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EXCEL - IDEA: XBRL DOCUMENT - SURFACE COATINGS, INC. | Financial_Report.xls |
EX-32.1 - CERTIFICATION - SURFACE COATINGS, INC. | ex32one.htm |
EX-31.2 - CERTIFICATION - SURFACE COATINGS, INC. | ex31two.htm |
EX-31.1 - CERTIFICATION - SURFACE COATINGS, INC. | ex31one.htm |
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2012
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE EXCHANGE ACT OF 1934
From the transition period from ___________ to ____________.
Commission File Number 333-145831
SURFACE COATINGS, INC.
(Exact name of small business issuer as specified in its charter)
Nevada | 20-8611799 | |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
1541 E. I30, Suite 140, Rockwall, Texas 75087
(Address of principal executive offices)
(972) 722-4411
(Issuer's telephone number)
_______________________
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:. Yes [ X ] No [ ].
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:
reporting company” in Rule 12b-2 of the Exchange Act:
Large Accelerated Filer | [ ] | Accelerated Filer | [ ] | ||
Non-Accelerated Filer | [ ] | Smaller Reporting Company | [X] |
Indicate by a check mark whether the company is a shell company (as defined by Rule 12b-2 of the Exchange Act: Yes [X ] No [ ].
As of November 10, 2012, there were 3,789,000 shares of Common Stock of the issuer outstanding.
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TABLE OF CONTENTS
PART I FINANCIAL STATEMENTS | ||
Item 1. | Financial Statements | 3 |
Item 2. | Management's Discussion and Analysis or Plan of Operation | 10 |
PART II OTHER INFORMATION | ||
Item 1. | Legal Proceedings | 13 |
Item 2. | Changes in Securities | 13 |
Item 3. | Default upon Senior Securities | 13 |
Item 4. | Submission of Matters to a Vote of Security Holders | 13 |
Item 5. | Other Information | 13 |
Item 6. | Exhibits and Reports on Form 8-K | 13 |
2 |
SURFACE COATINGS, INC. Consolidated Balance Sheets As of September 30, 2012 and December 31, 2011 |
As of September 30, 2012 (Unaudited) | As of December 31, 2011 (Audited) | |||||||
Assets | ||||||||
Current Assets | ||||||||
Cash and Cash Equivalents | $ | 780 | $ | 11,694 | ||||
Assets Held For Sale | — | 354,880 | ||||||
Total Current Assets | 780 | 366,574 | ||||||
Total Assets | $ | 780 | $ | 366,574 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current Liabilities | ||||||||
Accounts Payable | $ | 0 | $ | 265 | ||||
Accrued Expenses | 500 | 500 | ||||||
Due to Related Parties | 46,942 | 22,047 | ||||||
Liabilities Held For Sale | — | 204,452 | ||||||
Total Current Liabilities | 47,442 | 227,264 | ||||||
Total Liabilities | 47,442 | 227,264 | ||||||
Stockholders’ Equity: | ||||||||
Preferred stock, $.001 par value, 20,000,000 shares authorized, -0- shares issued and outstanding | 0 | 0 | ||||||
Common stock, $.001 par value, 50,000,000 shares authorized, 3,789,000 and 5,579,000 shares issued and outstanding, respectively | 3,789 | 5,579 | ||||||
Additional Paid In Capital | 192,354 | 287,913 | ||||||
Accumulated Deficit | (242,805 | ) | (154,182 | ) | ||||
Total Stockholders’ Equity (Deficit) | (46,662 | ) | 139,310 | |||||
Total Liabilities and Stockholders’ Equity | $ | 780 | $ | 366,574 |
The Accompanying Notes are an Integral Part of these Consolidated Financial Statements.
