SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-K/A





(Mark One)



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



For the Fiscal Year Ended December 31, 2010



OR



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



From the transition period from ___________
to ____________.



Commission File
Number333-145831



SURFACE COATINGS,
INC.

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



Nevada20-8611799

(State or other jurisdiction of incorporation
or organization) (IRS Employer Identification No.)



2007 Industrial
Blvd., Suite B, Rockwall, Texas 75087

(Address of principal executive offices)



(972) 722-7351

(Issuer's telephone number)



N/A

(Former name, former address and
former fiscal year, if changed since last report)



2010
Industrial Blvd., Suite 605, Rockwall, Texas 75087



Securities registered pursuant to Section 12(b)
of the Act: NONE

Securities registered pursuant to Section 12(g)
of the Act: Common Stock



Indicate by a check mark if the registrant
is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act. Yes [ ] No [X]



Indicate by a check mark if the registrant
is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Act. Yes [ ] No [X]



Indicate by check mark if disclosure
of delinquent filers pursuant to Item 405 of Regulation S-K (s229.405 of this chapter) is not contained herein, and will not be
contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]



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:



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 December 13, 2011, there were 5,429,000 shares of Common Stock
of the issuer outstanding.



2







EXPLANATORY NOTE



This Second Amendment on Form 10-K/A
(this “Amendment”) amends Surface Coatings Inc.’s (the “Registrant”) Annual Report on Form 10-K  for
the fiscal year ended December 31, 2010, which the Registrant previously filed with the Securities and Exchange Commission on March
7, 2011 (the “Original Filing”), and it’s First Amendment, filed on November 1, 2011.





The Registrant is filing this Amendment because
management was made aware of a deficiency contained within the Original Filing, and it’s First Amendment, namely the filings
did not include the financial statements and footnotes in ITEM 8 of Form 10-K.



The Registrant has re-submitted certifications:

- EXHIBIT 31.1: CHIEF EXECUTIVE OFFICER CERTIFICATION (paragraphs 1 through
3)
- EXHIBIT 31.2: CHIEF FINANCIAL OFFICER CERTIFICATION (paragraphs 1 through 3)
- EXHIBIT 32.1: CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT
TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



Except as set forth above, the Original Filing
has not been amended, updated or otherwise modified.



The company acknowledges that:

- The Company is responsible for the adequacy and accuracy of the disclosure in the
filings;
- Staff comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any action with respect to the filings: and
- The Company may not assert staff comments as a defense in any proceeding initiated
by the Commission or any person under the federal securities laws of the United States





3







ITEM 8



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 sheets of Surface Coatings, Inc. as of December 31, 2010 and 2009, and the related consolidated statements of operations,
cash flows and stockholders’ equity for the years 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 audits 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 audits 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 audits provide
a reasonable basis for our opinion.



We were not engaged to examine management’s
assertion about the effectiveness of Surface Coatings, Inc.’s internal control over financial reporting as of December 31,
2010 and 2009 and, accordingly, we do not express an opinion thereon.



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 December
31, 2010 and 2009, and the results of its operations and its cash flows for the years 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 9 to the financial statements,
the Company has 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 cash 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
9.  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



March 2, 2011





4











|SURFACE COATINGS, INC.
        Consolidated Balance Sheets
        As of December 31, 2010 and
        2009
|-----------------------------------------------------------------------------------------------------------



