UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549  FORM 10-Q  (MARK ONE)  [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934  FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2013  OR  [   ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934  FOR THE TRANSITION PERIOD FROM _________ TO _________  COMMISSION FILE NUMBER: 333-169554  RAINBOW CORAL CORP. (Exact name of registrant as specified in its charter)  Florida27-3247562(State or other jurisdiction of(I.R.S. EmployerIncorporation or organization)Identification Number)495 Grand Blvd., Suite 206Miramar Beach, Florida32550(Address of principal executive offices)(Zip Code)  Registrant’s telephone number, including area code: (850) 269-7230  Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes [X]  No [   ]  Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes [   ]  No [X]  Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  Large accelerated filer[   ]Accelerated filer[   ]Non-accelerated filer[   ]Smaller reporting company[X](Do not check if smaller reporting company)  Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)  Yes [   ]  No [X]  Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 17,851,900 shares of common stock are issued and outstanding as of November 19, 2013.    TABLE OF CONTENTS

PART I – FINANCIAL INFORMATIONItem 1.Financial StatementsConsolidated Balance Sheets (unaudited)3Consolidated Statements of Operations (unaudited)4Consolidated Statement of Stockholders’ Deficit (unaudited)5Consolidated Statements of Cash Flows (unaudited)6Notes to Consolidated Financial Statements (unaudited)7Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations12Item 3.Quantitative and Qualitative Disclosures About Market Risk14Item 4.Controls and Procedures14PART II – OTHER INFORMATIONItem 1.Legal Proceedings15Item 1A.Risk Factors15Item 2.Unregistered Sales of Equity Securities and Use of Proceeds15Item 3.Defaults Upon Senior Securities15Item 4.Mine Safety Disclosures15Item 5.Other Information16Item 6.Exhibits16
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Certain statements in this report contain or may contain forward-looking statements. These statements, identified by words such as “plan”, “anticipate”, “believe”, “estimate”, “should”, “expect” and similar expressions include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements are subject to known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward - looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, our ability to secure suitable financing to continue with our existing business or change our business and conclude a merger, acquisition or combination with a business prospect, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Readers should carefully review this report in its entirety, including but not limited to our financial statements and the notes thereto and the risks described in our Annual Report on Form 10-K for the fiscal year ended March 31, 2013. We advise you to carefully review the reports and documents we file from time to time with the Securities and Exchange Commission (the “SEC”), particularly our quarterly reports on Form 10-Q and our current reports on Form 8-K. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.

OTHER PERTINENT INFORMATION

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


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RAINBOW CORAL CORP.
Consolidated Balance Sheets
(Unaudited)

September 30,
2013March 31,
2013ASSETSCURRENT ASSETSCash and cash equivalents$79,641$84,592Prepaid expenses350350Inventory29,02029,020Total current assets109,011113,962Fixed assets, net of accumulated depreciation of $3,932 and $1,760, respectively3,2565,428Goodwill27,86827,868TOTAL ASSETS$140,135$147,258LIABILITIES AND STOCKHOLDERS’ DEFICITCURRENT LIABILITIESAccounts payable and accrued liabilities$80,556$117,351Current portion of convertible notes payable, net of discount of $0 and $3,491, respectively—1,024Related party advances payable121,70494,881Advances payable—133,455Total current liabilities202,260346,711Convertible notes payable, net of discount of $443,318 and $193,607, respectively16,94224,576Accrued interest payable7,03910,929TOTAL LIABILITIES226,241382,216Commitments and ContingenciesSTOCKHOLDERS’ DEFICITPreferred Stock, $0.0001 par value; 10,000,000 shares authorized; no shares issued and outstanding at September 30, 2013 and March 31, 2013——Common Stock, $0.0001 par value; 250,000,000 shares authorized; 16,931,977 shares and 12,519,828 shares issued and outstanding at September 30, 2013 and March 31, 2013, respectively.1,6931,252Additional paid-in capital2,215,5611,599,204Accumulated deficit(2,303,360)(1,835,414)Total stockholders’ deficit(86,106)(234,958)TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT$140,135$147,258
The accompanying notes are an integral part of these unaudited consolidated financial statements.


