer and director of RCC and FFAI, and is also the managing member of FFAL, a material relationship existed between the parties. The amount of consideration exchanged for the assets was $50,000; $10,000 cash at closing and a $40,000 note to Louis Foxwell. The purchase price was determined by using market multiples of projected EBITDA.
DIRECTOR INDEPENDENCE
We do not currently have any independent directors and we do not anticipate appointing additional directors in the foreseeable future. If we engage further directors and officers, however, we plan to develop a definition of independence and scrutinize our Board of Directors with regard to this definition.
Legal Proceedings
We know of no material, active or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceedings or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered beneficial shareholder are an adverse party or has a material interest adverse to us.
We will furnish annual reports to stockholders, which will include audited financial statements reported on by our Certified Public Accountants. In addition, we will issue unaudited quarterly or other interim reports to stockholders, as we deem appropriate or required by applicable securities regulations.
Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters
FINRA has approved an application for our sponsoring market maker to post quotations of our common stock on the OTCQB under the symbol “RBCC.” However, there are currently limited quotations on the bid or ask for our common stock, and therefore there is no trading market for our common stock. We expect a trading market for our common stock to develop in the near future, but there can be no assurances that this will happen.
Common stock
Rainbow Coral Corporation had 11,000,000 common stock shares issued and outstanding as of March 31, 2011. Holders of outstanding common stock are held by approximately 26 shareholders of record. Our outstanding common stock may also be held by an undetermined number of holders in street name.
15
Island Stock Transfer, 100 Second Avenue South, Suite 705S St. Petersburg, Florida 33701 (Telephone: 787-289-0010; Facsimile: 787-289-0069) is the registrar and transfer agent for our common shares.
Dividend Policy
Rainbow Coral Corporation has never paid a cash dividend on its common stock. The Company does not anticipate paying any cash dividends on its common stock in the next 12 month period. The payment of any dividends is at the discretion of the Board of Directors.
Recent Sales of Unregistered Securities
During the last three fiscal years we have had the following issuances of unregistered securities:
In August of 2010, we issued 9,000,000 shares to Louis Foxwell, the Company's founder, in exchange for cash of $9,000. On June 13, 2011 we issued Mr. Foxwell a note for $40,000 as consideration for the sale of FFAI. We relied upon Section 4(2) of the Securities Act, which exempts these issuances from registration “transactions by an issuer not involving any public offering.”
It is our belief Mr. Foxwell had such knowledge and experience in financial and business matters that he was capable of evaluating the merits and risks of the securities and therefore did not need the protections offered by registration under Securities and Act of 1933, as amended.
Mr. Foxwell certified that he was purchasing the shares and holding the debt for his own account. The issuances were not accompanied by general advertisement or general solicitation and the securities were issued with a Rule 144 restrictive legend.
Description of Registrant’s Registered Securities
COMMON STOCK
Our authorized number of common stock is two hundred and fifty million (250,000,000) shares with a par value of $0.0001. Shares of our common stock:
| | |
| · | have equal ratable rights to dividends from funds legally available if and when declared by our Board of Directors; |
| | |
| · | are entitled to share ratably in all of our assets available for distribution to holders of common stock upon liquidation, dissolution or winding up of our affairs; |
| | |
| · | do not have preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights; and |
| | |
| · | are entitled to one non-cumulative vote per share on all matters on which stockholders may vote. |
We refer you to the Bylaws of our Articles of Incorporation and the applicable statutes of the State of Florida for a more complete description of the rights and liabilities of holders of our securities.
NON-CUMULATIVE VOTING
Holders of shares of our common stock do not have cumulative voting rights, which means that the holders of more than 50% of the outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose, and, in that event, the holders of the remaining shares will not be able to elect any of our directors.
16
CASH DIVIDENDS
As of the date of this disclosure, we have not declared or paid any cash dividends to stockholders. The declaration of any future cash dividend will be at the discretion of our Board of Directors and will depend upon our earnings, if any, our capital requirements and financial position, our general economic conditions, and other pertinent conditions. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations.
Indemnification of Directors and Officers
Our Bylaws provide that we will indemnify our directors and officers to the fullest extent not prohibited by Florida law.
The general effect of the foregoing is to indemnify a control person, officer or director from liability, thereby making us responsible for any expenses or damages incurred by such control person, officer or director in any action brought against them based on their conduct in such capacity, provided they did not engage in fraud or criminal activity.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or control persons pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
There have been no disagreements between the Company and its independent accountants on any matter of accounting principles or practices or financial statement disclosure
Financial Statements and Exhibits
Reference is made to the disclosure set forth under Item 9.01 of this Current Report on Form 8-K, which disclosure is incorporated herein by reference
Section 5 – Corporate Governance and Management
Item 5.03 Change in Fiscal Year
Through Board resolution, the Company’s fiscal year has been changed from August 31 to March 31.
