Ciao (CIAU) CORRESP Correspondence with SEC

SPECIALTY CONTRACTORS, INC.

1541 E. I-30

Rockwall, Texas 75087

November 5, 2010

Ms. Pamela Long

Mr. Ernest Greene

Ms. Lisa Haynes

U.S. Securities and Exchange Commission

100 F Street NE

Washington, DC 20549

RE:	Specialty Contractors, Inc.
	Registration Statement on Form S-1
	Filed April 14, 2010
	File No. 333-166057

Dear Ms. Long, Mr. Greene and Ms. Haynes:

Following are responses to your comment letter dated August 10, 2010.

#1

Answer

We have updated the item numbers to conform with Regulation S-K.

#2

Answer

Item 501(b)(10)(iv) of regulation S-K requires us to use the legend ‘Subject to Completion’ if we plan to use the prospectus before the effective date of the registration statement. Since we will not be using the prospectus before the effective date of the registration statement, we have removed the legend ‘Subject to Completion’ because it is not applicable.

#3

Answer

A risk factor has been added to address the fact that we rely on a limited number of customers for our revenue and few of our customers are repeat customers.

#4

Answer

Many of the references to “Officers” have been changed. However, there are some references that we would like to leave plural, as our bylaws reference ‘officers’ and we would like to keep the terms consistent. We feel the current references to ‘officers’ do not make the reader think that there is more than one officer, but instead reinforce the terms within the Articles of Incorporation.

#5

Answer

We have updated our disclosures through September 30, 2010.

#6

Answer

Both Specialty Contractors, Inc. and our subsidiary, Texas Deco Pierre, LLC, were formed around the same time. Texas Deco Pierre, LLC was formed on October 15th, 2009, and Specialty Contractors, Inc. was formed on November 23rd, 2009.

Our subsidiary, Texas Deco Pierre, LLC was formed with the intent to make it the operating subsidiary of Specialty Contractors, Inc, which was done when we started operations in November. It is true that our sole officer and director did not have any experience in the industry, except for acting as a general contractor when constructing a building for his prior business.

#7

Answer

Our subsidiary was formed on October 15th, 2009, but began operations in November, 2009.

#8

Answer

We note your comment and have amended our ‘Description of Business’ section to explain our business as currently conducted.

#9

Answer

We note your comment and have explained why we believe the local and regional economies are healthy and have added additional detail to the subsequent paragraphs.

#10

Answer

We note your comment and have revised our disclosure to include the nature of the work performed.

#11

Answer

We have revised this disclosure, One or a Few Major Customers, for the year ended December 31, 2009 and for the nine months ended September 30, 2010 as we have updated all financial data and disclosures through September 30, 2010.

#12

Answer

We note your comment and have changed the caption to “Capitalization Table”.

2

#13

Answer

Our line-of-credit (“LOC”) with GCG Ventures (“GCG”) has a credit limit of $100,000 and an interest rate of 5% per annum.  The LOC is a revolving LOC with no payment terms and a due date of May 31st, 2012.

The LOC impacts our liquidity as we have the ability to draw up to a total of $100,000 and as of September 30, 2010 there was $22,511.22 credit available on the LOC as the balance was $77,488.78.  It provides the Company with a safety net while establishing and growing the business.

#14

Answer

We note your comment and have included a discussion on our results of operations from Inception to December 31, 2009.

#15

Answer

We note your comment and have removed the discussion of this non-GAAP measure.

#16

Answer

We have included a Revenue Recognition critical accounting policy and have explained how we estimate job costs and the percentage of completion (see below).  At the time of the preparation of the financial statements (at September 30, 2010 and December 31, 2009) sufficient time since the period end had passed that we were able to verify our estimates with actual results to ensure accuracy and completeness.

Revenue Recognition: We use the percentage of completion method of accounting for contracts in process in determining revenue.  The components in determining the percentage of completion are; 1) The Job quote, 2) The actual work completed, 3) The costs incurred, and 4) the amounts billed (or invoiced).

Underlying assumptions of a job quote: Each job quote is prepared based on customer expectations and there are three main components to a quote:

No. 1. Price: Each quote includes a 30% margin mark-up after calculating estimated costs (see material and labor costs below).

