Attached files
file | filename |
---|---|
EX-23.4 - Rainbow Coral Corp. | v205917_ex23-4.htm |
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
S-1/A
AMENDMENT
NO. 4
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
RAINBOW
CORAL CORP.
(Name of
Small Business Issuer in its Charter)
Florida
|
200
|
27-3247562
|
||
(State
or Other Jurisdiction
|
(Primary
Standard Industrial
|
(IRS
Employer
|
||
of
Organization)
|
Classification
Code)
|
Identification
#)
|
Louis
Foxwell
|
||
291
LaCosta Rd.
|
291
LaCosta Rd.
|
|
Nokomis,
FL 34275
|
Nokomis,
FL 34275
|
|
941-480-1230
|
941-480-1230
|
|
(Address
and telephone of
|
(Name,
address and telephone number
|
|
registrant's
executive office)
|
of
agent for service)
|
Please
send copies of all correspondence to:
Diane J.
Harrison
Harrison
Law, P.A.
6860
Gulfport Blvd. S. No. 162
South
Pasadena, Florida 33707
(941)
723-7564 (941) 531-4935 Fax
Approximate
date of proposed sale to the public: After this registration statement becomes
effective
If the
securities being registered herein will be sold by the security shareholders on
a delayed or continuous basis pursuant to Rule 415 of the Securities Act of 1933
please check the following box. x
If this
form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. ¨
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering.
If this
Form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering.
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 12b2 of the Exchange Act.
Large
accelerated filer
|
¨
|
Accelerated
filer
|
¨
|
Non-accelerated
filer
|
¨
|
Smaller
Reporting Company
|
x
|
CALCULATION
OF REGISTRATION FEE
Title
of Each
|
Proposed
|
Proposed
|
||||||||||||||
Class
of
|
Amount
|
Maximum
|
Maximum
|
Amount
of
|
||||||||||||
Securities
to be
|
to
be
|
Offering
Price
|
Aggregate
|
Registration
|
||||||||||||
Registered(3)
|
Registered
|
Per Unit (1)
|
Offering Price
|
Fee (2)
|
||||||||||||
Common
Stock by Company par value $0.0001
|
2,500,000 | $ | 0.0125 | $ | 31,250 | $ | 2.29 |
(1) The
offering price has been arbitrarily determined by the Company and bears no
relationship to assets, earnings, or any other valuation criteria. No assurance
can be given that the shares offered hereby will have a market value or that
they may be sold at this, or at any price.
(2)
Estimated solely for purposes of calculating the registration fee in accordance
with Rule 457(c) of the Securities Act of 1933.
(3) An
indeterminate number of additional shares of common stock shall be issuable
pursuant to Rule 416 to prevent dilution resulting from stock splits, stock
dividends or similar transactions and in such an event the number of shares
registered shall automatically be increased to cover the additional shares in
accordance with Rule 416 under the Securities Act.
(4)
Previously paid.
THE
REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS
MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A
FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
THE
INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT
SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL
THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN
ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
PROSPECTUS
RAINBOW
CORAL CORP.
2,500,000
SHARES OF COMMON STOCK
Prior to
this registration, there has been no public trading market for the common Stock
of RAINBOW CORAL CORP. ("RCC"), the "Company", "us", "we", "our") and it is not
presently traded on any market or securities exchange. 2,500,000 shares of
common stock are being offered for sale by the Company to the
public.
The
offering of the 2,500,000 shares is a "best efforts" offering, which means that
our director and officer will use his best efforts to sell the common stock and
there is no commitment by any person to purchase any shares. The shares will be
offered at a fixed price of $0.0125 per share for the duration of the offering.
There is no minimum number of shares required to be sold to close the offering.
This offering will continue for the earlier of: (i) 90 days after this
registration statement becomes effective with the Securities and Exchange
Commission, or (ii) the date on which all 2,500,000 shares registered hereunder
have been sold. We may at our discretion extend the offering for an additional
90 days. Proceeds from the sale of the shares will be used to fund the initial
stages of our business development. This offering will end no later than six (6)
months from the offering date. The offering date is the date by which this
registration statement becomes effective. This is a direct participation
offering since we, and not an underwriter, are offering the
stock.
SHARES
OFFERED
|
PRICE
TO
|
SELLING
AGENT
|
PROCEEDS
TO
|
||||||
BY
COMPANY
|
PUBLIC
|
COMMISSIONS
|
THE
COMPANY
|
||||||
Per
Share
|
$ | 0.0125 |
Not
applicable
|
$ | 0.0125 | ||||
Minimum
Purchase
|
None
|
Not
applicable
|
Not
applicable
|
||||||
Total
(2,500,000 shares)
|
$ | 31,250 |
Not
applicable
|
$ | 31,250 |
Neither
the Securities and Exchange Commission nor any state regulatory authority has
approved or disapproved of these securities, endorsed the merits of this
offering, or determined that this Prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
AN
INVESTMENT IN OUR SECURITIES IS SPECULATIVE. INVESTORS SHOULD BE ABLE TO AFFORD
THE LOSS OF THEIR ENTIRE INVESTMENT. SEE THE SECTION ENTITLED "RISK FACTORS"
BEGINNING ON PAGE 8 OF THIS PROSPECTUS.
THIS
PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY THESE SECURITIES AND WE SHALL NOT SELL ANY OF THESE SECURITIES IN ANY
STATE WHERE SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL BEFORE REGISTRATION
OR QUALIFICATION UNDER SUCH STATE'S SECURITIES LAWS.
You
should rely only on the information contained in this prospectus. We have not
authorized anyone to provide you with information different from that contained
in this Prospectus.
THE DATE
OF THIS PROSPECTUS IS ____________, 2010
2
The
following table of contents has been designed to help you find important
information contained in this prospectus. We encourage you to read the entire
prospectus.
TABLE
OF CONTENTS
|
PAGE
NO.
|
SUMMARY
OF OUR OFFERING
|
4
|
BUSINESS
SUMMARY
|
5
|
SUMMARY
OF OUR FINANCIAL INFORMATION
|
6
|
RISK
FACTORS
|
7
|
USE
OF PROCEEDS
|
14
|
DETERMINATION
OF OFFERING PRICE
|
15
|
DILUTION
OF THE PRICE YOU PAY FOR YOUR SHARES
|
16
|
THE
OFFERING
|
17
|
PLAN
OF DISTRIBUTION
|
18
|
DESCRIPTION
OF SECURITIES
|
19
|
INTEREST
OF NAMED EXPERTS AND COUNSEL
|
19
|
BUSINESS
DESCRIPTION
|
20
|
DESCRIPTION
OF PROPERTY
|
23
|
LEGAL
PROCEEDINGS
|
23
|
MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
|
24
|
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
24
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
|
29
|
CODE
OF BUSINESS CONDUCT AND ETHICS
|
29
|
MANAGEMENT
|
30
|
CONFLICTS
OF INTEREST
|
31
|
COMMITTEES
OF THE BOARD OF DIRECTORS
|
31
|
EXECUTIVE
COMPENSATION
|
32
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
|
34
|
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
|
35
|
DISCLOSURE
OF COMMISSION'S POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
|
35
|
REPORTS
TO SECURITY HOLDERS
|
36
|
WHERE
YOU CAN FIND MORE INFORMATION
|
36
|
STOCK
TRANSFER AGENT
|
36
|
FINANCIAL
STATEMENTS
|
F-1
|
Management
Certification
|
*
|
Net
Income Per Common Share
|
*
|
Revenue
and Cost Recognition
|
*
|
3
DEALER
PROSPECTUS DELIVERY OBLIGATION
Until a
date, which is 90 days after the date of this prospectus, all dealers that
effect transactions in these securities whether or not participating in this
offering, may be required to deliver a prospectus. This is in addition to the
dealers' obligation to deliver a prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.
SUMMARY
INFORMATION
This
Prospectus, and any supplement to this Prospectus include "forward-looking
statements". To the extent that the information presented in this Prospectus
discusses financial projections, information or expectations about our business
plans, results of operations, products or markets, or otherwise makes statements
about future events, such statements are forward-looking. Such forward-looking
statements can be identified by the use of words such as "intends",
"anticipates", "believes", "estimates", "projects", "forecasts", "expects",
"plans" and "proposes". Although we believe that the expectations reflected in
these forward-looking statements are based on reasonable assumptions, there are
a number of risks and uncertainties that could cause actual results to differ
materially from such forward-looking statements. These include, among others,
the cautionary statements in the "Risk Factors" section beginning on Page 8 of
this Prospectus and the "Management's Discussion and Analysis of Financial
Position and Results of Operations" section elsewhere in this
Prospectus.
This
summary only highlights selected information contained in greater detail
elsewhere in this Prospectus. This summary may not contain all of the
information that you should consider before investing in our common stock. You
should carefully read the entire Prospectus, including "Risk Factors" beginning
on Page 8, and the consolidated financial statements, before making an
investment decision
All
dollar amounts refer to US dollars unless otherwise indicated.
OUR
OFFERING
We have
9,000,000 shares of common stock issued and outstanding. Through this offering
we will register 2,500,000 shares of common stock for offering to the public.
These shares represent additional common stock to be issued by us. We may
endeavor to sell all 2,500,000 shares of common stock after this registration
becomes effective. The price at which we offer these shares is fixed at $0.0125
per share for the duration of the offering. There is no arrangement to address
the possible effect of the offering on the price of the stock. We will receive
all proceeds from the sale of the common stock.
Securities
being offered by the Company.
|
2,500,000
shares of common stock, par value $0.0001 offered by us in a direct
offering
|
|
Offering
price per share.
|
We
are offering the 2,500,000 shares of our common stock at
$0.0125.
|
|
Number
of shares outstanding before the offering of common
shares.
|
9,000,000
common shares are currently issued and outstanding.
|
|
Number
of shares outstanding after the offering of common shares.
|
11,500,000
common shares will be issued and outstanding if we sell all of the shares
that we are offering.
|
|
The
minimum number of shares to be sold in this offering.
|
None.
|
4
Market
for the common shares
|
There
is no public market for the common shares. The price per share is
$0.0125.
|
|
We
may not be able to meet the requirement for a public listing or quotation
of our common stock. Further, even if our common stock is quoted or
granted listing, a market for the common shares may not
develop.
|
||
The
offering price for the shares will remain $0.0125 per share for the
duration of the offering.
|
||
Use
of Proceeds
|
We
will receive all proceeds from the sale of the common stock and intends to
use the proceeds from this offering to begin implementing the business and
marketing plan. The expenses of this offering, including the preparation
of this prospectus and the filing of this registration statement,
estimated at $8,250.00 are being paid for by us.
|
|
Termination
of the Offering
|
This
offering will terminate upon the earlier to occur of (i) 90 days after
this registration statement becomes effective with the Securities and
Exchange Commission, or (ii) the date on which all 2,500,000 shares
registered hereunder have been sold. We may, at our discretion, extend the
offering for an additional 90 days. In any event, the offering will end
within six months of this Registration Statement being declared
effective.
|
|
Terms
of the Offering
|
|
Our
sole officer and director will sell the common stock upon effectiveness of
this registration statement on a BEST EFFORTS
basis.
|
You
should rely only upon the information contained in this prospectus. We have not
authorized anyone to provide you with information different from that which is
contained in this prospectus. We are offering to sell shares of common stock and
seeking offers to buy shares of common stock only in jurisdictions where offers
and sales are permitted.
BUSINESS
SUMMARY
We are a
development-stage company, incorporated in the State of Florida on August 13,
2010, as a for-profit company, and electing a fiscal year end of August 31. Our
business and registered office is located at 291 LaCosta Rd., Nokomis, FL 34275.
Our telephone number is 941-480-1230.
We
have not generated any revenues to date and our activities have been limited to
developing our business plan. We will not have the necessary capital to develop
or execute our business plan until we are able to secure financing. There can be
no assurance that such financing will be available on suitable terms. Even if we
raise 100% of the offering, we will not have sufficient capital to begin
generating revenues from operations. We do not anticpate generating revenues
until at least 18 months after we complete an additional $465,000 capital
raise.
We need
to raise $500,000 (including the $31,250 capital raise from this offering) to
implement our business plan over the next 18 months. The funds raised in this
offering, even assuming we sell all the shares being offered, will be
insufficient to commercialize our products or develop our business strategy. We
anticipate a burn rate of $1,000 per month. At 30% of shares sold, our burn rate
would be 9 months; at 50%, it would be15 to 16 months; at 75%, 23
months; and at 100%, 31 months.
The
management believes that at the current level of development, the company can
only justify a limited financing. We believe that with the money raised
through this offering we will be able to advance our business sufficiently to
attract more financing, which in turn will provide us with the capital required
to fully develop our business. Through the funds
earmarked as administrative expenses (see USE OF PROCEEDS section below), we
intend to seek potential investors from the investment
community. We intend to advance our business whether at a 30%,
50%, 75% or 100% level of financing. We believe we will able to present our
plans and goals to the investment community, friends, family, and industry
members via e-mail, telephone, mail, and networking. However, if the company
sells less than 30% of this Offering and we are unable to secure the additional
financing, we will not be able to effectively conduct the product development
and marketing activities necessary to move the Company forward. Under
those circumstances, the investors will likely lose their entire
investment.
We intend
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. Nearly every other organism in the pet industry is captive bred. Dogs,
cats, parrots, etc. are all farm raised.
5
We intend
that Corals be added to that list via our Coral Farm. We intend to actively
acquire specific parent colonies to maintain and continue to grow in our Coral
and the branches of these colonies are intended to be propagated by
fragmentation. (Fragmentation is a form of asexual reproduction where an
organism is split into fragments. Each fragment develops into mature fully grown
individuals that are a clone of the original organism. Both hard and soft corals
can be fragmented.).The fragments or ‘frags’ when properly farmed will grow into
Corals that resemble the parent colony. The parent Coral, or brood stock, in our
Farm regenerates and produces new frags,(the Coral is divided into frags to
start the regeneration process all over again) making the Coral Farm a
self-sustaining and reliable source for Coral harvesting. We intend to market
over 50 species of Hard and Soft Corals. We intend to acquire these specific
Corals that fit within a criteria suitable for commercial applications. It is
from these superior and ideal genetics that our Coral product line is to be
derived and ultimately farmed for retail stores, on-line stores and our intended
Website consumers.
To
acquire colonies of Corals we intend to explore different coral acquisition
opportunities. For example, Reef Clubs are made up of hobbyists who periodically
prune overgrown Coral from their tanks and donate these to a local club to
auction as a fund raise event. These Coral generally are sold significantly
below market price. We intend to acquire Corals at Auctions, as well at local
events. We also intend to visit local fish stores and individuals who advertise
in search of unusual corals. We will farm these Corals, give them specific names
and generate a line of Corals that the hobbyist should eventually recognize as
our line. It is too early in Corporate development to determine how many corals
to acquire and how much to allocate to Coral acquisition.