Item 5.06 Change in Shell Company Status
Reference is made to the disclosure set forth under Item 2.01 of this Current Report on Form 8-K, which disclosure is incorporated herein by reference. As a result of the Acquisition described under Item 2.01 of this Current Report on Form 8-K, the registrant believes that it is no longer a “shell company” as that term is defined in Rule 405 of the Securities Act and Rule 12b-2 of the Exchange
Section 9 – Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits
Rainbow Coral Corporation includes herein the following financial statements and Pro Forma financial information in the footnotes to our financial statements:
17
Rainbow Coral Corporation
Financial Statements
For the Period August 13, 2010 (date of inception) through March 31, 2011
| |
| Page |
Financial Statements: | |
Report of Independent Registered Public Accounting Firm | 19 |
Balance Sheet | 20 |
Statement of Operations | 21 |
Statement of Changes in Stockholders’ Equity | 22 |
Statement of Cash Flows | 23 |
Notes to Audited Financial Statements | 24 |
Father Fish Aquarium, Inc.
Financial Statements
For the years ended March 31, 2011 and 2010
| |
| Page |
Financial Statements: | |
Report of Independent Registered Public Accounting Firm | 30 |
Balance Sheet | 31 |
Statement of Profit | 32 |
Statement of Changes in Owner’s Equity | 33 |
Statement of Cash Flows | 34 |
Notes to Audited Financial Statements | 35 |
18
| |
| Peter Messineo Certified Public Accountant 1982 Otter Way Palm Harbor FL 34685 peter@pm-cpa.com T 727.421.6268 F 727.674.0511 |
Report of Independent Registered Public Accounting Firm
Rainbow Coral Corp.
Sarasota Florida
I have audited the balance sheet of Rainbow Coral Corp., as of March 31, 2011, the related statements of operation, stockholders’ equity, and cash flows for the period August 13, 2010 (date of inception) through March 31, 2011. These financial statements were the responsibility of Rainbow Coral Corp’s management. My responsibility was to express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that I plan and perform the audits to obtain reasonable assurance about whether the financial statements were free of material misstatement. Rainbow Coral Corp. was not required to have, nor was I engaged to perform, an audit of its internal control over financial reporting. My audit included consideration of internal control over financial reporting as a basis for designing audit procedures that were appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Rainbow Coral Corp.’s internal control over financial reporting. Accordingly, I express no such opinion. An audit 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. I believe that my audit provide a reasonable basis for my opinion.
In my opinion, the financial statements, referred to above, present fairly, in all material respects, the financial position of Rainbow Coral Corp. as of March 31, 2011 and the results of its operations and its cash flows for the period August 13, 2010 (date of inception) through March 31, 2011, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the financial statements, as of March 31, 2011, the Company has no revenues from operation, has not emerged from the development stage, and is requiring traditional financing or equity funding to commence its operating plan. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Further information and management’s plans in regard to this uncertainty were also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Peter Messineo, CPA
Peter Messineo, CPA
Palm Harbor, Florida
May 31, 2011
19
Rainbow Coral Corp.
(A Development Stage Enterprise)
Balance Sheet
| | | |
| March 31, | |
| 2011 | |
| | | |
ASSETS | | | |
Current Assets | | | |
Cash and cash equivalents | $ | 20,019 | |
Total Current Assets | | 20,019 | |
| | | |
TOTAL ASSETS | $ | 20,019 | |
| | | |
LIABILITIES AND STOCKHOLDERS' EQUITY | | | |
Current Liabilities | | | |
Accounts payable | $ | 3,032 | |
Total Current Liabilities | | 3,032 | |
| | | |
TOTAL LIABILITIES | | 3,032 | |
| | | |
Stockholders' Equity | | | |
Preferred stock; $0.0001 par value; 10,000,000 shares
authorized; 0 shares issued and outstanding | | — | |
Common stock: 250,000,000 authorized; $0.0001 par value
11,000,000 shares issued and outstanding | | 1,100 | |
Additional paid in capital | | 32,900 | |
Accumulated deficit during development stage | | (17,013 | ) |
Total Stockholders' Equity | | 16,987 | |
| | | |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 20,019 | |
The accompanying notes are an integral part of these financial statements.
20
Rainbow Coral Corp.
(A Development Stage Enterprise)
Statement of Operations
| | | | |
| | August 13, 2010 | |
| | (inception) | |
| | through | |
| | March 31, 2011 | |
| | | | |
Revenues | | $ | — | |
| | | | |
Operating Expenses | | | | |
Professional fees | | | 6,940 | |
Compliance expense | | | 9,815 | |
General and administrative | | | 258 | |
Total operating expenses | | | 17,013 | |
| | | | |
Net loss | | $ | (17,013 | ) |
| | | | |
| | | | |
| | | | |
| | | | |
BASIC AND DILUTED LOSS PER SHARE | | $ | (0.00 | ) |
| | | | |
| | | | |
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING | | | 9,391,304 | |
The accompanying notes are an integral part of these financial statements.
21
Rainbow Coral Corp.
(A Development Stage Enterprise)
Statement of Stockholders' Equity
