SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q/A

 

 

(Mark One)

 

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2013

 

OR

 

[    ] TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE EXCHANGE ACT OF 1934

 

From the transition period from ___________ to ____________.

 

Commission File Number 333-166057

 

SPECIALTY CONTRACTORS, INC.

(Exact name of small business issuer as specified in its charter)

 

Nevada		27-1897718
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

 

1541 E. I-30, Rockwall, Texas 75087

(Address of principal executive offices)

 

  (214) 457-1227

(Issuer's telephone number)

 

N/A

(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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ ]   No [X].

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

 

 

	Large Accelerated Filer [  ]	Accelerated Filer [  ]
	Non-Accelerated Filer [  ]	Smaller Reporting Company [X]

 

 

Indicate by a check mark whether the company is a shell company (as defined by Rule 12b-2 of the Exchange Act:   Yes [ ]   No [X].

 

As of October 30, 2013 there were 6,787,834 shares of Common Stock of the issuer outstanding.

 

 

 

 

EXPLANATORY NOTE

 

Specialty Contractors, Inc.( the “Company”) is filing this Amendment No. 1 to Form 10-Q for the quarter ended June 30, 2013, filed with the Securities and Exchange Commission on June 20, 2013 (the “Quarterly Report”) for the purpose of amending Part I, Item 1. Financial Statements to provide restated financial statements and amended footnotes thereto to reflect the treatment of the disposition of its subsidiary on February 28, 2013 and the subsequent purchase of Alpha Wise Assets, LLC (AWA).  The disposition of the Company’s subsidiary was originally reported under ASC 205-20. Subsequently, it was determined that immediately following the disposition and prior to the acquisition of AWA, the Company was a shell company and the acquisition of AWA should have been treated as a reverse merger.  The balance sheet, statement of cash flow, statement of operations and statement of shareholders equity herein have been restated to take into account the reporting of the acquisition as a reverse merger. The subsequent events footnote to the financial statements has also been amended and updated accordingly. Except for the inclusion of restated financial statements and amended notes thereto, this Form 10-Q/A has not been updated to reflect events that occurred after June 20, 2013, the filing date of the Quarterly Report. Accordingly, this Form 10-Q/A should be read in conjunction with the Company’s filings made with the SEC subsequent to the filing of the Quarterly Report, including any amendments to those filings.  This Form 10-Q/A includes Exhibits 31.1, 31.2, 32.1 and 32.2, new certifications by the company’s principal executive officer and principal financial officer as required by Rule 12b-15.

 

 

 

 

 

TABLE OF CONTENTS

 

 

	PART I FINANCIAL STATEMENTS
Item 1	Consolidated Financial Statements	4
Item 2	Management’s Discussion and Analysis or Plan of Operation	12
	PART II OTHER INFORMATION
Item 1	Legal Proceedings	14
Item 2	Changes in Securities	14
Item 3	Default upon Senior Securities	14
Item 4	Submission of Matters to a Vote of Security Holders	14
Item 5	Other Information	14
Item 6	Exhibits	14

 

 

 

 

 

 

 

 

 

SPECIALTY CONTRACTORS, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS			June 30, 2013				December 31, 2012
Current assets
Cash		$	16,135			$	4,773
Inventory			210,289				174,151
Total current assets			226,424				178,924
TOTAL ASSETS		$	226,424			$	178,924
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses		$	3,686			$	—
Accounts payable- related party			7,303				3,203
Line of credit			196,976				176,086
Total current liabilities			207,965				179,289
TOTAL LIABILITIES			207,965				179,289
Stockholders’ equity
Preferred stock, $0.001 par value, 20,000,000 authorized,
-0-  issued and outstanding at June 30, 2013 and December 31, 2012			—				—
Common stock, $0.001 par value, 50,000,000 authorized,
6,787,834 and 6,777,834 issued and outstanding at June 30, 2013 and December 31, 2012,  respectively			6,788				6,778
Additional paid-in-capital			73,454				23,222
Accumulated deficit			(61,783	)			(30,365	)
Total stockholders’ equity			18,459				(365	)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	226,424			$	178,924
See accompanying summary of accounting policies and notes to unaudited consolidated financial statements.