|                                                                                                                                                                   |  | As of
        December 31, 2010 |          |   | As of
        December 31, 2009 |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------- | -------- | - | ------------------------------- | -
|Assets                                                                                                                                                             | 
|Current Assets                                                                                                                                                     |  |                                 |          |   |                                 |  
|Cash and Cash Equivalents                                                                                                                                          |  | $                               | 114,494  |   |                                 | $
|Accounts Receivable (Net of
        Allowance for Doubtful
        Accounts
        of  $7,220 and $5,905)                                                         |  |                                 | 88,463   |   |                                 |  
|Allowance for Estimated Returns                                                                                                                                    |  |                                 | (6,845   | ) |                                 |  
|Prepaid Expenses                                                                                                                                                   |  |                                 | 0        |   |                                 |  
|Inventory                                                                                                                                                          |  |                                 | 57,464   |   |                                 |  
|Total Current Assets                                                                                                                                               |  |                                 | 253,576  |   |                                 |  
|Fixed Assets:                                                                                                                                                      |  |                                 |          |   |                                 |  
|Machinery and Equipment                                                                                                                                            |  |                                 | 18,327   |   |                                 |  
|Leasehold Improvements                                                                                                                                             |  |                                 | 1,406    |   |                                 |  
|Less: Accumulated Depreciation                                                                                                                                     |  |                                 | (10,645  | ) |                                 |  
|Total Fixed Assets                                                                                                                                                 |  |                                 | 9,088    |   |                                 |  
|                                                                                                                                                                   |  |                                 |          |   |                                 |  
|Total Assets                                                                                                                                                       |  | $                               | 262,664  |   |                                 | $
|                                                                                                                                                                   |  |                                 |          |   |                                 |  
|Liabilities and Stockholders’ Equity                                                                                                                               | 
|Current Liabilities                                                                                                                                                |  |                                 |          |   |                                 |  
|Accounts Payable                                                                                                                                                   |  | $                               | 33,028   |   |                                 | $
|Accrued Expenses                                                                                                                                                   |  |                                 | 73,050   |   |                                 |  
|Due to Related Parties                                                                                                                                             |  |                                 | 22,047   |   |                                 |  
|Customer Deposit                                                                                                                                                   |  |                                 | 33,462   |   |                                 |  
|Current Portion of Note Payable to Shareholder                                                                                                                     |  |                                 | 17,469   |   |                                 |  
|Current Portion of Note Payable to President                                                                                                                       |  |                                 | 0        |   |                                 |  
|Current Portion of Capital Lease Obligation                                                                                                                        |  |                                 | 3,336    |   |                                 |  
|Line-of-Credit                                                                                                                                                     |  |                                 | 29,503   |   |                                 |  
|Total Current Liabilities                                                                                                                                          |  |                                 | 211,895  |   |                                 |  
|Long-Term Liabilities                                                                                                                                              |  |                                 |          |   |                                 |  
|Capital Lease Obligation - Equipment                                                                                                                               |  |                                 | 1,116    |   |                                 |  
|Notes Payable to Related Parties (net of current portion)                                                                                                          |  |                                 | 35,779   |   |                                 |  
|Total Long-Term Liabilities                                                                                                                                        |  |                                 | 36,895   |   |                                 |  
|Total Liabilities                                                                                                                                                  |  |                                 | 248,790  |   |                                 |  
|Stockholders’ Equity:                                                                                                                                              |  |                                 |          |   |                                 |  
|Preferred stock, $.001 par value, 20,000,000
        shares
        authorized, -0- shares issued
        and outstanding                                          |  |                                 | 0        |   |                                 |  
|Common stock, $.001 par value, 50,000,000
        shares
        authorized, 5,429,000 and
        5,429,000  shares issued
        and outstanding,  respectively |  |                                 | 5,429    |   |                                 |  
|Paid In Capital                                                                                                                                                    |  |                                 | 265,563  |   |                                 |  
|Accumulated Deficit                                                                                                                                                |  |                                 | (257,118 | ) |                                 |  
|Total Stockholders’ Equity                                                                                                                                         |  |                                 | 13,874   |   |                                 |  
|Total Liabilities and Stockholders’ Equity                                                                                                                         |  | $                               | 262,664  |   |                                 | $







The Accompanying Notes are an Integral Part
of these Consolidated Financial Statements.









