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Surface Coatings, Inc. – IPO: ‘SB-1/A’ on 12/11/07

On:  Tuesday, 12/11/07, at 2:35pm ET   ·   Accession #:  1121781-7-398   ·   File #:  333-145831

Previous ‘SB-1’:  ‘SB-1’ on 8/31/07   ·   Latest ‘SB-1’:  This Filing

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Initial Public Offering (IPO):  Pre-Effective Amendment to Registration of Securities by a Small-Business Issuer   —   Form SB-1
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Document/Exhibit                   Description                      Pages   Size 

 1: SB-1/A      Surface Coatings, Inc.                              HTML    225K 
 2: EX-10.1     Material Contract                                   HTML      7K 


SB-1/A   —   Surface Coatings, Inc.


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  Surface Coatings, Inc. SB-1/A No. 1 12/11/07  


As filed with the Securities and Exchange Commission on December 11, 2007

File No. 333-145831


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


Form SB-1/A  (Alternative 2)



REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933


SURFACE COATINGS, INC.

(Exact name of registrant as specified in its charter)


Nevada
(State or other jurisdiction of
incorporation or organization)
  5039
(Primary Standard Industrial
Classification Code Number)
  20-8611799
(I.R.S. Employer
Identification Number)


2010 Industrial Blvd, Suite 605, Rockwall, Texas 75087     (972) 722-7351

(Address, including the ZIP code & telephone number, including area code of Registrant's principal executive office)


2010 Industrial Blvd, Suite 605, Rockwall, Texas 75087     (972) 722-7351

 (Address of principal place of business or intended principal place of business)


Richard Pietrykowski

2010 Industrial Blvd, Suite 605, Rockwall, Texas 75087     (972) 722-7351

 (Name, address, including zip code, and telephone number, including area code of agent for service)


Copies to:

J Hamilton McMenamy

Law Offices of J. Hamilton McMenamy, P.C.

8222 Douglas, Suite 850

Dallas, Texas 75225

(214) 706-0938 Tel

(214) 550-8179 Fax



Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.


If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the securities Act registration 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 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 number of the earlier effective registration statement for the same offering. |_|


If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. |_|

_________________


CALCULATION OF REGISTRATION FEE

 


Title of Each

Amount

Proposed                     Minimum/Maximum

Amount of

Class of Securities

   To be                

Offering Price             Proposed Aggregate

Registration

to be Registered

Registered           

Per Share (1)               Offering  (1)

Fee     

 



Common stock,

$0.001 par value

Minimum    

            150,000

$0.50

      $   75,000

$  10

Maximum

1,000,000

$0.50

$ 500,000

$  64

 


Total maximum

 

1,000,000

$0.50

$ 500,000

$  64


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 the registration statement shall hereafter 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 securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933. |X|


(1) Estimated solely for the purpose of calculating the registration fee.











  

Initial public offering prospectus       


Surface Coatings, Inc.


Minimum of 150,000 shares of common stock, and a

Maximum of 1,000,000 shares of common stock

$0.50 per share


We are making a best efforts offering to sell common stock in our company. The common stock will be sold by our officers and directors, Richard Pietrykowski and John Donahoe after the effective date of this registration statement. The offering price was determined arbitrarily and we will raise a minimum of $75,000 and a maximum of $500,000. The money we raise in this offering before the minimum amount, $75,000, is sold will be deposited in a separate non-interest bearing bank account where the funds will be held for the benefit of those subscribing for our shares, until the minimum amount is raised at which time we will deposit them in our bank account and retain the transfer agent who will then issue the shares. The offering will end on September 28, 2008 and if the minimum subscription is not raised by the end of the offering period, all funds will be refunded promptly to those who subscribed for our shares, without interest. There is no minimum purchase requirement for subscribers. After the offering, our officers and directors, Richard Pietrykowski and John Donahoe will continue to own sufficient shares to control the company.


The Offering:

         150,000 shares

        1,000,000 shares

      Minimum offering   

     

       Maximum offering     

Per Share   

 Amount  

Per Share

 Amount    


Public Offering Price

   

  $0.50

 $ 75,000

  $0.50    

$500,000


Offering expenses are estimated to be $16,769 if the minimum number of shares are sold, which equates to $0.08 per share, and $33,769 if the maximum number of shares are sold, which equates to $0.04 per share.


There is currently no market for our shares. We intend to work with a market maker who would then apply to have our securities quoted on the over-the-counter bulletin Board or on an exchange as soon as practicable after our offering. We will close our offering on September 28, 2008. However, it is possible that we do not get trading on the over-the-counter bulletin Board, and if we do get quoted on the bulletin board, we may not satisfy the listing requirements for an exchange, which are greater than that of the bulletin board.

____________________________


This investment involves a high degree of risk. You should purchase shares only if you can afford a complete loss. See “Risk Factors” beginning on Page 3.


Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of the prospectus. Any representation to the contrary is a criminal offense.

_____________________________


This Prospectus is dated __________________________



1







PROSPECTUS SUMMARY

OUR COMPANY


We were formed as a corporation on February 12, 2007 in Nevada in order to acquire 100% of the outstanding stock of Surface Armor, LLC, a Texas limited liability company (SAL).


Surface Coatings, Inc is a converter and master distributor of temporary surface protection tapes, serving the Americas from our operations and distribution center in Rockwall, Texas. We inventory a wide assortment of self-adhering, bulk films and convert them into rolls of tape at customer-specified widths, lengths, and quantities. We specialize in providing custom products, in reasonable quantities, at standard prices, and at off-the-shelf turnaround times.

The company was established to provide companies and individuals with the most progressive and positive answers to their temporary surface protection needs, quickly and at a reasonable price. The Surface Coatings, Inc warehouse is climate controlled which means our customers receive the highest quality without worrying about freeze/thaw or the 100+ degree Texas heat damaging their products. Additionally, Surface Coatings, Inc takes pride in having a “Can Do” attitude, maintaining customer-service-based relationships and dedicating ourselves to helping customers find solutions to both recurring and out-of-the-ordinary problems.  Our website is www.conarmor.com.


THE OFFERING


Our officers and directors will be selling the offering.

 Minimum

 Midpoint  

Maximum

Common shares offered

     150,000

     500,000

  1,000,000

Common shares outstanding before this offering

  5,000,000

  5,000,000

  5,000,000

Total shares outstanding after this offering

  5,150,000

  5,500,000

  6,000,000


Officers, directors and their affiliates will not be able to purchase shares in this offering.


SUMMARY FINANCIAL DATA


The following table sets forth certain of our summary financial information. This information should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this prospectus.


Balance Sheet

UNAUDITED

Sept 30, 2007

AUDITED

Apr 30, 2007

AUDITED

Dec 31, 2006

AUDITED

Dec 31, 2005

Working Capital

($62,222)

($33,558)

($14,606)

$52,479

Total Assets

$65,179

$63,458

$36,396

$75,364

Total Liabilities

$123,503

$93,510

$57,666

$22,885

Stockholder’s Equity

($58,324)

($30,025)

($11,274)

$52,479

     


Statement of Operations

UNAUDITED

Sept 30, 2007

AUDITED

Apr 30, 2007

AUDITED

Dec 31, 2006

AUDITED

Dec 31, 2005

Revenue

$177,266

$68,528

$151,908

$4,336

Cost of sales

$107,872

$39,357

$115,857

$2,412

General and administrative

$116,444

$47,922

$99,804

$5,937

Other income (expense)

$0

$0

$0

$0

Net loss

($47,050)

($18,751)

($63,753)

($4,013)

   Loss per share: Basic & diluted

($0.01)

($0.00)

($0.010)

($0.00)

   No. Shares outstanding

5,000,000

5,000,000

5,000,000

5,000,000



2







RISK FACTORS


You should carefully consider the risks described below and all other information contained in this prospectus before making an investment decision. We have identified all material risks known to, and anticipated by, us as of the filing of this registration statement.



We have a limited operating history, with cumulative losses since inception, which, if losses continue, could cause us to run out of money and close our business.


We have an accumulated deficit from operations. There is not sufficient gross revenue and profit to finance our planned growth and, without additional financing as outlined in this prospectus, we could continue to experience losses in the future. Our accumulated deficit from operations through September 30, 2007 was $114,816. We may incur significant expenses in promoting our business, and as a result, will need to generate significant revenues over and above our current revenue to achieve consistent profitability. If we are unable to achieve that profitability, your investment in our common stock may decline or become worthless.


We rely on our two officers for decisions and they may make decisions that are not in the best interest of all stockholders.


We rely on our two officers, Richard Pietrykowski and John Donahoe, to direct the affairs of the company and rely upon them to competently operate the business. We do not have key man insurance on them and have no employment agreements with them. Should something happen to them, this reliance on two people could have a material detrimental impact on our business and could cause the business to lose its place in the market, or even fail. Such events could cause the value of our stock to decline or become worthless.


Our two officers will retain control over our business after the offering and may make decisions that are not in the best interest of all stockholders.


Upon completion of this offering, our two officers, Richard Pietrykowski and John Donahoe, will, in the aggregate, beneficially own approximately 90.00% (or 75.00% if maximum is sold) of the outstanding common stock. As a result, our two officers will have the ability to control all the matters submitted to our stockholders for approval, including the election and removal of directors and any merger, consolidation or sale of all of our assets. They will also control our management and affairs. Accordingly, this concentration of ownership may have the effect of delaying, deferring or preventing a change in control of us, impeding a merger, consolidation, takeover or other business combination involving us or discouraging a potential acquirer from making a tender offer or otherwise attempting to take control of us, even if the transaction would be beneficial to other stockholders. This in turn could cause the value of our stock to decline or become worthless.


The nature of our business is dependent on a number of factors


Our quarterly and annual sales could vary significantly depending on a number of factors, including, but not limited to: a significant downturn in the construction and remodeling industry, fluctuating customer demand, delay or timing of raw materials, variations in selling product mix and price competition.  The



3







failure of achieving quarterly or annual revenue and profits expectations would likely adversely affect the price of our common stock.


Although we believe the funds we raise in this offering will allow us to generate sufficient funds from operations, if that is not the case, we may have to raise additional capital which may not be available or may be too costly, which, if we cannot obtain, could cause us to have to cease our operations.