We
project to Farm Soft Corals such as Zoos and Palys, Large Polyp, Stony Corals
(Acans and Duncans, Frog Spawn and Brains), Small Polyp Stony Corals (Acropora
and Montipora), Coralimorphians-Alse Corals (Anemones and Mushroom Corals),
Coral and Invertebrate Marine Reef System and Mixed Reef System
products.
We
project the Farm venture to produce Corals for local pet/aquarium stores,
on-line retailers and our own intended website.
We need
to raise an additional $500,000 (including the proposed $31,250 capital raise)
to implement our business plan over the next 18 months and the funds raised in
this offering, even assuming we sell all the shares offered, will be
insufficient to commercialize our product or develop our business
strategy.
SUMMARY
OF OUR FINANCIAL INFORMATION
The
following table sets forth selected financial information, which should be read
in conjunction with the information set forth in the "Management's Discussion
and Analysis of Financial Position and Results of Operations" section and the
accompanying financial statements and related notes included elsewhere in this
Prospectus.
PERIOD
FROM INCEPTION ON
|
||||
AUGUST
13, 2010 TO August 31, 2010
|
||||
(AUDITED)
|
||||
($)
|
||||
Revenues
|
$ | - | ||
Expenses
|
2,088 | |||
Net
Profit (Loss)
|
2,088 | |||
Net
Profit (Loss) per share
|
$ | 0.00 | ||
AS
AT August 31, 2010
|
||||
(AUDITED)
|
||||
($)
|
||||
Working
Capital (Deficiency)
|
||||
Total
Assets
|
$ | 6,912 | ||
Total
Current Liabilities
|
$ | 2,000 |
As
indicated in the financial statements accompanying this prospectus, we have had
no revenue to date and have incurred only losses since inception. We have had
limited operations and have been issued a "going concern" opinion by our
auditor, based upon our reliance on the sale of our common stock as the sole
source of funds for our future operations.
6
RISK
FACTORS
Please
consider the following risk factors and other information in this prospectus
relating to our business and prospects before deciding to invest in our common
stock.
This
offering and 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 in this prospectus 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 an investor regarding this
offering. 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
BECAUSE
WE HAVE NOT DEVELOPED A CORAL FARM AND FARMED CORAL THE HARVEST MAY NOT
MATERIALIZE AND/OR THE PRODUCTION COST CAN EXCEED EXPECTATIONS
We have
not developed a Coral Farm and harvested its products therefore, we do not know
the exact cost of production. In the case of a higher than expected cost of
production, we will not be able to offer our products at a competitive price in
the market place. Furthermore, we may find problems in the process. If we are
unable to harvest our products, we will have to cease our operations, resulting
in the complete loss of your investment.
OUR LACK
OF AN OPERATING HISTORY GIVES NO ASSURANCE THAT OUR FUTURE OPERATIONS WILL
RESULT IN PROFITABLE REVENUES, WHICH COULD RESULT IN THE SUSPENSION OR END OF
OUR OPERATIONS
We were
incorporated on August 13, 2010 and we have not realized any revenues to date.
We have very little operating history upon which an evaluation of our future
success or failure can be made. Our ability to achieve and maintain
profitability and positive cash flow is dependent upon the completion of this
offering and our ability to generate revenues through sales of our
products.
Based
upon current plans, we expect to incur operating losses in future periods
because we will be incurring expenses and not generating revenues. We cannot
guarantee that we will be successful in generating revenues in the future.
Failure to generate revenues may cause us to go out of business.
WE ARE A
NEW COMPANY WITH NO OPERATING HISTORY AND WE FACE A HIGH RISK OF BUSINESS
FAILURE WHICH WOULD RESULT IN THE LOSS OF YOUR INVESTMENT
We are a
development stage company formed recently to carry out the activities described
in this prospectus and thus have only a limited operating history upon which an
evaluation of its prospectus can be made. We were incorporated on August 13,
2010 and to date have been involved primarily in the development of our business
plan. We have limited business operations. Thus, there is no internal or
industry-based historical financial data upon which to estimate our planned
operating expenses.
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 Coral Farm harvested product; the availability of
motivated and qualified personnel; the initiation, renewal or expiration of our
customer base; pricing changes by the Company or its competitors, specific
economic conditions in the Coral market and general economic conditions.
Accordingly, our future sales and operating results are difficult to
forecast.
As of the
date of this prospectus, we have earned no revenue. Failure to generate revenue
will cause us to go out of business, which could result in the complete loss of
your investment.
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. Further, in the uncertain event that a
public market for our stock develops, the volatility in the equity markets may
make it difficult in the future for us to access the equity markets for
additional capital at attractive prices, if at all. The current credit crisis in
other countries, for example, and concerns over debt levels of certain other
European Union member states, has increased volatility in global credit and
equity markets. If we are unable to obtain credit or access capital markets, our
business could be negatively impacted. For example, we may be unable to raise
all or a portion the $500,000 that we estimate we will require to launch our
business (including the $31,250 we aim to raise in this offering). See the risk
factor below entitled "IF WE CANNOT SECURE ADDITIONAL CAPITAL, OR IF AVAILABLE
CAPITAL IS TOO EXPENSIVE, OUR BUSINESS WILL FAIL”.
7
BECAUSE
OUR CURRENT OFFICER AND DIRECTOR DOES NOT HAVE SIGNIFICANT EXPERIENCE IN
STARTING A CORAL FARM COMPANY AND SINCE THIS IS A FARMING OPERATION, IF ALL
CONDITIONS ARE NOT RIGHT, OUR CROP COULD FAIL. WE ALSO LACK CUSTOMERS AND
SUPPLIERS, OUR BUSINESS HAS A HIGHER RISK OF FAILURE
Although
our Chief Executive Officer and Director has extensive business experience in
Coral, he does not have experience in developing a Coral Farm or in the
development of a Website for e-commerce. Additionally, we currently have no
contracts or agreements with customers or suppliers of our intended products.
Therefore, without this experience, contracts or suppliers, our management's
business experience may not be enough to effectively start-up and maintain our
company. As a result, the implementation of our business plan may be delayed, or
eventually, unsuccessful.
BECAUSE
WE ARE SMALL AND DO NOT HAVE MUCH CAPITAL, WE MUST LIMIT OUR MARKETING
ACTIVITIES. AS A RESULT, OUR 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. We intend to generate revenue through the sale of 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
PRODUCTS MAY NOT FIND ACCEPTANCE IN RETAIL STORE ESTABLISHMENTS, ON-LINE
RETAILERS AND OUR INTENDED WEBSITE.
We are a
new company with no established visibility or recognition in the CORAL industry.
We anticipate our Coral products to be positioned at a moderate price point.
However, since our brand is not established and our products are not going to be
recognized within the industry, we may have trouble placing our products with
retailers. If we are not able to have our products sold at these retailers and
our intended website, we may not be able to generate revenues and our business
plan may fail.
OUR
OPERATING RESULTS MAY PROVE UNPREDICTABLE WHICH COULD NEGATIVELY AFFECT OUR
PROFIT
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 equity sales; the level of commercial
acceptance by retailers and consumers of our products; fluctuations in the
demand for Coral 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.
OUR SOLE
OFFICER AND DIRECTOR MAY NOT BE IN A POSITION TO DEVOTE A MAJORITY OF HIS TIME
TO OUR OPERATIONS, WHICH MAY RESULT IN PERIODIC INTERRUPTIONS AND EVEN BUSINESS
FAILURE
Mr.
Foxwell, our sole officer and director, has other outside business activities
and is devoting approximately 10-25 hours per week to our operations. Our
operations may be sporadic and occur at times which are not convenient to Mr.
Foxwell, which may result in periodic interruptions or suspensions of our
business plan. Such delays could have a significant negative effect on the
success of the business.
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 its sole officer and director, his
departure or the loss of other key personnel in the future, could have a
material adverse effect on the business. We believe that all commercially
reasonable efforts have been made to minimize the risks attendant with the
departure by key personnel from service.
8
However,
there is no guarantee that replacement personnel, if any, will help the Company
to operate profitably. 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 purchasers of the offered shares to recover all or
any portion of the purchase price for the offered shares will depend on the
amount of funds realized and the claims to be satisfied there from.
IF WE ARE
UNABLE TO GAIN ANY SIGNIFICANT MARKET ACCEPTANCE FOR OUR PRODUCTS OR ESTABLISH A
SIGNIFICANT MARKET PRESENCE, WE MAY BE UNABLE TO GENERATE SUFFICIENT REVENUE TO
CONTINUE OUR BUSINESS
Our
growth strategy is substantially dependent upon our ability to farm and market
our products successfully to prospective customers. However, our planned
products may not achieve significant acceptance. Such acceptance, if achieved,
may not be sustained for any significant period of time. Failure of our products
to achieve or 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 THE BUSINESS STRATEGY MAY BE SLOWER THAN EXPECTED AND WE
MAY BE UNABLE TO GENERATE A PROFIT
Our plans
include obtaining business from retailers which may not occur. Our growth
strategy is subject to significant risks which you should carefully consider
before purchasing the shares we are offering.
Although
we plan on Farming our products carefully, the products 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 its intended markets successfully. The factors that could
affect our growth strategy include our success in(a)Successfully developing the
Coral Farm (b)obtaining orders from retail stores, on-line retailers and our
intended website (c) obtaining adequate financing on acceptable terms, and (d)
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 the
Company experiences significant growth in the foreseeable future, its 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 the Company's financial condition or the results of its
operations.
Since
inception on August 13, 2010 to August 31, 2010, we have spent a total of
approximately $2,088 on start-up costs. We have not generated any revenue from
business operations. All proceeds currently held by us are the result of the
sale of common stock to its officer.
OUR
PRODUCT MAY NOT BE ABLE TO DISTINGUISH ITSELF IN THE MARKET AND WE MAY BE UNABLE
TO ATTRACT ENOUGH CUSTOMERS TO OPERATE PROFITABLY, WITHOUT A PROFIT WE MAY HAVE
TO SUSPEND OR CEASE OPERATIONS
Our
product will target the pet store/aquarium market. If we are unable to
demonstrate clearly the concept that makes our products unique to potential
customers, they may not purchase the product. If the public doesn't acknowledge
the singularity and innovation of our products, we may be unable to attract
enough customers.
9
WE MAY BE
UNABLE TO MAKE NECESSARY ARRANGEMENTS AT ACCEPTABLE COST, WE MAY HAVE TO SUSPEND
OR CEASE OPERATIONS ENTIRELY WHICH COULD RESULT IN A TOTAL LOSS OF YOUR
INVESTMENT.
Because
we are a small business, with limited assets, we are not in a position to assume
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, INFRINGING OUR CUSTOMER BASE, AND
AFFECTING OUR BUSINESS ADVERSELY.
We have
identified a market opportunity for our products. Competitors may enter this
sector with superior products, service, conditions and/or benefits. This would
infringe on our customer base, have an adverse affect upon our business and the
results of our operations.
SINCE OUR
SOLE OFFICER AND DIRECTOR CURRENTLY OWNS 100% OF THE OUTSTANDING COMMON STOCK,
INVESTORS MAY FIND THAT HIS DECISIONS ARE CONTRARY TO THEIR INTERESTS YOU SHOULD
NOT PURCHASE SHARES 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 W. Foxwell, owns 9,000,000 shares of common stock
representing 100% of our outstanding stock. Mr. Foxwell will own 9,000,000
shares of our common stock after this offering is completed representing 78% of
our outstanding shares, assuming all securities are sold. As a result, he will
have control of us even if the full offering is subscribed for and be able to
choose all of our directors. His interests may differ from the ones of other
stockholders. Factors that could cause his interests to differ from the other
stockholders include the impact of corporate transactions on the timing of
business operations and his ability to continue to manage the business given the
amount of time he is able to devote to us.
All
decisions regarding the management of our affairs will be made exclusively by
him. Purchasers of the offered shares may not participate in our management and,
therefore, are dependent upon his management abilities. The only assurance that
our shareholders, including purchasers of the offered shares, 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. Mr. Foxwell also has
the ability to accomplish or ratify actions at the shareholder level which would
otherwise implicate his fiduciary duties if done as one of the members of our
board of directors.
Accordingly,
no person should purchase the offered shares unless willing to entrust all
aspects of management to the sole officer and director, or his successors.
Potential purchasers of the offered shares must carefully evaluate the personal
experience and business performance of our management.
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 September 8, 2010; our auditors have expressed an opinion
that substantial doubt exists as to whether we can continue as an ongoing
business. Because our officer 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 18 months of the effective date of this registration statement, we may be
required to suspend or cease the implementation of our business plan. Due to the
fact that there is no minimum investment and no refunds on sold shares, you may
be investing in a company that will not have the funds necessary to develop its
business strategies. As such we may have to cease operations and you could lose
your entire investment. See the "September 8, 2010 Audited Financial Statements
- Auditors Report". Because we have been issued an opinion by its auditor that
substantial doubt exists as to whether we can continue as a going concern it may
be more difficult to attract investors.
10
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").
Upon
becoming a public company, we will be 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 officer, 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 officer, and we may need to incur additional operating
costs. This could prevent us from becoming profitable.
SINCE WE
ANTICIPATE OPERATING EXPENSES WILL INCREASE PRIOR TO EARNING REVENUE, WE MAY
NEVER ACHIEVE PROFITABILITY
We
anticipate an increase in our operating expenses, without realizing any revenues
from the sale of its products. Within the next 18 months, we will have costs
related to (i) creating a Coral Farm Facility, (ii) selecting Coral colonies
(iii) initiation of our sales and marketing campaign, (iv) administrative
expenses and (v) the expenses of this offering.
There is
no history upon which to base any assumption as to the likelihood that we will
prove successful. We cannot provide investors with any assurance that our
products will attract customers; generate any operating revenue or ever achieve
profitable operations. If we are unable to address these risks, there is a high
probability that our business can fail, which will result in the loss of your
entire investment.
IF WE
CANNOT SECURE ADDITIONAL CAPITAL, OR IF AVAILABLE CAPITAL IS TOO EXPENSIVE, OUR
BUSINESS WILL FAIL.
Developing
and executing our business plan, Rainbow Coral Corp. requires a significant
capital investment. Debt or equity financing may not be available for us to do
so, or if available may be too expensive. Executing our business plan could
require an initial investment of approximately $500,000 (including this $31,250
initial fundraise) and we anticipate 8-31 months of operational losses at
approximately $1,000 per month.
