Item 1 - Business
General
SMSA Kerrville Acquisition Corp. (Company) was organized on May 3, 2010 as a Nevada corporation to effect the reincorporation of Senior Management Services of Kerrville, Inc., a Texas corporation, mandated by the plan of reorganization discussed below.
On December 15, 2010, the Company, STC Edgar, Inc. (STC Edgar) and the individual stockholders of Edgar entered into a Share Exchange Agreement (Exchange Agreement) whereby the stockholders of Edgar exchanged 100.0% of the issued and outstanding stock of Edgar for 9,500,000 shares of restricted, unregistered common stock of the Company. Edgar then became a wholly-owned subsidiary of the Company.
In February 2011, the Company filed a Registration Statement on Form 10 on a voluntary basis to become a reporting issuer pursuant to Section 12(g) of the Securities Exchange Act of 1934, which is a prerequisite for our common stock to become eligible for quotation on the OTC Bulletin Board. This Registration Statement was declared effective by the SEC on or about April 13, 2011.
Effective April 1, 2011, the Company’s wholly-owned subsidiary, STC Edgar, commenced business as a start-up company and took over the closed electronic document filing operations and clients formerly serviced by Securities Transfer Corporation, a related entity controlled by the Company’s President and majority stockholder, Kevin B. Halter, Jr. No consideration was paid from the Company to Securities Transfer Corporation for the this business. This action removed the Company from the requirements of reporting as a “development stage company”.
Through the Company’s wholly-owned subsidiary, Edgar, the Company provides EDGARizing services to various commercial and corporate entities. Our primary service is the EDGARization of corporate documents that require filing on EDGAR, the Electronic Data Gathering, Analysis, and Retrieval system maintained by the Securities and Exchange Commission (SEC). EDGAR performs automated collection, validation, indexing, acceptance, and forwarding of submissions by companies and others who are required by law to file forms with the Securities and Exchange Commission. These documents include registration statements, prospectuses, annual reports, quarterly reports, periodic reports, debt agreements, special proxy statements, offering circulars, tender offer materials and other documents related to corporate financing, acquisitions and mergers. We receive our clients’ information in a variety of media, and reformat it for distribution, either in print, digital or Internet form. Neither the Company nor its wholly-owned subsidiary have any past or present affiliation with the U. S. Securities and Exchange Commission in any manner.
The acquisition of STC Edgar, Inc. on December 15, 2010 by SMSA Kerrville Acquisition Corp. effected a change in control and was accounted for as a “reverse acquisition” whereby STC Edgar, Inc. is the accounting acquiror for financial statement purposes. Accordingly, for all periods subsequent to the December 15, 2010 “reverse acquisition” transaction, the historical financial statements of the Company reflect the financial statements of STC Edgar, Inc. since it’s inception on November 9, 2010 and the operations of SMSA Kerrville Acquisition Corp. subsequent to December 15, 2010.
History
On December 5, 2010, the Company entered into a stock exchange agreement pursuant to which the Company agreed to issue 9,500,000 shares of restricted common stock to Kevin B. Halter, Jr. for all the issued and outstanding shares of STC Edgar, Inc. (“STC Edgar”). In connection with the stock exchange agreement Timothy P. Halter resigned as the President, Chief Financial Officer, Treasurer, Secretary and Director of the Company and Kevin B. Halter, Jr. was appointed as the President, Chief Financial Officer, Treasurer, Secretary and Director of the Company. Kevin B. Halter, Jr. is the brother of Timothy P. Halter.
On January 17, 2007, Senior Management Services of Kerrville, Inc. and its affiliated companies, or collectively SMS Companies, filed a petition for reorganization under Chapter 11 of the United States Bankruptcy Code. On August 1, 2007, the bankruptcy court entered its confirmation order which confirmed the First Amended, Modified Chapter 11 Plan, or the Plan, as presented by SMS Companies and their creditors. The effective date of the Plan was August 10, 2007.