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RAINBOW CORAL CORP.
Consolidated Statements of Operations
(Unaudited)

Six months ended
September 30,Three months ended
September 30,2013201220132012REVENUE$58,553$51,956$33,971$27,568COST OF GOODS SOLD34,87627,65717,06813,784GROSS PROFIT23,67724,29916,90313,784OPERATING EXPENSESGeneral and administrative expenses310,944749,702171,31382,355LOSS FROM OPERATIONS(287,267)(725,403)(154,410)(68,571)INTEREST EXPENSE(180,679)(87,327)(94,167)(87,116)NET LOSS$(467,946)$(812,730)$(248,577)$(155,687)NET LOSS PER COMMON SHARE –
Basic and fully diluted$(0.03)$(0.24)$(0.01)$(0.03)WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING15,525,1343,355,71516,631,9376,059,575
The accompanying notes are an integral part of these unaudited consolidated financial statements.


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RAINBOW CORAL CORP.
Consolidated Statement of Stockholders’ Deficit
(Unaudited)

AdditionalCommon StockPaid-InAccumulatedSharesAmountCapitalDeficitTotalBALANCE, MARCH 31, 201312,519,828$1,252$1,599,204$(1,835,414)$(234,958)Shares issued for conversion of notes payable4,412,149441199,672—200,113Discount on issuance of convertible note payable——416,685—416,685Net loss———(467,946)(467,946)BALANCE, SEPTEMBER 30, 201316,931,977$1,693$2,215,561$(2,303,360)$(86,106)
The accompanying notes are an integral part of these unaudited consolidated financial statements.


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RAINBOW CORAL CORP.
Consolidated Statements of Cash Flows
(Unaudited)

Six months ended September 30,20132012CASH FLOWS FROM OPERATING ACTIVITIES:Net loss$(467,946)$(812,730)Adjustments to reconcile net loss to net cash used in operating activities:Stock-based compensation—542,000Amortization of discount on convertible notes payable170,46585,937Depreciation2,172719Changes in operating assets and liabilities:Inventory—(10,767)Accounts payable and accrued liabilities(29,908)5,275Accrued interest payable10,214—NET CASH USED IN OPERATING ACTIVITIES(315,003)(189,566)CASH FLOWS FROM INVESTING ACTIVITIESPurchase of fixed assets—(728)NET CASH USED IN INVESTING ACTIVITIES—(728)CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from advances283,229177,895Proceeds from related party advances28,50925,721Repayments of related party advances(1,686)(14,790)NET CASH PROVIDED BY FINANCING ACTIVITIES310,052188,826NET DECREASE IN CASH(4,951)(1,468)CASH, at the beginning of the period84,59220,219CASH, at the end of the period$79,641$18,751Supplemental Disclosures of Cash Flow Information:Cash paid during the period for:Interest$—$—Taxes$—$—Noncash investing and financing transactions:Refinance of advances into convertible note payable$416,685$88,236Beneficial conversion on convertible note payable$416,685$88,236Issuance of common stock for convertible notes payable and interest$200,113$85,136
The accompanying notes are an integral part of these unaudited consolidated financial statements.


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RAINBOW CORAL CORP.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2013

NOTE 1. GENERAL ORGANIZATION AND BUSINESS

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

The Company was incorporated on August 13, 2010 with its corporate headquarters located in Nokomis, Florida. The Company’s fiscal year end is March 31.

NOTE 2. GOING CONCERN

The Company incurred a net loss of $467,946 during the six months ended September 30, 2013 and had negative cash flow from operating activities of $315,003 for the same period. The Company does not expect to generate positive net income or generate positive cash flow from operating activities in the next twelve months. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. These matters, among others, raise substantial doubt about the ability of the Company to continue as a going concern. These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern.