 

 

 

SPECIALTY CONTRACTORS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2013 AND 2012 AND THE SIX MONTHS ENDED JUNE 30, 2013 AND THE PERIOD FROM INCEPTION (FEBRUARY 23, 2012) TO JUNE 30, 2012 (Unaudited)

 

		Three Months Ended								Six Months Ended				Period from Inception (February 23, 2012) to
		June 30, 2013				June 30, 2012				June 30, 2013				June 30, 2012
Revenue		$	—			$	—			$	—			$	—
Cost of revenues			—				—				—				—
Gross Profit			—				—				—				—
Operating Expenses:
General and Administrative			18,443				—				31,419				30,365
Total Operating Expenses			18,443				—				31,419				30,365
Operating Loss			(18,443	)			—				(31,419	)			(30,365	)
Other Expense
Interest Income			1				—				1				—
Total Expense			1				—				1				—
Net Loss		$	(18,442	)		$	—			$	(31,418	)		$	(30,365	)
Basic and Diluted Loss per share		$	(0.00	)		$	0.00			$	(0.00	)		$	(0.00	)
Weighted Average Shares Outstanding:
Basic and Diluted			6,787,834				6,777,834				6,784,519				6,777,834

 

 

 

See accompanying summary of accounting policies and notes to unaudited consolidated financial statements.

 

 

SPECIALTY CONTRACTORS, INC. CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) FOR THE SIX MONTHS ENDED JUNE 30, 2013 AND THE PERIOD FROM INCEPTION (FEBRUARY 23, 2012) TO DECEMBER 31, 2012 (Unaudited)

 

 

		Common Stock								Paid-In				Accumulated
		Shares				Amount				Capital				(Deficit)				Totals
Stockholders' Equity (Deficit),
February 23, 2012 (Inception)			—			$	—			$	—			$	—			$	—
Issuance of Common Stock for Services			6,777,834				6,778				23,222								30,000
Net Loss															(30,365	)			(30,365	)
Stockholders' Equity (Deficit),
December 31, 2012			6,777,834			$	6,778			$	23,222			$	(30,365	)		$	(365)
Effect of Reverse Recapitalization											45,142								45,142
Issuance of Common Stock for Services			10,000				10				5,090								5,100
Net Loss															(31,418	)			(31,418	)
Stockholders' Equity (Deficit),
June 30, 2013			6,787,834			$	6,788			$	73,454			$	(61,783	)		$	18,459

 

 

See accompanying summary of accounting policies and notes to unaudited consolidated financial statements.

 

 

SPECIALTY CONTRACTORS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2013 AND THE PERIOD FROM INCEPTION (FEBRUARY 23, 2012) TO JUNE 30, 2012 (Unaudited)
			June 30, 2013				June 30, 2012
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	(31,418	)		$	(30,365	)
Adjustments to reconcile net loss to net cash
used by operating activities:
Stock Issued for Services			5,100				30,000
Changes in operating assets and liabilities:
Inventory			(12,675	)			(110,076	)
Accounts payable			(2,973	)			4,328
Accrued expenses			—				2,703
Due to Shareholder			4,500				—
NET CASH USED BY OPERATING ACTIVITIES			(37,466	)			(103,410	)
CASH FLOWS FROM INVESTING ACTIVITIES
Cash received from reverse merger			50,662				—
NET CASH PROVIDED BY INVESTING ACTIVITIES			50,662				—
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowing on Building Line of Credit			2,939				103,410
NET CASH (USED) PROVIDE BY  FINANCING ACTIVITIES			2,939				103,410
NET CHANGE IN CASH AND CASH EQUIVALENTS			16,135				—
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD			—				—
CASH AND CASH EQUIVALENTS AT END OF PERIOD		$	16,135			$	—
SUPPLEMENTAL DISCLOSURES
Cash Paid During the Period for Interest Expense		$	—			$	—
Cash Paid During the Period for Taxes		$	—			$	—
Noncash financing and investing activities:
Accounts payable related to the reverse merger		$	5,520			$	—
See accompanying summary of accounting policies and notes to the unaudited consolidated financial statements.