We expect that the funds we raise in this offering will take us to the point of a positive cash flow. However, if that does not turn out to be the case, our capital requirements could be more than our operating income. As of September 30, 2007, our cash balance was $1,802. We do not have sufficient cash to indefinitely sustain operating losses, but believe we can continue generate positive cash flow within twelve months from the funds raised in this offering. Our potential profitability depends on our ability to generate and sustain substantially higher net sales with reasonable expense levels. We may not operate on a profitable basis or that cash flow from operations will be sufficient to pay our operating costs. We anticipate that the funds raised in this offering will be sufficient to fund our planned growth for the year after we close on the offering assuming we raise the minimum amount in this offering. Thereafter, if we do not achieve profitability, we will need to raise additional capital to finance our operations. We have no current or proposed financing plans or arrangements other than this offering. We could seek additional financing through debt or equity offerings. Additional financing may not be available to us, or, if available, may be on terms unacceptable or unfavorable to us. If we need and cannot raise additional funds, further development of our business, upgrades in our technology, additions to our product lines may be delayed or postponed indefinitely; if this happens, the value of your investment could decline or become worthless.


No public market for our common stock currently exists and an active trading market may never materialize, and an investor may not be able to sell their stock.


Prior to this offering, there has been no public market for our common stock. We plan work with a market maker who would then apply to have our securities quoted on the OTC Bulletin Board. In order to be quoted on the OTCBB, we must be sponsored by a participating market maker who would make the application on our behalf; at this time, we are not aware of a market maker who intends to sponsor our securities and make a market in our stock. Assuming we become quoted, an active trading market still may not develop and if an active market does not develop, the market value could decline to a value below the offering price in this prospectus. Additionally, if the market is not active or illiquid, investors may not be able to sell their securities.


If a public trading market for our common stock materializes, we will be classified as a ‘penny stock’ which has additional requirements in trading the stock, which could cause you not to be able to sell your stock.


The U.S. Securities and Exchange Commission treats stocks of certain companies as a ‘penny stock’. We are not aware of a market maker who intends to make a market in our stock, but should we be cleared to trade, we would be classified as a ‘penny stock’ which makes it harder to trade even if it is traded on an electronic exchange like the over-the-counter bulletin board. These requirements include (i) broker-dealers who sell to customers must have the buyer fill out a questionnaire, and (ii) broker-dealers may decide upon the information given by a prospective buyer whether or not the broker-dealer determines the stock is suitable for their financial position. These rules may adversely affect the ability of both the selling



4







broker-dealer and the buying broker-dealer to trade your securities as well as the purchasers of your securities to sell them in the secondary market. These requirements may cause potential buyers to be eliminated and the market for the common stock you purchase in this offering could have no effective market to sell into, thereby causing your investment to be worthless.


Investing in a penny stock has inherent risks, affecting both brokers, buyers and sellers, which could cause the marketability of your stock to be lesser than if there were not those requirements.


When a seller of a ‘penny stock’ desires to sell, they must execute that trade through a broker. Many brokers do not deal in penny stocks, so a seller’s ability to market/sell their stock is reduced because of the number of brokers who engage in trading such stocks. Additionally, if a broker does engage in trading penny stocks, and the broker has a client who wishes to buy the stock, they must have the client fill out a number of pages of paperwork before they can execute the trade. These requirements cause a burden to some who may decide not to buy because of the additional paperwork. Thus, the marketability of your stock is less as a penny stock than as a stock listed on an exchange. This could cause your investment to be worth less liquid and investors may not be able to market their shares effectively.


Shareholders purchasing shares in this offering will experience immediate and substantial dilution, causing their investment to immediately be worth less than their purchase price.


If you purchase common stock in this offering, you will experience an immediate and substantial dilution in the projected book value of the common stock from the price you pay in this initial offering. This means that if you buy stock in this offering at $0.50 per share, you will pay substantially more than our current shareholders. The following represents your dilution: (a) if the minimum of 150,000 shares are sold, an immediate decrease in book value to our new shareholders from $0.50 to $0.00 per share and an immediate dilution to the new shareholders of $0.50 per common share; (b) if the midpoint of 500,000 shares are sold, an immediate decrease in book value to our new shareholders from $0.50 to $0.03 per share and an immediate dilution to the new shareholders of $0.47 per common share. and (c) if the maximum of 1,000,000 shares are sold, an immediate decrease in book value to our new shareholders from $0.50 to $0.07 per share and an immediate dilution to the new shareholders of $0.43 per common share.


Investors are not able to cancel their subscription agreements they sign, therefore losing any chance to change their minds.


Once the Company receives an investors subscription, they will not be able to cancel their subscription. The investor will therefore lose any right or opportunity to change their mind after receipt by the Company.


Our offering price of $0.50 was determined arbitrarily by our President.  Your investment may not be worth as much as the offering price because of the method of its determination.


The President arbitrarily determined the price for the offering of $0.50 per share.  As the offering price is not based on a specific calculation or metric the price has inherent risks and therefore your investment could be worth less than the offering price.



5







FORWARD LOOKING STATEMENTS


This prospectus contains forward looking statements. These forward looking statements are not historical facts but rather are based our current expectations, estimates and projections about our industry, our beliefs and our assumptions. Words such as "anticipates", "expects", "intends", "plans", "believes", "seeks" and "estimates", and variations of these words and similar expressions, are intended to identify forward looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed, implied or forecasted in the forward looking statements. In addition, the forward looking events discussed in this prospectus might not occur. These risks and uncertainties include, among others, those described in "Risk Factors" and elsewhere in this prospectus. Readers are cautioned not to place undue reliance on these forward looking statements, which reflect our management's view only as of the date of this prospectus.


DILUTION


If you purchase common stock in this offering, you will experience an immediate and substantial dilution in the projected book value of the common stock from the price you pay in this initial offering.


The book value of our common stock as of September 30, 2007 was negative $58,324 or negative $0.01 per share. Projected book value per share is equal to our total assets, less total liabilities, divided by the number of shares of common stock outstanding.


After giving effect to the sale of common stock offered by us in this offering, and the receipt and application of the estimated net proceeds (at an initial public offering price of $0.50 per share, after deducting estimated offering expenses), our projected book value as of September 30, 2007 would be:

Negative $93 or $0.00 per share, if the minimum is sold, $165,907 or $0.03 per share, if the midpoint amount is sold, and $407,907 or $0.07 per share, if the maximum is sold.


This means that if you buy stock in this offering at $0.50 per share, you will pay substantially more than our current shareholders. The following represents your dilution:


·

if the minimum of 150,000 shares are sold, an immediate decrease in book value to our new shareholders from $0.50 to $0.00 per share and an immediate dilution to the new shareholders of $0.50 per common share.


·

if the midpoint amount of 500,000 shares are sold, an immediate decrease in book value to our new shareholders from $0.50 to $0.03 per share and an immediate dilution to the new shareholders of $0.47 per common share.


·

if the maximum of 1,000,000 shares are sold, an immediate decrease in book value to our new shareholders from $0.50 to $0.07 per share and an immediate dilution to the new shareholders of $0.43 per common share.










6







The following table illustrates this per share dilution:

Minimum

Midpoint

Maximum

                          Assumed initial public offering price

 $ 0.50

$ 0.50

 $ 0.50

                                                                  Book value as of September 30, 2007

  

($ 0.01)

            ($ 0.01)

             ($ 0.01)

                                                                 Projected book value after this offering

 $ 0.00

$ 0.03

 $ 0.07

                          

                         Increase attributable to new stockholders:

 $ 0.01

$ 0.04

 $ 0.08


Projected book value as of

     September 30, 2007 after this offering

$ 0.00

$ 0.03

 $ 0.07

Decrease to new stockholders

$(0.50)

$(0.47)

 $(0.43)

                                                                 Percentage dilution to new stockholders

  100%

   94%

    86 %


The following table summarizes and shows on a projected basis as of September 30, 2007, the differences between the number of shares of common stock purchased, the total consideration paid and the total average price per share paid by the existing stockholders and the new investors purchasing shares of common stock in this offering:



Minimum offering

Number of shares owned

Percent of shares owned


Amount paid

Average price per share

Current investors

5,000,000

  97.09

$13,500

$0.01

New investors

   150,000

   2.91

$75,000

$0.50

Total

5,150,000

100.00

$88,500

 
     

Midpoint offering

    

Current investors

5,000,000

  90.91

$  13,500

$0.01

New investors

   500,000

   9.09

$250,000

$0.50

Total

5,500,000

100.00

$263,500

 
     

Maximum offering

    

Current investors

5,000,000

 83.33

$  13,500

$0.01

New investors

1,000,000

  16.67

$500,000

$0.50

Total

6,000,000

100.00

$513,500

 



PLAN OF DISTRIBUTION


The common stock is being sold on our behalf by our two officers and directors, who will receive no commission on such sales. All sales will be made by personal contact by our two officers and directors, Richard Pietrykowski and John Donahoe. We will not be mailing our prospectus to anyone or soliciting anyone who is not personally known by them, or introduced or referred to them. We have no agreements, understandings or commitments, whether written or oral, to offer or sell the securities to any individual or entity, or with any person, including our attorney, or group for referrals and if there are any referrals, we will not pay finders fees.


The officers will be selling the common stock in this offering relying on the safe harbor from broker registration under the Rule 3a4-1(a) of the Securities Exchange Act of 1934. The officers qualifies under this safe harbor because they (a) are not subject to a statutory disqualification, (b) will not be compensated in connection with his participation by the payment or other remuneration based either directly or indirectly on transactions in the securities, (c) are not an associated person of a broker dealer,



7







and have not been an associated person of a broker dealer within the preceding twelve months, and (d) primarily performs, and will perform, after this offering, substantial duties for the issuer other than in connection with the proposed sale of securities in this offering, and he is not a broker dealer, or an associated person of a broker dealer, within the preceding 12 months, and they have not participated in selling securities for any issuer in the past 12 months and shall not sell for another issuer in the twelve months following the last sale in this offering.


Additionally, they will be contacting relatives, friends and business associates to invest in this offering and provide them with a printed copy of the prospectus and subscription agreement. No printed advertising materials will be used for solicitation, no internet solicitation and no cold calling people to solicit interest for investment.  Officers, directors and affiliates may purchase shares in this offering, but only up to five percent of the total amount sold.


The money we raise in this offering before the minimum amount is sold will be deposited in a separate non-interest bearing bank account where the funds will be held for the benefit of those subscribing for our shares, until the minimum amount is raised at which time we will deposit the funds in our bank account and retain the transfer agent who will then issue the shares. We do not have an escrow agreement or any other agreement regarding the custody of the funds we raise. The offering will end on September 28, 2008 and if the minimum subscription is not raised by the end of the offering period, all funds will be refunded by the end of the next business day to those who subscribed for our shares, without interest. The offering will close on September 28, 2008, if not terminated sooner.