During the three years prior to filing the reorganization petition, SMS Companies operated a chain of skilled nursing homes in Texas, which prior to the bankruptcy proceedings consisted of 14 nursing facilities, ranging in size from approximately 114 beds to 325 beds. In the aggregate, SMS Companies provided care to approximately 1,600 resident patients and employed over 1,400 employees. A significant portion of the SMS Companies cash flow was provided by patients covered by Medicare and Medicaid. The SMS Companies facilities provided round-the-clock care for the health, well-being, safety and medical needs of its patients. The administrative and operational oversight of the nursing facilities was provided by an affiliated management company located in Arlington, Texas.
In 2005, SMS Companies obtained a secured credit facility from a financial institution. The credit facility eventually was comprised of an $8.3 million term loan and a revolving loan of up to $15 million which was utilized for working capital and to finance the purchase of the real property on which two of its nursing care facilities operated. By late 2006, SMS Companies were in an “over advance” position, whereby the amount of funds extended by the lender exceeded the amount of collateral eligible to be borrowed under the credit facility. Beginning in September 2006, SMS Companies entered into the first of a series of forbearance agreements whereby the lender agreed to forebear from declaring the financing in default provided SMS Companies obtained a commitment from a new lender to refinance and restructure the credit facility. SMS Companies were unsuccessful in obtaining a commitment from a new lender and on January 5, 2007, the lender declared SMS Companies in default and commenced foreclosure and collection proceedings. On January 9, 2007 the lender agreed to provide an additional $1.7 million to fund payroll and permit a controlled transaction to bankruptcy. Subsequently, on January 17, 2007 the SMS Companies filed a petition for reorganization under Chapter 11 of the Bankruptcy Code.
Plan of Reorganization
During the administration of the SMS Companies bankruptcy reorganization proceedings, it became apparent that there would not be any available funds to pay the claims of the unsecured creditors. Halter Financial Group, Inc., or HFG, an affiliate, Timothy P. Halter, was contacted by a legal representative of the SMS Companies to determine whether HFG would participate with the SMS Companies and their creditors in formulating the structure of the Plan to provide an opportunity for the unsecured SMS Companies’ creditors to receive payment for all or a portion of their claims. HFG had no affiliation or involvement with any of the SMS Companies prior to the bankruptcy action.
HFG is a Dallas, Texas based consulting firm specializing in the area of mergers, acquisitions and corporate finance. HFG had previously participated with other companies and their creditors in structuring reorganization plans under Chapter 11 of the Bankruptcy Code which provided, in part, for a debtor with significant unsecured creditors to emerge out of bankruptcy, with the creditors exchanging their claims for equity in the reorganized company. The reorganized company would then seek a merger or business combination with an operating business, which would provide the shareholders with the opportunity to recover all or a portion of their previous claims through appreciation of the stock value after a business combination with a private operating company.
HFG agreed to participate with SMS Companies and their creditors in structuring the Plan. As part of the Plan, HFG provided $115,000 to be used to pay professional fees associated with the Plan confirmation process. HFG was granted an option that provided for the issuance of equity securities in each of the 23 SMS Companies, including Senior Management Services of Kerrville, Inc. in satisfaction of HFG’s administrative claims. The option to acquire equity securities in lieu of repayment of the $115,000 administrative claim was exercised by HFG. Although HFG was unable to specifically determine how the $115,000 was utilized, it believes that the bankruptcy trustee used the funds to pay administrative expenses, including legal and other fees which were incurred during the structuring and implementation of the Plan.
The Plan provided that HFG would receive approximately 80% of the common stock in each SMS Company and that the unsecured creditors would receive the remaining 20% of the common stock in exchange for their claims. Each creditor would receive its pro rata share of the common stock based on the percentage of its claim to the total amount of the outstanding unsecured claims for each SMS Company in which the creditor holds a claim. Other than receiving 80% of the common stock in each SMS Company, HFG did not receive any additional cash compensation from or equity securities in any of the SMS Companies, nor will HFG recoup any portion of the $115,000 payment from any of the SMS Companies.
As provided in the Plan, approximately 80% of the then outstanding common stock of Senior Management Services of Kerrville, Inc., or 415,960 shares, was issued to HFG in satisfaction of HFG’s administrative claims. The remaining 20% of our outstanding common stock, or 109,074 shares, was issued to 482 holders of unsecured debt. In accordance with the bankruptcy court order, the 525,034 shares, or Plan Shares, were issued pursuant to Section 1145(a) of the Bankruptcy Code. As further consideration for the issuance of the 415,960 Plan Shares to HFG, the Plan required HFG to assist us in identifying a potential merger or acquisition candidate.