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

NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Interim Financial Statements

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, these condensed financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and such adjustments are of a normal recurring nature. These financial statements should be read in conjunction with the financial statements for the year ended March 31, 2013 and notes thereto and other pertinent information contained in our Form 10-K the Company has filed with the Securities and Exchange Commission (the “SEC”).

The results of operations for the six months period ended September 30, 2013 are not necessarily indicative of the results for the full fiscal year ending March 31, 2014.

Basis of Presentation

The Financial Statements and related disclosures have been prepared pursuant to the rules and regulations of the SEC.  The Financial Statements have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting Principles (“GAAP”) of the United States (See Note 2 regarding the assumption that the Company is a “going concern”).

Principles of Consolidation

The consolidated financial statements include the accounts of Rainbow Coral Corp. and its wholly-owned subsidiaries, Rainbow Biosciences, LLC and Father Fish Aquarium, Inc.  All material intercompany accounts and transactions are eliminated in consolidation. The year end for the Company and its subsidiaries is March 31.


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Use of Estimates

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

Cash and Cash Equivalents

For the purpose of the financial statements, cash equivalents include all highly liquid investments with maturity of three months or less. Cash and cash equivalents were $79,641 and $84,592 at September 30, 2013 and March 31, 2013, respectively.

Inventory

The Company follows ASC 330, Inventory. Inventory represents live coral and other items valued at the lower of cost or net realizable value determined using the weighted average cost method, and with market defined as the lower of replacement cost or realizable value. The cost of inventory includes all costs to purchase, costs of conversion and other costs incurred in bringing the inventory to its present location and condition. The cost of conversion of living coral inventory includes the cost of maintenance through the balance sheet date. Inventory is reduced for the estimated losses due to obsolescence.

Goodwill

Goodwill represents the excess of purchase price and related costs over the value assigned to the net tangible and intangible assets of businesses acquired. We evaluate goodwill for impairment utilizing undiscounted projected cash flows in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 350, “Intangibles — Goodwill and Other” (“ASC Topic 350”). The Company has determined that there was no impairment of goodwill during the six months ended September 30, 2013.

Deferred Income Taxes and Valuation Allowance

The Company accounts for income taxes under ASC 740 Income Taxes.  Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs.  A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.  No deferred tax assets or liabilities were recognized as of September 30 or March 31, 2013.

Revenue and Cost Recognition

In accordance with ASC 605, Revenue Recognition, the Company recognizes revenue when persuasive evidence of an arrangement exists, product delivery has occurred or the services have been rendered, the price is fixed or determinable and collectability is reasonably assured. Revenue is generated from the sales of live coral and other related products in a retail setting. Revenue is recognized net of sales returns and allowances.

Share-based Expense

The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, Equity – Based Payments to Non-Employees.  Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable:  (a) the goods or services received; or (b) the equity instruments issued.  The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.

Share-based expense for the six months ended September 30, 2013 and 2012 was $0 and $542,000, respectively.


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Earnings (Loss) per Common Share

The Company computes basic and diluted earnings per common share amounts in accordance with ASC Topic 260, Earnings per Share. Basic earnings per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per share reflects the potential dilution that could occur if stock options and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company.  For the six months ended September 30, 2013 and 2012, the effect of common stock equivalents has been excluded from the calculation of diluted earnings per share as their effect would be anti-dilutive.

Financial Instruments

The Company’s balance sheet includes certain financial instruments. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization.

ASC 820, Fair Value Measurements and Disclosures, 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:

·Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities·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.·Level 3 - Inputs that are both significant to the fair value measurement and unobservable.
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of September 30, 2013. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments.

Commitments and Contingencies

The Company follows ASC 450-20, Loss Contingencies, to report accounting for contingencies.  Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.  There were no known commitments or contingencies as of September 30, 2013 and March 31, 2013.

Recently Issued Accounting Pronouncements

Recently issued or adopted accounting pronouncements are not expected to, or did not have, a material impact on our financial position, results of operations or cash flows.