The subscription agreement will provide investors the opportunity to purchase shares at $0.50 per share by purchasing directly from the Company. The agreement also provides that investors are not entitled to cancel, terminate or revoke the agreement. In addition, if the minimum subscription is not raised by September 28, 2008, the subscription agreement will be terminated and any funds received will be promptly returned to the investors. Changes in the material terms of this offering and the effective date of this registration statement will terminate the original offer and subscribers would then be entitled to a refund. Material changes include a) extension of the offering period beyond September 28, 2008, b) a change in the offering price, c) a change in the minimum purchase required by investors, d) a change in the amount of proceeds necessary to release proceeds to the company, and e) a change in the application of proceeds from the offering.


Certificates for shares of common stock sold in this offering will be delivered to the purchasers by Signature Stock Transfer, Inc., the stock transfer company chosen by the company within 30 days of the minimum subscription amount being raised. The transfer agent will only be engaged in the event that we obtain at least the minimum subscription amount in this offering.




USE OF PROCEEDS


The total cost of the minimum offering is estimated to be $16,769, or $33,769 if the maximum is sold consisting primarily of legal, accounting and blue sky fees (the fees charged by regulatory agencies or states with regard to this offering).







8







The following table sets forth how we anticipate using the proceeds from selling common stock in this offering, reflecting the minimum and maximum subscription amounts:


 

$75,000 Minimum

$250,000

Mid-Level

$500,000 Maximum

Legal, Accounting & Printing Expenses

$  6,500

$  15,000

$ 23,000

Other Offering Expenses

  10,269

    10,769

   10,769

Net Proceeds to Company

  58,231

  224,231

  466,231

TOTAL

$75,000

$250,000

$500,000


The following describes each of the expense categories:

·

Legal, accounting and printing expense is the estimated costs associated with this offering. As more shares are sold, we anticipate legal fees to increase due to the likelihood of investors being from other states which could result in state blue sky securities filings. Although our legal fees are not contingent on the number of shares sold, it is likely that the legal fees will increase as our attorney will charge us for these filings.  Also, as more shares are sold, our printing expenses will increase.

·

Other offering expenses include SEC registration fee, blue sky fees and miscellaneous expenses with regards to this offering.  The blue sky fees are fees charged by the States to pay for registering in various states, which vary by state, as well as additional legal fees.


The following table sets forth how we anticipate using the net proceeds to the company:


 

$75,000 Minimum

$250,000

Mid-Level

$500,000 Maximum

Marketing/Advertising

$7,000

$11,500

$18,000

Inventory   purchases

28,000

121,000

248,000

Salaries, commissions

15,000

60,000

125,000

New location opening costs

0

18,000

37,000

General corporate overhead (1)

8,231

13,731

38,231

Proceeds to company

$58,231

$224,213

$466,231


(1) General Corporate overhead includes office rents, office supplies, utilities, taxes, and any other expense incurred in the normal course of business.


We do not plan to use any of the proceeds to pay off debts owed by the Company. Additionally, all amounts allocated for salaries/commissions will be for new hires and not for officers or directors of the company.  For a more detailed discussion of the use of proceeds, reader is referred to Management’s Discussion and Plan of Operation on page 18 of this offering.


The proceeds from this offering will enable the Company to further develop its web-based business model which in turn provides access to markets that are currently unreachable.  We plan to expand our web-based business through integrated marketing campaigns which include: advertising, buying targeted lists and utilizing banner advertising on partner web-sites.  


Advertising: We plan to utilize both traditional advertising mediums (newspaper, industry magazines, etc.) and the internet (web-site banners).


Targeted-lists and e-mails:  We are researching the benefits of purchasing industry target lists.  Through



9







this medium we would be able to reach a new set of customers that to-date have been unaware of our product line.


We plan on developing partnerships with the targeted companies and achieve preferred supplier status.  By having preferred supplier status we expect volume to increase as we capitalize on the designation in the market place through our integrated marketing campaigns.



DESCRIPTION OF BUSINESS


Surface Armor, LLC was formed in 2005 as a result of 30 years of experience in general contracting.  Our stated goal is to serve the ever-expanding market of protecting expensive finishes and all types of surfaces from damage during manufacturing processes, shipping, handling and installation.   In April 2006 Surface Coatings, Inc. was created with the express purpose to acquire Surface Armor, LLC.  The shareholders are the same as Surface Armor, LLC and therefore there was no cash consideration in the transaction.  Consequently the Surface Armor, LLC operations became Surface Coatings, Inc.


The company offers the most progressive and complete solutions to our customer’s temporary surface protection needs.  Our business model is set-up to serve The Americas from our facility in Rockwall, Texas where we inventory and convert all our materials and products.  Our warehouse is climate controlled ensuring consistent quality in the Texas heat in the summer and the freeze/thaw weather pattern in the winter.  


We inventory a wide assortment of self-adhering, bulk films and convert them into rolls at customer-specified widths, lengths, and quantities. We specialize in providing custom products, in reasonable quantities, at standard prices, and at off-the-shelf turnaround times.  This model has enabled us to gain traction in the market place while we grow our business.  Providing the converted product is just one part of our product offering – the other, service.  We have a customer focused, server-based relationship model that assists our customers in finding solutions to their surfacing needs as well as any out-of-the-ordinary problems.


As is the case in many industries, efficiency is critical, and the construction business is no different.  Contractors are under increasing pressure to complete projects and therefore are more aware of damage done to already completed work.  Our products are solutions to real needs that companies experience every day.


The company currently serves a customer base of 349 accounts, yielding an average gross margin per sale of 40.25%. We do not have any contracts or arrangements of consequence with any customer or supplier. Our business model focuses on the ordering and delivery process which is summarized below:

   

Existing Customers typically have repeat orders of specific products and dimension. The process includes:

1.

Customer faxes/emails orders to Surface Armor

2.

Surface Armor emails order confirmation to customer, confirming price and ship date (typically within 2 days)

3.

Job tickets, carton labels and product labels are issued to production from customer service

4.

Production takes bulk film from warehouse inventory, winds the specified log lengths and slices rolls at the specified widths

5.

Rolls are labeled, inspected and packaged



10







6.

Customer Service issues invoices, packing slips, shipping documents

7.

Packaged products are shipped via customer specified carrier (UPS, FedEx, common carrier) and service level (Ground, Next Day, etc.)


New Customers have typically been provided with technical data sheets, product samples and pricing information prior to their first order

1.

New Customer demographic information is entered into the order processing computer system

2.

Approved credit status or Credit Card information is entered into system

3.

If appropriate, new inventory items are created for new film type and/or product dimensions

4.

Orders are processed, as above, for existing customers


Sales segment summary for the periods presented:


$

2007 (thru Sep)

2006

2005

FILM

167,015

117,458

4,336

LIQUID

6,782

34,450

0

DISPENSERS

3,469

0

0

TOTAL

177,266

151,908

4,336



PRODUCTS


Surface Coatings, Inc delivers product for various purposes, namely General Surface Protection, Glass Surface Protection, Laminate Surface Protection, Metal Surface Protection, and Plastic Surface Protection. These products are summarized below:




11










12










   





13





In addition to surface protection products, Surface Coatings, Inc provides industry specific protection films. Such industries are highlighted as follows:

   

AIRCRAFT ADHESIVE TAPE & PROTECTIVE FILM
Surface Coatings, Inc maintains an inventory of protection films that are widely used in the aircraft industry to protect against damage and ultraviolet rays.

Carpets
Custom cut carpet film available for immediate delivery
Windows
Protection for window acrylics to prevent damage while your plane is in storage in maintenance or between flights.
Seats
Prevent stains snagging or damage to all types of fabric seats
Canopies
From canopies to leading edge protection, we can find a solution to your temporary surface protection problems.


AUTOMOTIVE PROTECTION TAPE
Surface Coatings, Inc manufactures pressure sensitive tapes that offer temporary protection for the interior and exterior of automobiles.

Interior – Windows, seats & carpet…
Exterior – Windows, accessories & painted metals…

Carpet protection
Surface Coatings, Inc carpet tapes keep flooring looking like new, even after transport and test drives.
Auto glass protection
Our pressure sensitive films will protect the glass from scratching, pitting, and paint overspray.
Pre-paint and post-paint protection
Protection from assembly line damage to post paint transportation. Surface Coatings, Inc films cover and protect commonly damaged areas of the car.
Specialty films
Surface Coatings, Inc will develop custom products based on your needs and specifications.


CONSTRUCTION - TEMPORARY PROTECTION FILM
Protect Profit By Protecting Finishes
One scratch on a window, One scratch on an expensive counter top, One stain on an expensive carpet and earned profit may be forfeited due to damage. Our inventory of construction film will protect windows, carpets and counter tops from accidents and carelessness which will give peace of mind knowing that earned profit is protected.

We keep a full inventory of construction protection films in our warehouse ready for immediate shipment or we will custom convert protection films specific to need:

Carpeting
Carpet film resists punctures and protects installed carpets from mud, abrasion, snags or most other abuse that generally occurs during construction. Our carpet film removes easily and does not leave a residue when used as directed. Surface Coatings, Inc stocks 2’ & 3’ widths of carpet film in 2mil and 3mil thicknesses. 2mil carpet film is guaranteed for 30 days and the 3mil carpet film is guaranteed for 45 days


14





 

use. If you require custom widths or lengths let us know and we will convert the products to your specifications. Surface Coatings, Inc carpet film is reverse wound for easy application.
Windows
Surface Coatings, Inc stocks a wide range of window protection film, including 90 day, 180 day and 360 day protection. (360 day tape is recommended for a controlled environment such as a warehouse or assembly line.) Our window film protects your glass from scratching and abrasion caused by mortar, cleaning, mud, paint, etc. and incorporates graduated protection from ultraviolet sun rays.(90,180 and 360 day UV protection) Surface Coatings, Inc will custom convert our window film based on your size specifications. Our protection film removes easily and leaves no residue behind when used as directed.
Hard Floors
Surface Coatings, Inc converts films that protect granite, marble, tile and other non-wood hard floors from scratches. These products are useful in both commercial and residential construction.
Countertops
Replacing a countertop can significantly delay construction not to mention the labor and material costs. That's why Surface Coatings, Inc converts films to protect laminate, solid surfaces, granite, marble or specialty surfaces from scratches, gouges and abrasion. We carry an inventory of standard sizes and will also custom cut film to your specifications.
Tubs, Sinks and Spas
Main Tape's films for acrylic, porcelain and ceramic surfaces can protect tubs, sinks and spas during manufacturing, handling, transit and construction.