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SURFACE COATINGS, INC. Consolidated Statements of Operations For the Three and Nine Months Ended September 30, 2012 and 2011 (Unaudited) |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2012 | September 30, 2011 | September 30, 2012 | September 30, 2011 | |||||||||||||
Revenue | $ | — | $ | — | $ | — | $ | — | ||||||||
Cost of Sales | — | — | — | — | ||||||||||||
Gross Profit | — | — | — | — | ||||||||||||
Operating Expenses: | ||||||||||||||||
General and Administrative | 37,644 | 3,730 | 61,544 | 22,067 | ||||||||||||
Total Operating Expenses | 37,644 | 3,730 | 61,544 | 22,067 | ||||||||||||
Net Operating Income (Loss) from Continuing Operations | (37,644 | ) | (3,730 | ) | (61,544 | ) | (22,067 | ) | ||||||||
Net Income (Loss) from Discontinued Operations | — | 43,258 | (27,079 | ) | 101,082 | |||||||||||
Net Income (Loss) | $ | (37,644 | ) | $ | 39,528 | $ | (88,623 | ) | $ | 79,015 | ||||||
Basic and Diluted Earnings (Loss) per share from Continuing Operations | $ | (0.01 | ) | $ | 0.00 | $ | (0.01 | ) | $ | 0.00 | ||||||
Basic and Diluted Earnings (Loss) per share from Discontinued Operations | $ | 0.00 | $ | 0.01 | $ | (0.01 | ) | $ | 0.02 | |||||||
Basic and Diluted Earnings (Loss) per share | $ | (0.01 | ) | $ | 0.01 | $ | (0.02 | ) | $ | 0.02 | ||||||
Weighted Average Shares Outstanding: | ||||||||||||||||
Basic and Diluted | 3,785,630 | 5,429,000 | 4,976,847 | 5,429,000 |
The Accompanying Notes are an Integral Part of these Consolidated Financial Statements.
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SURFACE COATINGS, INC. Consolidated Statement of Stockholders' Equity For the Nine Months Ended September 30, 2012 (Unaudited) and the Year Ended December 31, 2011 (Audited) |
Additional | ||||||||||||||||||||
Common Stock | Paid-in | Accumulated | ||||||||||||||||||
Shares | Par Value | Capital | Deficit | Total | ||||||||||||||||
Stockholders’ Equity, December 31, 2010 | 5,429,000 | $ | 5,429 | $ | 265,563 | $ | (257,118 | ) | $ | 13,874 | ||||||||||
Shares Issued for Services | 150,000 | 150 | 22,350 | 22,500 | ||||||||||||||||
Net Income | 102,936 | 102,936 | ||||||||||||||||||
Stockholders’ Equity, December 31, 2011 | 5,579,000 | $ | 5,579 | 287,913 | $ | (154,182 | ) | $ | 139,310 | |||||||||||
Shares cancelled due to sale of Subsidiary to Related Party | (1,800,000 | ) | (1,800 | ) | (178,200 | ) | (180,000 | ) | ||||||||||||
Shares Issued for Services | 10,000 | 10 | 25,990 | 26,000 | ||||||||||||||||
Gain on Sale of Subsidiary to Related Party | 56,651 | 56,651 | ||||||||||||||||||
Net Loss | (88,623 | ) | $ | (88,623 | ) | |||||||||||||||
Stockholders’ Equity, (Deficit), September 30, 2012 | 3,789,000 | $ | 3,789 | $ | 192,354 | $ | (242,805 | ) | $ | (46,662 | ) | |||||||||
The Accompanying Notes are an Integral Part of these Consolidated Financial Statements.