We require
$31,250 to begin implementing the business and marketing plan. This amount
includes the $8,250 required for offering expense. We will require additional
funding of approximately $ 500,000 (this includes the anticipated $31,250
fundraise) to fully execute our business plan and bring our products to the
marketplace. We intend to accomplish this in two phases. Phase One will require
additional funding of $150,000 to begin implementing the business plan. This
includes establishing the Coral Farm Design and Specifications, Layout,
Equipment and Coral Colonies and produce (0-9 Months). Phase Two will require
additional funding of $350,000 (9-18 Months) to execute the completion of the
Coral Farm Facility, administrative, marketing and sales strategy. As of August
31, 2010, we had cash on hand of $8,912.
No
assurance can be given that we will obtain access to capital markets in the
future or that adequate financing to satisfy the cash requirements of
implementing our business strategies will be available on acceptable terms. Our
inability to gain access to capital markets or obtain acceptable financing could
have a material adverse effect upon the results of its operations and its
financial conditions.
If we are
not successful in earning revenue once we have started our sales activity, we
may require additional financing to sustain our business operations. 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 affect on the timing, amount, terms or conditions of
additional financing and make such additional financing unavailable to
us.
11
WE DO NOT
HAVE SUFFICIENT CAPITAL TO CONTINUE MAINTAINING OUR REPORTING
STATUS.
As of the
date of this Prospectus, the current funds available to us will not be
sufficient to continue maintaining our reporting status with the SEC. Our
management believes that if we cannot maintain our reporting status with the SEC
we will have to cease all efforts directed towards developing our company. As
such, any investment could be lost in its entirety.
Risks
Related To This Offering
BECAUSE
THERE IS NO PUBLIC TRADING MARKET FOR OUR COMMON STOCK, YOU MAY NOT BE ABLE TO
RESELL YOUR STOCK
We intend
to apply to have our common stock quoted on the OTC Bulletin Board. This process
takes at least 60 days and the application must be made on our behalf by a
market maker. Our stock may be listed or traded only to the extent that there is
interest by broker-dealers in acting as a market maker. Despite our best
efforts, it may not be able to convince any broker/dealers to act as
market-makers and make quotations on the OTC Bulletin Board. We may consider
pursuing a listing on the OTCBB after this registration becomes effective and we
have completed our offering.
If our
common stock becomes listed and a market for the stock develops, the actual
price of our shares will be determined by prevailing market prices at the time
of the sale.
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 from the selling security holders.
INVESTING
IN OUR COMPANY IS HIGHLY SPECULATIVE AND COULD RESULT IN THE ENTIRE LOSS OF YOUR
INVESTMENT
Purchasing
the offered shares is highly speculative and involves significant risk. The
offered shares 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 their purchase of the offered
shares and may lose their entire investment. For this reason, each prospective
purchaser of the offered shares should read this prospectus and all of its
exhibits carefully and consult with their attorney, business and/or investment
advisor.
INVESTING
IN OUR COMPANY MAY RESULT IN AN IMMEDIATE LOSS BECAUSE BUYERS WILL PAY MORE FOR
OUR COMMON STOCK THAN THE PRO RATA PORTION OF THE ASSETS ARE WORTH
We have
only been recently formed and have only a limited operating history and no
earnings, therefore, the price of the offered shares is not based on any data.
The offering price and other terms and conditions regarding our shares have been
arbitrarily determined and do not bear any relationship to assets, earnings,
book value or any other objective criteria of value. No investment banker,
appraiser or other independent third party has been consulted concerning the
offering price for the shares or the fairness of the offering price used for the
shares. Our net tangible book value per share of common stock is $0.001 as of
August 31, 2010, our most recent financial statement date.
The
arbitrary offering price of $0.0125 per common share as determined herein is
substantially higher than the net tangible book value per share of our common
stock. Our assets do not substantiate a share price of $0.0125. This premium in
share price applies to the terms of this offering. The offering price will not
change for the duration of the offering even if we obtain a listing on any
exchange or become quoted on the OTC Bulletin Board.
BECAUSE
WE HAVE 250,000,000 AUTHORIZED SHARES, MANAGEMENT COULD ISSUE ADDITIONAL SHARES,
DILUTING THE CURRENT SHARE HOLDERS' EQUITY
12
We have
250,000,000 authorized shares, of which only 9,000,000 are currently issued and
outstanding and only 11,500,000 will be issued and outstanding after this
offering terminates. 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.
AS WE DO
NOT HAVE AN ESCROW OR TRUST ACCOUNT WITH SUBSCRIPTIONS FOR INVESTORS, IF WE FILE
FOR OR ARE FORCED INTO BANKRUPTCY PROTECTION, INVESTORS WILL LOSE THE ENTIRE
INVESTMENT
Invested
funds for this offering will not be placed in an escrow or trust account and if
we file for bankruptcy protection or a petition for involuntary bankruptcy is
filed by creditors against us, your funds will become part of the bankruptcy
estate and administered according to the bankruptcy laws. As such, you will lose
your investment and your funds will be used to pay creditors.
WE DO NOT
ANTICIPATE PAYING DIVIDENDS IN THE FORESEEABLE FUTURE, SO THERE WILL BE LESS
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 make it more difficult for broker-dealers to recommend that their
customers buy 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.
13
YOU MAY
FACE SIGNIFICANT RESTRICTIONS ON THE RESALE OF YOUR SHARES DUE TO STATE
"BLUE
SKY" LAWS.
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
and will not do so until we receive expressions of interest from investors
resident in specific states after they have viewed this Prospectus.
We will initially focus our offering in the state of Florida and will rely on
exemptions found in section 517.061 of the Florida Securities and Investor
Protection Act. 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.
USE OF
PROCEEDS
Our
offering is being made on a self-underwritten basis: no minimum number of shares
must be sold in order for the offering to proceed. The offering price per share
is $0.0125. The following table sets forth the uses of proceeds assuming the
sale of 30%, 50%, 75% and 100%, respectively, of the securities offered for sale
by us.
14
Use
Of Proceeds Table
IF
30% OF
|
IF
50% OF
|
IF
75% OF
|
IF
100% OF
|
|||||||||||||
SHARES
SOLD
|
SHARES
SOLD
|
SHARES
SOLD
|
SHARES
SOLD
|
|||||||||||||
GROSS
PROCEEDS FROM THIS OFFERING
|
$
|
9,375
|
$
|
15,625
|
$
|
23,438
|
$
|
31,250
|
||||||||
OFFERING
EXPENSES
|
||||||||||||||||
Accounting
fees
|
2,125
|
2,125
|
2,125
|
2,125
|
||||||||||||
Legal
fees
|
4,375
|
4,375
|
4,375
|
4,375
|
||||||||||||
Printing
|
250
|
250
|
250
|
250
|
||||||||||||
Transfer
Agent
|
1,500
|
1,500
|
1,500
|
1,500
|
||||||||||||
TOTAL
|
$
|
8,250
|
$
|
8,250
|
$
|
8,250
|
$
|
8,250
|
||||||||
PRODUCT
DEVELOPMENT
|
$
|
75
|
$
|
5,000
|
$
|
11,688
|
$
|
17,000
|
||||||||
MARKETING
|
$
|
50
|
$
|
1,375
|
$
|
2,000
|
$
|
3,000
|
||||||||
ADMINISTRATION
EXPENSES
|
$
|
1,000
|
$
|
1,000
|
$
|
1,000
|
$
|
3,000
|
||||||||
TOTALS
|
$
|
9,375
|
$
|
15,625
|
$
|
23,438
|
$
|
31,250
|
The use
of proceeds at 30%, 50%, 75% and 100% forecasted capital raise is anticipated to
be utilized as follows:
Offering
Expenses
The
accounting, legal, printing (Edgarizing) and Transfer Agent fees are the
estimated costs associated with conducting this offering.
Product
Development
We intend
to conduct an investigation to determine the Coral products (Soft, Hard,
Anemones) that are most appropriate for and compatible with farming and
harvesting. The level of effort in this investigation increases as
the offering proceeds increase. We would begin preliminary Coral
product acquisition only when at least 75% of the offering is sold.
Marketing
Our
marketing will include surveying Local Fish Stores (LFS) to determine needs and
wants of retailers and customers; the more offering proceeds received, the
greater number of LFS surveyed. In addition developing a website
presence would be accomplished as we approach selling 100% of the offering.
Administration
Administration expenses include
costs associated with activities to obtain additional financing as discussed in
the “Plan of
Operations”
in the “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” section elsewhere
in this Prospectus. Such activities include telephone calls, e-mails, mailings
of this prospectus, and preparations and distribution of a Powerpoint-type
presentation. Administration expenses also includes the legal accounting and
Edgarizing expenses associated with the continuous disclosure requirements of
the SEC (e.g., required quarterly (Form 10-Q) and annual (Form 10-K) reporting).
The SEC disclosure requirements are our highest priority. However, if the
company sells less than 30% of this Offering and we are unable to secure the
additional financing discussed above, we will not be able to effectively conduct
the product development and marketing activities necessary to move the Company
forward. Under those circumstances, the investors will likely lose their entire
investment.
Continuous Disclosure
Obligations
Auditing,
Legal, Printing (Edgarizing) and Transfer Agent expenses are the estimated costs
associated with continuous disclosure obligations of the SEC reporting
requirements (e.g., quarterly reports on Form 10-Q,annual reports on Form 10-K).
While there could be some variance between these activities, the $8,250 budget
should be sufficient to meet this company’s continuous reporting requirements.
The reporting requirements should always take precedence over all other company
activities. However, if the company sells less than 30% of this Offering, given
this fixed obligation, the investors will likely lose their entire investment.
The
maximum proceeds from this offering ($31,250) will satisfy our basic,
subsistence level, cash requirements for up to 31 months, including legal and
accounting costs associated with this offering ($8,250), the costs associated
with our continuous disclosure obligations, incidental expenses, and the cost of
implementing the investigative aspects of our business plan including
identifying and securing additional sources of financing, employees/consultants,
suppliers, and customers. Seventy-five percent (75%) of the possible
proceeds from this offering ($23,438) will satisfy our basic, subsistence level,
cash requirements for up to 23 months, while 50% of the proceeds ($15,625) will
sustain us for up to 16 months, and 30% of the proceeds ($9,375) will sustain us
for up to 9 months. Our budgetary allocations may vary, however, depending upon
the percentage of proceeds that we obtain from the offering. For example,
we may determine that is it more beneficial to allocate funds toward securing
potential financing and business opportunities in the short terms rather than to
conserve funds to satisfy continuous disclosure requirements for a longer
period. Nevertheless, if we are only successful in selling 30% or less of
the shares being registered, we will dedicate all proceeds to satisfying our
continuous disclosure requirements.
If we are
unable to raise additional monies other than the proceeds of this offering, we
only have enough capital to cover the above described expenses. The
expenses of this offering include the preparation of this prospectus, the filing
of this registration statement and transfer agent fees. Implementing the
business and marketing plan includes preparing basic marketing materials,
contacting potential sources of financing, suppliers, and potential customers.
Our continuous disclosure requirements include the costs of preparing quarterly
financial statements, and reports on forms 10-Q, 10-K and 8-K. As of
August 31, 2010 we had $8,912 cash on hand. This cash will not cover the
expenses of this offering or working capital requirements for even one month
given the undertaking of this offering and expenses involved.
Even if
we are able to sell all of the securities being offered in this Prospectus, we
will still require approximately $500,000 (this includes the anticipated $31,250
raise) to cover our anticipated expenses over the next 18 months. Please review
our disclosure titled "Plan of Operations" in the "Management's Discussion and
Analysis of Financial Condition and Results of Operations" elsewhere in this
Prospectus. Please note that there can be no assurance that we will be able to
raise such funds.
If we are only able to sell less than
30% of the securities we are offering, substantially all of the funds raised by
this offering will be spent on assuring that we meet our corporate and
disclosure obligations so that we remain in good standing with the State of
Florida and maintain our status as a reporting issuer with the
SEC. If we sell less than 30% of the securities that we are
offering the investors will likely lose their entire investment.
DETERMINATION
OF OFFERING PRICE
The
offering price for the shares in this offering was arbitrarily determined. In
determining the initial public offering price of the shares we considered
several factors including the following:
o our
start up status;
o our new
business structure and operations as well as lack of client base;
o
prevailing market conditions, including the history and prospects for our
industry;
o our
opinion is that Coral Farm companies are not public and market conditions tend
to be harder on new businesses;
o our
future prospects and the experience of our management;
o our
capital structure;
Therefore,
the public offering price of the shares does not necessarily bear any
relationship to established valuation criteria and may not be indicative of
prices that may prevail at any time or from time to time in the public market
for the common stock. You cannot be sure that a public market for any of our
securities will develop and continue or that the securities will ever trade at a
price at or higher than the offering price in this offering.
15
DILUTION
OF THE PRICE YOU PAY FOR YOUR SHARES
The price
of the current offering is fixed at $0.0125 per share. This price is
significantly greater than the price paid by our sole officer and director for
common equity since our inception on August 13, 2010. Our sole officer and
director paid $ 0.001 per share, a difference of $0.0115 per share lower than
the share price in this offering.
Dilution
represents the difference between the offering price and the net tangible book
value per share immediately after completion of this offering. Net tangible book
value is the amount that results from subtracting total liabilities and
intangible assets from total assets. Dilution arises mainly as a result of our
arbitrary determination of the offering price of the shares being offered.
Dilution of the value of the shares you purchase is also a result of the lower
book value of the shares held by our existing stockholders. The following tables
compare the differences of your investment in our shares with the investment of
our existing stockholders.
EXISTING STOCKHOLDERS IF ALL
OF THE SHARES ARE SOLD
Price
per share
|
$ | 0.0125 | ||
Net
tangible book value per share before offering
|
$ | 0.001 | ||
Potential
gain to existing shareholders
|
$ | 0.0025 | ||
Net
tangible book value per share after offering
|
$ | 0.0040 | ||
Increase
to present stockholders in net tangible book value
|
||||
per
share after offering
|
$ | 0.0030 | ||
Capital
contributions
|
$ | 37,500 | ||
Capital
contribution by officer & director in September 2009
|
$ | 9,000 | ||
Number
of shares outstanding before the offering
|
9,000,000 | |||
Number
of shares after offering held by existing stockholders
|
9,000,000 | |||
Percentage
of ownership after offering
|
78 | % |
PERCENTAGE
OF SHARES SOLD
|
||||||||||||||||
DILUTION
TO NEW SHAREHOLDERS
|
30%
|
50%
|
75%
|
100%
|
||||||||||||
Per
share offering price
|
$ | 0.0125 | $ | 0.0125 | $ | 0.0125 | $ | 0.0125 | ||||||||
Net
tangible book value per
|
||||||||||||||||
share
before offering
|
$ | 0.001 | $ | 0.001 | $ | 0.001 | $ | 0.001 | ||||||||
Net
tangible book value per
|
||||||||||||||||
share
after offering
|
$ | 0.0019 | $ | 0.0024 | $ | 0.0030 | $ | 0.0040 | ||||||||
Increase
in book value
|
||||||||||||||||
attributable
to new
|
||||||||||||||||
shareholders
|
$ | 0.0008 | $ | 0.0014 | $ | 0.0020 | $ | 0.0030 | ||||||||
Dilution
to new shareholders
|
$ | 0.011 | $ | 0.010 | $ | 0.0095 | $ | 0.0084 |
16
THE
OFFERING
We are
registering 2,500,000 shares of our common stock for offer and sale at $0.0125
per share.