5











|SURFACE COATINGS, INC.
        Consolidated Statements of Operations
        For the Years Ended December 31, 2010 and
        2009
|-----------------------------------------------------------------------------------------------------------------------------------





|                                            |  | Year Ended        |          
|------------------------------------------- |  | ----------------- | ---------
|                                            |  | December 31, 2010 |          
|Revenue                                     |  | $                 | 870,856  
|Cost of Sales                               |  |                   | 527,146  
|Gross Profit                                |  |                   | 343,710  
|Operating Expenses:                         |  |                   |          
|Depreciation Expense                        |  |                   | 4,811    
|Advertising Expense                         |  |                   | 37,009   
|General and Administrative                  |  |                   | 319,560  
|Total Operating Expenses                    |  |                   | 361,380  
|                                            |  |                   |          
|Net Operating Income (Loss)                 |  |                   | (17,670  
|                                            |  |                   |          
|Other Income (Expense)                      |  |                   |          
|Loss on Sale of Asset                       |  |                   | 0        
|Interest Expense                            |  |                   | (4,401   
|Total Other Income (Expense)                |  |                   | (4,401   
|                                            |  |                   |          
|Net Income (Loss)                           |  | $                 | (22,071  
|                                            |  |                   |          
|                                            |  |                   |          
|Basic and Diluted Earnings (Loss) per share |  | $                 | (0.00    
|                                            |  |                   |          
|Weighted Average Shares Outstanding:        |  |                   |          
|Basic and Diluted                           |  |                   | 5,429,000





The Accompanying Notes are an Integral Part
of these Consolidated Financial Statements.







6















SURFACE COATINGS, INC.

Consolidated Statement of Stockholders' Equity

For the Years Ended

December 31, 2010and 2009








Common Stock


Additional

Paid-in


Accumulated

DeficitShares


Par Value


Capital





TotalsStockholders’ Equity,

December 31, 2008


5,000,000


$
5,000


$
51,492


$
(192,894)


$
(136,402
)Shares Issued for Cash


429,000



429



214,071







214,500Net (Loss)














(42,153)



(42,153
)Stockholders’ Equity,

December 31, 2009


5,429,000


$
5,429


$
265,563


$
(235,047)


$
35,945Net (Loss)














(22,071)



(22,071)Stockholders’ Equity,

December 31, 2010


5,429,000


$
5,429


$
265,563


$
(257,118)


$
13,874














The Accompanying Notes are an Integral Part of these Consolidated Financial Statements.













7











|SURFACE COATINGS, INC.
        Consolidated Statements of Cash Flows
        For the Years Ended December 31, 2010 and
        2009
|-----------------------------------------------------------------------------------------------------------------------------------