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SURFACE COATINGS, INC. Consolidated Statements of Cash Flows For the Nine months Ended September 30, 2012 and September 30, 2011 (Unaudited) |
Nine months Ended September 30, 2012 | Nine months Ended September 30, 2011 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net Income (Loss) | $ | (88,623 | ) | $ | 118,543 | |||
Adjustments to reconcile net deficit to cash used by operating activities: | ||||||||
Depreciation | 8,341 | 3,088 | ||||||
Stock Issued for Services | 26,000 | 0 | ||||||
Bad Debt Expense | 4,300 | (13,413 | ) | |||||
Increase in Allowance for Sales Returns | 0 | 0 | ||||||
Change in Assets and Liabilities: | ||||||||
(Increase) in Accounts Receivable | (59,491 | ) | (27,408 | ) | ||||
(Increase) in Inventory | (6,787 | ) | (3,387 | ) | ||||
(Increase) in Other Assets | (16,539 | ) | (14,946 | ) | ||||
Increase in Accounts Payable | 14,871 | 35,122 | ||||||
Increase in Related Party Accounts Payable | 29,012 | 0 | ||||||
(Decrease) in Other Liabilities | 0 | (33,462 | ) | |||||
Increase (Decrease) in Accrued Expenses | 3,910 | (35,097 | ) | |||||
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES | (85,006 | ) | 29,040 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Transfer of Cash in Sale of Subsidiary | (22,272 | ) | 0 | |||||
CASH FLOWS PROVIDED BY INVESTING ACTIVITIES | (22,272 | ) | 0 | |||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Proceeds from Advances on (Payments on) Line of Credit | 15,738 | (19,716 | ) | |||||
Proceeds on Note Payable from Shareholder | 0 | 20,000 | ||||||
Payments on Capital Leases | (1,112 | ) | (2,502 | ) | ||||
Payments on Notes to Related Parties | (23,019 | ) | (22,275 | ) | ||||
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES | (8,393 | ) | (24,493 | ) | ||||
NET INCREASE (DECREASE) IN CASH | (115,671 | ) | 4,547 | |||||
Cash, beginning of period | 116,451 | 114,494 | ||||||
Cash, end of period | $ | 780 | $ | 119,041 | ||||
SUPPLEMENTAL CASH FLOW INFORMATION | ||||||||
Interest paid | $ | 4,203 | $ | 2,546 | ||||
Income taxes paid | $ | 0 | $ | 0 | ||||
Stock Issued for Services | $ | 26,000 | $ | 0 | ||||
The Accompanying Notes are an Integral Part of these Consolidated Financial Statements.
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SURFACE COATINGS, INC. Notes to the Consolidated Financial Statements September 30, 2012 (Unaudited) |
NOTE 1 – NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES
Nature of Activities, History and Organization:
Surface Coatings, Inc. (“Surface Coatings”, the “Company”) was 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 five 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.
On June 30, 2012, due to an accumulated deficit of $154,182 at December 31, 2011 and a net loss of $50,979 through six months of 2012, the Registrant divested their wholly owned subsidiary Surface Armor, LLC to our President at the time of the transaction, who has since resigned and been replaced. A majority of shareholders other than the President approved the sale. In conjunction with the disposition, the 1,800,000 shares registered in the name of the President were cancelled. The Company recorded a gain of $56,651 on the transaction, which was recorded as additional paid in capital. Accordingly the company has reported results from operations for six months ending June 30, 2011 related to Surface Armor (under discontinued operations) and have reported the balance sheet of only Surface Coatings, Inc at September 31, 2012 and its expenses for the nine months ended September 31, 2012.
The Company operates on a calendar year-end. The Company is currently evaluating business options which may include, but not be limited to, pursuing an asset acquisition, merger, exchange of capital stock or other business combination with a domestic or foreign business.
Unaudited Interim Financial Statements:
The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States and applicable Securities and Exchange Commission (“SEC”) regulations for interim financial information. These financial statements are unaudited and, in the opinion of management, include all adjustments (consisting of normal recurring accruals) necessary to present fairly the balance sheets, statements of operations and statements of cash flows for the periods presented in accordance with accounting principles generally accepted in the United States. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to SEC rules and regulations. It is presumed that users of this interim financial information have read or have access to the audited financial statements and footnote disclosure for the preceding fiscal year contained in the Form 10-K filed on March 30, 2012. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2012 and should be read in conjunction with the Company’s Form 10-K filing for 2011.
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.
The financial statements and notes are representations of the Company’s management which is responsible for their integrity and objectivity. Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company's system of internal accounting control is designed to assure, among other items, that 1) recorded transactions are valid; 2) valid transactions are recorded; and 3) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods being presented.
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Basis of Presentation:
The Company prepares its financial statements on the accrual basis of accounting. All intercompany balances and transactions are eliminated. Investments in subsidiaries are reported using the equity method.