There is
currently no active trading market for our common stock, and such a market may
not develop or be sustained. We currently plan to have our common stock listing
on the OTC Bulletin Board, subject to the effectiveness of this Registration
Statement. In addition, a market maker will be required to file a Form 211 with
the Financial Industry Regulatory Authority (FINRA) before the market maker will
be able to make a market in our shares of common stock. At the date hereof, we
are not aware that any market maker has any such intention.
We may
not sell the shares registered herein until the registration statement filed
with the Securities and Exchange Commission is effective. Further, we will not
offer the shares through a broker-dealer or anyone affiliated with a
broker-dealer. Upon effectiveness, all of the shares being registered herein may
become tradable. The stock may be traded or listed only to the extent that there
is interest by broker-dealers in acting as a market maker in our stock. Despite
our best efforts, it may not be able to convince any broker/dealers to act as
market-makers and make quotations on the OTC Bulletin Board. We may consider
pursuing a listing on the OTCBB after this registration becomes effective and we
have completed our offering.
17
The price
per share will remain at $0.0125 even if we obtain a listing on any exchange or
are quoted on the Over-The-Counter (OTC) Bulletin Board, the offering price of
$0.0125 will not change for the duration of the offering.
We will
receive all of the proceeds from such sales of securities and are bearing all
expenses in connection with the registration of our shares.
PLAN OF
DISTRIBUTION
We are
offering the shares on a "self-underwritten" basis directly through Louis W.
Foxwell our Sole Officer and Director named herein. Mr. Foxwell will not receive
any commissions or other remuneration of any kind in connection with his
participation in this offering based either directly or indirectly on
transactions in securities.
This
offering is a self-underwritten offering, which means that it does not involve
the participation of an underwriter to market, distribute or sell the shares
offered under this prospectus. This offering will terminate upon the earlier to
occur of (i) 90 days after this registration statement becomes effective with
the Securities and Exchange Commission, (ii) the date on which all 2,500,000
shares registered hereunder have been sold. We may, at our discretion, extend
the offering for an additional 90 days.
We
anticipate that we will be initially offering our securities in the State of
Florida. Once this Registration Statement is effective, and if Mr. Foxwell
believes that there is sufficient interest in our company to offer our
securities in the state of Florida, we will register with the state of Florida
under 'blue sky' laws. However, we have not yet applied for 'blue sky'
registration in the state of Florida, or any other state, and there can be no
assurance that we will be able to apply, or that our application will be
approved and our securities will be registered, in Florida or any other state in
the US. For further discussion regarding 'blue sky' registration please see
'Risk Factors' elsewhere in this Prospectus.
Mr.
Foxwell will not register as broker-dealers pursuant to Section 15 of the
Securities Exchange Act of 1934, in reliance upon Rule 3a4-1, which sets forth
those conditions under which a person associated with an issuer may participate
in the offering of the issuer's securities and not be deemed to be a
broker-dealer.
1. Mr.
Foxwell is not subject to a statutory disqualification, as that term is defined
in Section 3(a)(39) of the Act, at the time of his participation;
2. Mr.
Foxwell will not be compensated in connection with his participation by the
payment of commissions or other remuneration based either directly or indirectly
on transactions in securities;
3. Mr.
Foxwell is not, nor will he be at the time of participation in the offering, an
associated person of a broker-dealer; and
4. Mr.
Foxwell meets the conditions of paragraph (a)(4)(ii) of Rule 3a4-1 of the
Exchange Act, in that he (A) primarily performs, or is intended primarily to
perform at the end of the offering, substantial duties for or on behalf of our
company, other than in connection with transactions in securities; and (B) is
not a broker or dealer, or been an associated person of a broker or dealer,
within the preceding twelve months; and (C) has not participated in selling and
offering securities for any issuer more than once every twelve months other than
in reliance on Paragraphs (a)(4)(i) or (a)(4)(iii).
Our
officer, director, control persons and affiliates do not intend to purchase any
shares in this offering.
If
applicable, the shares may not be offered or sold in certain jurisdictions
unless they are registered or otherwise comply with the applicable securities
laws of such jurisdictions by exemption, qualification or otherwise. We intend
to sell the shares only in the states in which this offering has been qualified
or an exemption from the registration requirements is available, and purchases
of shares may be made only in those states.
In
addition and without limiting the foregoing, we will be subject to applicable
provisions, rules and regulations under the Exchange Act with regard to security
transactions during the period of time when this Registration Statement is
effective.
18
We will
not use public solicitation or general advertising in connection with the
offering. The shares will be offered at a fixed price of $0.0125 per share
for the duration of the offering. There is no minimum number of shares required
to be sold to close the offering. This offering will terminate upon the
earlier to occur of (i) 90 days after this registration statement becomes
effective with the Securities and Exchange Commission, or (ii) the date on which
all 2,500,000 shares registered hereunder have been sold. We may, at our
discretion, extend the offering for an additional 90 days. In any event, the
offering will end within six months of this Registration Statement being
declared effective
This is a
direct participation offering since we, and not an underwriter, are offering the
stock. We will receive all of the proceeds from such sales of securities and are
bearing all expenses in connection with the registration of our shares.
DESCRIPTION
OF SECURITIES
COMMON
STOCK
Our
authorized number of shares is two hundred and fifty million (250,000,000). The
authorized common stock is two hundred and fifty million (250,000,000) shares
with a par value of $0.0001. Shares of our common stock:
|
o
|
have
equal ratable rights to dividends from funds legally available if and when
declared by our Board of Directors;
|
|
o
|
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;
|
|
o
|
do
not have preemptive, subscription or conversion rights and there are no
redemption or sinking fund provisions or rights;
and
|
|
o
|
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. After this offering is completed, present
stockholders will own approximately 75% of our outstanding shares.
CASH
DIVIDENDS
As of the
date of this Prospectus, 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.
INTEREST
OF NAMED EXPERTS AND COUNSEL
No expert
or counsel named in this Prospectus as having prepared or certified any part
thereof or having given an opinion upon the validity of the securities being
registered or upon other legal matters in connection with the registration or
offering of our common stock was employed on a contingency basis or had or is to
receive, in connection with the offering, a substantial interest, directly or
indirectly, in us. Additionally, no such expert or counsel was connected with us
as a promoter, managing or principal underwriter, voting trustee, director,
officer or employee.
Diane J.
Harrison, Harrison Law, P.A., 6860 Gulfport Blvd. S. No. 162, South Pasadena,
Florida 33707,
has passed upon certain legal matters in connection with the validity of the
issuance of the shares of common stock.
19
Peter
Messineo, CPA, Certified Public Accountant, of 1982 Otter Way , Palm Harbor, FL
34685, 727-421-6268 has audited our Financial Statements for the period August
13, 2010 (date of inception) through August 31, 2010 and to the extent set forth
in its report, which are included herein in reliance upon the authority of said
firm as experts in accounting and auditing. There were no disagreements related
to accounting principles or practices, financial statement disclosure, internal
controls or auditing scope or procedure from date of appointment as our
independent registered accountant through the period of audit (inception August
13, 2010 through August 31, 2010).
BUSINESS
DESCRIPTION
OVERVIEW
We are a
development stage company and were incorporated in the State of Florida on
August 13, 2010, as a for-profit company, and an established fiscal year end of
August 31. As of the date of this Prospectus, we have not established any
business operations and have not achieved any revenues. The development of our
business has been limited to organizational matters, the preparation of our
business plan, and the preparation of the financial statements and other
information presented in this Prospectus. Our ability to establish operations is
entirely dependent on our ability to raise sufficient financing to execute our
business plan, however, there is no guarantee that we will be successful in this
regard. Furthermore, if we successfully establish operations, there is no
guarantee that there will be a significant market for our products or that we
will achieve significant revenues, if any
We intend
to establish 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 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 ecosystems
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. Nearly every other organism in the pet industry is captive bred. Dogs,
Cats, Parrots, etc. are all Farm raised. We believe that Corals be added to that
list via the establishment of our Coral Farm.
We intend
to actively acquire specific Parent Colonies to maintain and continue to grow in
our Farm, and the branches of these colonies are anticipated to be propagated by
fragmentation. The fragments or “frags” when properly farmed will grow into
Corals that resemble the parent colony. The parent Coral, or brood stock, in our
Farm regenerates and produces new frags, making the Coral Farm a self-sustaining
and reliable source for Corals. We intend to market over 50 species of Hard and
Soft Corals. We intend to acquire these specific genetics that fit within a
criteria suitable for commercial application. It is from these genetics that our
product line is intended to be derived and ultimately sold to retail stores and
consumers.
We
anticipate the Farm venture to produce Corals for store retailers, on-line
retailers and our own intended website.
CORAL
PRODUCTS
We expect
to Farm:
SOFT
CORALS
Zoanthoa
Palythoa
Leather
Corals-Toadstools, fingers, etc.
Pacific
mushroom Corals-Discasoma, Rhodactis, Ricordia
Atlantic/Carribean-mushroom
Corals-Discosoma, Ricordia
Xenia
Anthelia
HARD
CORALS-SPS & LPS
Acropora
Montipora-Including
finger, cap, encrusting formns
Pavona
Seriuatopora-Birdsnest
Hydnophora
Galaxea
Caulastrea-Candycane
Corals
Euyphyllia-Hammers
& Frogspawn
Duncanopsammia-Duncans
ANEMONES
20
We expect
our Facility to be a truly State-Of-The-Art Coral Farm with rows of saltwater
holding “raceways” and the latest technology in lighting, filtration, water
movement, and quarantine systems. The Facility itself is intended to have
exceptional ventilation in order to maintain the proper levels of oxygen while
decreasing humidity with the use of a sealed Air Exchanger System. We expect
that every aspect of the operation will be tightly controlled and trained
aquatic personnel will monitor the conditions of the tanks as well as the Corals
themselves daily. We intend to make a considerable investment in this Coral Farm
Facility to ensure our Corals are the healthiest specimens available in the
industry. Our goal is to grow the best Corals, which we hope will help
accelerate the demand for Aquaculture Corals. (Aquaculture
is known as aqua farming: the farming of aquatic organisms such as coral, fish,
plants, etc.)
Of the
many types of Corals available to the hobbyist, we intend to focus our efforts
on species that adapt well to a closed environment. We expect to complement
these Corals with species hand-selected at some of the largest importers in the
U.S. All corals acquired from importers will be quarantined and monitored for
several months. We will assess not only their health but also their ability to
adapt well to artificial lighting in a closed system before we make the decision
to use them in the propagation process. (Propagation is the biological process
by which new “offspring” of individual organisms are reproduced and are broadly
grouped into two main types: Sexual and Asexual).
THE CORAL FARM
FACILITY
We
currently have no plan in place to design or have specifications to execute the
Coral Farm Facility. However, we envision from the experience of the sole
officer the following:
Size:
25,000 gallons across nine discreet handling systems
Staff:
6-10 employees
Power Back
Up:
|
All system return pumps in the
entire facility are to be hooked to an External natural gas power back up
generator
|
Air
Handling:
|
Sealed building feed by two air
handling systems maintaining humidity Levels of below 50%, and a stable
temperature of 76 degrees
Fahrenheit
|
Facility
Overview:
Acclimation
Room
Quarantine
System
Testing
Bench
Pack out
areas
Coral
Brood stock and Growth-out area
We
anticipate it will take 18 months to start marketing the harvest of our Coral
Farm. We intend to utilize consultants to assist in the design and execution of
all phases of the Coral Farm Facility.
We do not
currently have any agreements in place with customers for the acquisition of our
corals or with any suppliers for the provision of supplies that we will require
to carry on our business. There can be no assurance that we will be able to
secure such agreements or that we will be able to do so on terms favorable to
us.
We have
not generated any revenues to date and our activities have been limited to
organizational matters, the development of our business plan, and the
preparation of our financial statement and the other information presented in
this Prospectus. We will not have the necessary capital to implement our
business plan until we are able to secure adequate financing. We
anticipate that we will require total financing of $500,000;
$468,750 of which we will be seeking to raise subsequent
to this $31,250.00 offering in order to execute our business plan over an 18
month period. There can be no assurance that such financing will be
available or available on suitable terms. Please see "Risk Factors" elsewhere in
this Prospectus for a full discussion on this potential business risk.
We have
not accomplished any of our intended efforts to date. We have not generated any
revenues to date and our activities have been limited to developing our business
plan. We will not have the necessary capital to develop our Business Plan until
we are able to secure additional financing. There can be no assurance that such
financing will be available on suitable terms. Please see “Risk Factors”
elsewhere in this Prospectus for full discussion on this potential business
risk.
We have
no plans to change our business activities or to combine with another business
and are not aware of any events or circumstances that might cause us to change
our plans. We have no revenues, have incurred losses since inception, have no
operations, have been issued a going concern opinion from our auditors and rely
upon the sale of our securities to fund operations.
Business
Plan Implementation Schedule
We have
not generated any revenues to date and have not established business operations.
We will be unable to fully establish operations or otherwise implement our
business plan until we are able to secure total financing of approximately
$500,000 (including this $31,250 capital raise). However there can be no
assurance that sufficient financing will be available or available on suitable
terms.
We have
not established a schedule for the completion of specific tasks or milestones
contained in our business plan. With the clear exception of the costs
associated with this offering ($8,250) virtually all aspects of our business
plan are scalable in terms of size, quality, and effectiveness, and the timing
of their execution must be concurrent or near concurrent and progressive over a
eighteen month period. We anticipate that we will require a total of $500,000 in
order to generate significant revenues within an 18 month period.