CONSUMER ELECTRONICS PROTECTION
Surface Coatings, Inc manufactures a variety of films that will protect your electronics from scratches and abrasions.

TFT/LCD and LED Screens
Computer screens, Television screens, Calculator faces and bezels, Telephone screens, Printer and Copier faces.
Mobile phone lenses and PDA
Mobile phone, Blackberry and PDA faces.
Backlit Units
All types of backlit products that need protection from damage during manufacturing and transportation.
Touch panels – ITO
Computer touch screens.
Custom products for most electronics and plastics.
Whatever the plastic or the shape, there is a protection solution.


FURNITURE PROTECTION
Prevent Scratches and Gouges
Furniture and laminates create special challenges during shipping. Just one ding or stain can dramatically decrease the value of a bookcase, desk, speaker cover, or other vulnerable item.

Furniture manufacturers and movers can rely on Surface Coatings, Inc for high quality pressure sensitive tapes that are easy to install, easy to remove and won’t leave residue when used as directed. Our tapes can either be installed by hand or during the fabrication process by machines.

High-pressure laminate
Hard surface laminates on counter tops, wall panels and any other products that are vulnerable to scratches, gouging or abrasion.
Low-pressure laminates



15







Surface Coatings, Inc offers options for even the most expensive acrylics or soft laminates without leaving a residue or affecting colors.
Vinyl overlays
Specialty surfaces can be protected thru customized surface protection solutions.  Coated and uncoated solid surfacing materials (such as wood) before fabrication into countertops, cabinets, furniture and the like protect your furniture components from damage during the fabrication and transportation process.


GLASS & MIRROR PROTECTION FILM AND TAPE
Insure That Your Glass And Mirrors Remain Scratch Free
Surface Coatings, Inc carries a full line of self adhering protection films that protect glass and mirrors during fabrication, transportation and installation. If we don’t have your specification on the shelf, Surface Coatings, Inc will custom convert the film to your exact requirement.

Mirrors
Surface Coatings, Inc Mirror protection film is ideal for hand or machine application and will protect your products during every phase of the process, fabrication, transportation and installation.


Windows
Surface films are designed to protect windows, glass and shower doors from damage caused by fabrication, transportation, installation, and construction activities. Films are available in varying thicknesses that last 30, 90, 180 or even 360 days. These films are easy to install, easy to remove and do not leave a residue when used as directed.
Auto glass protection
In the automotive aftermarket, glass manufacturers and installers are covering new glass windows with Surface Coatings, Inc films. This prevents scratching during shipping and installation.


METAL PROTECTION
Preventing Damage to Smooth and Polished Surfaces
From raw materials to finished products, Surface Coatings, Inc provides protection products to serve your industry. Give us your specifications and we will design a customized solution for your needs.

Aluminum
Surface Coatings, Inc custom films protect mill-finished, buffed, brushed or mirrored aluminum during fabrication, processing, handling, and shipment.

Stainless steel
Surface Coatings, Inc gives stainless steel the special protection it needs during processing, break forming, punching, drawing, drilling, plasma cutting, shipping, and handling.

Painted metals
From pre-fabricated panels to appliances and metal buildings, painted metals need special protection during fabrication, manufacturing, shipping, and handling.


PLASTIC PROTECTION
Tapes ľ” and Wider
From large plastic sheets of acrylic and polycarbonate to the smallest plastic products, Surface Coatings, Inc custom converts tapes specially formulated to protect plastics from scratches and abrasions. These tapes apply and remove easily, leaving no sticky residue when used as directed.


SURFACE COATINGS, INC STRATEGIES



16







Our Business Strategy:

Our objective is to become a leading distributor of temporary surface protection tapes.  We plan to achieve this objective by continuing to implement our business strategy, which includes the primary elements we discuss below.


Marketing and Sales:

Our marketing efforts target manufacturers and processors of metals, plastics and glass.  In the past we have generated a significant amount of our revenues through web based advertising. We plan to supplement search engine advertising with traditional advertising and marketing channels to accelerate sales growth.


Customers:

We rely heavily on repeat customers. Our management is responsible for developing and maintaining successful long-term relationships with key customers.  We are not dependent on any one customer. Rather, we have built up a customer base which we market to and have developed into steady repeat customers.


Government Regulation:

At the present time there are no federal government regulations are in effect that would impact our business operations.  


Our Qualifications:

Our qualifications are our reputation and experience in the surface protection industry.  


Industry and Competitors

An industry founder, competitor and primary manufacturer of surface protection products is 3M Corporation, a NYSE publicly traded company.  3M products are sold through numerous distribution channels, including directly to users and through numerous wholesalers, retailers, jobbers, distributors and dealers in a wide variety of trades in many countries around the world. Management believes the confidence of wholesalers, retailers, jobbers, distributors and dealers in 3M and its products — a confidence developed through long association with skilled marketing and sales representatives — has contributed significantly to 3M’s position in the marketplace and to its growth. 3M has 169 sales offices worldwide, with 10 in the United States and 159 internationally.


3M is not a supplier to the Company. Our primary raw materials are adhesive-backed films and kraft-paper cores. Our primary supplier of films is Main Tape out of Cranbury, NJ (90%). Our primary supplier of cores is Sonoco out of Dallas, Texas (100%). Both materials are readily available. We are significantly dependent upon Main Tape as a supplier due to the performance characteristics of the proprietary adhesives. We do have backup suppliers, specifically Surface Guard in Illinois, with reasonably comparable products, however, to convert our customer base over to a new supplier’s products would be a high effort undertaking.


The surface protection industry is served by at least 30 foreign and domestic manufacturers of films and tapes. Historically, customers primarily purchased from local distributors. With the broad reach of the internet, low order quantity customers, that don’t require direct assistance from a local distributor, prospect the web for an effective product at a reasonable price. Once a film/tape has been approved for use in production, customers are slow to change to another product as the cost of evaluating a new product can exceed the potential savings to be gained by changing.




17







Because we do not have field sales people knocking on high-volume prospects’ doors, we don’t really compete on a head to head basis. Our competitive position is based on servicing the customers needs:

·

Low order minimum quantity

·

Fast turnaround

·

High quality


Prospects find us on the web and our method of competition is:

·

Provide price quotes within the hour (industry average is 24-72 hours)

·

Ship samples within 24 hours (industry average is 7-14 days)

·

Ship orders within 48 hours (industry response ranges from several days to three weeks)

·

Few competitors are able to respond as rapidly as we are, giving us a competitive edge


Due to our growth we have not experienced any significant seasonality.  There is some seasonality in the construction market (February and November) but the manufacturing market is more consistent.  As we grow we continue to market to both industries thereby decreasing the impact of seasonality.


Future products and services:

At the present time, we do not have plans to develop or market additional products or services.


Sources and Availability of Raw Material:

Our primary raw materials are adhesive-backed films and kraft-paper cores. Our primary supplier of films is Main Tape out of Cranbury, NJ (90%). Our primary supplier of cores is Sonoco out of Dallas, Texas (100%). Both materials are readily available. We are significantly dependent upon Main Tape as a supplier due to the performance characteristics of the proprietary adhesives. We do have backup suppliers, Specifically Surface Guard in Illinois, with reasonably comparable products, however, to convert our customer base over to a new supplier’s products would be a high effort undertaking.


Dependence on One or a Few Major Customers:

We are not dependent on any one or a few major customers.


Costs and Effects of Compliance with Environmental Laws:

We are not aware of nor do we anticipate any environmental laws with which we will have to comply.


Number of Employees:

We have three employees, the President, a fulltime production person and a part time office person. The duties of the President are to solicit business by implementing the marketing initiatives and developing customers.  The day to day duties are performed by the President and his staff.


Operations and Technology:

We are not subject to a dependence on technology.


Research and Development:

The company does not have in development a product that will require the use of a material amount of the assets of the company.  Since inception, the company has spent zero ($0) on company-sponsored research and development.  As we are a distributor and converter of surface protection tapes, we do not anticipate spending any funds on research and development in the future.






18







MANAGEMENTS DISCUSSION AND PLAN OF OPERATIONS


As of September 30, 2007 our cash balance was $1,802.


Revenues for the nine months ended September 30, 2007 were $177,266 and for the fiscal years 2006 and 2005 were $151,908 and $4,336 respectively.


Operating expenses for the nine months ended September 30, 2007 were $116,444 and for the fiscal years 2006 and 2005 were $99,804 and $5,937 respectively.  In 2007 Contract Services are $9,710 versus $36,943 in 2006.  The variance is attributed to services by current employees that were not yet on the payroll in 2006.  If they had been then $35,793 would have been reclassed to payroll.


The plan of operations for the 12 months following the commencement of this offering will include the continued growth plan. The Company plans to implement this growth plan by purchasing additional inventory and manufacturing capabilities. If the maximum amount is raised, we expect to spend $248,000 on additional inventory equipment and manufacturing personnel.


Augmenting our growth will be the addition of salesmen.  The company has budgeted $125,000 for salaries and commissions if the maximum amount is raised in this offering.  If the maximum amount is raised, the majority of this will be used for salesmen at each new location.


With the amount raised we expect to move our facility within Rockwall to a specific purpose building.  The building will be 10,000 s.f. with 8,000 s.f. for production / warehousing, 1,000 s.f. for office /admin and 1,000 free for expansion.  We have budgeted $18,000 if the minimum is raised and that is broken down as follows: $10,000 for leasehold improvements and $8,000 for equipment.  If the maximum is raised we plan to move into a 20,000 s.f. facility with 18,000 s.f. being deidicated to production / warehousing.  We have budgeted $37,000 if the maximum is raised, that is broken down as follows: $20,000 for leasehold improvements and $17,000 for equipment.  Opening new locations will be dependent on future sales growth and customer requirements.


Marketing and advertising costs will be determined by the amount raised in the initial offering.  If the maximum amount of $500,000 is raised, these costs are projected to total $18,000 in the first 12 months of operation.  As previously mentioned, advertising costs will include targeted mailings to manufacturing companies.  If the minimum amount is raised in this offering, in the first 12 months of operation, $7,000 is budgeted to be spent on advertising.