Cash and Cash Equivalents:
Cash and cash equivalents includes cash in banks with original maturities of three months or less and are stated at cost which approximates market value, which in the opinion of management, are subject to an insignificant risk of loss in value.
Income Taxes:
The Company has adopted ASC 740-10 “Income Taxes”, which requires the use of the liability method in the computation of income tax expense and the current and deferred income taxes payable. There are no provisions for current taxes due to net available operating losses.
Reclassification:
Certain prior year amounts have been reclassified in the consolidated balance sheets, consolidated statements of operations and consolidated statements of cash flows to conform to current period presentation. These reclassifications were not material to the consolidated financial statements and had no effect on net earnings reported for any period.
Earnings per Share:
Earnings per share (basic) is calculated by dividing the net income (loss) by the weighted average number of common shares outstanding for the period covered. As the Company has no potentially dilutive securities, fully diluted earnings per share is identical to earnings per share (basic).
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.
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.
NOTE 2 – DUE TO RELATED PARTIES
The Company had $46,942 and $22,047 due to a minority shareholder , related to funding of operating expenses, as of September 30, 2012 and December 31, 2011, respectively.
NOTE 3 – EQUITY
The Company is authorized to issue 20,000,000 preferred shares at a par value of $.001 per share. There were no preferred shares outstanding as of September 30, 2012 and December 31, 2011.
The Company is authorized to issue 50,000,000 common shares at a par value of $.001 per share. These shares have full voting rights. There were 3,789,000 and 5,579,000 shares issued and outstanding as of September 30, 2012 and December 31, 2011, respectively. In conjunction with the disposition of the wholly owned subsidiary, Surface Armor, the 1,800,000 shares registered in the name of the President were cancelled at a value of $.10 per share or $180,000. The value of the cancelled shares was determined by the closing price of the stock on the day of the cancellation, discounted for a lack of marketability, as the stock was restricted and comprised of a block of approximately 32% of the outstanding shares. When the current President was appointed he was awarded 10,000 shares.
The Company does not have any stock option plans or stock warrants.
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NOTE 4 – INCOME TAXES
The Company has adopted ASC 740-10 “Income Taxes” (which requires the use of the liability method in the computation of income tax expense and the current and deferred income taxes payable (deferred tax liability) or benefit (deferred tax asset). Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.
The cumulative tax effect at the expected tax rate of 25% of significant items comprising the Company’s net deferred tax amounts as of September 30, 2012 and December 31, 2011 are as follows:
Deferred tax asset related to:
September 30, | December 31, | |||||||
2012 | 2011 | |||||||
Prior Year | $ | 59,696 | 85,430 | |||||
Tax Benefit for Current Period | 22,156 | 0 | ||||||
Utilization of NOL | 0 | (25,734 | ) | |||||
Net Operating Loss Carry-forward | $ | 81,852 | $ | 59,696 | ||||
Less: Valuation Allowance | (81,852 | ) | (59,696 | ) | ||||
Net Deferred Tax Asset | $ | 0 | $ | 0 |
The cumulative net operating loss carry-forward is $242,805 at September 30, 2012 and $154,000 at December 31, 2011, and will expire in the years 2026 through 2032. The realization of deferred tax benefits is contingent upon future earnings; therefore, the net deferred tax asset has been fully reserved.
NOTE 5 – SALE OF SUBSIDIARY TO RELATED PARTY
On June 30, 2012, due to an accumulated deficit of $154,182 at December 31, 2011 and a net loss of $50,979 through six months of 2012, the Registrant divested their wholly owned subsidiary Surface Armor, LLC to the President (at the time of the transaction), who has since resigned and been replaced. A majority of shareholders other than the President approved the sale. In conjunction with the disposition, the 1,800,000 shares registered in the name of the President were cancelled. The shares were valued at $.10 per share or $180,000. The value of the cancelled shares was determined by the closing price of the stock on the day of the cancellation, discounted for a lack of marketability, as the stock was restricted and comprised of a block of approximately 32% of the outstanding shares. The Company recorded a gain of $56,651 on the transaction, which was recorded as additional paid in capital.