The Plan provides that all costs and expenses associated with or related to our reincorporation in the State of Nevada, any subsequent mergers, the issuance of the Plan Shares and any other filings or actions with regard thereto shall be borne solely by HFG. HFG was responsible for the payment of our operating expenses and will assist us with formulating the structure of any proposed merger or acquisition. Additionally, HFG was responsible for paying our legal and accounting expenses related to this registration statement and our expenses incurred in consummating a merger or acquisition. Also, HFG was not entitled to receive any repayment of such expenses prior to, or as a conditions of, a merger or acquisition.
Pursuant to the Plan, the pre-confirmation unsecured creditors of Senior Management Services of Kerrville, Inc. (our predecessor company) agreed to accept Plan Shares in SMSA Kerrville Acquisition Corp., as reorganized, in lieu of asserting recovery of their claims against the Plan’s liquidating trust. As previously discussed, the confirmation order provided for an injunction protecting us from the claims of the pre-confirmation unsecured creditors while we pursue a business combination with an operating business. If we did not consummate a business combination prior to February 10, 2011, our issued Plan Shares will be deemed canceled and we would file dissolution documents with the State of Nevada and will cease to exist. Accordingly, the discharge provided in the Plan to us will not be effective. In such event the pre-confirmation unsecured creditors could attempt to assert their pre-confirmation claims against us and the Plan liquidating trust. However, because of the reverse acquisition transaction with STC Edgar, Inc. on December 15, 2010, we met our obligations under the Plan and have received a certificate of compliance from the Bankruptcy Court.
The SMS Companies bankruptcy case is closed as a final decree has been entered. The confirmation order of the Plan was effective on August 10, 2007. No appeal was filed. There is no continuing jurisdiction being exercised by the bankruptcy court over us, or any of the SMS Companies, other than the acceptance of a certificate of compliance to be filed by each individual entity upon the timely completion of a merger or acquisition.
Effective September 15, 2010, HFG transferred its 415,960 Plan Shares to Halter Financial Investments L.P., or HFI, a Texas limited partnership controlled by Timothy P. Halter, which still owns such shares representing less than 5% of shares outstanding.
Timothy P. Halter is the sole officer, director and shareholder of HFG and an officer and member of Halter Financial Investments GP, LLC, general partner of HFI. Mr. Halter is the brother of Kevin B. Halter, Jr. who has served as our president and sole director since December 15, 2010. Kevin B. Halter, Jr. will assist us with the implementation of our business plan.
SMSA Kerrville Acquisition Corp. has no interest in the other SMS Companies and no on-going business relationship with any of them. We are not aware of any plans for any of those companies.
Our Business
STC Edgar, Inc. was formed in November 2010 by Kevin B. Halter, Jr. as a private company and became a wholly-owned subsidiary of the Company concurrent with the closing of the December 15, 2010 transaction. STC Edgar commenced business as a start-up company and took over the EDGAR clients of Securities Transfer Corporation which discontinued providing EDGAR services to its clients. No consideration was paid from the Company to Securities Transfer Corporation for the discontinued EDGAR service operation.
Through our subsidiary STC EDGAR, Inc., we provide EDGARizing services to various commercial and corporate entities. Our primary service is the EDGARization of corporate documents that require filing on EDGAR, the Electronic Data Gathering, Analysis, and Retrieval system maintained by the Securities and Exchange Commission. EDGAR performs automated collection, validation, indexing, acceptance, and forwarding of submissions by companies and others who are required by law to file forms with the Securities and Exchange Commission. These documents include registration statements, prospectuses, annual reports, quarterly reports, periodic reports, debt agreements, special proxy statements, offering circulars, tender offer materials and other documents related to corporate financings, acquisitions and mergers. We receive our clients’ information in a variety of media, and reformat it for distribution, either in print, digital or Internet form.