|                                                                           |  | Year Ended December 31, 2010 |         | Year Ended December 31, 2009
|-------------------------------------------------------------------------- |  | ---------------------------- | ------- | ----------------------------
|CASH FLOWS FROM OPERATING ACTIVITIES                                       |  |                              |         |                             
|Net Income (Loss)                                                          |  | $                            | (22,071 | )                           
|                                                                           |  |                              |         |                             
|Adjustments to reconcile net deficit to cash used by operating activities: |  |                              |         |                             
|Depreciation                                                               |  |                              | 4,304   |                             
|Bad Debt Expense                                                           |  |                              | (11,167 | )                           
|Change in Assets and Liabilities:                                          |  |                              |         |                             
|Increase (Decrease)  in Allowance for Sales Returns                        |  |                              | 4,735   |                             
|(Increase) Decrease in Accounts Receivable                                 |  |                              | (38,692 | )                           
|Increase in Due from Related Parties                                       |  |                              | 0       |                             
|(Increase) Decrease  in Inventory                                          |  |                              | (1,778  | )                           
|Increase (Decrease)  in Accounts Payable                                   |  |                              | 16,381  |                             
|Increase  in Accrued Expenses                                              |  |                              | 13,645  |                             
|Increase (Decrease) in Line-of-Credit                                      |  |                              | 10,568  |                             
|Increase in Other Liabilities                                              |  |                              | 33,462  |                             
|CASH FLOWS (USED IN)  OPERATING ACTIVITIES                                 |  |                              | 9,387   |                             
|                                                                           |  |                              |         |                             
|CASH FLOWS FROM INVESTING ACTIVITIES                                       |  |                              |         |                             
|Sale of Fixed Assets                                                       |  |                              | 0       |                             
|Loss on Sale of Fixed Asset                                                |  |                              | 0       |                             
|CASH FLOWS PROVIDED BY INVESTING ACTIVITIES                                |  |                              | 0       |                             
|                                                                           |  |                              |         |                             
|CASH FLOWS FROM FINANCING ACTIVITIES                                       |  |                              |         |                             
|Payments on Shareholder Note                                               |  |                              | (3,145  | )                           
|Proceeds from Sale of Stock                                                |  |                              | 0       |                             
|Capitalized Lease Commitment                                               |  |                              | (3,336  | )                           
|Release of Subscription Deposit                                            |  |                              | 0       |                             
|Payments on Note  to Related Parties                                       |  |                              | (23,371 | )                           
|CASH FLOWS PROVIDED BY  (USED IN) FINANCING ACTIVITIES                     |  |                              | (29,852 | )                           
|                                                                           |  |                              |         |                             
|NET INCREASE IN CASH                                                       |  |                              | (20,465 | )                           
|                                                                           |  |                              |         |                             
|Cash, beginning of period                                                  |  |                              | 134,959 |                             
|Cash, end of period                                                        |  | $                            | 114,494 |                             
|                                                                           |  |                              |         |                             
|                                                                           |  |                              |         |                             
|                                                                           |  |                              |         |                             
|SUPPLEMENTAL CASH FLOW INFORMATION                                         |  |                              |         |                             
|Interest paid                                                              |  | $                            | 4,401   |                             
|Income taxes paid                                                          |  | $                            | 0       |                             
|                                                                           |  |                              |         |                             
|                                                                           |  |                              |         |                             





The Accompanying Notes are an Integral Part
of these Consolidated Financial Statements.





8











|SURFACE COATINGS, INC.
        Notes to the Consolidated Financial Statements
        December 31, 2010
|-------------------------------------------------------------------------------------------------------





NOTE 1 – NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING
POLICIES



Nature of Activities, History and Organization:



Surface Coatings, Inc. (“Surface Coatings”,
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 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.



Surface Coatings is a private holding company
established under the laws of Nevada on February 12, 2007, and was formed in order to acquire 100% of the outstanding membership
interests 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 members of Surface Armor owned a majority of the voting stock of Surface
Coatings.  The transaction was accounted for as a reverse merger whereby Surface Armor was considered to be the accounting
acquirer as its members 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 or liabilities 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.



During 2008, the Company filed a Form S-1 to
register the sale of their common stock.  The registration was declared effective on Ocotber 14, 2008.  Since
then the Company has filed a post effective amendment reducing their minimum amount under the registration from $75,000 to $50,000
which was approved on September 30, 2009.  The offering closed in 2009 and as of December 31, 2009, the Company raised
$214,500 by selling 429,000 shares at $.50 per share.



The Company operates on a calendar year-end.  Due to the
nature of their operations, the Company operates in only one business segment.







9









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.



FASB Accounting Standards Codification:



In June 2009, the Financial Accounting Standards
Board (“FASB”) issued new guidance concerning the organization of authoritative guidance under U.S. Generally Accepted
Accounting Principles (“GAAP”). This new guidance created the FASB Accounting Standards Codification (“Codification”).  The
Codification has become the source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities.
Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative U.S. GAAP
for SEC registrants. The Codification became effective for the Company in its quarter ended September 30, 2009. As the Codification
is not intended to change or alter existing U.S. GAAP, it did not have any impact on the Company’s consolidated financial
statements. On its effective date, the Codification superseded all then-existing non-SEC accounting and reporting standards. All
other nongrandfathered non-SEC accounting literature not included in the Codification will become nonauthoritative.