21
BUSINESS
STRATEGY
Our
strategy is to build brand recognition by marketing to Local Marine Aquarium
Clubs, National and Regional Reef Conferences, Booths at Reef Conferences and
the Internet. We intend to create and maintain adverse coral reserve, a genetic
bank of Corals, permanently residing in closed environments completely
independent of the oceans, as a future reserve against the decline of natural
wild reefs, to grow and distribute as many varieties and sizes possible of
captive-bred Corals that are attractive and free of nuisance organisms, to as
many customers as possible who can maintain them in a healthy ecosystem, to
provide to aquarists an environmentally conscientious alternative choice to
buying wild caught Corals, to provide a healthier, pest-free Coral that has a
far lower mortality rate for the consumers tank and does not impact wild reefs
negatively, to educate the consumer about the stressors that the natural ocean
reefs are currently being exposed to, such as increasing water temperatures, and
what, if anything, can be done to help, to educate the consumer about the
advantages of captive-bred Corals over wild caught Corals, to provide Corals who
spend their entire life cycle in closed ecosystems, independent of the oceans,
where all the parameters such as lighting, specific gravity, and temperature are
provided to the consumer, to enhance the survivability of the
Coral.
To
acquire colonies of Corals, we intend to explore different coral acquisition
opportunities. For example, Reef Clubs are made up of hobbyists who periodically
prune overgrown Coral from their tanks and donate these to a local club to
auction as a fund raise event. These Coral generally are sold significantly
below market price. We intend to acquire Corals at Auctions, as well at local
events. We also intend to visit local fish stores and individuals who advertise
in search of unusual corals. We will farm these Corals, give them specific names
and generate a line of Corals that the hobbyist should eventually recognize as
our line. It is too early in corporate development to determine how many Corals
to acquire and how much to allocate to Coral acquisition.
SALES and MARKETING
STRATEGY
We
anticipate to market and distribute Rainbow Coral products in the United States,
by attendance and exhibiting at industry and trade shows. We intend to enter
into sales agency agreements with independent sales representatives each of whom
is granted exclusive rights to market and sell Rainbow Coral products in their
respective territory. We currently have no agreements in place with commissioned
sales agents. Our vision is to market the most popular Coral products in the
United States with unquestionable superior Coral products.
We intend
to market, sell and distribute our Rainbow Coral products through attendance at
all of the major trade and pet/aquarium industry exhibitions, advertising in
trade publications, direct sales to store retailers (via sales representatives),
on-line retailers and our intended website. We have no yet begun the development
of this website.
CHARACTERISTICS AND MAKE UP
OF TARGET MARKET
The
initial Market Area targeted is the United States. We intend to obtain this
national exposure through our planned Internet Web Site, trade magazines and
advertising, and attending National/Regional Shows. We anticipate to market to
marine retailers, wholesalers, and distributors and also direct to the consumer.
It is
estimated that there are 10-20 million aquarium enthusiasts in the United States
alone. The keeping of marine aquaria, especially the so called “reef tanks”
which contain live corals, is primarily attributed to recent advances in
technology that now allow corals and other marine invertebrates to thrive in
home aquariums. Total world retail value of the Aquarium industry in 1995 was
estimated at between 4 and 15 billion $ US by the “Center for Tropical &
Subtropical Aquaculture”, Publication #140. August 1999 and can be viewed at:
http://www.ctsa.org/upload/publication/ctsa_140631672856230935160.pdf
BRAND
RECOGNITION AND CHARACTERISTICS
As this
industry grows, so will Coral farmers and their need to sell their stock. More
farmers mean more competition and thus the need to be different from the rest.
We believe brand naming our Corals may create a commodity. We intend to develop
a logo, creating a form of advertising and recognition branding for our future
products. We have not to date developed a brand name.
COMPETITION
Based on
our knowledge of the industry, Coral Farming consists of small mom and pop
on-line retailers, small brick and mortar retailers. The largest private
Company appears to be Segrest Wholesalers and Farmers in Ruskin, FL. Other
Companies include:
Mid West
Coral Farms,
Carolina
Coral Farms,
Blue
Planet Reef Farm,
Boston
Aqua Farms,
ORA
Farms,
Tyree
Farms,
and
numerous small on line companies.
EMPLOYEES and EMPLOYMENT
AGREEMENTS
As of
August 31, 2010, we have no employees other than Mr. Foxwell, our sole officer
and director. Mr. Foxwell has the flexibility to work on our business up to 10
to 25 hours per week. He is prepared to devote more time to our operations as
may be required and we do not have any employment agreements with
him.
22
We do not
presently have pension, health, annuity, insurance, stock options, profit
sharing, or similar benefit plans; however, we may adopt plans in the future.
There are presently no personal benefits available to our sole director and
officer.
During
the initial implementation of our business plan, we intend to hire independent
consultants to assist in its development and execution.
GOVERNMENT
REGULATIONS
We are
unaware of and do not anticipate having to expend significant resources to
comply with any governmental regulations of the Coral market. We are subject to
the laws and regulations of those jurisdictions in which we plan to sell or farm
our product, which are generally applicable to business operations, such as
business licensing requirements, income taxes and payroll taxes. In general, the
development and operation of our business is not subject to special regulatory
and/or supervisory requirements.
From a
positive standpoint, The US Department of Fish and Wildlife has begun to inspect
nearly every coral shipment into the country due to pressure from animal rights
activists, seizing many corals, even those with permits, and dooming them to
death in delays. Many countries exporting corals and fish have started to
self-limit to save their dwindling resources. http://www.practicalcoralfarming.com
(LATEST NEWS 11/01/2007-Present) page 1 of 2.
This news
article brings to light the need for Rainbow Coral Farming today.
Intellectual
Property
We do not
currently hold rights to any intellectual property and have not filed for
copyright or trademark protection for our name or intended website.
Research and
Development
Since our
inception to the date of this Prospectus, we have not spent any money on
research and development activities.
Reports to Security
Holders
Any
member of the public may read and copy any materials filed by us with the
Securities and Exchange Commission at the Securities and Exchange Commission's
Public Reference Room at 100 F Street, N.E. Washington, D.C. 20549. Information
on the operation of the Public Reference Room may be obtained by calling the
Securities and Exchange Commission at 1-800-732-0330. The Securities and
Exchange Commission maintains an internet website (http://www.sec.gov) that
contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the Securities and Exchange
Commission.
DESCRIPTION
OF PROPERTY
We
maintain our statutory registered agent's office at 291 LaCosta Rd., Nokomis, FL
34275 and our business office is located at 291 LaCosta Rd., Nokomis, FL 34275.
Tel: (941) 480-1230.
Our
office space needs are limited at the current time and is donated free of charge
by our sole director and officer.
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 director, officer or affiliate, or any
registered beneficial shareholder are an adverse party or has a material
interest adverse to us.
23
MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET
INFORMATION
Our
common stock is not traded on any exchange. We intend to apply to have our
common stock quoted on the OTC Bulletin Board once this Prospectus has been
declared effective by the SEC; however, there is no guarantee that we will
obtain a listing.
There is
currently no trading market for our common stock and there is no assurance that
a regular trading market will ever develop. OTC Bulletin Board securities are
not listed and traded on the floor of an organized national or regional stock
exchange. Instead, OTC Bulletin Board securities transactions are conducted
through a telephone and computer network connecting dealers. OTC Bulletin Board
issuers are traditionally smaller companies that do not meet the financial and
other listing requirements of a regional or national stock
exchange.
To have
our common stock listed on any of the public trading markets, including the OTC
Bulletin Board, we will require a market maker to sponsor our securities. We
have not yet engaged any market maker to sponsor our securities, and there is no
guarantee that our securities will meet the requirements for quotation or that
our securities will be accepted for listing on the OTC Bulletin Board. This
could prevent us from developing a trading market for our common
stock.
HOLDERS
As of the
date of this Prospectus there was one holder of record of our common
stock.
DIVIDENDS
To date,
we have not paid dividends on shares of our common stock and we do not expect to
declare or pay dividends on shares of our common stock in the foreseeable
future. The payment of any dividends will depend upon our future earnings, if
any, our financial condition, and other factors deemed relevant by our Board of
Directors.
EQUITY
COMPENSATION PLANS
As of the
date of this Prospectus we did not have any equity compensation
plans.
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
This
section of the prospectus includes a number of forward-looking statements that
reflect our current views with respect to future events and financial
performance. Forward-looking statements are often identified by words like:
"believe", "expect", "estimate", "anticipate", "intend", "project" and similar
expressions, or words that, by their nature, refer to future events. You should
not place undue certainty on these forward-looking statements, which apply only
as of the date of this prospectus. These forward-looking statements are subject
to certain risks and uncertainties that could cause actual results to differ
materially from historical results or our predictions.
Our
financial statements are stated in United States Dollars (USD or US$) and are
prepared in accordance with United States Generally Accepted Accounting
Principles. All references to "common shares" refer to the common shares in our
capital stock.
Overview
We are a
development-stage company, incorporated in the State of Florida on August 13,
2010, as a for-profit company, and an established fiscal year of August 31. We
have not yet generated or realized any revenues from business operations. Our
auditor has issued a going concerned opinion. This means there is substantial
doubt that we can continue as an on-going business for the next eighteen (18)
months unless we obtain additional capital to pay our bills.
Accordingly,
we must raise cash from sources other than loans we undertake.
From
inception through our current date, August 31, 2010, our business operations
have primarily been focused on developing our business plan. We have spent a
total of approximately $ 2,088 on start-up costs. We have not generated any
revenue from business operations. All cash currently held by us is the result of
the sale of common stock to our sole director and officer.
24
The
proceeds from this offering will satisfy our cash requirements for up to 6
months. If we are unable to raise additional monies, we only have enough capital
to cover the costs of this offering and to begin implementing the business and
marketing plan. The expenses of this offering include the preparation of this
prospectus, the filing of this registration statement and transfer agent fees.
Implementing the business and marketing plan. As of August 31, 2010 we had $
8,912 cash on hand.
Plan of
Operations
We
believe we do not have adequate funds to satisfy our working capital
requirements for the next twelve months. We will need to raise additional
capital to continue our operations. During the 18 months following the
completion of this offering, we intend to implement our business and marketing
plan. We believe we must raise an additional $500,000 (this includes the
anticipated $31,250 capital raise) to pay for expenses associated with our
development over the next 18 months. $150,000 will be used to finance
anticipated activities during Phase One of our development plan as described
below, and $350,000 will be used to finance anticipated activities during Phase
Two of our development plan as described below.
As of
August 31, 2010, we had cash on hand of $ 8,912.
PHASE
ONE
PROJECTED
|
||||||||
DATE
OF
|
ESTIMATED
|
|||||||
ANTICIPATED MILESTONES
|
COMPLETION
|
BUDGET $
|
||||||
0-9
MONTHS
|
||||||||
Complete
RCC Site Selection and Farm Construction Drawings and
Specifications
|
65,000 | |||||||
Complete
RCC Initial Coral Stock Selection and Inventory for
propagation
|
20,000 | |||||||
Complete
RCC Final Coral Stock Selection and Inventory for
propagation
|
20,000 | |||||||
Interview
Sales Agents and Sign Territorial Agreements
|
5,000 | |||||||
Complete
the Operational Website of RCC including Hosting
|
20,000 | |||||||
Complete
Selection of RCC Consulting Team to Execute Business Plan and Full Time
Employees
|
5,000 | |||||||
Additional
Working Capital Including Professional Fees
|
15,000 | |||||||
TOTAL
PHASE ONE
|
$ | 150,000 |
Note:
This table above does not include costs related to commencing sales and
marketing
of our products.
25
PHASE
TWO
PROJECTED
|
||||||||
TIME
TO
|
ESTIMATED
|
|||||||
MILESTONES
|
COMPLETION
|
BUDGET
$
|
||||||
9-18
MONTHS
|
||||||||
PRODUCTION
Complete
RCC Site Selection and Execute Purchase All Specified Equipment
(Production, Office, Warehouse, QC, Testing) Coral Stock For Propagation
|
210,000 | |||||||
MARKETING
& SALES
Complete
Sales Literature, Displays, Advertising Operational Website, Complete all
Displays Literature And Advertising Program
|
40,000 | |||||||
MANAGEMENT,
FARMING & ADMINISTRATION
Consultants
Operational CFO, Production, Marketing Farming Employees
|
70,000 | |||||||
ADDITIONAL
WORKING CAPITAL
|
30,000 | |||||||
TOTAL
PHASE TWO
|
$ | 350,000 | ||||||
TOTAL
PHASE ONE & TWO
|
$ | 500,000 | * |
*This
includes the anticipated $31,250 capital raise.
Many of
the developments enumerated in Phase 2 are dependent on the completion of
objectives in Phase 1 and both Phases are dependent on us securing additional
financing even if we are able to sell all of the securities offered by this
Prospectus. There can be no assurance that we will be able to sell any of the
securities offered by this Prospectus or secure additional financing. If we are
able to raise some, but not all funds required to undertake the developments in
Phase 1 and Phase 2, our management will re-examine our proposed business
activities to use our resources most efficiently. In this event, our focus will
likely be on spending available funds on assuring that we retain our reporting
status with the SEC and developing our product designs to attract
investors.
If we are
unable to raise additional funds we will not be able to complete any of the
milestones in either Phase 1 or Phase 2. Due to the fact that many of the
milestones are dependent on each other, if we do not raise any additional
capital we will not be able to implement any facets of our business
plan.
We intend
to pursue capital through public or private financing as well as borrowings and
other sources, such as our officer and director in order to finance our
businesses activities. We cannot guarantee that additional funding will be
available on favorable terms, if at all. If adequate funds are not available,
then our ability to continue our operations may be significantly
hindered.
We have
not yet begun the development of any of our anticipated products and even if we
do secure adequate financing, there can be no assurance that our products will
be accepted by the marketplace and that we will be able to generate
revenues.
Our
management does not plan to hire any employees at this time. Our sole officer
and director will be responsible for business plan development. If we develop
our products and are in a position to begin sales, marketing and distribution,
we intend to hire independent consultants and sales representatives as we deem
necessary.
RESULTS
OF OPERATIONS
There is
no historical financial information about us upon which to base an evaluation of
our performance. We have incurred expenses of $2,088 on our operations as of
August 31, 2010 on selling, general and administrative expenses and our only
other activity consisted of the sale of 9,000,000 shares of our common stock to
our sole director and officer for aggregate proceeds of $9,000.
26
We have
not generated any revenues from our operations. We cannot guarantee we will be
successful in our business operations. Our business is subject to risks inherent
in the establishment of a new business enterprise, including the financial risks
associated with the limited capital resources currently available to us for the
implementation of our business strategies. (See "Risk Factors"). To become
profitable and competitive, we must develop the business and marketing plan and
execute the plan. Our management will attempt to secure financing through
various means including borrowing and investment from institutions and private
individuals.
Since
inception, the majority of our time has been spent refining its business plan
and collection design sketches, and preparing for a primary financial
offering.