Mr. Halter, our majority stockholder, is also the President and majority shareholder of Securities Transfer Corporation. Securities Transfer Corporation formerly provided Edgar filing services for its clients. He is not required to commit his full time to our affairs, and will devote approximately four hours per week to our business, which may result in a conflict of interest in allocating his time between our operations and other businesses. If his other business affairs require him to devote more substantial amounts of time to such interests, it could limit his ability to devote time to our affairs and could have a negative impact on our ability to implement our business plan.
EDGARization Software
We currently license Edgarizer HTML, our EDGARization software, from Edgarfilings, Ltd. Edgarizer HTML is a widely used EDGARization software available for compiling and submitting SEC EDGAR filings. The program converts documents produced by word processing, spreadsheet, and desktop publishing packages into the EDGAR HTML format, adding the required submission information and EDGAR tags. Edgarizer HTML includes complete test filing capabilities to ensure that filings are compliant, and full communications features to facilitate filing directly to the SEC. We pay approximately $3,790 per year to Edgarfilings, Ltd. for our license, which is renewable on an annual basis. Other sources of Edgar software are available if we were to lose our access to Edgarizer HTML.
Our Services
We are a full-service EDGARizing firm that facilitates the filing of documents with the SEC on behalf of public companies pursuant to the requirements of Regulation S-T. The scope of work undertaken by a full-service EDGARizing includes the following:
1.
applying for and maintaining EDGAR access codes;
2.
conversion of document to EDGAR acceptable format;
3.
client approval of EDGARized document; and
4.
electronic filing of the document.
We offer HTML (Hypertext Markup Language) and unofficial PDF (Portable Document Format) filing service for those clients who prefer their documents to appear similar to their original format. We use the most current EDGARization software, which allows for filings to be transmitted via the Internet for no fee. Documents prepared by the management of public companies generally require additional work to conform to the requirements of the EDGAR system. We receive the documents to be EDGARized via email in an electronic format, generally as a PDF, Microsoft Word or Excel formatted file. In order to convert that document to an HTML document, our personnel take the following steps to prepare a document for filing with the SEC:
1.
Identify the document type to be filed and print the document and open the Edgarizer HTML Software on the desktop.
2.
Open the Contact Manager section of the software and input the new client information. This includes client name, CCC, CIK, password, pass phrase, I.R.S. # and other pertinent information.
3.
Create a new submission information file for the particular filing and input the correct and required information for the particular filing. For example, a current report on Form 8-K will have correlating item numbers which must be input in advance of EDGARization, as well as a “date of event” field. Exhibits are then added to the newly create submission information file. The file is then saved.
4.
From this point, the document attachment is opened in its original format and proofed for formatting errors before conversion. For example, in a document prepared with Microsoft Word, we would do the following:
a.
accept track changes;
b.
turn off track changes;
c.
convert auto numbers;
d.
ensure consistent formatting of the document, such as spacing, underlines, bold, italics, paragraph justification, font size, and font type; and
e.
copy and paste into the newly created submission information file, the main body of the document.
f.
additional steps may be required depending on the quality and type of original documents provided. PDF documents would require the extra conversion steps using other software programs to allow for it to be appropriately copied into the submission information file.
5.
The Edgarized document is proofed for errors and any necessary formatting corrections are made within the Edgarizer HTML Software.
6.
Financial tables are then converted and adjusted using the” Convert to financial table tool”, within the Edgarizer HTML Software. Once completed, financial tables require time to correct column width, row height, indents, spacing, underlines, and centering. Financial tables can be significantly more complex than text to convert.
7.
Exhibits are opened, proofed in the same manner as above, and pasted into their allotted space within the submission information file. Exhibits are proofed again for accuracy and corrected as necessary. An exhibit number and style header is added to the top of each exhibit.
8.
Page breaks are added throughout the entire document and page numbers are inserted.
9.
Adjustments are also made to the page numbers of the table of contents, as needed and where applicable.
10.
Finally, the appropriate signature lines are added from within the Edgarizer HTML software toolbar. The appropriate information is then cut and pasted in. Dates are added and signatures conformed as required.