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.



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.





10









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.



Fair Value of Financial Instruments:



In accordance with the reporting requirements
of ASC 820, “Fair Value Measurements” (formerly SFAS No. 157, Disclosures About Fair Value of Financial  Instruments”),  the
Company  calculates the fair value of its assets and  liabilities which qualify as financial  instruments  under
this statement and includes this additional information in the notes to the financial statements  when the fair value
is different  than the  carrying  value of those financial instruments.



The carrying amounts of cash, cash equivalents,
accounts receivable, accounts payable and notes payable approximate  their fair values due to the short-term maturities
of these instruments.  The carrying amount of the Company’s marketable securities and capital leases approximate
fair value due to the stated interest rates approximating market rates.



Accounts Receivable:



Accounts receivable are carried at their face
amount, less an allowance for doubtful accounts.  On a periodic basis, the Company evaluates accounts receivable and
establishes the allowance for doubtful accounts based on a combination of specific customer circumstances and credit conditions,
based on a history of write offs and collections. The Company’s policy is generally not to charge interest on trade receivables
after the invoice becomes past due.  A receivable is considered past due if payments have not been received within agreed
upon invoice terms and a provision is made for all accounts greater than 60 days from invoice date.   Write-offs
are recorded at a time when a customer receivable is deemed uncollectible.  The Company has a large number of customers
in various industries and geographies and establishes reasonable credit lines to limit credit risk.



Fair Value of Financial Instruments:



In accordance with the reporting requirements
of ASC 820, “Fair Value Measurements” (formerly Statement of Financial Accounting Standards (“SFAS”)
No. 157, “Disclosures About Fair Value of Financial  Instruments”),  the Company  calculates
the fair value of its assets and  liabilities which qualify as financial  instruments  under this
statement and includes this additional information in the notes to the financial statements  when the fair value is different  than
the  carrying  value of those financial instruments.



The carrying amounts of cash, cash equivalents,
accounts receivable, accounts payable and notes payable approximate  their fair values due to the short-term maturities
of these instruments.  The carrying amount of the Company’s marketable securities and capital leases approximate
fair value due to the stated interest rates approximating market rates.



Accounts receivable are carried at their face
amount, less an allowance for doubtful accounts.  On a periodic basis, the Company evaluates accounts receivable and
establishes the allowance for doubtful accounts based on a combination of specific customer circumstances and credit conditions,
based on a history of write offs and collections. The Company’s policy is generally not to charge interest on trade receivables
after the invoice becomes past due.  A receivable is considered past due if payments have not been received within agreed
upon invoice terms and a provision is made for all accounts greater than 60 days from invoice date.   Write-offs
are recorded at a time when a customer receivable is deemed uncollectible.  The Company has a large number of customers
in various industries and geographies and establishes reasonable credit lines to limit credit risk.





11









Inventory Valuation:



Inventory is comprised of goods purchased for
resale; therefore the Company has no raw materials or work in process.  The Company uses the specific identification
and FIFO (“First In, First Out”) methods for inventory tracking and valuation.    Inventory is
stated at the lower of cost or market value.



Fixed Assets:



Fixed assets 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 five to seven years.



Revenue Recognition:



The Company recognizes revenue from the sale
of products in accordance with ASC 605-15 “Revenue Recognition” (formerly  Securities and Exchange Commission
Staff Accounting Bulletin No. 104 ("SAB 104")), "Revenue Recognition in Financial Statements."     Revenue
will be recognized only when all of the following criteria have been met:



| | ● | Persuasive evidence of an arrangement exists;                                                    
| | - | -------------------------------------------------------------------------------------------------
| | ● | Ownership and all risks of loss have been transferred to buyer, which is generally upon shipment;
| | ● | The price is fixed and determinable; and                                                         
| | ● | Collectability is reasonably assured                                                             



All inventory is shipped to customers FOB shipping
point.  The risk of loss transfers to the customer at the time of shipment.  Currently all revenue is generated
from the sale of products and no revenue is earned from services rendered.