  

 

SPECIALTY CONTRACTORS, INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

(Unaudited)

 

NOTE 1 – NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES

 

Nature of Activities, History and Organization:

 

Specialty Contractors, Inc. (“Specialty”, the “Company”) was incorporated under the laws of the State of Nevada on November 18, 2009.  The Company operates as a home builder in the State of Texas and operates through its wholly owned subsidiary Alpha Wise Assets, LLC, formed in the State of Texas on February 23, 2012.

 

On February 28, 2013, Specialty Contractors, Inc. ("Specialty"), acquired 100% of the outstanding common stock of Alpha Wise Assets, LLC (“Alpha”).  On February 28, 2013, Specialty purchased 5,070,000 shares of its common stock from its President and simultaneously issued it in exchange for a 100% equity interest in Alpha.  As a result of the transaction, Alpha became the wholly owned subsidiary of Specialty and the shareholders of Alpha owned a majority of the voting stock of Specialty.  The transaction was regarded as a reverse recapitalization whereby Alpha was considered to be the accounting acquirer as its shareholders controlled of Specialty after the transaction, although Specialty is the legal parent company.  The share exchange was treated as a recapitalization of Specialty.  As such, Alpha (and its historical financial statements) is the continuing entity for financial reporting purposes. The financial statements have been prepared as if Alpha had always been the reporting company and, on the share transaction date, changed its name and reorganized its capital stock.

 

The Company operates on a calendar year-end.   The Company operates in only one business segment.

 

Basis of Accounting and Consolidation:

 

The Company prepares its financial statements on the accrual basis of accounting.  It had one subsidiary, Alpha Wise Assets, LLC, which is consolidated. All intercompany balances and transactions are eliminated.  Investments in subsidiaries are reported using the consolidation method.

 

The accompanying unaudited interim consolidated 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 consolidated financial statements are unaudited and, in the opinion of management, include all adjustments (consisting of normal recurring accruals) necessary to make the consolidated financial statements not misleading, and 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 consolidated financial information have read or have access to the audited consolidated financial statements and footnote disclosure for the preceding fiscal year. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2013. Notes to the consolidated financial statements which would substantially duplicate the disclosure contained in the audited consolidated financial statements for the most recent fiscal year ended December 31, 2012 as reported in form 10-K have been omitted.

 

These financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company anticipates future losses in the development of its business raising substantial doubt about the Company’s ability to continue as a going concern.

 

Going Concern

 

At June 30, 2013, the Company has limited revenues and cash flows. As such, the accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company does not have sufficient working capital for its planned activities, which raises substantial doubt about its ability to continue as a going concern.

 

Continuation of the company as a going concern is dependent upon obtaining additional working capital and the management of the Company will accomplish this objective through short-term loans from related parties and additional equity investments, if necessary, which will enable the Company to continue operations for the coming year.

 

Reclassifications

 

Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation.

 

 

 

SPECIALTY CONTRACTORS, INC.

Notes to the Consolidated Financial Statements

June 30, 2013

(Unaudited)

 

NOTE 1 – NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES (CON’T)

 

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--INVENTORY

 

Real estate is recorded at cost. Costs related to the acquisition, development, construction and improvement of properties are capitalized.  Interest costs are capitalized until construction is substantially complete. When sold or otherwise disposed of, the related asset cost and accumulated depreciation are removed from the respective accounts and the net difference, less any amount realized from disposition,  is reflected in income. Ordinary repairs and maintenance that do not extend the life of the asset are expensed as incurred. Inventory of real estate was $210,289 and $197,614 at June 30, 2013 and February 28, 2013, respectively.