We focus on evaluating our financial condition and operating performance based on asset quality and cash flow. Asset management includes the management of our largest asset category, specifically inventories. Regarding material trends (raw materials), uncertainties or events that may reasonably occur affecting financial conditions or revenues include procurement and quality of product. Primary raw materials are low density polyethylene films that are pre-coated with water-based acrylic adhesives. Being a derivative of crude oil, prices of plastic films will increase in some proportion to the cost of oil. A significant price increase is anticipated in January of 2008. As competitors are faced with the same issue, price increases will not cause a loss of market share. Also, because protective films prevent very costly damage they will continue to be used, despite the price increase. Secondary, raw materials are paperboard cores and cartons, which have seen a cumulative increase of 15% in the past 12 months. This increase is insignificant for very large rolls of product. However, this increase is very significant for rolls under 200 feet in length. Customers purchasing short roll lengths will be encouraged to change to longer roll lengths or accept the price increase of paper products.




19







Operating cash flows for six months in 2006 was negative $49,000 versus the first six months of 2007 of negative $43,000.  September 2007 saw the first positive cash flow month ($4,000) and with an increasing sales trend (2006 - $151,000, YTD Sep 2007 - $177,000) we expect to finish 2007 between $230,000 to $240,000 in sales and net operating cash flows of approximately negative $40,000.  We expect continued growth in 2008, not at the same percentage, but similar in nominal dollars.


Earnings have begun to grow as evidenced by our improved operating cash flow position in the second half of 2007.  As sales continue to increase in the 2007 and beyond we expect to begin to turn a net profit on a monthly basis in 2008.


We are not aware of any economic or industry factors relevant to company. We see material opportunities, challenges, and risks in the short and long term. These include the combination of film thickness, film color and adhesive coating is an additional product line, appealing to a broader base of prospects, as well as increased sales opportunities to existing customers. Surface Armor evaluates potential demand for additional film types and adds them to inventory when there is sufficient demand. While this boosts sales revenue and is profitable over a period of time, this growth in product inventory is a challenge to both cash flow and to warehouse space. Surface Armor is actively prospecting for a larger warehouse and operating facility, as well as additional operating capital.


We will not use the proceeds of the offering to pay down debt.


We have not entered into any off-balance sheet arrangements that currently have or would have a future effect on our financial condition. Additionally, there are no significant critical accounting estimates or assumptions.


Generating Sufficient Revenue:

Since inception, we have generated revenue through advertising, referrals, word of mouth and limited web-based advertising.  Over the next twelve months we plan to develop our web-based marketing and explore the benefits of implementing a web-based ordering system.  More sophisticated web-based advertising and a web-based ordering system will expose the Company to a different set of demographics and geographies.


The Company plans to generate sufficient revenue by expanding and developing its inventory, production capabilities and increasing market penetration.

 

Financing Needs:

Our cash flows since inception have not been adequate to support on-going operations.  As noted above, the Company's financing needs for the next twelve months can and will be met even if the minimum offering amount is raised.  We believe that by raising the minimum amount of funds in this offering we will have sufficient funds to cash flow our growth plans for a minimum of twelve months.


DESCRIPTION OF PROPERTY


Our corporate facilities are in a 2,000 s.f. facility of which 1,250 s.f. is production/warehouse space.  We are currently running one shift and utilizing almost 100% of the space.  Adding a second shift would increase capacity but would put a strain on our warehouse space.  


The facility is not a specific purpose building and therefore we do not have a truck-height loading dock amongst other features.  Thus the facility is adequate but could be greatly improved upon by moving to a specific purpose building which is in our plans if this offering is approved and as the business grows.



20








DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES


 The directors and officers of the company, their ages and principal positions are as follows:


Richard Pietrykowski

59               

Director, President; Secretary and Treasurer

John Donahoe

59

Director, Vice-President


Background of Directors and Executive Officers:


Richard Pietrykowski:

Mr. Pietrykowski entered the U.S. Air Force upon graduation from high school in 1966.  He served on active duty for seven years as an aircraft weapons technician, a computer maintenance specialist, and as a technical instructor.  After receiving an honorable discharge in 1973 he joined a daily newspaper in West Bend, Wisconsin as Systems and Production Manager.  In 1981 Mr. Pietrykowski was recruited by a specialty printing company in Milwaukee, Wisconsin as National Systems and Production Manager.  In 1989 Mr. Pietrykowski was hired as the Electric Prepress Manager for a color trade shop in Madison, Wisconsin where he was employed for four years.  He then joined Perry Printing, a magazine and catalog printer as the Prepress Systems Engineer.  He remained with Perry Printing for four years and in 1997

Mr. Pietrykowski was recruited by Serigraph, Inc in West Bend, Wisconsin.  He was with Serifraph, Inc. for seven years. During that time he served as Director of Graphic Services and Director of Digital Printing for Serigraph. Additionally, he served as General Manager of Serigraph's subsidiary company, Carvel Print, in Queretaro, Mexico for over a year as part of a turnaround team. Following Serigraph, Mr. Pietrykowski provided Electronic Prepress Systems and Prepress Operations Management consulting services to Discover Color and Imperial Lithograph in Madison and Milwaukee, Wisconsin, respectively.  In August of 1995 he founded Surface Armor, LLC that is wholly owned by Surface Coatings, Inc., for which he serves as President.


John Donahoe:

Mr. Donahoe graduated from Whitewater University in 1971 and moved to Chicago to work for a regional land developer, Plaza Excavating as a Field Supervisor. He was promoted to Director of Operations in 1975 and formed a General Contracting firm in 1976, JM Donahoe Construction. The company established national clients, (Southland Corporation, McDonalds, Burger King, Taco Bell, Kentucky Fried Chicken , among others)  and was built from the ground up ..  The main business line was remodel ing stores for the customers across the Midwest. At the request of a major client, Mr. Donahoe relocated the construction company to Dallas, Texas and continued building for existing customers along with new customers across the country. IN 1995 he moved , with his family,to Costa Rica where he  organized and operated a Teakwood processing and distribution business, selling and shipping semi-processed product to companies in England, Taiwan, Italy and the United States. In 1997 he accepted the position VP of Operations for a Dallas based construction company, Commercial Construction Group a subsidiary of Public Corporation , with an annual gross income of approximately $30,000,000. In June of 2000 Mr. Donahoe formed Trinity Heritage Construction and currently serves as its President and is a Director and Vice-President of Surface Coatings, Inc.



REMUNERATION OF DIRECTORS AND OFFICERS


Our officers and directors received the following compensation for the years of 2004 and 2005. They have no employment contract with the company.




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     Name of Person

Capacity in which he served

  Aggregate

Receiving compensation

   to receive remuneration

remuneration

Richard Pietrykowski   

President, Secretary

2006 - $40,000

     and Treasurer

2005 - $        0


John Donahoe

   

Vice-President

 

2006 - $        0

2005 - $        0


We have no plans to pay remuneration to any other officer in or associated with our company. When we have funds and/or revenue, our board of directors will determine any other remuneration at that time.


We have a $20,000 advance from Trinity Heritage Construction, LLC, a company controlled by John Donahoe, one of our directors.


INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS


In February 2007, we exchanged 5,000,000 shares of common stock for 100% of the outstanding stock of Surface Armor, LLC. In this transaction, the president and vice-president of the company received a total of 4,500,000 shares of common stock in consideration for 100% of Surface Coatings, Inc.


As of the date of this filing, there are no other agreements or proposed transactions, whether direct or indirect, with anyone, but more particularly with any of the following:

*

a director or officer of the issuer;

*

any principal security holder;

*

any promoter of the issuer;

*

any relative or spouse, or relative of such spouse, of the above referenced persons.




PRINCIPAL SHAREHOLDERS


The following table lists the officers, directors and stockholders who, at the date hereof, own of record or beneficially, directly or indirectly, more than 5% of the outstanding common stock, and all officers and directors of the company:

Amount

Amount

Owned

Owned

Title / relationship

Before the

After the

 to Issuer

Name of Owner

offering         Percent  

offering    Percent


President, Secretary

            and Director

Richard Pietrykowski

1,800,000        36.00%

Minimum

1,800,000    34.95%

Maximum

1,800,000    30.00%


Vice-President

             and Director

John Donahoe

2,700,000        54.00%

Minimum

2,700,000    52.43%

Maximum

2,700,000    45.00%


No options, warrants or rights have been issued by the Company.



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SIGNIFICANT PARTIES


The following table lists the relationship of the significant parties to the issuer:


Relationship

Name and


to Issuer

business address

Residential address


Officer  

Richard Pietrykowski

Richard Pietrykowski

and Director

2010 Industrial Blvd, Suite 605

949 Wisperwood Drive

Rockwall, Texas 75087

Rockwall, Texas 75087


Officer  

John Donahoe

John Donahoe

and Director

2010 Industrial Blvd, Suite 605

619 Loch View Ct.

Rockwall, Texas 75087

Rockwall, Texas 75087


Record owners of

Richard Pietrykowski

Richard Pietrykowski

5% (or more) owner

2010 Industrial Blvd, Suite 605

949 Wisperwood Drive

of equity securities

Rockwall, Texas 75087

Rockwall, Texas 75087


Officer  

John Donahoe

John Donahoe

and Director

2010 Industrial Blvd, Suite 605

619 Loch View Ct.

Rockwall, Texas 75087

Rockwall, Texas 75087


Counsel to Issuer

J Hamilton McMenamy, P.C.

8222 Douglas Ave, Suite 850

Dallas, Texas 75225



SECURITIES BEING OFFERED


We are offering for sale common stock in our company at a price of $0.50 per share. We are offering a minimum of 150,000 shares and a maximum of 1,000,000 shares. The authorized capital in our company consists of 50,000,000 shares of common stock, $0.001 par value per share and 20,000,000 shares of preferred stock, $0.001 par value.  As of November 20, 2007 , we had 5,000,000 shares of common stock issued and outstanding and no preferred stock outstanding.


Every investor who purchases our common stock is entitled to one vote at meetings of our shareholders and to participate equally and ratably in any dividends declared by us and in any property or assets that may be distributed by us to the holders of common stock in the event of a voluntary or involuntary liquidation, dissolution or winding up of the company.


The existing stockholders and all who subscribe to common shares in this offering do not have a preemptive right to purchase common stock offered for sale by us, and no right to cumulative voting in the election of our directors. These provisions apply to all holders of our common stock.








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RELATIONSHIP WITH ISSUER OF EXPERTS NAMED IN REGISTRATION STATEMENT


The experts named in this registration statement were not hired on a contingent basis and have no direct or indirect interest in our company.



LEGAL PROCEEDINGS


We are not involved in any legal proceedings at this time.



CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS


We have retained The Hall Group, CPA’s as our registered independent public accounting firm. We have had no disagreements with them on accounting and disclosure issues.


DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION

FOR SECURITIES ACT LIABILITIES


Our bylaws provide that the liability of our officers and directors for monetary damages shall be eliminated to the fullest extent permissible under Delaware Law, which includes elimination of liability for monetary damages for defense of civil or criminal actions. The provision does not affect a director’s responsibilities under any other laws, such as the federal securities laws or state or federal environmental laws.


The position of the U.S. Securities & Exchange Commission under the Securities Act of 1933:


Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the “Act”) may be permitted to directors, officers and controlling persons of the small business issuer pursuant to the foregoing provisions, or otherwise, the small business issuer has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.


We have no underwriting agreement and therefore no provision for indemnification of officers and directors is made in an underwriting by a broker dealer.


LEGAL MATTERS


Our attorney has passed upon the legality of the common stock issued before this offering and passed upon the common stock offered for sale in this offering. Our attorney is J. Hamilton McMenamy, Law Offices of J. Hamilton McMenamy, P.C. 8222 Douglas, Suite 850 Dallas, Texas 75225.


EXPERTS


The financial statements as of April 30, 2007, December 31, 2006 and 2005, and for the four months ended April 30, 2007 and the twelve months ended December 31, 2006 and 2005 of the company included in this prospectus have been audited by The Hall Group, CPA’s,  our independent registered public accounting firm, as set forth in their report. The financial statements have been included in reliance upon the authority of them as experts in accounting and auditing.



24








The financial statements as of September 30, 2007, and for the nine months ended September 30, 2007 of the company included in this prospectus have been prepared by management and include all adjustments required by generally accepted accounting principles which in the opinion of management are necessary in order to make the financial statements not misleading. They have not been audited or reviewed by our auditors, The Hall Group, CPA’s.


DIVIDEND POLICY


To date, we have not declared or paid any dividends on our common stock. We do not intend to declare or pay any dividends on our common stock in the foreseeable future, but rather to retain any earnings to finance the growth of our business. Any future determination to pay dividends will be at the discretion of our board of directors and will depend on our results of operations, financial condition, contractual and legal restrictions and other factors it deems relevant.


CAPITALIZATION


The following table sets forth our capitalization as of September 30, 2007. Our capitalization is presented on an actual basis, and

·

a pro forma basis to give effect to net proceeds from the sale of the minimum number of shares (150,000) we plan to sell in this offering; and

·

a pro forma basis to give effect to net proceeds from the sale of the midpoint number of shares (500,000) we plan to sell in this offering; and

*

a pro forma basis to give effect to the net proceeds from the sale of the maximum number of shares (1,000,000) we plan to sell in this offering.




(In $US except for share data)

Actual Unaudited

Sept 30, 2007

After Minimum Offering

After Midpoint Offering

After Maximum Offering

Stockholder’s equity

Common Stock, $0.001 par value;

50,000,000,shares authorized:



5,000



    5,150



   5,500



    6,000

Additional paid-in-capital

51,492

109,573

276,723

516,723

Retained deficit

  (114,816)

(114,816)

(114,816)

(114,816)

Total stockholder’s equity (deficit)

(58,324)

(        93)

165,907

407,907

Total capitalization

(58,324)

(        93)

165,907

407,907

Number if shares outstanding

5,000,000

5,150,000

5,500,000

6,000,000


The Company has only one class of stock outstanding. The common stock sold in this offering will be fully paid and non assessable, having voting rights of one vote per share, have no preemptive or conversion rights, and liquidation rights as is common to a sole class of common stock. The company has no sinking fund or redemption provisions on any of the currently outstanding stock and will have none on the stock sold in this offering.


TRANSFER AGENT


We will serve as our own transfer agent and registrar for the common stock until such time as this registration is effective and we sell the minimum offering, then we intend to retain Signature Stock Transfer, Inc., 2301 Ohio Drive, Suite 100, Plano, Texas 75093.



25










REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors and Management of

Surface Coatings, Inc.

Rockwall, Texas


We have audited the accompanying consolidated balance sheet of Surface Coatings, Inc. as of April 30, 2007, December 31, 2006 and 2005 and the related consolidated statements of operations, cash flows and stockholders’ equity for the periods then ended These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.


We conducted our audit of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.


In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Surface Coatings, Inc. as of April 30, 2007, December 31, 2006 and 2005, and the results of its operations and its cash flows for the periods then ended in conformity with accounting principles generally accepted in the United States of America.


The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 6 to the financial statements, the Company ahs suffered significant losses and will require additional capital to develop its business until the Company either (1) achieves a level of revenues adequate to generate sufficient cahs flows from operations; or (2) obtains additional financing necessary to support its working capital requirements. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 6. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.




/s/  The Hall Group, CPAs

The Hall Group, CPAs


Dallas, Texas

August 10, 2007




F-1









 

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


 


F-2








[incomestatement1002.gif]

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


 





F-3






[equity1002.gif]


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


 





F-4

 


 







[cashflow1002.gif]

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


 





F-5


 

 


SURFACE COATINGS, INC.
Notes to the Financial Statements
April 30, 2007, December 31, 2006 and 2005



NOTE 1 – NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES


Nature of Activities, History and Organization:


Surface Coatings, Inc. (The “Company”) is the parent company of Surface Armor, LLC, (“Surface Armor”) a company incorporated under the laws of the State of Texas on July 19, 2005. The Company operates as a converter and distributor of temporary surface protection tapes, mainly to the construction industry and for the past two years has been developing its business. The Company is located in Texas and sells its product locally as a distributor and throughout the U.S. over the internet.


Surface Coatings, Inc. ("Surface Coatings"), a private holding company established under the laws of Nevada on February 12, 2007, was formed in order to acquire 100% of the outstanding common stock of Surface Armor.  On February 15, 2007, Surface Coatings issued 5,000,000 shares of common stock in exchange for a 100% equity interest in Surface Armor.  As a result of the share exchange, Surface Armor became the wholly owned subsidiary of Surface Coatings.  As a result, the shareholders of Surface Armor owned a majority of the voting stock of Surface Coatings.  The transaction was regarded as a reverse merger whereby Surface Armor was considered to be the accounting acquirer as its shareholders retained control of Surface Coatings after the exchange, although Surface Coatings is the legal parent company.  The share exchange was treated as a recapitalization of Surface Coatings.  As such, Surface Armor, (and its historical financial statements) is the continuing entity for financial reporting purposes. The financial statements have been prepared as if Surface Coatings had always been the reporting company and then on the share exchange date, had changed its name and reorganized its capital stock. The share exchange transaction was effected to change the state of incorporation to allow the opportunity for a reduction of franchise taxes under the new Texas franchise tax calculations and to facilitate the initial public offering. At the time of the exchange transaction, Surface Coatings had no assets and Surface Armor had assets of approximately $57,000 with equity of approximately $19,500.


The capital structure of Surface Coatings is presented as a consolidated entity as if the transaction had been effected in 2005 to consistently reflect the number of shares outstanding. However, the capital structure as presented is different that the capital structure that appears in the historical statements of Surface Armor, LLC in earlier periods due to the recapitalization accounting.


The Company operates on a calendar year-end.  







F-6






SURFACE COATINGS, INC.
Notes to the Financial Statements
April 30, 2007, December 31, 2006 and 2005




Significant Accounting Policies:


The Company’s management selects accounting principles generally accepted in the United States of America and adopts methods for their application.  The application of accounting principles requires the estimating, matching and timing of revenue and expense.  Below is a summary of certain significant accounting policies selected by management.


Basis of Presentation:


The Company prepares its financial statements on the accrual basis of accounting.


Cash and Cash Equivalents:


All highly liquid investments with original maturities of three months or less are stated at cost which approximates market value.


Inventory:


            Inventory is comprised of goods purchased for resale; therefore the Company has no work in process.  The Company uses the specific identification method for inventory tracking and valuation and inventory is stated at the lower of cost or market value.


Fixed Assets


Property and equipment are stated at cost less accumulated depreciation.  Major renewals and improvements are capitalized; minor replacements, maintenance and repairs are charged to current operations.  Depreciation is calculated on a straight-line basis over the five and seven years for the telephone system and property and equipment, respectively.  


Revenue Recognition:


Surface Coatings recognizes revenue once products are shipped.  The following conditions are present for all sales:


·

The selling price is determinable at the time of sale

·

The buyer is obligated to pay the Company generally with 30 day terms

·

If credit is granted, buyer must have economic business operations

·

Surface Coatings has no future obligation after the product ships



F-7






SURFACE COATINGS, INC.
Notes to the Financial Statements
April 30, 2007, December 31, 2006 and 2005



All inventory is shipped to customers FOB shipping point.  Currently all revenue is generated from the sale of products and no revenue is earned from services rendered.


Revenue is reduced at the value of the original sale price in the period the product is returned.


Allowance for Doubtful Accounts


The Company maintains an allowance for doubtful accounts on all its  accounts receivable  for  estimated  losses resulting  from the  inability  of its  customers  to make  required payments.  The allowance for doubtful accounts was $-0- for all periods presented..


Income Taxes:


Income from the corporation is taxed at regular corporate rates per the Internal Revenue Code.  There are no provisions for current taxes due to net available operating losses.


Use of Estimates:


The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures.  Accordingly, actual results could differ from those estimates.


Cost of Goods Sold:


The types of costs included in Cost of Goods Sold are:


·

Direct material costs

·

Direct labor

·

Ingoing & outgoing freight

·

Warehousing


Direct Labor does include costs for purchasing and receiving, inspection and warehousing.








F-8






SURFACE COATINGS, INC.
Notes to the Financial Statements
April 30, 2007, December 31, 2006 and 2005



Recently Issued Accounting Pronouncements


The Company  does not expect  the  adoption  of  recently  issued  accounting pronouncements  to have a significant  impact on the Company’s  results of  operations, financial position or cash flow.



NOTE 2 – FIXED ASSETS


Fixed assets at April 30, 2007, December 31, 2006 and 2005 are as follows:

      

 

 
April 30,
December 31,
     
2007
 
2006
 
2005
 
  Property & Equipment
$
2,358
$
2,358
$
0
 
  Telephone System  
1,406
 
1,406
 
0
 
  Less: Accumulated Depreciation  
(639)
 
(432)
 
0
 
                 
  Total Fixed Assets
$
3,125
$
3,332
$
0
 

 

 


The Company’s Property and Equipment and Telephone System are depreciated on a straight-line basis for seven and five years, respectively.   Depreciation expense was $207, $432 and $0 for the four months ended April 30, 2007, the twelve months ended December 31, 2006 and the period from July 19, 2005 (date of inception) to December 31, 2005.