Reclassifications

Certain reclassifications have been made to the prior period financial statements to conform with the current period presentation.


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NOTE 4. RELATED PARTY

During the six months ending September 30, 2013, the Company received advances of $28,509 from the President of our Father Fish subsidiary for purposes of funding operations, of which $1,686 of the advances were repaid during the six months ended September 30, 2013.

NOTE 5. CONVERTIBLE NOTES PAYABLE AND ADVANCES

Convertible notes payable consist of the following as of September 30, 2013:

AmountConvertible note payable effective March 31, 2013 due March 31, 2015, bearing interest at 10% per year, convertible into common stock at a rate of $0.05 per share$43,575Convertible note payable effective June 30, 2013 due June 30, 2015, bearing interest at 10% per year, convertible into common stock at a rate of $0.04 per share192,600Convertible note payable effective September 30, 2013, due September 30, 2015, bearing interest at 10% per year, convertible into common stock at a rate of $0.04 per share224,085Total convertible notes payable460,260Less: discounts on convertible notes payable(443,318)Convertible notes payable$16,942
All principal along with accrued interest is payable on the maturity date. The notes are convertible into common stock at the option of the holder. The holder of the notes cannot convert the notes into shares of common stock is that conversion would result in the holder owning more than 4.9% of the outstanding stock of the Company.

During the six months ending September 30, 2013, the Company entered into convertible promissory notes with Vista View Ventures Inc. which refinanced non-interest bearing advances. The convertible notes have the following terms:

Effective DateMaturity DateInterest RateConversion RateLoan AmountJune 30, 2013June 30, 201510%$0.04 per share$ 192,600September 30, 2013September 30, 201510%$0.04 per share$ 224,085
All principal along with accrued interest is payable on the maturity date.

The Company evaluated the terms of the notes in accordance with ASC Topic No. 815 – 40, Derivatives and Hedging - Contracts in Entity’s Own Stock and determined that the underlying common stock is indexed to the Company’s common stock. The Company determined that the conversion features did not meet the definition of a liability and therefore did not bifurcate the conversion feature and account for it as a separate derivative liability. The Company evaluated the conversion features for a beneficial conversion feature. The effective conversion price was compared to the market price on the date of the notes and was deemed to be less than the market value of underlying common stock at the inception of the note. Therefore, the Company recognized a discount for the beneficial conversion feature in the amount of $416,685, in aggregate, on the date the notes were signed. The beneficial conversion feature was recorded as an increase in additional paid-in capital and a discount to the convertible notes payable. The discount to the convertible notes payable will be amortized to interest expense over the life of the note.

During the six months ended September 30, 2013, the holders of the convertible promissory note in the original amount of $117,775 elected to convert principal in the amount of $73,275 of principal and $8,702 of accrued interest into 2,049,428 shares of common stock. As a result of this conversion, the remaining unamortized discount related to the converted principal in the amount of $60,611 was immediately amortized to interest expense and the note payable was extinguished.

During the six months ended September 30, 2013, the holders of the convertible promissory note in the original amount of $94,515 elected to convert principal of $4,515 and interest in the amount of $6,934 into 228,983 shares of common stock. As a result of this conversion, the remaining unamortized discount related to the converted principal in the amount of $3,338 was immediately amortized to interest expense and the note payable was extinguished.


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During the six months ended September 30, 2013, the holders of the convertible promissory note in the original amount of $101,333 elected to convert all principal and accrued interest in the amount of $5,354 into 2,133,738 shares of common stock. As a result of this conversion, the remaining unamortized discount related to the converted principal in the amount of $74,493 was immediately amortized to interest expense and the note payable was extinguished.

During the six months ended September 30, 2013 and 2012, the Company received non-interest bearing advances of $283,229 and $177,895, respectively, from Vista View Ventures Inc.  The funds were advanced to the Company through an intermediary agent which also provides certain legal, accounting and support services to the Company.