Our
results of operations are summarized below:
August 13, 2010 (Inception)
|
||||
TO August 31, 2010
|
||||
(AUDITED)
|
||||
($)
|
||||
Revenue
|
- | |||
Cost
of Revenue
|
- | |||
Expenses
|
$ | 2,088 | ||
Net
Loss -
|
$ | 2,088 | ||
Net
Loss per Share - Basic and Diluted
|
(0.00 | ) | ||
Weighted
Average Number Shares Outstanding - Basic and
Diluted
|
9,000,000 |
LIQUIDITY
AND CAPITAL RESOURCES
As of the
date of this prospectus, we had yet to generate any revenues from our business
operations. For the period ended August 31, 2010, we issued 9,000,000 shares of
common stock to our sole officer and director for cash proceeds of
$9,000.
We
anticipate needing a minimum of $150,000 for Phase One and an additional
$350,000 for Phase Two, totaling $500,000 (this includes the anticipated $31,250
raise) in order to effectively execute our business plan over the next eighteen
months. Currently available cash is not sufficient to allow us to commence full
execution of our business plan. Our business expansion will require significant
capital resources that may be funded through the issuance of common stock or of
notes payable or other debt arrangements that may affect our debt structure.
Despite our current financial status we believe that we may be able to issue
notes payable or debt instruments in order to start executing our business plan.
However, there can be no assurance that we will be able to raise money in this
fashion and have not entered into any agreements that would obligate a third
party to provide us with capital.
Through
August 31, 2010, we spent $2,088 on general operating expenses. We raised the
cash amounts to be used in these activities from the sale of common stock to our
sole officer and director, however we currently have accrued liabilities of
$2,000 and a working capital of $6,912.
As of
August 31, 2010 we had $8,912 cash on hand.
To date,
the Company has managed to keep our monthly cash flow requirement low for two
reasons. First, our sole officer does not draw a salary at this time. Second,
the Company has been able to keep our operating expenses to a minimum by
operating in space owned by our sole officer and will be only paying the direct
expenses associated with our business operations.
As of the
date of this registration statement, the current funds available to the Company
will not be sufficient to continue maintaining a reporting status. Management
believes if the Company cannot maintain its reporting status with the SEC it
will have to cease all efforts directed towards the Company. As such, any
investment previously made would be lost in its entirety.
27
The
Company currently has no external sources of liquidity such as arrangements with
credit institutions or off-balance sheet arrangements that will have or are
reasonably likely to have a current or future effect on our financial condition
or immediate access to capital.
The sole
Director and Officer has made no commitments written or oral, with
respect to providing a source of liquidity in the form of cash
advances, loans and/or financial guarantees.
If the
Company is unable to raise the funds partially through this offering the Company
will seek alternative financing through means such as borrowings from
institutions or private individuals. There can be no assurance that the Company
will be able to keep costs from being more than these estimated amounts or that
the Company will be able to raise such funds. Even if we sell all shares offered
through this registration statement, we expect that the Company will seek
additional financing in the future. However, the Company may not be able to
obtain additional capital or generate sufficient revenues to fund our
operations. If we are unsuccessful at raising sufficient funds, for whatever
reason, to fund our operations, the Company may be forced to seek a buyer for
our business or another entity with which we could create a joint venture. If
all of these alternatives fail, we expect that the Company will be required to
seek protection from creditors under applicable bankruptcy
laws.
Our
independent auditor has expressed substantial doubt about our ability to
continue as a going concern and believes that our ability is dependent on our
ability to implement our business plan, raise capital and generate revenues. See
Note 2 of our financial statements.
Recent
Federal legislation, including the Sarbanes-Oxley Act of 2002, has resulted in
the adoption of various corporate governance measures designed to promote the
integrity of the corporate management and the securities markets. Some of these
measures have been adopted in response to legal requirements. Others have been
adopted by companies in response to the requirements of national securities
exchanges, such as the NYSE or The NASDAQ Stock Market, on which
their securities are listed. Among the corporate governance measures that are
required under the rules of national securities exchanges are those that address
board of directors' independence, audit committee oversight, and the adoption of
a code of ethics. Our Board of Directors is comprised of one individual who is
also our executive officer. Our executive officer makes decisions on all
significant corporate matters such as the approval of terms of the
compensation of our executive officer and the oversight of the accounting
functions.
Although
the Company has adopted a Code of Ethics and Business Conduct the Company has
not yet adopted any of these other corporate governance measures and, since our
securities are not yet listed on a national securities exchange, the Company is
not required to do so. The Company has not adopted corporate governance measures
such as an audit or other independent committees of our board of directors as we
presently do not have any independent directors. If we expand our board
membership in future periods to include additional independent directors, the
Company may seek to establish an audit and other committees of our board of
directors. It is possible that if our Board of Directors included independent
directors and if we were to adopt some or all of these corporate governance
measures, stockholders would benefit from somewhat greater assurances that
internal corporate decisions were being made by disinterested directors and that
policies had been implemented to define responsible conduct. For example,
in the
absence of audit, nominating and compensation committees comprised of at least a
majority of independent directors, decisions concerning matters such as
compensation packages to our senior officer and recommendations for director
nominees may be made by a majority of directors who have an interest in the
outcome of the matters being decided. Prospective investors should bear in mind
our current lack of corporate governance measures in formulating their
investment decisions.
OFF-BALANCE
SHEET ARRANGEMENTS
We have
no significant off-balance sheet arrangements that have or are reasonably likely
to have a current or future effect on our financial condition, changes in our
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that are material to our
stockholders.
INFLATION
The
effect of inflation on our revenues and operating results has not been
significant.
28
CRITICAL
ACCOUNTING POLICIES
Our
financial statements are affected by the accounting policies used and the
estimates and assumptions made by management during their preparation. A
complete listing of these policies is included in Note 3 of the notes to our
financial statements for the year ended August 31, 2010. We have identified
below the accounting policies that are of particular importance in the
presentation of our financial position, results of operations and cash flows,
and which require the application of significant judgment by
management.
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
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
RESEARCH
AND DEVELOPMENT EXPENSES - Expenditures for research, development, and
engineering of products will be expensed as incurred.
EARNINGS
(LOSS) PER SHARE - Basic loss per share is computed by dividing net loss
attributable to common stockholders by the weighted average common shares
outstanding for the period. Diluted loss per share is computed giving effect to
all potentially dilutive common shares. Potentially dilutive common shares may
consist of incremental shares issuable upon the exercise of stock options and
warrants and the conversion of notes payable to common stock. In periods in
which a net loss has been incurred, all potentially dilutive common shares are
considered antidilutive and thus are excluded from the calculation. At August
31, 2010 the Company did not have any potentially dilutive common
shares.
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND
FINANCIAL DISCLOSURE
Peter
Messineo, CPA, has audited our Financial Statements for the period from August
13, 2010 (date of inception) through August 31, 2010 and to the extent set forth
in its report, which are included herein in reliance upon the authority of said
firm as experts in accounting and auditing. There were no disagreements related
to accounting principles or practices, financial statement disclosure, internal
controls or auditing scope or procedure during the two fiscal years and interim
period.
CODE OF
BUSINESS CONDUCT AND ETHICS
On August
13, 2010 we adopted a Code of Ethics and Business Conduct which is applicable to
our employees and which also includes a Code of Ethics for our CEO and principal
financial officer and persons performing similar functions. A code of ethics is
a written standard designed to deter wrongdoing and to promote
o
|
honest
and ethical conduct,
|
o
|
full,
fair, accurate, timely and understandable disclosure in regulatory
filings and public
statements,
|
o
|
compliance
with applicable laws, rules and
regulations,
|
o
|
the
prompt reporting violation of the code,
and
|
o
|
accountability
for adherence to the code.
|
A copy of
our Code of Business Conduct and Ethics has been filed with the Securities and
Exchange Commission as an exhibit to this S-1 filing. Any person desiring a copy
of the Code of Business Conduct and Ethics, can obtain one by going to Edgar and
looking at the attachments to our this S-1 filing.
29
MANAGEMENT
Officer and
Director
Our sole
officer and director will serve until his successor is elected and qualified.
Our officer is elected by the board of directors to a term of one (1) year and
serve until their successor is duly elected and qualified, or until they are
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
and vice president is set forth below:
NAME AND ADDRESS
|
AGE
|
POSITION(S)
|
||
Louis
W. Foxwell
|
69
|
President,
Secretary/ Treasurer
|
||
291
LaCosta Rd.
|
Principal
Executive Officer
|
|||
Nokomis,
FL 34275
|
Principal
Financial Officer and sole member of the Board of
Directors
|
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.
30
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
CONFLICTS
OF INTEREST
As of
August 31, 2010, we have no employees. Mr. Louis Foxwell, our founder, Chief
Executive Officer and sole Director, currently devotes 10 to 25 hours per week
to our business as required from time to time without compensation. We have not
entered into any formal agreement with Mr. Foxwell regarding the provision of
his services to the Company.
Mr.
Foxwell is not obligated to commit his full time and attention to our business
and accordingly, he may encounter a conflict of interest in allocating his time
between our operations and those of other businesses. Presently, Mr. Foxwell
earns his livelihood as owner and operator of a company carrying on business as
a retail fish/pet store, the Father Fish Aquarium. Although Mr. Foxwell is
presently able to devote 10 to 25 hours per week to our business while
maintaining his own private business, this may change. Also, if we require Mr.
Foxwell to devote more than 10 to 25 hours per week to our business on a regular
basis for an extended period, it is uncertain that he will be able to satisfy
our requirements unless we have sufficient resources to compensate him for any
lost income from his private business.
There is
no relationship between Rainbow Coral and Father Fish Aquarium.
In
general, officers and directors of a corporation are required to present
business opportunities to the corporation if:
o the
corporation could financially undertake the opportunity;
o the
opportunity is within the corporation's line of business; and
o it
would be unfair to the corporation and its stockholders not to bring the
opportunity to the attention of the corporation.
COMMITTEES
OF THE BOARD OF DIRECTORS
Our sole
director has not established any committees, including an Audit Committee, a
Compensation Committee or a Nominating Committee, any committee performing a
similar function. The functions of those committees are being undertaken by our
sole director. Because we do not have any independent directors, our sole
director believes that the establishment of committees of the Board would not
provide any benefits to our company and could be considered more form
than substance.
We do not
have a policy regarding the consideration of any director candidates that may be
recommended by our stockholders, including the minimum qualifications for
director candidates, nor has our sole director established a process for
identifying and evaluating director nominees. We have not adopted a policy
regarding the handling of any potential recommendation of director candidates by
our stockholders, including the procedures to be followed. Our sole director has
not considered or adopted any of these policies as we have never received a
recommendation from any stockholder for any candidate to serve on our Board of
Directors.
31
Given our
relative size and lack of directors and officers insurance coverage, we do not
anticipate that any of our stockholders will make such a recommendation in the
near future. While
there have been no nominations of additional directors proposed, in the event
such a proposal is made, all current members of our Board will participate in
the consideration of director nominees.
Our sole
director is not an "audit committee financial expert" within the meaning of Item
401(e) of Regulation S-K. In general, an "audit committee financial expert" is
an individual member of the audit committee or Board of Directors
who:
|
o
|
understands
generally accepted accounting principles and financial
statements,
|
|
o
|
is
able to assess the general application of such principles in connection
with accounting for estimates, accruals and
reserves,
|
|
o
|
has
experience preparing, auditing, analyzing or evaluating financial
statements comparable to the breadth and complexity to our financial
statements,
|
|
o
|
understands
internal controls over financial reporting,
and
|
|
o
|
understands
audit committee functions.
|
Our Board
of Directors is comprised of solely of Mr. Foxwell who was integral to our
formation and who is involved in our day to day operations. While we would
prefer to have an audit committee financial expert on our board of directors,
Mr. Foxwell does not have a professional background in finance or accounting. As
with most small, early stage companies until such time our
company further develops its business, achieves a stronger revenue base and has
sufficient working capital to purchase directors and officers insurance, the
Company does not have any immediate prospects to attract independent directors.
When the Company is able to expand our Board of Directors to include one or more
independent directors, the Company intends to establish an Audit Committee of
our Board of Directors. It is our intention that one or more of these
independent directors will also qualify as an audit committee financial
expert. Our
securities are not quoted on an exchange that has requirements that a majority
of our Board members be independent and the Company is not currently otherwise
subject to any law, rule or regulation requiring that all or any portion of our
Board of Directors include "independent" directors, nor are we required to
establish or maintain an Audit Committee or other committee of our Board of
Directors.
WE DO NOT
HAVE ANY INDEPENDENT DIRECTORS AND THE COMPANY HAS NOT VOLUNTARILY IMPLEMENTED
VARIOUS CORPORATE GOVERNANCE MEASURES, IN THE ABSENCE OF WHICH, STOCKHOLDERS MAY
HAVE MORE LIMITED PROTECTIONS AGAINST INTERESTED DIRECTOR TRANSACTIONS,
CONFLICTS OF INTEREST AND SIMILAR MATTERS.
EXECUTIVE
COMPENSATION
We have
made no provisions for paying cash or non-cash compensation to our sole officer
and director. No salaries are being paid at the present time, no salaries or
other compensation were paid in cash, or otherwise, for services performed prior
to August 13, 2010, our date of inception, and no compensation will be paid
unless and until our operations generate sufficient cash flows.
The table
below summarizes all compensation awarded to, earned by, or paid to our named
executive officer for all services rendered in all capacities to us for the
period from inception August 13, 2010 through August 31, 2010.
SUMMARY
COMPENSATION TABLE
Name
|
Non-Equity
|
Nonqualified
|
||||||||||||||||||||||||||||||||||
and
|
Stock
|
Option
|
Incentive Plan
|
Deferred
|
||||||||||||||||||||||||||||||||
principal
|
Salary
|
Bonus
|
Awards
|
Awards
|
Compensation
|
Compensation
|
All Other
|
Total
|
||||||||||||||||||||||||||||
position
|
Year
|
($)
|
($)
|
($)
|
($)
|
($)
|
Earnings ($)
|
Compensation
|
($)
|
|||||||||||||||||||||||||||
Louis
|
||||||||||||||||||||||||||||||||||||
Foxwell
|
||||||||||||||||||||||||||||||||||||
President
|
2010 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
32
We have
not paid any salaries to our sole director and officer as of the date of this
Prospectus. We do not anticipate beginning to pay salaries until we have
adequate funds to do so. There are no other stock option plans,
retirement, pension, or profit sharing plans for the benefit of our officer 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 August 31, 2010.