NOTE 3 – ADVANCE FROM RELATED PARTY


As of December 31, 2006 and April 30, 2007, the Company has an outstanding advance from a related party of $20,000.  The balance of the advance was $18,000 as of December 31, 2005.   There are no specified terms attached to the advance. The Company will repay the advance out of future earnings from operations, when possible.  No interest has been imputed, as the date the obligation is payable is currently undeterminable.  







F-9







SURFACE COATINGS, INC.
Notes to the Financial Statements
April 30, 2007, December 31, 2006 and 2005


 

 

 


NOTE 4 – COMMITMENTS AND CONTINGENCIES


The Company leases office space and equipment with expiration dates ranging from August 2008 through August 2009.  Future commitments are as follows:


Remainder of 2007

$  11,285

2008

    14,380

2009

      4,220

2010

 0

2011 and after

             0  


Total

$  29,885


Total rent expense for the four months ended April 30, 2007 , the twelve months ended December 31, 2006 and the period from July 19, 2005 (date of inception) to December 31, 2005  was $2,000, $6,000 and $0.  The equipment lease expense for the four months ended April 30, 2007 , the twelve months ended December 31, 2006 and the period from July 19, 2005 (date of inception) to December 31, 2005 was $3,595, $6,659 and $0.



NOTE 5 – INCOME TAXES


The Company has adopted SFAS No. 109, which requires the use of the liability method in the computation of income tax expense and the current and deferred income taxes payable.  Under SFAS No. 109, income tax expense consists of taxes payable for the year and the changes during the year in deferred assets and liabilities.  Deferred income taxes are recognized for the tax consequences in future years of differences between the tax basis and financial reporting basis of assets and liabilities.  Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.  

The net deferred tax asset generated by the loss carryforward has been fully reserved.  The cumulative net operating losses were $86,517, $67,766 and $4,013 at April 30, 2007, December 31, 2006 and December 31, 2005 respectively, and will expire in the years 2025 through 2026.

The provision for refundable Federal income taxes consists of the following:

     

      2007

2006

2005

Refundable Federal income tax attributable to:

Net Operating loss

  

            $   86,517

    $    67,766

      $    4,013

Less: Valuation allowance

                (86,517)

        (67,766)

           (4,013)

Net refundable amount

            $           0    

    $            0

      $           0



F-10






SURFACE COATINGS, INC.
Notes to the Financial Statements
April 30, 2007, December 31, 2006 and 2005



The cumulative tax effect at the maximum expected rate of 34% of significant items comprising the Company’s net deferred tax amounts are as follows:

 

 
 
     
2007
 
2006
 
2005
 
  Refundable Federal income tax attributable to:
 
     
 
 
 
  Net Operating loss
$
29,416
$
23,040
$
1,364
 
               
     
(29,416)
 
(23,040)
 
(1,364)
 
                 
  Total Fixed Assets
$
0
$
0
$
0
 

 

 


The realization of deferred tax benefits is contingent upon future earnings.



NOTE 6 – FINANCIAL CONDITION AND GOING CONCERN


The Company has an accumulated deficit through April 30, 2007 totaling $86,517 and had negative working capital of $33,558. Because of this accumulated deficit, the Company will require additional working capital to develop its business operations. The Company intends to raise additional working capital either through private placements, public offerings and/or bank financing. There are no assurances that the Company will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placement, public offerings and/or bank financing necessary to support the Company’s working capital requirements. To the extent that funds generated from private placements, public offerings and/or bank financing are insufficient, the Company will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company. If adequate working capital is not available, the Company may not be able to continue its operations.


The Company faces many factors in its ability to continue as a going concern, including but not limited to, competition from larger and better capitalized companies.


Should the above concerns materialize, it is conceivable that the Company would have to suspend or discontinue operations. Management believes that the efforts it has made to promote its operation will continue for the foreseeable future. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.



F-11








Surface Coatings, Inc.


2010 Industrial Blvd, Suite 605

Rockwall, Texas 75087

(972) 722-7351





October 30, 2007



U.S. Securities & Exchange Commission

100  F Street NE

Washington, DC 20549




Dear Sir:



The accompanying financial statements as of September 30, 2007 and for the nine months ended September 30, 2007 have been prepared in accordance with generally accepted accounting principles and include all adjustments which in the opinion of management are necessary in order to make the financial statements not misleading.



Sincerely,



/s/  Richard Pietrykowski

Richard Pietrykowski

President





F-12










[balancesheet2002.gif]

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




F-13








[incomestatement2002.gif]



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


 

F-14

 

 







[equity2002.gif]

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




F-15










[cashflow2002.gif]

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


 

F-16






SURFACE COATINGS, INC.
Notes to the Financial Statements
September 30, 2007




NOTE 1 – NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES


Nature of Activities, History and Organization:


Surface Coatings, Inc. (The “Company”) is the parent company of Surface Armor, LLC, (“Surface Armor”) a company incorporated under the laws of the State of Texas on July 19, 2005. The Company operates as a converter and distributor of temporary surface protection tapes, mainly to the construction industry and for the past two years has been developing its business. The Company is located in Texas and sells its product locally as a distributor and throughout the U.S. over the internet.


Surface Coatings, Inc. ("Surface Coatings"), a private holding company established under the laws of Nevada on February 12, 2007, was formed in order to acquire 100% of the outstanding common stock of Surface Armor.  On February 15, 2007, Surface Coatings issued 5,000,000 shares of common stock in exchange for a 100% equity interest in Surface Armor.  As a result of the share exchange, Surface Armor became the wholly owned subsidiary of Surface Coatings.  As a result, the shareholders of Surface Armor owned a majority of the voting stock of Surface Coatings.  The transaction was regarded as a reverse merger whereby Surface Armor was considered to be the accounting acquirer as its shareholders retained control of Surface Coatings after the exchange, although Surface Coatings is the legal parent company.  The share exchange was treated as a recapitalization of Surface Coatings.  As such, Surface Armor, (and its historical financial statements) is the continuing entity for financial reporting purposes. The financial statements have been prepared as if Surface Coatings had always been the reporting company and then on the share exchange date, had changed its name and reorganized its capital stock. The share exchange transaction was effected to change the state of incorporation to allow the opportunity for a reduction of franchise taxes under the new Texas franchise tax calculations and to facilitate the initial public offering. At the time of the exchange transaction, Surface Coatings had no assets and Surface Armor had assets of approximately $57,000 with equity of approximately $19,500.


The capital structure of Surface Coatings is presented as a consolidated entity as if the transaction had been effected in 2005 to consistently reflect the number of shares outstanding. However, the capital structure as presented is different that the capital structure that appears in the historical statements of Surface Armor, LLC in earlier periods due to the recapitalization accounting.


The Company operates on a calendar year-end.  





F-17






SURFACE COATINGS, INC.
Notes to the Financial Statements
September 30, 2007


 

 


Significant Accounting Policies:


The Company’s management selects accounting principles generally accepted in the United States of America and adopts methods for their application.  The application of accounting principles requires the estimating, matching and timing of revenue and expense.  Below is a summary of certain significant accounting policies selected by management.


Basis of Presentation:


The Company prepares its financial statements on the accrual basis of accounting.


Cash and Cash Equivalents:


All highly liquid investments with original maturities of three months or less are stated at cost which approximates market value.


Inventory:


Inventory is comprised of goods purchased for resale; therefore the Company has no work in process.  The Company uses the specific identification method for inventory tracking and valuation and inventory is stated at the lower of cost or market value.


Fixed Assets


Property and equipment are stated at cost less accumulated depreciation.  Major renewals and improvements are capitalized; minor replacements, maintenance and repairs are charged to current operations.  Depreciation is calculated on a straight-line basis over the five and seven years for the telephone system and property and equipment, respectively.  


Revenue Recognition:


Surface Coatings recognizes revenue once products are shipped.  The following conditions are present for all sales:


·

The selling price is determinable at the time of sale

·

The buyer is obligated to pay the Company generally with 30 day terms

·

If credit is granted, buyer must have economic business operations

·

Surface Coatings has no future obligation after the product ships




F-18





SURFACE COATINGS, INC.
Notes to the Financial Statements
September 30, 2007




All inventory is shipped to customers FOB shipping point.  Currently all revenue is generated from the sale of products and no revenue is earned from services rendered.


Revenue is reduced at the value of the original sale price in the period the product is returned.


Allowance for Doubtful Accounts


The Company maintains an allowance for doubtful accounts on all its  accounts receivable  for  estimated  losses resulting  from the  inability  of its  customers  to make  required payments.  The allowance for doubtful accounts was $-0- for all periods presented..


Income Taxes:


Income from the corporation is taxed at regular corporate rates per the Internal Revenue Code.  There are no provisions for current taxes due to net available operating losses.


Use of Estimates:


The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures.  Accordingly, actual results could differ from those estimates.


Cost of Goods Sold:


The types of costs included in Cost of Goods Sold are:


·

Direct material costs

·

Direct labor

·

Ingoing & outgoing freight

·

Warehousing


Direct Labor does include costs for purchasing and receiving, inspection and warehousing.





F-19






SURFACE COATINGS, INC.
Notes to the Financial Statements
September 30, 2007




Recently Issued Accounting Pronouncements


The Company  does not expect  the  adoption  of  recently  issued  accounting pronouncements  to have a significant  impact on the Company’s  results of  operations, financial position or cash flow.



NOTE 2 – FIXED ASSETS


Fixed assets at September 30, 2007 are as follows:

      

Sept 30,

   2007


Property & Equipment

$  2,358

Telephone System

    1,406

Less:  Accumulated Depreciation

      

 (    639)


Total Fixed Assets    

 

$  3,125

 


The Company’s Property and Equipment and Telephone System are depreciated on a straight-line basis for seven and five years, respectively.   Depreciation expense was $464 for the nine months ended September 30, 2007.



NOTE 3 – ADVANCE FROM RELATED PARTY


As of September 30, 2007, the Company has an outstanding advance from a related party of $20,000. There are no specified terms attached to the advance. The Company will repay the advance out of future earnings from operations, when possible.  No interest has been imputed, as the date the obligation is payable is currently undeterminable.  