No. 2. Material Costs: At the time of preparing a quote we know the per unit cost of materials and can accurately estimate the amount of materials needed based on area (square footage) and scope of a job.  Material cost is estimated to be 30% of the contract.

No. 3. : Labor: We know our hourly labor rate and estimate the labor hours for a job based on type of work and area (square-footage).  Labor is estimated to be 40% of the contract.

At the end of an accounting period we review the actual work completed and calculate a completion percentage based on the job quote.  We then review the actual costs incurred through the end of the period and the amount of revenue invoiced and compare these amounts to an amount calculated by multiplying the completion percentage by the job quote estimates.  Any difference between the actual numbers and the completion percentage calculation is captured in Billings in Excess of Cost / Cost in Excess of Billings.  We also review the actual gross margin versus the estimated gross margin.

3

#17

Answer

Exhibit 99.1 is not an employment agreement, it is a contract agreement. The language in the Executive Compensation and Corporate Governance section has been updated to help clarify.

#18

Answer

We note your comment and have included the required information into both Note 4 to the financial statements and Transactions with Related Persons, Promoters and Certain Control Persons.

#19

Answer

We note your comment, and the financial statements have been updated in accordance with Rule 8-08 of Regulation S-X.

#20

Answer

We have clarified the 2009 period where $146 of depreciation expense was recognized (from inception to December 31, 2009).

#21

Answer

We have clarified which periods in which the $15,000 (three months ended March 31, 2010) and $5,342 (inception to December 31, 2009) were made.  The expense for the nine months ended September 30, 2010 was $30,469.  The related services were rendered during the time periods in which the expense recognized.

#22

Answer

We have clarified that the amounts presented for our weighted average outstanding shares and our loss for common shareholders represent both basic and diluted amounts.

#23

Answer

Our President has limited experience in the company’s industry and therefore we changed the risk factor to reflect the correction.

In past endeavors our President has built and remodeled buildings and therefore has experience in construction including purchasing materials and running labor crews.

We supplementary include a table that shows how we calculated Cost in Excess of Billings at December 31, 2009.  We do not have schedule for March 2010 or 2010 because there were no jobs in progress at that time.  Typically a job is completed within a given month.

4

Please see the following table estimates to actual costs.

Specialty Contractors, Inc.
Contract Estimate vs Actual Expenses
September 30, 2010
								Other		Estimated						Other		Actual
	Contract			Estimated		Estimated		Estimated		Gross		Actual		Actual		Actual		Gross
	Amount			Labor		Materials		Costs		Profit		Labor		Materials		Costs		Profit
Hawkins		33814			13600		10000		1750		8464		16220		10480		3940		3174
Maud		46500			18750		13950		3250		10550		21380		11850		4190		9080
Rodgers		32328			13000		9700		2250		7378		13800		8850		2030		7648
Rodgers 2		20895			8300		6250		1500		4845		8740		5560		2450		4145
Gunbarrell		20253			8100		6000		1500		4653		8500		5880		1980		3893
Beaumont		5519			2250		1500		500		1269		1400		800		600		2719
Dynacap		15600			6250		5000		1000		3350		5890		4450		1250		4010
Townsend (Baytown)		10000			4000		3000		750		2250		3640		2730		940		2690
Totals		184909			74250		55400		12500		42759		79570		50600		17380		37359
Actuals per Financial Statements		184909			79570		50600		17380
Difference		0			-5320		4800		-4880
Total cost variance - Labor		-5320
Total cost variance - Materials		4800
Total cost variance - Other		-4880
Total cost variance		-5400
Total contracts		184909
% costs were underestimated by:		-2.92	%

5

#24

Answer

We note your comment and mean, Percentage of Completion.

Change orders: The timing of a change order to client approval is usually less than one week due to the hands on approach of the President, thus, there are no issues of revenue recognition from pending change orders.  If there was a delay at the end of an accounting period and there was no approval for a change order then the Company would not recognize any revenue related to that change order.

Claims:  If a claim is deemed to be ‘valid’ then it will be booked in the accounting period in which it was received.

#25

Answer

We have amended our cost of goods sold accounting policy footnote to explain that we include an allocation of depreciation expense in cost of goods sold.

#26

Answer

The line of credit and related pledge exhibits are included in this filing.

Please contact me with any further questions or clarification on the answers above.

Sincerely,

/s/  Charles Bartlett

Charles Bartlett

President

6