The Company’s return policy allows customers
to return products for up to 15 days after shipment.  Customer returns were approximately $14,800 and $5,900 for the
years ended December 31, 2010 and 2009, respectively.  In accordance with Statement of Financial Accounting Standards
("SFAS") No. 48, "Revenue Recognition when Right of Return Exists," revenue is recorded net of a reserve
to estimate returns, markdowns, price concessions and warranty costs. Such reserve is based on management's evaluation of historical
experience and company and industry trends.  As of December 31, 2010 and 2009, the allowance for estimated returns was
$6,845 and $2,110, respectively.



Revenue is recorded net of any sales taxes charged to customers.



Cost of Goods Sold:



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



| | ● | Direct material costs               
| | - | ------------------------------------
| | ● | Purchasing, receiving and inspection
| | ● | Ingoing and outgoing freight        



Advertising:



The Company incurred $37,009 and $31,104 in
advertising costs for the years ended December 31, 2010 and 2009, respectively.





12









Income Taxes:



The Company has adopted ASC 740-10 “Income
Taxes” (formerly 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.   There are no provisions for current taxes due to net available
operating losses.



Comprehensive Income:



ASC 220 “Comprehensive Income”,
(formerly SFAS No. 130, "Reporting Comprehensive Income"), establishes standards for reporting and display of
comprehensive income and its components in a full set of general purpose financial statements.  For the years ended December
31, 2010 and 2009, the Company had no items of other comprehensive income. Therefore, the net loss equals comprehensive loss for
the periods then ended.



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).





NOTE 2 – FIXED ASSETS



Fixed Assets at December 31, 2010 and December 31, 2009 are as follows:



|                                |  | December 31, |         |   | December 31, |  
|------------------------------- |  | ------------ | ------- | - | ------------ | -
|                                |  | 2010         |         |   | 2009         |  
|Property & Equipment            |  | $            | 18,327  |   |              | $
|Telephone System                |  |              | 1,406   |   |              |  
|Less:  Accumulated Depreciation |  |              | (10,645 | ) |              |  
|Total Fixed Assets              |  | $            | 9,088   |   |              | $



The Company’s fixed assets are depreciated
on a straight-line basis over the asset’s useful lives, ranging from five to seven years.   Depreciation expense
was $4,304 and $4,305 for the years ended December 31, 2010 and 2009.  Capitalized lease amortization expense for the
three months ended September 30, 2010 and 2009 was $286 and $857 for the nine months ended September 30, 2010 and 2009.



At December 31, 2010, there was a $8,775 capital
lease asset included in fixed assets with a remaining capitalized lease obligation of $4,452.  At December 31, 2010,
capitalized interest associated with the lease was $1,523.





NOTE 3 – DUE TO RELATED PARTIES



The Company had $22,047 and $32,047 due to a minority shareholder
as of December 31, 2010 and December 31, 2009.





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NOTE 4 – NOTES PAYABLE TO RELATED PARTIES



Note Payable to Shareholder:



The Company’s President has loaned the
Company $33,028 since inception and the balance was converted into a note on January 2, 2007.  This note bears interest
at a rate of 10% and requires monthly payments of $1,066 for 36 months. The total amount owed at December 31, 2010 was $0 and at
December 31, 2009 was $3,145.



Notes Payable to Related Parties:



As of December 31, 2008, the Company owed $74,596
under two note agreements with Trinity Heritage Construction, L.L.C (“Trinity”), a related party:



●	$54,596 was advanced
from Trinity to fund operations (“Trinity Operations Note”).  This note had an interest rate of 10% and was
due in full on March 1, 2010.



●	$20,000 was borrowed
from Trinity in 2005 and 2006 as start-up capital (“Trinity Advance Note”).  This note had an interest of
10% and was due in full on March 1, 2010.