NOTE 6. STOCKHOLDERS’ EQUITY

During April and May, 2012, the Company issued 80,000 shares of common stock to a third party for services. The shares were valued at $542,000 based on the market value of the stock on the date of issuances.

During the six months ended September 30, 2013, $179,123 of convertible notes payable and $20,990 of accrued interest were converted into 4,412,149 shares of common stock.

NOTE 7. SUBSEQUENT EVENTS

Management has evaluated subsequent events through the date these consolidated financial statements were issued. Based on our evaluation, only the events described below requires disclosure.

On October 15, 2013, the holder of the convertible promissory note in the original amount of $43,575 elected to convert the principal and interest in the amount of $45,996 into 919,923 shares of common stock. As a result of this conversion, the remaining unamortized discount related to the converted principal in the amount of $32,651 was immediately amortized to interest expense.


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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

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

The Company was incorporated on August 13, 2010 with its corporate headquarters located in Nokomis, Florida. The Company’s fiscal year end is March 31.

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

Results of Operations

The following discussion should be read in conjunction with the consolidated financial statements for the year ended March 31, 2013 included in the Company’s Form 10-K filed with the Securities and Exchange Commission (“SEC”). Results of interim periods may not be indicative of results for the full year.

Six months ended September 30, 2013 compared to the six months ended September 30, 2012.

Revenue

Revenue increased slightly to $58,553 for the six months ended September 30, 2013 compared to $51,956 for the six months ended September 30, 2012 as a result of increased volumes of sales in 2013.

Cost of Goods Sold

Cost of goods sold increased to $34,876 for the six months ended September 30, 2013 compared to $27,657 for the comparable period of 2012. The increase in cost of goods sold was greater than the increase in revenue since the Company made more sales at discounted prices during the first quarter of 2013.

Gross Profit

Gross profit decreased from $24,299 for the six months ended September 30, 2012 to $23,677 for the six months ended September 30, 2013. The decrease in gross profit was a result of increase in cost of goods sold as discussed above.

General and administrative expenses

We recognized general and administrative expenses in the amount of $310,944 and $749,702 for the six months ended September 30, 2013 and 2012, respectively. During the six months ended September 30, 2012, we issued stock for services resulting in general and administrative expense of $542,000. Excluding this expense, general and administrative expense for the six months ended September 30, 2012 would have been $207,702. General and administrative expense, excluding the stock issued for services, increased from the six months ended September 30, 2012 compared to 2013 as a result of higher costs related to professional services.


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Interest Expense

Interest expense increased from $87,327 for the six months ended September 30, 2012 to $180,679 for the six months ended September 30, 2013. Interest expense for the six months ended September 30, 2013 included amortization of discount on convertible notes payable in the amount of $170,465 compared to 85,937 for the comparable period of 2012. The remaining increase is the result of the Company entering into interest-bearing convertible notes payable.

Net Loss

We incurred a net loss of $467,946 for the six months ended September 30, 2013 as compared to $812,730 for the comparable period of 2012. The decrease in the net loss was primarily the result of the decrease in the general and administrative expense as discussed above.

Three months ended September 30, 2013 compared to the Three months ended September 30, 2012.

Revenue

Revenue increased to $33,971 for the three months ended September 30, 2013 compared to $27,568 for the three months ended September 30, 2012.

Cost of Goods Sold

Cost of goods sold increased to $17,068 for the three months ended September 30, 2013 compared to $13,784 for the comparable period of 2012. The increase in cost of goods sold comparable to the increase in revenue.

Gross Profit

Gross profit increased from $13,784 for the three months ended September 30, 2012 to $16,903 for the three months ended September 30, 2013. The increase in gross profit was a result of increase in revenue as discussed above.

General and administrative expenses

We recognized general and administrative expenses in the amount of $171,313 and $82,355 for the three months ended September 30, 2013 and 2012, respectively. The increase in general and administrative expense was the result of increased costs related to professional services

Interest Expense

Interest expense increased from $87,116 for the three months ended September 30, 2012 to $94,167 for the three months ended September 30, 2013. The increase is the result of the Company entering into interest-bearing convertible notes payable.