OPTION
AWARDS
|
STOCK
AWARDS
|
|||||||||||||||||
Equity
|
||||||||||||||||||
Incentive
|
||||||||||||||||||
Equity
|
Plan
|
|||||||||||||||||
Incentive
|
Awards:
|
|||||||||||||||||
Plan
|
Market
|
|||||||||||||||||
Market
|
Awards:
|
or
|
||||||||||||||||
Value
|
Number
|
Payout
|
||||||||||||||||
Equity
|
Number
|
of
|
of
|
Value
of
|
||||||||||||||
Incentive
|
of
|
Shares
|
Unearned
|
Unearned
|
||||||||||||||
Plan
|
Shares
|
or
|
Shares,
|
Shares,
|
||||||||||||||
Number
of
|
Awards:
|
or
|
Units
|
Units
or
|
Units
or
|
|||||||||||||
Securities
|
Number
of
|
Number
of
|
Units of
|
of
|
Other
|
Other
|
||||||||||||
Underlying
|
Securities
|
Securities
|
Stock
|
Stock
|
Rights
|
Rights
|
||||||||||||
Unexercised
|
Underlying
|
Underlying
|
That
|
That
|
That
|
That
|
||||||||||||
Option
|
Unexercised
|
Unexercised
|
Option
|
Option
|
Have
|
Have
|
Have
|
Have
|
||||||||||
(#)
|
Options
(#)
|
Unearned
|
Exercise
|
Expiration
|
Not
|
Not
|
Not
|
Not
|
||||||||||
Name
|
Exercisable
|
Unexercisable
|
Options
(#)
|
Price
($)
|
Date
|
Vested
(#)
|
Vested
($)
|
Vested
(#)
|
Vested
(#)
|
|||||||||
Louis
Foxwell
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
There
were no grants of stock options since inception to the date of this
Prospectus.
We do not
have any long-term incentive plans that provide compensation intended to serve
as incentive for performance.
Our sole
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. We may develop an incentive based stock option
plan for our officer and director and may reserve up to 10% of our outstanding
shares of common stock for that purpose.
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 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.
33
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
director and officer 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
director is not 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 director is or will be compensated in the future for any
services provided as a director.
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 stock options to purchase shares of our common stock as awarded by our
board of directors.
EMPLOYMENT
CONTRACTS, TERMINATION OF EMPLOYMENT, CHANGE-IN-CONTROL
ARRANGEMENTS
There are
no employment contracts or other contracts or arrangements with our officer or
director 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 her 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 director and officer 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.
DIRECTOR
COMPENSATION
The table
below summarizes all compensation awarded to, earned by, or paid to our sole
director for all services rendered in all capacities to us for the period from
inception August 13, 2010 through August 31, 2010.
DIRECTOR
COMPENSATION
Fees
|
Non-Equity
|
Non-Qualified
|
||||||||||||||||||||||||||
Earned
|
Incentive
|
Deferred
|
||||||||||||||||||||||||||
or
Paid
|
Stock
|
Option
|
Plan
|
Compensation
|
All
Other
|
|||||||||||||||||||||||
in
Cash
|
Awards
|
Awards
|
Compensation
|
Earnings
|
Compensation
|
Total
|
||||||||||||||||||||||
Name
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
|||||||||||||||||||||
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. If there is sufficient cash flow available from our future
operations, we may enter into employment agreements with our sole officer and
director or future key staff members.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The
following table sets forth, as of the date of this prospectus, 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 table also reflects what his ownership will be
assuming completion of the sale of all shares in this offering. The stockholder
listed below has direct ownership of his shares and possesses sole voting and
dispositive power with respect to the shares.
34
Name and Address of
|
Amount and Nature of
|
Percent of
|
||||||||
Title of Class
|
Beneficial Owner [1]
|
Beneficial Ownership
|
Class [2]
|
|||||||
Common
Stock
|
Louis
W. Foxwell
|
9,000,000 | 100 | % | ||||||
291
LaCosta Rd.
|
||||||||||
Nokomis,
FL 34275
|
||||||||||
All
Officers and
|
9,000,000 | 100 | % | |||||||
Directors
as a Group
|
||||||||||
(1
person)
|
The
following table sets forth the beneficial ownership table after the anticipated
100% completion of the offering.
After
completion of the offering
Name and Address of
|
Amount and Nature of
|
Percent of
|
||||||||
Title of Class
|
Shareholders
|
Shareholders Ownership
|
Class
|
|||||||
Common
Stock
|
Louis
W. Foxwell
|
9,000,000
|
78
|
%
|
||||||
291
LaCosta Rd.
|
||||||||||
Nokomis,
FL 34275
|
||||||||||
All
other Shareholders
|
2,500,000
|
22
|
%
|
[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. Foxwell is the only
"promoter" of our company. Mr. Foxwell is also our sole director and
officer.
[2] Based
on 9,000,000 shares issued and outstanding as of the date of this
Prospectus
CHANGE IN
CONTROL
We are
not aware of any arrangement that might result in a change in control of our
company in the future.
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
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.
There
have been no other transactions since our audit date, August 31, 2010, or any
currently proposed transactions in which we are, or plan to be, a participant
and in which any related person had or will have a direct or indirect material
interest.
DIRECTOR
INDEPENDENCE
We intend
to quote our securities on the OTC Bulletin Board which does not have any
director independence requirements. Once we engage further directors and
officers, 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 intend
to 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.
DISCLOSURE
OF COMMISSION'S POSITION ON INDEMNIFICATION FORSECURITIES ACT
LIABILITIES
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.
35
REPORTS
TO SECURITY HOLDERS
We are
not required to deliver an annual report to our stockholders but will
voluntarily send an annual report, together with our annual audited financial
statements. Any Securities and Exchange Commission filings that we do file will
be available to the public over the internet at the SEC's website at
http://www.sec.gov.
The
public may read and copy any materials filed by us with the SEC at the SEC's
Public Reference Room at 100 F Street, NE, Washington DC 20549. The public may
obtain information on the operation of the Public Reference Room by calling the
SEC at 1-800-SEC-0330. We are an electronic filer. The SEC maintains an internet
site that
WHERE YOU
CAN FIND MORE INFORMATION
We have
filed with the Securities and Exchange Commission, 100 F Street NE, Washington,
D.C. 20549, under the Securities Act of 1933 a registration statement on Form
S-1 of which this prospectus is a part, with respect to the common shares
offered hereby. We have not included in this prospectus all the information
contained in the registration statement, and you should refer to the
registration statement and our exhibits for further information.
In the
Registration Statement, certain items of which are contained in exhibits and
schedules as permitted by the rules and regulations of the Securities and
Exchange Commission. You can obtain a copy of the Registration Statement from
the Securities and Exchange Commission by mail from the Public Reference Room of
the Securities and Exchange Commission at 100 F Street, NE, Washington, D.C.
20549, at prescribed rates. In addition, the Securities and Exchange Commission
maintains a Web site at http://www.sec.gov containing reports, proxy and
information statements and other information regarding registrants that file
electronically with the Securities and Exchange Commission. The Securities and
Exchange Commission's telephone number is 1-800-SEC-0330 (1-800-732-0330). These
SEC filings are also available to the public from commercial document retrieval
services.
You
should rely only on the information contained in this prospectus. No finder,
dealer, sales person or other person has been authorized to give any information
or to make any representation in connection with this offering other than those
contained in this prospectus and, if given or made, such information or
representation must not be relied upon as having been authorized by Rainbow
Coral Corp.. This prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities offered hereby by anyone
in any jurisdiction in which such offer or solicitation is not authorized or in
which the person making such offer or solicitation is not qualified to do so or
to any person to whom it is unlawful to make such offer or
solicitation.
STOCK
TRANSFER AGENT
We have
not engaged the services of a transfer agent at this time. However, within the
next twelve months we anticipate doing so. Until such a time a transfer agent is
retained, we will act as our own transfer agent.
36
RAINBOW
CORAL CORP.
(A
Development Stage Corporation)
Financial
Statements
For the
Period from August 13, 2010 (Date of Inception)
Through
August 31, 2010
CONTENTS
Financial
Statements:
|
|
Report
of Independent Registered Public Accounting Firm
|
F-1
|
Balance
Sheet
|
F-2
|
Statements
of Operations
|
F-3
|
Statement
of Stockholder's Equity
|
F-4
|
Statement
of Cash Flows
|
F-5
|
Notes
to Financial Statements
|
F-6
- F-9
|
Peter
Messineo
Certified
Public Accountant
1982
Otter Way Palm Harbor FL 34685
peter@cpa-ezxl.com
T 727.421.6268 F 727.674.0511
|
Report
of Independent Registered Public Accounting Firm
To the
Board of Directors and Shareholders:
Rainbow
Coral Corp.
I have
audited the balance sheets of Rainbow Coral Corp. as of August 31, 2010 and the
related statement of operations, changes in stockholder’s equity, and cash flows
for the period August 13, 2010 (date of inception) through August 31, 2010.
These financial statements were the responsibility of the Company’s
management. My responsibility was to express an opinion on these financial
statements based on my audits.
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. The Company 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 the Company’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 August
31, 2010, and the results of its operations and its cash flows for the period
August 13, 2010 (date of inception) through August 31, 2010, 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, 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
September
8, 2010
F-1
Rainbow
Coral Corp.
(A
Development Stage Company)
Balance
Sheet
August
31, 2010
|
||||
ASSETS
|
||||
CURRENT
ASSETS
|
||||
Cash
and cash equivalents
|
$ | 8,912 | ||
Total
current assets
|
8,912 | |||
TOTAL
ASSETS
|
$ | 8,912 | ||
LIABILITIES AND STOCKHOLDER'S
EQUITY
|
||||
CURRENT
LIABILITIES
|
||||
Accounts
payable & Accrued liabilities
|
$ | 2,000 | ||
Total
liabilities
|
2,000 | |||
STOCKHOLDER'S
EQUITY
|
||||
Capital
Stock (Note
4)
|
||||
Authorized:
|
||||
250,000,000
common shares, $0.0001 par value
|
||||
Issued
and outstanding shares:
|
||||
9,000,000
|
$ | 900 | ||
Additional
paid-in capital
|
8,100 | |||
Deficit
accumulated during the development stage
|
(2,088 | ) | ||
Total
Stockholder's Equity
|
6,912 | |||
TOTAL
LIABILITIES AND STOCKHOLDER'S EQUITY
|
$ | 8,912 |
See
accompanying auditors' report and notes to the financial
statements.
F-2
Rainbow
Coral Corp.
(A
Development Stage Company)
Statement
of Operations
For the
period August 13, 2010 to August 31, 2010
For the Period
|
||||
from Inception
|
||||
August 13, 2010
|
||||
through
|
||||
August 31, 2010
|
||||
REVENUES
|
$ | - | ||
EXPENSES
|
||||
General
& Administrative
|
88 | |||
Professional
Fees
|
$ | 2,000 | ||
Loss
Before Income Taxes
|
$ | (2,088 | ) | |
Provision
for Income Taxes
|
- | |||
Net
Loss
|
$ | (2,088 | ) | |
PER
SHARE DATA:
|
||||
Basic
and diluted loss per common share
|
$ | (0.00 | ) | |
Basic
and diluted weighted Average Common shares outstanding
|
9,000,000 |
See
accompanying auditors' report and notes to the financial
statements.
F-3
Rainbow
Coral Corp.
(A
Development Stage Company)
Statement
of Stockholders' Equity (Deficiency)
Deficit
|
||||||||||||||||||||
Accumulated
|
||||||||||||||||||||
Additional
|
During the
|
|||||||||||||||||||
Common Stock
|
Paid-in
|
Development
|
||||||||||||||||||
Shares
|
Amount
|
Capital
|
Stage
|
Total
|
||||||||||||||||
Inception
- August 13, 2010
|
- | $ | - | $ | - | $ | - | $ | - | |||||||||||
Common
shares issued to Founder
|
||||||||||||||||||||
for
cash at $0.001 per share
|
9,000,000 | 1,000 | 8,000 | - | 9,000 | |||||||||||||||
(par
value $0.0001) on 8/13/2010
|
||||||||||||||||||||
Loss
for the period from inception on
|
||||||||||||||||||||
August
13, 2010 to August 31, 2010
|
- | - | - | (2,088 | ) | (2,088 | ) | |||||||||||||
- | ||||||||||||||||||||
Balance
- August 31, 2010
|
9,000,000 | 1,000 | 8,000 | (2,088 | ) | 6,912 |
See
accompanying auditors' report and notes to the financial
statements.
F-4
Rainbow
Coral Corp.
(A
Development Stage Company)
Statement
of
Cash
Flow
For the
period August 13, 2010 to August 31, 2010
For the Period
|
||||
from Inception
|
||||
August 13, 2010
|
||||
through
|
||||
August 31, 2010
|
||||
OPERATING
ACTIVITIES
|
||||
Net
Loss
|
$ | (2,088 | ) | |
Changes
in Operating Assets and Liabilities:
|
||||
Increase
(decrease) in accounts payable
|
||||
and
accrued liabilities
|
2,000 | |||
Net
cash used in operating activities
|
(88 | ) | ||
INVESTING
ACTIVITIES
|
||||
Common
stock issued for cash
|
9,000 | |||
Net
cash provided by financing activities
|
9,000 | |||
INCREASE
IN CASH AND CASH EQUIVALENTS
|
8,912 | |||
CASH
AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
- | |||
CASH
AND CASH EQUIVALENTS AT END OF PERIOD
|
$ | 8,912 | ||
Supplemental
Cash Flow Disclosures:
|
||||
Cash
paid for:
|
||||
Interest
expense
|
$ | - | ||
Income
taxes
|
$ | - |
See
accompanying auditors' report and notes to the financial
statements.
F-5
Rainbow
Coral Corp.
(A
Development Stage Corporation)
Notes to
Financial Statements
For the
Period from August 13, 2010 (Date of Inception) through August 31,
2010
1.
|
BACKGROUND
INFORMATION
|
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. Nearly every other
organism in the pet industry is captive bred. Dogs, cats, parrots, etc. are all
farm raised.
The
Company was incorporated on August 13, 2010 (Date of Inception) with its
corporate headquarters located in Nokomis, Florida and its year-end is August
31.
2.
|
GOING
CONCERN
|
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. For the period ended August 31, 2010, the
Company had no operations. As of August 31, 2010, the Company has not emerged
from the development stage. In view of these matters, the Company's ability to
continue as a going concern is dependent upon the Company's ability to begin
operations and to achieve a level of profitability. The Company intends on
financing its future development activities and its working capital needs
largely from the sale of public equity securities with some additional funding
from other traditional financing sources, including term notes until such time
that funds provided by operations are sufficient to fund working capital
requirements. The financial statements of the Company do not include any
adjustments relating to the recoverability and classification of recorded
assets, or the amounts and classifications of liabilities that might be
necessary should the Company be unable to continue as a going
concern.