NOTE 4 – COMMITMENTS AND CONTINGENCIES


The Company leases office space and equipment with expiration dates ranging from August 2008 through August 2009.  Future commitments are as follows:


Remainder of 2007

$  11,285

2008

    14,380

2009

      4,220

2010

 0

2011 and after

             0  


Total

$  29,885




F-20





SURFACE COATINGS, INC.
Notes to the Financial Statements
September 30, 2007



Total rent expense for the nine months ended September 30, 2007 was $4,500.  The equipment lease expense for the nine months ended September 30, 2007 was $8,089.



NOTE 5 – INCOME TAXES


The Company has adopted SFAS No. 109, which requires the use of the liability method in the computation of income tax expense and the current and deferred income taxes payable.  Under SFAS No. 109, income tax expense consists of taxes payable for the year and the changes during the year in deferred assets and liabilities.  Deferred income taxes are recognized for the tax consequences in future years of differences between the tax basis and financial reporting basis of assets and liabilities.  Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.  

The net deferred tax asset generated by the loss carryforward has been fully reserved.  The cumulative net operating losses were $114,816 at September 30, 2007 and will expire in the years 2025 through 2026.

The provision for refundable Federal income taxes consists of the following:

     

 

     
2007
  Refundable Federal income tax attributable to:    
       
  Net Operating loss
$
114,816
       
  Less: Valuation allowance  
(114,816)
       
  Net refundable amount
$
0

The cumulative tax effect at the maximum expected rate of 34% of significant items comprising the Company's net deferred tax amounts are as follows:

     
2007
  Refundable Federal income tax attributable to:    
       
  Net Operating loss
$
39,037
       
  Less: Valuation allowance  
(39,037)
       
  Net refundable amount
$
0

The realization of deferred tax benefits is contingent upon future earnings.

 

 




F-21






SURFACE COATINGS, INC.
Notes to the Financial Statements
September 30, 2007



NOTE 6 – FINANCIAL CONDITION AND GOING CONCERN


The Company has an accumulated deficit through September 30, 2007 totaling $114,816 and had negative working capital of $62,222. Because of this accumulated deficit, the Company will require additional working capital to develop its business operations. The Company intends to raise additional working capital either through private placements, public offerings and/or bank financing. There are no assurances that the Company will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placement, public offerings and/or bank financing necessary to support the Company’s working capital requirements. To the extent that funds generated from private placements, public offerings and/or bank financing are insufficient, the Company will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company. If adequate working capital is not available, the Company may not be able to continue its operations.


The Company faces many factors in its ability to continue as a going concern, including but not limited to, competition from larger and better capitalized companies.


Should the above concerns materialize, it is conceivable that the Company would have to suspend or discontinue operations. Management believes that the efforts it has made to promote its operation will continue for the foreseeable future. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.




F-22








No dealer, salesman or any other person has been authorized to give any quotation or to make any representations in connection with the offering described herein, other than those contained in this Prospectus.  If given or made, such other information or representation'; must not he relied upon as having been authorized by the Company or by any Underwriter.  This Prospectus does not constitute an offer to sell, or a solicitation of an otter to buy any securities offered hereby in any jurisdiction to any person to whom it is unlawful to make such an offer or solicitation in such jurisdiction.


           TABLE OF CONTENTS

Prospectus Summary

  2

Corporate Information

  2

Summary Financial Data

  2

Risk Factors

  3

Forward Looking Statements

  6

Dilution

  6

Plan of Distribution

  7

Use of Proceeds

  8

Description of Business

10

Management’s Discussion and Plan of Operations

19

Description of Property

20

Director’s, Executive Officers and Significant Employees

21

Remuneration of Officers and Directors

21

Interest of Management and Others in Certain Transactions

22

Principal Shareholders

22

Significant Parties

23

Securities Being Offered

23

Relationship with Issuer of Experts Named in Registration Statement

24

Legal Proceedings

24

Changes In and Disagreements with Accountants on Accounting

and Financial Disclosure

24

Disclosure of Commission Position of Indemnification for

Securities Act Liabilities

24

Legal Matters

24

Experts

24

Dividend Policy

25

Capitalization

25

Transfer Agent

25

Financial Statements

F-1


Until the 90th day after the later of (1) the effective date of the registration statement or (2) the first date on which the securities are offered publicly), 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.




26







PART II

INFORMATION NOT REQUIRED IN PROSPECTUS


Item 1.          Indemnification of Directors and Officers


Our certificate of incorporation provides that the liability of our officers and directors for monetary damages shall be eliminated to the fullest extent permissible under Nevada Revised Statutues, which includes elimination of liability for monetary damages for defense of civil or criminal actions. The provision does not affect a director’s responsibilities under any other laws, such as the federal securities laws or state or federal environmental laws.


Article Thirteen of our Articles of Incorporation states:


No director shall be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided, however, that nothing contained herein shall limit the liability of a director (i) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for any transaction from which the director derived an improper personal benefit, or (iv) for any act or omission occurring prior to their resignation as a director.



Item 2.          Other Expenses of Issuance and Distribution


All expenses, including all allocated general administrative and overhead expenses, related to the offering or the organization of the Company will be borne by the Company. Neither the company or any shareholder has paid any premium on any policy to insure or indemnify directors or officers against any liabilities arising from the registration, offering, or sale of these securities.


The following table sets forth a reasonable itemized statement of all anticipated out-of-pocket and overhead expenses (subject to future contingencies) to be incurred in connection with the distribution of the securities being registered, reflecting the minimum and maximum subscription amounts.


       

                                       Minimum          Maximum

        SEC Filing Fee

$       64

$         64

        Printing and Engraving Expenses

    1,000

      5,000

        Legal Fees and Expenses

    2,500

    15,500

        Edgar Fees

    2,800

      2,800

        Accounting Fees and Expenses

    3,000

      3,000

        Blue Sky Fees and Expenses

    4,500

      7,000

        Miscellaneous

    2,905

         405

        TOTAL   

$16,769             

 $ 33,769


As more shares are sold, we anticipate legal fees to increase due to the liklihood of investors being from other states which could result in state blue sky securities filings. Although our legal fees are not contingent on the number of shares sold, it is likely that the legal fees will increase as our attorney will charge us for these filings. Also, as more shares are sold, our printing expenses will increase.




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Item 3.        Undertakings

   1(a)

Rule 415 Offering.  If the small business issuer is registering securities under Rule 415 of the Securities Act (230.415 of this chapter), that the small business issuer will:

         (1)    File, during any period in which it offers or sells securities, a post-effective amendment to this Registration Statement to:

                (i)    Include any prospectus required by section 10(a)(3) of the Securities Act; and

                (ii)   Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information 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 Commission pursuant to Rule 424(b) (230.424(b) of this chapter) 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)    Include any additional or changed material information on the plan of distribution.

         (2)    For determining liability under the Securities Act, treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time to be the initial bona fide offering.

         (3)    File a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering.

         (4)    For determining liability of the undersigned small business issuer under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned small business issuer undertakes that in a primary offering of securities of the undersigned small business issuer pursuant to his 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 undersigned small business issuer will be a seller to the purchaser and will be considered to offer or sell such securities to purchaser:

    (i)

Any preliminary prospectus or prospectus of the undersigned small business issuer relating to the offering required to be filed pursuant to Rule 424 (230.424 of this chapter);

   (ii)

Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned small business issuer or used or referred to by the undersigned small business issuer;

   (iii)

The portion of any other free writing prospectus relating to the offering containing material information about the undersigned small business issuer or its securities provided by or on behalf of the undersigned small business issuer; and

   (iv)

Any other communication that is an offer in the offering made by the undersigned small business issuer to the purchaser.

 

Registrant hereby undertakes to request acceleration of the effective date of the registration statement under Rule 461 of the Securities Act:

                Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act”) may be permitted to directors, officers and controlling persons of the small business issuer pursuant to the foregoing provisions, or otherwise, the small business issuer has been advised that in the opinion of the



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Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.

In the event that a claim for indemnification against such liabilities (other than payment by the small business issuer of expenses incurred or paid by a director, officer or controlling person of the small business issuer 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 small business issuer will, unless in the opinion of its counsel the matter ahs 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 by the Securities Act and will be governed by the final adjudication of such issue.


Item 4.          Unregistered Securities Issued or Sold Within One Year


In February 2007, the Company issued 5,000,000 shares of common stock in exchange for 100% of the outstanding common stock of Surface Armor, LLC (SAL). Of the 5,000,000 shares issued, the officers received 4,500,000 shares and two unrelated individuals each received 250,000, each receiving their stock for their respective ownership in SAL. This stock was issued under the exemption under the Securities Act of 1933, section 4(2); this section states that transactions by an issuer not involving any public offering is an exempted transaction. The company relied upon this exemption because in a private transaction in February 2007, the shareholders of a private corporation received their respective shares for their ownership of the Company which they received for equity in SAL. The certificates evidencing the securities bear legends stating that the shares may not be offered, sold or otherwise transferred other than pursuant to an effective registration statement under the Securities Act, or an exemption from such registration requirements.





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SIGNATURES


In accordance with the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets the requirements for filing on Form SB-1 and authorized this Registration Statement to be signed on its behalf by the undersigned, in the City of Rockwall, State of Texas, on December 11, 2007.


Surface Coatings, Inc.




By:  /s/  Richard Pietrykowski

      Richard Pietrykowski, President



In accordance with the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons, in the capacities and on the dates stated.



Signature

Title

Date

   

/s/  Richard Pietrykowski

Richard Pietrykowski

President, Secretary, Treasurer, Director

December 11, 2007

   

/s/  Richard Pietrykowski

Richard Pietrykowski

Chief Executive Officer

December 11, 2007

   

/s/  Richard Pietrykowski

Richard Pietrykowski

Chief Financial Officer

December 11, 2007

   

/s/  Richard Pietrykowski

Richard Pietrykowski

Chief Accounting Officer

December 11, 2007

   

/s/  John Donahoe

John Donahoe

Vice-President and Director

December 11, 2007

   




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Item 5.       Exhibits


                The following Exhibits are filed as part of the Registration Statement:


Exhibit No.                   Identification of Exhibit

   2.1*    - Articles of Incorporation

   2.4*    - By Laws

   3.1*    - Specimen Stock Certificate

   4.1*    - Form of Subscription Agreement

 10.1      - Consent of The Hall Group, CPA’s

 11.1*    - Opinion and Consent of The Law Offices of J. Hamilton McMenamy, PC

 


* Filed previously




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Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘SB-1/A’ Filing    Date    Other Filings
9/28/08None on these Dates
12/31/07
Filed on:12/11/07
11/20/07
10/30/07
9/30/07
8/10/07
4/30/07
2/15/07
2/12/07
12/31/06
12/31/05
7/19/05
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