Clients and Pricing
STC Edgar currently provides Edgarization services for thirty-five reporting companies and approximately four other filers. The Edgar services provided by STC Edgar are based upon charges in the range of $10.00 to $15.00 per page filed. This pricing model is believed to be typical in the Edgar filing business, although we believe our prices are lower than those changed by the dominant financial printing companies.
Our Industry
The SEC, through Regulation S-T, established a program for the electronic filing of documents under the Federal Securities Laws, entitled Electronic Data Gathering Analysis and Retrieval (EDGAR). This program requires participants or their agents to file disclosure information with the SEC in an electronic format rather than by the formerly traditional paper-filing package. This electronic format includes additional submission information and coding “tags” within the document for aid in the SEC’s analysis of the document and retrieval by the public. EDGAR allows registrants to file and the public to retrieve disclosure information electronically.
The SEC began the development of EDGAR with a pilot program in 1984. Through a phase-in schedule, the SEC assigned one of ten dates by which all public companies were to start filing disclosure documents through EDGAR operational system, which began April 26, 1993. All publicly held companies were expected to be required to file disclosure documents through EDGAR by May 1996. In addition, in 1999, the National Association of Securities Dealers, Inc. mandated that companies that participate on the Over-The-Counter Bulletin Board, an electronic quotation medium, file registration statements with the SEC via EDGAR, and to begin filing periodic filings with the SEC, which significantly increased the number of companies that needed to utilize EDGAR filer services.
In May 1999, the EDGAR system began accepting documents in HTML (Hypertext Markup Language) and unofficial documents in PDF (Portable Document Format). This modernization of the EDGAR system was intended to make the system more user friendly, and give the documents submitted a look which was closer to that of the original document. At some point in the future, it is anticipated that the SEC will no longer accept the traditional ASCII documents, and HTML will become the new standard.
The EDGAR system has been enormously successful in making public company information more widely available and increasing transparency in the market place.
Our Target Markets and Marketing Strategy
We believe that our primary target market will consist of small and medium size corporate entities and law firms that desire EDGARizing services for them or their clients. Our marketing strategy is to promote our services and products and attract businesses to us. Our marketing initiatives will include:
*
establish relationships with industry professionals, such as attorneys and accountants, who can refer customers to us;
*
utilizing direct response print advertisements placed primarily in small business, entrepreneurial, and financially-oriented magazines and special interest magazines;
*
attend industry tradeshows;
*
initiate direct contact with potential customers, and
*
market our services via the Internet.
These activities will be conducted by Mr. Halter initially and later by employed marketing personnel as revenues permit.
Growth Strategy
Our objective is to become one of the dominant providers of EDGARizing services to small cap and micro cap public companies and small to medium size law firms. Our strategy is to provide clients with competitive pricing, exceptional personal service and reliable quality. Key elements of our strategy include:
*
increase our relationships with businesses, law firms and accountants;
*
continue and expand our website;
*
provide additional services for businesses and other filers; and
*
pursue relationships with companies that will support our business development.
Our website, www.stcedgar.com, provides a description of our services along with our contact information including our address, telephone number and e-mail address. Our website also provides prospective customers with relevant information about our pricing and payment options, our filing procedures, frequently asked questions and investor relations. We will also make available our SEC disclosure filing and press releases on our website.
Our Competition
The EDGARizing services industry in the United States is highly competitive. The EDGARizing process reformats documents required to be filed with the SEC from files that were originally generated using a variety of word processing and spreadsheet software. We compete with a variety of companies, many of which have greater financial and other resources than us, or are subsidiaries or divisions of larger organizations. In particular, the industry is characterized by a small number of large, dominant organizations that perform this service, such as Bowne & Co., Inc., RR Donnelley & Sons Co. and Merrill Corporation, along with corporate entities or law firms that have their own in-house EDGARizing capability.
The major competitive factors in our business are the timeliness and quality of customer service, the quality of finished products and price. Our ability to compete effectively in providing customer service and quality finished products depends primarily on the level of training of our staff, the utilization of computer software and equipment and the ability to perform the services with speed and accuracy. We believe we compete effectively in all of these areas.
Many of our competitors have substantially greater financial, technical, managerial, marketing and other resources than we do, and they may compete more effectively than we can. If our competitors offer EDGARizing services at lower prices than we do, we may have to lower the prices we charge, which will adversely affect our results of operations. Furthermore, many of our competitors are able to obtain more experienced employees than we can.