 

 

NOTE 3 – LINE OF CREDIT

 

At June 30, 2013 and December 31, 2012, the Company has a line of credit (“LOC”) with Independent Bank.  The LOC has a $208,500 credit limit, and bears an interest rate of 5.25% per annum, due September 2, 2013. The Company is in process of extending the note until September 3, 2014. Our CFO has guaranteed the building loan for the home which is currently listed for sale.  As of September 30, 2013 and December 31, 2012, the amount outstanding under this line of credit was $196,976 and $176,086, respectively.

 

The Company has pledged 100% of the inventory owned by Specialty Contractors, Inc. or its affiliates as collateral against this line of credit.  The line of credit has no financial covenants.

  

 

NOTE 4 – RELATED PARTY TRANSACTIONS

 

In March 2013, the Company issued the President 10,000 common shares valued at $5,100 for his services as an officer.

 

During the six months ended June 30, 2013, $5,250 was paid to Yorkdale Capital, a related party entity, partly owned by Charles Smith, CFO, for services and expenses paid on behalf of the Company and $4,500 was due as of June 30, 2013.

 

In addition, $2,803 was due to a related party as of June 30, 2013. This amount is unsecured, noninterest bearing and due on demand.

 

NOTE 5 -- ASSET PURCHASE AGREEMENT

 

On February 28, 2013, we purchased 100% of Alpha Wise Assets, LLC (“Alpha Wise”), a Texas limited liability company (the “Seller”). The asset purchase was determined to constitute a reverse capitalization and therefore reverse merger accounting has been followed, whereby Alpha was considered to be the accounting acquirer and as such, Alpha (and its historical financial statements) is the continuing entity for financial reporting purposes. The financial statements have been prepared as if Alpha had always been the reporting company and, on the share transaction date, changed its name and reorganized its capital stock.

 

The purchase price for the assets was $30,000 (the “Purchase Price”) which was paid to repurchase 5,970,000 shares of common stock which was then immediately reissued for 100% of Alpha Wise. The Company filed a Form 8-K on July 31, 2013 with the audit of Alpha in accordance with Generally Accepted Accounting Principles (GAAP) and as required by the rules and regulations as promulgated by the Securities and Exchange Commission.

 

 

 

NOTE 6 – JUNE 30, 2013 RESTATEMENT

 

The Company identified an error relating to the accounting of the disposition of a subsidiary.  On February 28, 2013, the Company sold its subsidiary, Texas Deco Pierre, LLC (TDP) to the former President of the Company for indemnification for all acts and activities that may result from the operation of TDP and then immediately purchased another subsidiary, Alpha Wise Assets, LLC (AWA). Applying ASC 205-20, we reported the results of TDP as a discontinued operation. However, subsequently, we determined that immediately following the disposition of TDP and immediately preceding the acquisition of AWA, the Company was a shell company and the acquisition of AWA should have been treated as a reverse merger.

 

The effect of the error is to decrease net loss by $21,366 for the six months ended June 30, 2012. Net loss per share for all periods was unchanged.

 

The Company determined that the misstated amount of $21,366 is material to the June 30, 2013 financial statements.  As a result, the Company amended and restated the interim financial statements for the six months ended June 30, 2013.

 

The following tables reflect the impact of the restatement to the consolidated balance sheet, the consolidated statement of operations and the consolidated statement of cash flows.