On July 31, 2009 the Company, one of its Vice
Presidents and Directors, John Donahue and Trinity (of which Mr. Donahue is also an officer and shareholder), agreed to combine
the Trinity Operations Note and the Trinity Advance Note into one note.  The new note is for a total of $73,000, ($63,594
of principal and $9,406 of accrued interest) at an interest rate of 6% per annum, payable over five years with monthly payments
of $1,405.90 beginning on August 1, 2009 and ending on July 1, 2014.  At December 31, 2010 the balance on the note was
$53,248 with $14,133 classified as short-term as it is due within one year.  The current portion as of December 31, 2009
was $16,669.





NOTE 5 – LINE OF CREDIT



The Company has a line of credit (“LOC”)
with Bank of America.  The LOC has a $36,000 credit limit, and bears an interest rate of 7.24% per annum.  The
Company is required to make monthly payments equal to 1% of the outstanding balance plus the interest expense for the previous
month.    As of December 31, 2010 and December 31, 2009, the amounts outstanding under this line of credit
were $29,503 and $18,935, respectively.





NOTE 6 – EQUITY



The Company is authorized to issue 20,000,000
preferred shares at a par value of $.001 per share.  There were no shares outstanding as of December 31, 2010 and 2009.



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 5,429,000
and 5,429,000 shares issued and outstanding as of December 31, 2010 and 2009, respectively.



On June 29, 2009 the Company’s post-effective
amendment, to the registration statement which became effective in October, 2008, became effective.  The offering closed
in 2009 and as of September 30, 2010, the Company raised $214,500 by selling 429,000 shares at $.50 per share.



The Company does not have any stock option
plans or stock warrants.





14









NOTE 7 – COMMITMENTS AND CONTINGENCIES



The Company leases a 7,500 square foot office
and warehouse facility in Rockwall, Texas.  The Company signed a five year lease in November 2009 at a rate of $2,250
per month.    The Company has no other lease obligations.    The Company’s future
lease obligations are as follows:



|      |  | Future
        Obligation |        
|----- |  | ------------------------- | -------
|2011  |  |                           | 27,000 
|2012  |  |                           | 27,000 
|2013  |  |                           | 27,000 
|2014  |  |                           | 24,750 
|Total |  | $                         | 105,750





NOTE 8 – INCOME TAXES



The Company has adopted ASC 740-10 “Income
Taxes” (formerly 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 (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 December 31, 2010 and December 31,
2009 are as follows:



Deferred tax asset related to:



|                                |  | December 31, |         | December 31,
|------------------------------- |  | ------------ | ------- | ------------
|                                |  | 2010         |         | 2009        
|Prior Year                      |  | $            | 79,916  |             
|Tax Benefit for Current Period  |  |              | 5,514   |             
|Net Operating Loss Carryforward |  | $            | 85,430  |             
|Less: Valuation Allowance       |  |              | (85,430 | )           
|Net Deferred Tax Asset          |  | $            | 0       |             



The cumulative net operating loss carry-forward is approximately
$257,000 at December 31, 2010 and $235,000 at December 31, 2009, and will expire in the years 2025 through 2030.    The
realization of deferred tax benefits is contingent upon future earnings, therefore, the net deferred tax asset has been fully reserved
at December 31, 2010.





NOTE 9 – FINANCIAL CONDITION AND GOING CONCERN



The Company has an accumulated deficit through
December 31, 2010 of approximately $257,000 and had working capital of approximately $42,000.  Because of this accumulated
deficit, the Company will require additional working capital to develop its business operations.



The Company has experienced no loan defaults,
labor stoppages, legal proceedings or any other operating interruption in 2010.  Therefore, these items will not factor
into whether the business continues as a going concern, and accordingly, Management has not made any plans to dispose of assets
or factor receivables to assist in generating working capital.





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The Company intends to raise additional working
capital either through private placements, public offerings and/or bank financing, or additional loans from Management if there
is need for liquidity.   Management may also consider reducing administrative costs and suspending all bonus and
incentive programs.  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 generated from operations,
financing is not available, or the Management cannot loan sufficient funds, the Company may not be able to continue its 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.