3.
|
SIGNIFICANT
ACCOUNTING POLICIES
|
The
significant accounting policies followed are:
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
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
CASH AND
CASH EQUIVALENTS - All cash, other than held in escrow, is maintained with a
major financial institution in the United States. Deposits with this bank may
exceed the amount of insurance provided on such deposits. Temporary cash
investments with an original maturity of three months or less are considered to
be cash equivalents.
RESEARCH
AND DEVELOPMENT EXPENSES - Expenditures for research, development, and
engineering of products are expensed as incurred. There has been no research and
development cost incurred for the period August 13, 2010 (date of inception)
through August 31, 2010.
COMMON
STOCK - The Company records common stock issuances when all of the legal
requirements for the issuance of such common stock have been
satisfied.
REVENUE
AND COST RECOGNITION - The Company has no current source of revenue; therefore
the Company has not yet adopted any policy regarding the recognition of revenue
or cost.
F-6
ADVERTISING
COSTS - The Company's policy regarding advertising is to expense advertising
when incurred. There has been no advertising cost incurred for the period August
13, 2010 (date of inception) through August 31, 2010.
INCOME
TAXES - Income taxes are provided for the tax effects of transactions reported
in the financial statements and consist of taxes currently due plus deferred
taxes resulting from temporary differences. Such temporary differences result
from differences in the carrying value of assets and liabilities for tax and
financial reporting purposes. The deferred tax assets and liabilities represent
the future tax consequences of those differences, which will either be taxable
or deductible when the assets and liabilities are recovered or settled.
Valuation allowances are established when necessary to reduce deferred tax
assets to the amount expected to be realized.
The
Company adopted the provisions of FASB ASC 740-10 "Uncertainty in Income Taxes"
(ASC 740-10), on January 1, 2007. The Company has not recognized a liability as
a result of the implementation of ASC 740-10. A reconciliation of the beginning
and ending amount of unrecognized tax benefits has not been provided since there
is no unrecognized benefit since the date of adoption. The Company has not
recognized interest expense or penalties as a result of the implementation of
ASC 740-10. If there were an unrecognized tax benefit, the Company would
recognize interest accrued related to unrecognized tax benefits in interest
expense and penalties in operating expenses.
EARNINGS
(LOSS) PER SHARE - Basic loss per share is computed by dividing net loss
attributable to common stockholders by the weighted average common shares
outstanding for the period. Diluted loss per share is computed giving effect to
all potentially dilutive common shares. Potentially dilutive common shares may
consist of incremental shares issuable upon the exercise of stock options and
warrants and the conversion of notes payable to common stock.
In periods in which a net loss has been incurred, all
potentially dilutive common shares are considered antidilutive and thus are
excluded from the calculation. At August 31, 2010, the Company did not have any
potentially dilutive common shares.
FINANCIAL
INSTRUMENTS - In September 2006, the Financial Accounting Standards Board (FASB)
introduced a framework for measuring fair value and expanded required disclosure
about fair value measurements of assets and liabilities. The Company adopted the
standard for those financial assets and liabilities as of the beginning of the
2008 fiscal year and the impact of adoption was not significant. FASB Accounting
Standards Codification (ASC) 820 "Fair Value Measurements and
Disclosures" (ASC 820) defines fair value as the exchange price that would be
received for an asset or paid to transfer a liability (an exit price) in the
principal or most advantageous market for the asset or liability in an orderly
transaction between market participants on the measurement date. ASC 820 also
establishes a fair value hierarchy that distinguishes between
(1) market participant assumptions developed based on market data obtained from
independent sources (observable inputs) and (2) an entity's own assumptions
about market participant assumptions developed based on the best information
available in the circumstances (unobservable inputs). The fair value hierarchy
consists of three broad levels, which gives the highest priority to unadjusted
quoted prices in active markets for identical assets or
liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).
The three levels of the fair value hierarchy are described below:
o Level 1 - Unadjusted quoted prices in active markets that
are accessible at the measurement date for identical, unrestricted assets or
liabilities.
o Level 2 - Inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either directly or
indirectly, including quoted prices for similar assets or liabilities in active
markets; quoted prices for identical or similar assets or liabilities in markets
that are not active; inputs other than quoted prices that are observable for the
asset or liability (e.g., interest rates); and inputs that are derived
principally from or corroborated by observable market data by correlation or
other means.
o Level 3 - Inputs that are both significant to the fair value
measurement and unobservable.
F-7
Fair
value estimates discussed herein are based upon certain market assumptions and
pertinent information available to management as of August 31, 2010.
The respective carrying value of certain on-balance-sheet financial instruments
approximated their fair values due to the short-term nature of these
instruments. These financial instruments include accounts receivable, other
current assets, accounts payable, accrued compensation and
accrued expenses. The fair value of the Company's notes payable
is estimated based on current rates that would be available for debt of similar
terms which is not significantly different from its stated value.
On August
31, 2010, the Company applied ASC 820 for all non-financial assets and
liabilities measured at fair value on a non-recurring basis. The adoption of ASC
820 for non-financial assets and liabilities did not have a significant impact
on the Company's financial statements.
RECENT
ACCOUNTING PRONOUNCEMENTS
In
October 2009, the FASB issued Accounting Standard Update ("ASU") No. 2009-13,
Multiple-Deliverable Revenue Arrangements ("ASU 2009-13") and No. 2009-14,
Certain Revenue Arrangements that include Software Elements ("ASU 2009-14").
These standards update FASB ASC 605, Revenue Recognition ("ASC 605") and FASB
ASC 985, Software ("ASC 985"). The amendments to ASC 605 requires entities to
allocate revenue in an arrangement using estimated selling prices of the
delivered goods and services based on a selling price hierarchy. The amendments
to ASC 985 remove tangible products from the scope of software revenue guidance
and provide guidance on determining whether software deliverables in an
arrangement that includes a tangible product are covered by the scope of the
software revenue guidance. These amendments to ASC 605 and ASC 985 should be
applied on a prospective basis for revenue arrangements entered into or
materially modified in fiscal years beginning on or after June 15, 2010, with
early adoption permitted. The Company will adopt these amendments on September
1, 2010. Management does not believe that the adoption of this standard will
have a material impact on the Company's financial statements.
In
January 2010, the FASB issued ASU No. 2010-06, Fair Value Measurements and
Disclosures ("ASU 2010-06"). This standard updates FASB ASC 820, Fair Value
Measurements ("ASC 820"). ASU 2010-06 requires additional disclosures about fair
value measurements including transfers in and out of Levels 1 and 2 and separate
disclosures about purchases, sales, issuances, and settlements relating to Level
3 measurements. It also clarifies existing fair value disclosures about the
level of disaggregation and about inputs and valuation techniques used to
measure fair value. The standard is effective for interim and annual reporting
periods beginning after December 15, 2009 except for the disclosures about
purchases, sales, issuances and settlements which is effective for fiscal years
beginning after December 15, 2010 and for interim periods within those fiscal
years. The Company will adopt ASU 2010-06 on September 1, 2010; management does
not expect the adoption to have a material impact on the financial
statements.
Other
recent accounting pronouncements issued by the FASB (including its EITF), the
AICPA, and the SEC did not or are not believed by management to have a material
impact on the Company's present or future financial statements.
4.
RELATED PARTY TRANSACTIONS
In August
13, 2010, the Company sold 9,000,000 shares of common stock to its founder for
$0.001 per share.
The
officer and director of the Company is involved in other business activities and
may, in the future, become involved in other business opportunities that become
available. They may face a conflict in selecting between the Company and other
business interests. The Company has not formulated a policy for the resolution
of such conflicts.
The
Company does not own or lease property or lease office space. The office space
used by the Company was arranged by the founder of the Company to use at no
charge.
The above
terms and amounts are not necessarily indicative of the terms and amounts that
would have been incurred had comparable transactions been entered into with
independent parties.
F-8
5. INCOME
TAXES
There are
no current or deferred income tax expense or benefit for the period ended August
31, 2010.
The
provision for income taxes is different from that which would be obtained by
applying the statutory federal income tax rate to income before income taxes.
The items causing this difference are as follows:
August 13, 2010
|
||||
(Date of Inception)
|
||||
through
|
||||
August 31, 2010
|
||||
Tax
benefit at U.S. statutory rate
|
$ | - | ||
State
income tax benefit, net of federal benefit.
|
- | |||
$ | - |
The
Company did not have any temporary differences for the period from August 13,
2010 (Date of Inception) through August 31, 2010.
F-9
PART II.
INFORMATION NOT REQUIRED IN THE PROSPECTUS
INDEMNIFICATION
OF DIRECTORS AND OFFICERS
Under our
Articles of Incorporation and Bylaws of the corporation, we may indemnify an
officer or director who is made a party to any proceeding, including a lawsuit,
because of his position, if he acted in good faith and in a manner he reasonably
believed to be in our best interest. The Company may advance expenses incurred
in defending a proceeding. To the extent that the officer or director is
successful on the merits in a proceeding as to which he is to be
indemnified, we must indemnify him against all expenses incurred, including
attorney's fees. With respect to a derivative action, indemnity may be made only
for expenses actually and reasonably incurred in defending the proceeding, and
if the officer or director is judged liable, only by a court order. The
indemnification is intended to be to the fullest extent permitted by the laws of
the State of Florida.
Regarding
indemnification for liabilities arising under the Securities Act of 1933, which
may be permitted to directors or officers under Florida law, we are informed
that, in the opinion of the Securities and Exchange Commission,
indemnification is against public policy, as expressed in the Act and is,
therefore, unenforceable.
OTHER
EXPENSES OF ISSUANCE AND DISTRIBUTION
The
registrant will pay for all expenses incurred by this offering. Whether or
not all
of the offered shares are sold, these expenses are estimated as
follows:
Securities
and Exchange Commission registration fee
|
$ | 4 | ||
Federal
Taxes
|
$ | - | ||
State
Taxes and Fees
|
$ | - | ||
Listing
Fees
|
$ | - | ||
Printing
Fees
|
$ | 246 | ||
Transfer
Agent Fees
|
$ | 1,500 | ||
Accounting
fees and expenses
|
$ | 2,125 | ||
Legal
fees and expenses
|
$ | 4,375 | ||
TOTAL
|
$ | 8,250 |
RECENT
SALES OF UNREGISTERED SECURITIES
During
the last three fiscal years we have had the following issuances of unregistered
securities:
|
o
|
In
August 13 of 2010, we issued 9,000,000 shares to Louis Foxwell, the
Company's founder, in exchange for cash of $9,000. We relied upon Section
4(2) of the Securities Act, which exempts 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 investment
and therefore did not need the protections offered by registering their shares
under Securities and Act of 1933, as amended. Mr. Foxwell certified that he was
purchasing the shares for their own accounts, with investment intent. This
offering was not accompanied by general advertisement
or general solicitation and the shares were issued with a Rule 144 restrictive
legend.
EXHIBITS
The
following exhibits are filed as part of this registration statement,
pursuant
to Item 601 of Regulation K. All exhibits have been previously filed
unless
otherwise noted.
EXHIBIT
NO.
|
DOCUMENT
DESCRIPTION
|
|
3.1
|
Articles
of Incorporation of Rainbow Coral Corp.*
|
|
3.2
|
Bylaws
of Rainbow Coral Corp.*
|
|
4.1
|
Specimen
Stock Certificate of Rainbow Coral Corp.*
|
|
5.1
|
Opinion
of Counsel.*
|
|
14.1
|
Code
of Ethics.*
|
|
23.1
|
Consent
of Accountants.
|
|
99.1
|
Subscription
Agreement Rainbow Coral Corp.*
|
*
Previously included as an exhibit to our Registration Statement
UNDERTAKINGS
The
registrant hereby undertakes:
1.
|
To
file, during any period in which offers or sales are being made, a
post-effective amendment to this registration
statement:
|
|
(i)
|
To
include any prospectus required by section 10(a)(3) of the Securities
Act;
|
|
(ii)
|
To
reflect in the prospectus any facts or events arising after the effective
date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation from
the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the SEC pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no
more than 20% change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective registration
statement; and
|
(iii)
|
To
include any material information with respect to the plan of distribution
not previously disclosed in the registration statement or any material
change to such information in the registration
statement;
|
2. That
for the purpose of determining liability under the Securities Act, each
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof;
3.
|
To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering; and
|
4.
|
That,
for the purpose of determining liability of the registrant under the
Securities Act to any purchaser in the initial distribution of the
securities, the registrant undertakes that in a primary offering of
securities of the registrant pursuant to this registration statement,
regardless of the underwriting method used to sell the securities to the
purchaser, if the securities are offered or sold to such purchaser by
means of any of the following communications, the registrant will be a
seller to the purchaser and will be considered to offer or sell such
securities to such purchaser:
|
|
(i)
|
Any
preliminary prospectus or prospectus of the registrant relating to the
offering required to be filed pursuant to Rule
424;
|
|
(ii)
|
Any
free writing prospectus relating to the offering prepared by or on behalf
of the registrant or used or referred to by the
registrant;
|
|
(iii)
|
The
portion of any other free writing prospectus relating to the offering
containing material information about the registrant or its securities
provided by or on behalf of the registrant;
and
|
|
(iv)
|
Any
other communication that is an offer in the offering made by the
registrant to the purchaser.
|
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the SEC such indemnification is against public
policy as expressed in the Securities Act and is, therefore,
unenforceable.
In the
event that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
Each
prospectus filed pursuant to Rule 424(b) as part of a registration statement
relating to an offering, other than registration statements relying on Rule 430B
or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be
part of and included in the registration statement as of the date it is first
used after effectiveness. Provided, however, that no statement made in a
registration statement or prospectus that is part of the registration statement
or made in a document incorporated or deemed incorporated by reference
into the
registration statement or prospectus that is part of the registration statement
will, as to a purchaser with a time of contract of sale prior to such first use,
supersede or modify any statement that was made in the registration statement or
prospectus that was part of the registration statement or made in any such
document immediately prior to such date of first use.
SIGNATURES
Pursuant
to the requirements of the Securities Act, the registrant has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Nokomis, Florida, on December
17,
2010.
RAINBOW
CORAL CORP.
|
||
By:
|
/s/
Louis W. Foxwell
|
|
Louis
W. Foxwell
|
||
President,
Chief Executive Officer,
|
||
Chief
Financial Officer, Principal
|
||
Accounting
Officer, Secretary,
|
||
Treasurer,
Director
|
In
accordance with the requirements of the Securities Act, this Prospectus has been
signed by the following persons in the capacities and on the dates
stated.
SIGNATURES
|
TITLE
|
DATE
|
||
/s/ Louis W. Foxwell
|
President,
Chief Executive Officer,
|
December
17, 2010
|
||
Louis
W. Foxwell
|
Chief
Financial Officer, Principal
|
|||
Accounting
Officer, Secretary,
|
||||
Treasurer,
Director
|