NOTE 6 – FINANCIAL CONDITION AND GOING CONCERN
The Company has an accumulated deficit through September 30, 2012 totaling $242,805 and had negative working capital of $46,662. Surface Coatings’ consolidated financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Surface Coatings has suffered losses since inception and has no operations to generate revenue or cash flows. These conditions raise substantial doubt as to Surface Coatings’ ability to continue as a going concern.
The Company’s will rely on shareholder advances or will seek alternate capital funding to fund the Company’s activities while the Company takes steps to locate and negotiate with a business entity through acquisition, or merger with, an existing company; however, there can be no assurance these activities will be successful.
NOTE 7 – SUBSEQUENT EVENTS
In conjunction with the preparation of these financial statements, an evaluation of subsequent events was performed through November 14, 2012, which is the date the financial statements were issued. On November 16, 2012 David McCune resigned as an officer and director of Surface Coatings, Inc. The shareholders, by majority consent in lieu of a meeting, appointed Charles Smith to serve as a Director and as President, Chief Executive Officer, Secretary and Treasurer of Surface Coatings, Inc. Otherwise, no reportable events were noted.
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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
This report contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. The Company’s actual results could differ materially from those set forth on the forward looking statements as a result of the risks set forth in the Company’s filings with the Securities and Exchange Commission, general economic conditions, and changes in the assumptions used in making such forward looking statements.
General
On June 30, 2012, due to an accumulated deficit of $154,182 at December 31, 2011 and a net loss of $50,979 through six months of 2012, the Registrant divested our wholly owned subsidiary Surface Armor, LLC to our President (at the time of the transaction), who has since resigned and been replaced. A majority of shareholders, other than the President, approved the sale. In conjunction with the disposition, the 1,800,000 shares registered in the name of the President were cancelled. The shares were valued at $.10 per share or $180,000. The value of the cancelled shares was determined by the closing price of the stock on the day of the cancellation, discounted for a lack of marketability, as the stock was restricted and comprised of a block of approximately 32% of the outstanding shares. The Company recorded a gain of $56,651 on the transaction, which was recorded as additional paid in capital.
RESULTS FOR THE QUARTER ENDED SEPTEMBER 30, 2012
Our second quarter ended on September 30, 2012. Any reference to the end of the fiscal quarter refers to the end of the third quarter for the period discussed herein.
REVENUE. There was no revenue from continuing operations for the three and nine months ended December 31, 2012 and 2011.
OPERATING EXPENSES. Total operating expenses for the three months ended September 30, 2012 and 2011 were $37,644 and $3,730, respectively. Total operating expenses for the nine months ended September 30, 2012 and 2011 were $61,544 and $25,797, respectively. The expenses relate to the continuing operations related audit fees and other services. There was no depreciation expense incurred.
DISCONTINUED OPERATIONS. The net income related to discontinued operations for the three months ending September 30, 2012 and 2011 was $0 and $43,258, respectively. The net income (loss) related to discontinued operations for the nine months ending September 30, 2012 and 2011 was a loss of $27,079 and income of $101,082, respectively.
NET INCOME (LOSS). The net income (loss) for the three months ended September 30, 2012 and 2011 was a loss of $37,644 and income of $39,528, respectively. The net income (loss) for the nine months ending September 30, 2012 and 2011 was a loss of $88,623 and income of $79,015, respectively.
LIQUIDITY AND CAPITAL RESOURCES. Our cash balance was $760 at September 30, 2012. As discussed in Note 6 to the financial statements, the Company has recurring losses and an accumulated deficit. As discussed in Notes 1 and 5 to the financial statements, the Company sold its wholly owned subsidiary as of June 30, 2012. We now have minimal cash flow requirements as we have to cover the costs of public company requirements, while we search for a suitable acquisition candidate.
In addition to the preceding, the Company plans for liquidity needs on a short term and long term basis as follows:
Short Term Liquidity:
The company currently relies on short-term financing of working capital from shareholder advances, when necessary, to fund operations.
