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TMCNet:  RAINBOW INTERNATIONAL, CORP. - 10-Q - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

[January 21, 2014]

RAINBOW INTERNATIONAL, CORP. - 10-Q - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

(Edgar Glimpses Via Acquire Media NewsEdge) Trends and Uncertainties.

The demand for the registrant's products is dependent on general economic conditions, which are cyclical in nature. Because a major portion of our activities are the receipt of revenues from our mining operations in the future, our business operations may be adversely affected by competitors and prolonged recessionary periods.


There are no other known trends, events or uncertainties that have, or are reasonably likely to have, a material impact on our short term or long term liquidity. Sources of liquidity will come from the sale of our products and services, as well as the private sale of our stock. There are no material commitments for capital expenditure at this time. There are no trends, events or uncertainties that have had or are reasonably expected to have a material impact on the net sales or revenues or income from continuing operations. There are no significant elements of income or loss that do not arise from the registrant's continuing operations. There are no other known causes for any material changes from period to period in one or more line items of our financial statements.

Capital and Source of Liquidity.

For the six months ended November 30, 2013 and 2012, we did not pursue any investing activities.

For the six months ended November 30, 2013, we received $74,965 from proceeds from notes payable. As a result, we had net cash flows from financing activities of $74,965 for the six months ended November 30, 2013.

For the six months ended November 30, 2012, we paid $100,000 to shareholders, resulting in net cash used in financing activities of $100,000 for the six months ended November 30, 2012.

Our long-term liquidity is dependent on the continuation of operations, and the receipt of revenues.

Results of Operations.

We have not yet earned any revenues.

13 For the three months ended November 30, 2013, we paid legal and professional fees of $2,004 and other general and administrative expenses of $25. As a result, we had a net loss of $2,029 for the three months ended November 30, 2013.

Comparatively, for the three months ended November 30, 2012, we paid exploration costs of $10,000 and legal and professional fees of $30,518. We paid contract labor costs of $10,000 and other general and administrative expenses of $132.

As a result, we had a net loss of $50,650 for the three months ended November 30, 2012.

Our operations were minimal during the three months ended November 30, 2013 compared to the three months ended November 30, 2012, which resulted in the 96% decrease in operating loss between the two periods.

For the six months ended November 30, 2013, we paid exploration costs of $15,120. We paid legal and professional fees of $27,734 and other administrative expenses of $4,200. As a result we had a net loss of $47,054 for the six months ended November 30, 2013.

Comparatively, for the six months ended November 30, 2012, we paid exploration costs of $34,046 and legal and professional fees of $75,327. We paid contract labor costs of $40,000 and other general and administrative expenses of $585.

As a result, we had a net loss of $149,958 for the six months ended November 30, 2012.

We had greatly reduced operations during the six months ended November 30, 2013 compared to the six months ended November 30, 2012. We did not pay for any labor costs during the six months ended November 30, 2013, and paid far less in exploration costs and legal and professional fees due to highly reduced operations. As a result, we had a 68.6% decrease in net loss for the six months ended November 30, 2013 compared to the six months ended November 30, 2012.

Plan of Operation.

The registrant may experience problems, delays, expenses and difficulties, many of which are beyond the registrant's control. These include, but are not limited to, unanticipated problems relating to additional costs and expenses that may exceed current estimates and competition.

Critical Accounting Policies The following accounting policies are considered critical by our management.

These and other accounting policies require that estimates be made based on assumptions and judgment, which affect revenues, expenses, assets, liabilities and disclosure of contingencies in our financial statements. These estimates and assumptions are based on historical experience and on various other factors that are believed to be reasonable under the circumstances. However, actual results may differ from these estimates under different and/or future circumstances.

14 Revenue Recognition In general, we record revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, and collectability is reasonably assured. The following policies reflect specific criteria for the various revenue streams of the Company: Revenue is recognized at the time the product is delivered or the service is performed.

Property and Equipment Property and equipment are recorded at cost and are depreciated based upon estimated useful lives using the straight-line method. Estimated useful lives range from three to ten years. At November 30, 2013, we believe the remaining carrying values of these assets are recoverable.

Stock-Based Compensation We record stock based compensation in accordance with FASB ASC 718, Stock Compensation. ASC 718 requires that the cost resulting from all share-based transactions be recorded in the financial statements and establishes fair value as the measurement objective in accounting for share-based payment arrangements and requires all entities to apply a fair-value-based measurement in accounting for share-based payment transactions with employees. The Statement also establishes fair value as the measurement objective for transactions in which an entity acquires goods or services from non-employees in share-based payment transactions.

Recent Pronouncements We have determined that all recently issued accounting standards will not have a material impact on our financial statements, or do not apply to our operations.

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