Government Regulation
We are subject to federal, state and local laws and regulations applied to businesses generally. We believe that we are in conformity with all applicable laws in all relevant jurisdictions. We do not believe that we are exposed to liability under any environmental laws and regulations of the United States and the states in which we operate.
Our Research and Development
We are not currently conducting any research and development activities. We do not anticipate conducting such activities in the near future.
Intellectual Property
We do not presently own any copyrights, patents, trademarks, licenses, concessions or royalties, and we may rely on certain proprietary technologies, trade secrets, and know-how that are not patentable.
EDGARizer is a registered trademark of EDGARfilings, Ltd. EDGAR is registered trademark of the SEC. Because we use the name or phrase EDGAR in our operating company name and materials, we may need to secure a trademark license issued by EDGARfilings, Ltd. In the event that we use the name or phrase EDGAR in our materials, we may need to secure a trademark license issued by the SEC.
We own the Internet domain name “www.stcedgar.com”, which we obtained from Securities Transfer Corp. Under current domain name registration practices, no one else can obtain an identical domain name, but someone might obtain a similar name, or the identical name with a different suffix, such as “.org”, or with a country designation. The regulation of domain names in the United States and in foreign countries is subject to change, and we could be unable to prevent third parties from acquiring domain names that infringe or otherwise decrease the value of our domain names.
Employees
As of March 22, 2012, we have no full-time employees. Mr. Kevin Halter, Jr., our president, chief financial officer, secretary and sole director, currently devotes approximately four hours per week of his business time to our operations. We have no other management personnel. We currently contract with Securities Transfer Corporation to utilize the surplus capacity of their staff to perform our services at a rate of $1,200 per month. We paid or accrued approximately $10,800 during the year ended December 31, 2011 for these services. We do not currently anticipate that we will hire any employees in the foreseeable future unless we significantly increase our client roster and require more personnel time than Securities Transfer Corporation has available. From time-to-time, we anticipate that we will use the services of other independent contractors and consultants to support our expansion and business development.
Item 1A
Item 1A - Risk Factors
Not applicable.
Item 1B
Item 1B - Unresolved Staff Comments
None
Item 2
Item 2 - Properties
Our executive, administrative and operating offices are located at 2591 Dallas Parkway, Suite 102, Frisco Texas 75034. In connection with the Securities Transfer Corporation’s discontinuing providing EDGAR services and the commencement of our business operations on April 1, 2011, we began to sublease approximately 200 square feet of office space from Securities Transfer Corporation at a cost of $400 per month, which approximates the cost of such space to Securities Transfer Corp, on a month-to-month basis. We paid or accrued approximately $3,600 during the year ended December 31, 2011 for the use of this space. We do not have a written lease or sublease agreement with Securities Transfer Corp. We believe that our facilities are adequate for our needs and that additional suitable space will be available on acceptable terms as required.
Item 3
Item 3 - Legal Proceedings
The Company is not a party to any pending legal proceedings, and no such proceedings are known to be contemplated.
Item 4
Item 4 - Mine Safety Disclosures
Not applicable to the Company.
PART II
Item 5
Item 5 - Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market for Trading and Eligibility for Future Sale
Pursuant to a letter from the Financial Industry Regulatory Authority (FINRA) dated January 23, 2012, the Company’s common stock was cleared for trading on the OTC Bulletin Board and Pink Sheets. The Company’s equity securities trade under the symbol “SKER”. Information obtained from market activity reports available on the websites, www.bigcharts.com and www.otcmarkets.com, disclose no trading activity since our approval date for trading through March 20, 2012. Additionally, there is no published Bid or Ask price on either of these sources.
At March 20, 2012, there were approximately 483 holders of record, exclusive of shares held in street name, of the Company's Common Stock.
Dividends
Since its inception, no dividends have been paid on the Company's common stock. Future dividends, if any, will be contingent upon the Company’s revenues and earnings, if any, and capital requirements and financial conditions. The payment of dividends, if any, will be within the discretion of the Company’s Board of Directors. The Company presently intends to retain all earnings, if any, and accordingly the Board of Directors does not anticipate declaring any dividends prior to a business combination.