NOTE 10 – RECENT ACCOUNTING PRONOUNCEMENTS



In 2010, the FASB issued the following guidance:



On January 1, 2010, the Company adopted Accounting
Standard Update (“ASU”) 2009-16, “Transfers and Servicing (Topic 860): Accounting for Transfers of Financial
Assets.” This ASU is intended to improve the information provided in financial statements concerning transfers of financial
assets, including the effects of transfers on financial position, financial performance and cash flows, and any continuing involvement
of the transferor with the transferred financial assets. The Company does not have a program to transfer financial assets; therefore,
this ASU had no impact on the Company’s consolidated financial statements.



On January 1, 2010, the Company adopted ASU
2009-17, “Consolidations (Topic 810): Improvements to Financial Reporting by Enterprises Involved with Variable Interest
Entities,” which amended the consolidation guidance applicable to variable interest entities and required additional disclosures
concerning an enterprise’s continuing involvement with variable interest entities. The Company does not have variable interest
entities; therefore, this ASU had no impact on the Company’s consolidated financial statements.



On January 1, 2010, the Company adopted ASU
2010-06, “Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements,”
which added disclosure requirements about transfers in and out of Levels 1 and 2 and separate disclosures about activity relating
to Level 3 measurements and clarifies existing disclosure requirements related to the level of disaggregation and input and valuation
techniques. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements
or the related disclosures.



Management has reviewed these new standards
and believes they had or will have no material impact on the financial statements of the Company.





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NOTE 11 – SUBSEQUENT EVENTS



In May 2009, the FASB issued ASC 855-10, “Subsequent
Events”, (formerly SFAS No. 165, “Subsequent Events,” which establishes general standards for accounting
for and disclosure of events that occur after the balance sheet date but before the financial statements are issued or are available
to be issued. The pronouncement requires the disclosure of the date through which an entity has evaluated subsequent events and
the basis for that date, whether that date represents the date the financial statements were issued or were available to be issued.  In
conjunction with the preparation of these financial statements, an evaluation of subsequent events was performed through March
1, 2011, which is the date the financial statements were issued. No reportable events were noted.





|NOTE 12 – FAIR VALUE OF FINANCIAL INSTRUMENTS
|---------------------------------------------



Accounting Standards Codification (“ASC”)  Topic
820, “Fair Value Measurements and Disclosures” (formally SFAS No. 157), defines fair value, establishes a framework
for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. SFAS
157 was effective for our financial assets and liabilities on January 1, 2008. The FASB delayed the effective date of SFAS
157 for all non-financial assets and non-financial liabilities, except those that are recognized or disclosed at fair value in
the financial statements on a recurring basis (at least annually) to fiscal years beginning after November 15, 2008.



SFAS 157’s valuation techniques are based
on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable
inputs reflect our market assumptions. The Standard classifies these inputs into the following hierarchy:



Level 1 Inputs – Quoted prices
for identical instruments in active markets.

Level 2 Inputs – Quoted prices
for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and
model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 Inputs – Instruments with
primarily unobservable value drivers.



As of December 31, 2010, the Company had no
instruments with Level 1 or Level 2 inputs.



The Company had notes payable to shareholders
and related parties totaling $75,295 at December 31, 2010, which are valued using Level 3 inputs.   Due to the short
maturity of these obligations (one less than one year, the other less than five years), the carrying value of these notes approximates
the fair value in all material respects.



As of December 31, 2010, the Company did not
have any other financial instruments.



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Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned hereunto duly authorized.





SURFACE COATINGS, INC.





|                         |                                                  
|------------------------ | -------------------------------------------------
|By:                      | Richard Pietrykowski                             
|                         | Richard Pietrykowski                             
|                         | Chief Executive Officer & Chief Financial Officer
|                         |                                                  
|Dated: December 14, 2011









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