 

		June 30, 2013
Consolidated Balance Sheet		As Previously Reported				Adjustment				As Restated
Stockholders’ Deficit
Common Stock		$	6,788			$	--			$	6,788
Additional Paid-in Capital			315,188				(241,734	)			73,454
Accumulated Deficit			(303,617	)			241,834				(61,783	)
Total Stockholder’ Deficit		$	18,359			$	100			$	18,459

 

		For the Six Months Ended June 30, 2013
Consolidated Statement of Operations		As Previously Reported				Adjustment				As Restated
General and Administrative		$	32,589			$	(1,170	)		$	31,419
Loss on Acquisition of Alpha Wise			28,528				28,528				--
Total Operating Expense			(61,117	)			29,698				(31,419	)
OTHER EXPENSE
Interest Expense			2				(1	)			1
Total Other Expense			2				(1	)			1
Loss Before Discontinued Operations			(61,115	)			29,697				(31,418	)
Gain from Discontinued Operations			16,294				(16,294	)			--
Loss From Discontinued Operations			(7,963	)			7,963
Net Loss		$	(52,784	)		$	21,366			$	(31,418	)
Net Loss Per Share – Basic and Diluted		$	(0.00	)						$	(0.00	)

 

		Period from February 23, 2012 (Inception) to June 30, 2012
Consolidated Statement of Operations		As Previously Reported				Adjustment				As Restated
General, Administrative and Depreciation		$	25,659			$	4,706			$	30,365
Total Operating Expense			(25,659	)			(4,706	)			(30,365	)
Interest Expense			(946	)			946				--
Net Loss			(26,605	)			(3,760	)			(30,365	)
Loss From Discontinued Operations			(7,374	)			7,374
Net Loss		$	(33,979	)		$	3,614			$	(30,365	)

 

 

 

 

		For the Six Months Ended June 30, 2013
Consolidated Statement of Cash Flows		As Previously Reported				Adjustment				As Restated
Net Loss		$	(52,784	)		$	21,366			$	(31,418	)
Net Cash Provided by Operating Activities			(31,905	)			(5,561	)			(37,466	)
Net Cash Provided by Investing Activities			4,236				46,426				50,662
Net Cash Provided by Financing Activities			(47,828	)			50,767				2,939
Net Change in Cash and Cash Equivalents			(75,497	)			91,632				16,135
Cash and Cash Equivalents at Beginning of Period			91,632				(91,632	)			--
Cash and Cash Equivalents at End of Period		$	16,135			$	--			$	16,135

 

 

		Period from February 23, 2012 (Inception) to June 30, 2012
Consolidated Statement of Cash Flows		As Previously Reported				Adjustment				As Restated
Net Loss		$	(32,479	)		$	(2,114	)		$	(30,365	)
Net Cash Used by Operating Activities			(16,508	)			(86,902	)			(103,410	)
Net Cash Used by Investing Activities			--				--				--
Net Cash Provided by Financing Activities			1,300				102,110				103,410
Net Change in Cash and Cash Equivalents			(15,208	)			15,208				--
Cash and Cash Equivalents at Beginning of Period			153,642				(153,642	)			--
Cash and Cash Equivalents at End of Period		$	138,434			$	(138,434	)		$	--

 

 

December 31, 2012 Financial Statements

 

The error only affected the financial statements from the date of disposition of its subsidiary. Therefore, prior SEC filings, including the December 31, 2012 Form 10-K will not be amended or restated.

 

 

ITEM 2: Management’s Discussion and Analysis

 

EXECUTIVE OVERVIEW:

 

The national economy and the housing market saw strengthening and we saw an increase in sales in our area due to that. We anticipate that our home in inventory will sell in 2013.

 

At June 30, 2013, we have a home in inventory that we are finishing so it will be ready to put on the market. We expect to sell this property in 2013.

 

We are in the home building business and we believe that given the times we live in of low interest rates and the ability to get financing for construction, that the Company will be able to generate cash flow from operations by taking advantage of market conditions in the home building industry. Additionally, the current Administration and Congress are discussing rules to relax the lending standards which would provide greater access to home mortgage loans for people that would not qualify under current standards. Additionally, the Federal Reserve has indicated that it will continue to pursue a policy of ‘easy money’ which indicates that low interest rates will be around at least for the next year or two.

 

Result of our operations for the three months ended June 30, 2013 and 2012 and for the six months ended June 30, 2013 and period from inception (February 23, 2012) to June 30, 2012.