Net Loss

We incurred a net loss of $248,577 for the three months ended September 30, 2013 as compared to $155,687 for the comparable period of 2012. The increase in the net loss was primarily the result of the increase in the general and administrative expense as discussed above.

Going Concern

We incurred a net loss of $467,946 for the six months ended September 30, 2013. Net cash used by operations for the six months ended September 30, 2013 was $315,003. We do not anticipate having positive net income in the immediate future. These conditions create an uncertainty as to our ability to continue as a going concern.

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


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Liquidity and Capital Resources

At September 30, 2013, we had cash on hand of $79,641.

Net cash used in operating activities for the six months ended September 30, 2013 was $315,003. We do not expect to achieve positive cash flow from operating activities in the near future. We will require additional cash in order to fully implement our business plan. There is no guarantee that we will be able funds when we need them or that funds will be available on terms that are acceptable to the Company.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

As smaller reporting company, this information is not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Management’s Report On Internal Control Over Financial Reporting

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

·Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;·Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and·Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

As of September 30, 2013, management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.

The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) inadequate segregation of duties consistent with control objectives; and (3) ineffective controls over period end financial disclosure and reporting processes. The aforementioned material weaknesses were identified by our Chief Executive Officer in connection with the review of our financial statements as of September 30, 2013.


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

Management’s Remediation Initiatives

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

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

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

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

Changes in internal controls over financial reporting

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

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

None.

ITEM 1A. RISK FACTORS.

Not applicable to a smaller reporting company.

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

One July 9, 2013, we issued 733,738 shares of common stock as a result of the conversion of interest on a Convertible Note Payable in the amount of $36,687.

One July 15, 2013, we issued 1,400,000 shares of common stock as a result of the conversion of interest on a Convertible Note Payable in the amount of $70,000.

An exemption under Section 4(1) of the Securities Act is claimed for the common stock issued in the above conversions since the criteria of Rule 144 were satisfied.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.


ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.


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ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS.

2.1Stock Purchase Agreement, dated as of June 13, 2011, by and among Rainbow Coral Corporation and Father Fish Aquarium, Inc. (1)2.2Membership Interest Purchase Agreement, dated as of June 13, 2011 by and among Father Fish Aquarium, Inc. and Father Fish Aquarium, LLC. (1)3.1Articles of Incorporation of Rainbow Coral Corp. (2)3.2Articles of Amendment of Rainbow Coral Corp. (1)3.3Articles of Amendment of Rainbow Coral Corp. (3)3.4Bylaws of Rainbow Coral Corp. (2)3.5Articles of Incorporation of Father Fish Aquarium, Inc. (1)3.6Articles of Amendment of Father Fish Aquarium, Inc. (1)3.7Bylaws of Father Fish Aquarium, Inc. (1)3.8Articles of Organization of Father Fish Aquarium, LLC (1)3.9Articles of Amendment of Father Fish Aquarium, LLC (1)3.10Bylaws of Father Fish Aquarium, LLC (1)10.1Note from Rainbow Coral Corp. to Louis Foxwell (1)31.1 *Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive officer31.2 *Rule 13(a)-14(a)/15(d)-14(a) Certification of principal financial and accounting officer32.1 *Section 1350 Certification of principal executive officer and principal financial and accounting officer101 **XBRL Interactive Data
* Filed or furnished herewith
** To be submitted by amendment.
(1) Incorporated by reference to the comparable exhibit filed with our Form 8-K filed on June 13, 2011
(2) Incorporated by reference to the comparable exhibit filed with our Registration Statement on Form S-1
(3) Incorporated by reference to the Registrant’s Form 10-K for the year ended March 31, 2013.


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SIGNATURES

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

RAINBOW CORAL CORP.BY:/s/ Patrick BrownPatrick BrownPresident, Secretary, Treasurer,Principal Executive Officer,Principal Financial and AccountingOfficer and Sole DirectorDated: November 19, 2013

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