Long Term Liquidity:
The company has no long term liquidity plans as it is searching for a suitable acquisition partner.
Capital Resources
We do not expect any significant change to our debt structure and do not anticipate entering into any off-balance sheet arrangements.
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Material Changes in Financial Condition
WORKING CAPITAL: Working Capital decreased from December 31, 2011 to September 30, 2012 by about $186,000, to approximately negative $47,000. This reduction is due to the sale of its operating subsidiary.
STOCKHOLDER’S EQUITY: Stockholder’s Equity decreased by approximately $212,000, as a result of the loss for the period ($88,623) as well as the cancellation of shares ($180,000) and the gain on the sale of its subsidiary ($56,651) and the issuance of 10,000 shares ($26,000).
Employees
At September 30, 2012, the Company had one employee, the President.
Management Advisors
Yorkdale Capital, LLC advises and assists the President with many aspects related to the regulatory filings including assistance with the consolidation of financial statements for the quarterly reviews and year-end audit. Yorkdale Capital, LLC or its principals are shareholders and have advanced the Company $46,942 and $22,047 as September 30, 2012 and December 31, 2011, respectively, for operating expenses.
Item 3: Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
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Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of September 30, 2012. This evaluation was accomplished under the supervision and with the participation of our chief executive officer / principal executive officer, and chief financial officer / principal financial officer who concluded that our disclosure controls and procedures are not effective to ensure that all material information required to be filed in the quarterly Form 10-Q has been made known to them.
For purposes of this section, the term disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Act (15 U.S.C. 78a et seg.) is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure, controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by in our reports filed under the Securities Exchange Act of 1934, as amended (the "Act") is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Based upon an evaluation conducted for the period ended September 30, 2012, our Chief Executive and Chief Financial Officer as of September 30, 2012 and as of the date of this Report, has concluded that as of the end of the periods covered by this report, we have identified the following material weakness of our internal controls:
• | Reliance upon independent financial reporting consultants for review of critical accounting areas and disclosures and material non-standard transaction. |
• | Lack of sufficient accounting staff which results in a lack of segregation of duties necessary for a good system of internal control. |
In order to remedy our existing internal control deficiencies, as our finances allow, we will hire additional accounting staff.
Changes in Internal Controls over Financial Reporting
We have not yet made any changes in our internal controls over financial reporting that occurred during the period covered by this report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II
Item 1 Legal Proceedings
On September 14, 2012 the Company was issued a subpoena to produce documents to the SEC. The subpoena requested all documents and correspondence of the Company by and between its auditors, advisors and subsidiaries for the period January 1, 2007 through the present. This is a non-public, fact-finding inquiry and the direction and scope of the SEC inquiry is undetermined at this point.
Items No. 1A, 2, 3, 4, 5 - Not Applicable.
Item No. 6 - Exhibits and Reports on Form 8-K
(a) | Three Form 8-K’s were filed since March 31, 2012: |
July 9, 2012 announcing the resignation of Rick Pietrykowski and Jeannie Pietrykowski from their positions as officers and directors and announcing the appointment of David McCune as President and Director.
August 1, 2012 announcing the disposition of its wholly owned subsidiary, Surface Armor, LLC.
August 3, 2012 announcing the change of address.
November 16, 2012 announcing David McCune resigned as an officer and director of Surface Coatings, Inc. The shareholders, by majority consent in lieu of a meeting, appointed Charles Smith to serve as a Director and as President, Chief Executive Officer, Secretary and Treasurer of Surface Coatings, Inc.
(b) Exhibits
Exhibit Number | Name of Exhibit | |
31.1 | Certification of Chief Executive Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2 | Certification of Chief Financial Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1 | Certification of Chief Executive Officer and Chief Financial Officer, pursuant to 18 United States Code Section 1350, as enacted by Section 906 of the Sarbanes-Oxley Act of 2002. |
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
Surface Coatings, Inc.
By /s/ Charles Smith
Director, President, Chief Executive Officer, Secretary and Treasurer
Date: November 19, 2012
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