 

REVENUE:  Revenue was $0 for both the three and six months ended June 30, 2013 and in the three months ended June 30, 2012 and the period from inception (February 23, 2012) to June 30, 2012.

 

COST OF REVENUE: Cost of revenues was $0 for both the three and six months ended June 30, 2013 and in the three months ended June 30, 2012 and the period from inception (February 23, 2012) to June 30, 2012.

 

OPERATING EXPENSES. Operating expenses for the three months ended June 30, 2013 and 2012 were $18,443 and $0 respectively. Operating expenses for the six months ended June 30, 2013 and period from inception (February 23, 2012) to June 30, 2012 were $31,419 and $30,365 respectively.

 

OTHER INCOME AND EXPENSE. Other income and expense included interest income of $1 and $0 for the three months ended June 30, 2013 and 2012 respectively, and $1 and $0 for the six months ended June 30, 2013 and the period from inception (February 23, 2012) to September 30, 2012 respectively.

 

NET LOSS. Our net loss for the three months ended June 30, 2013 and 2012 were $18,442 and $0 respectively. Our net loss for the six months ended June 30, 2013 and period from inception (February 23, 2012) to June 30, 2012 were $31,418 and $30,365 respectively.

 

LIQUIDITY AND CAPITAL RESOURCES.  The Company believes it will have to raise additional capital to fund its business operations for the next twelve months.

 

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 relies on one primary funding source for short term liquidity needs: advances from the line of credit. The Company has borrowed $196,976 and $176,086 as of June 30, 2013 and December 31, 2012, respectively, for working capital.  The line of credit accrues interest at 5.25%. We finance our inventory through the line of credit. We do not have any commitments for equity funding at this time. As such there is no assurance that we can raise additional capital from external sources, the failure of which could cause us to curtail operations.

 

Long Term Liquidity:

 

The long term liquidity needs of the Company are projected to be met primarily through the cash flow provided by operations. Cash flow used in Operating Activities for the three months ended June 30, 2013 was $37,466.  We anticipate cash flow from operating activities to improve. Future cash flow will be derived from line of credit advances to fund our expected loss.

 

GOING CONCERN: The Company has limited operations and has working capital of $18,359 and an accumulated deficit of $61,883 as of June 30, 2013. Because of this accumulated deficit and limited operations, the Company may require additional working capital to survive. The Company intends to raise additional working capital either through private placements or bank loans or loans from management if there is need for liquidity to alleviate the substantial doubt to continuing as a going concern. There are no assurances that the Company will be able to do any of these. 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 cannot be generated, the Company may not be able to continue its operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

 

Item 3:  Quantitative and Qualitative Disclosures About Market Risk

 

Not applicable.

 

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 June 30, 2013.  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.

 

Based upon an evaluation conducted for the period ended June 30, 2013, our Chief Executive Officer and Chief Financial Officer as of June 30, 2013 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 third party 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.

 

Misstatement of previously issued financial statements by treating the disposition of a subsidiary and purchase of another subsidiary as discontinued operations when it the purchase of the subsidiary subsequent to disposition should have been treated as a reverse merger. This resulted in amended filings for Form 8-K and Form 10-Q for the periods ended March 31, 2013 and June 30, 2013

 

 

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

 

There were no changes in our internal controls over financial reporting that occurred during the period covered by this report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 

PART II

 

Items 1, 2, 3 and 4 Not Applicable

 

 

Item 5. Other information

 

(a)

Reports on Form 8-K

 

A Form 8-K/A was filed on July 31, 2013 to file the audit of Alpha Wise Assets, LLC, the entity purchased by the Company on February 28, 2013, along with the related purchase documents.

 

 

(b)  None

 

 

Item No. 6 - Exhibits

 

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.

 

Specialty Contractors, Inc.

 

 

By /s/ Michael Goode

Michael Goode, Chief Executive Officer

 

Date: February 3, 2014