Item 6
Item 6 - Selected Financial Data
Not applicable
Item 7
Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations
Caution Regarding Forward-Looking Information
Certain statements contained in this annual filing, including, without limitation, statements containing the words "believes", "anticipates", "expects" and words of similar import, constitute forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.
Such factors include, among others, the following: international, national and local general economic and market conditions: demographic changes; the ability of the Company to sustain, manage or forecast its growth; the ability of the Company to successfully make and integrate acquisitions; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; and other factors referenced in this and previous filings.
Given these uncertainties, readers of this Form 10-K and investors are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.
General
SMSA Kerrville Acquisition Corp. (Company) was organized on May 3, 2010 as a Nevada corporation to effect the reincorporation of Senior Management Services of Kerrville, Inc., a Texas corporation, mandated by the plan of reorganization discussed below.
On December 15, 2010, the Company, STC Edgar, Inc. (Edgar) and the individual stockholders of Edgar entered into a Share Exchange Agreement (Exchange Agreement) whereby the stockholders of Edgar exchanged 100.0% of the issued and outstanding stock of Edgar for 9,500,000 shares of restricted, unregistered common stock of the Company. Edgar then became a wholly-owned subsidiary of the Company.
In February 2011, the Company filed a Registration Statement on Form 10 on a voluntary basis to become a reporting issuer pursuant to Section 12(g) of the Securities Exchange Act of 1934, which is a prerequisite for our common stock to become eligible for quotation on the OTC Bulletin Board. This Registration Statement was declared effective by the SEC on or about April 13, 2011.
Effective April 1, 2011, the Company’s wholly-owned subsidiary, Edgar, commenced business as a start-up company and took over the electronic document filing operations and clients formerly serviced by Securities Transfer Corporation, a related entity controlled by the Company’s President and majority stockholder, Kevin B. Halter, Jr., which was closed. No consideration was paid from the Company to Securities Transfer Corporation for the this business. This action removed the Company from the requirements of reporting as a “development stage company”.
Through the Company’s wholly-owned subsidiary, Edgar, the Company provides EDGARizing services to various commercial and corporate entities. Our primary service is the EDGARization of corporate documents that require filing on EDGAR, the Electronic Data Gathering, Analysis, and Retrieval system maintained by the Securities and Exchange Commission. EDGAR performs automated collection, validation, indexing, acceptance, and forwarding of submissions by companies and others who are required by law to file forms with the Securities and Exchange Commission. These documents include registration statements, prospectuses, annual reports, quarterly reports, periodic reports, debt agreements, special proxy statements, offering circulars, tender offer materials and other documents related to corporate financing, acquisitions and mergers. We receive our clients’ information in a variety of media, and reformat it for distribution, either in print, digital or Internet form. Neither the Company nor its wholly-owned subsidiary have any past or present affiliation with the U. S. Securities and Exchange Commission in any manner.
The acquisition of STC Edgar, Inc. on December 15, 2010 by SMSA Kerrville Acquisition Corp. effected a change in control and was accounted for as a “reverse acquisition” whereby STC Edgar, Inc. is the accounting acquiror for financial statement purposes. Accordingly, for all periods subsequent to the December 15, 2010 “reverse acquisition” transaction, the historical financial statements of the Company reflect the financial statements of STC Edgar, Inc. since it’s inception on November 9, 2010 and the operations of SMSA Kerrville Acquisition Corp. subsequent to December 15, 2010.
Results of Operations
All disclosures in this section relate solely to the operations of STC Edgar, which constitutes 100% of our operations.
The Company had no operating revenue during the period from November 9, 2010 through March 31, 2011. Effective April 1, 2011, the Company’s wholly-owned subsidiary, STC Edgar, commenced business as a start-up company and took over the closed electronic document filing operations and clients formerly serviced by Securities Transfer Corporation, a related entity controlled by the Company’s President and majority stockholder, Kevin B. Halter, Jr. No consideration was paid from the Company to Securities Transfer Corporation for the this business. This action removed the Company from the requirements of reporting as a “development stage company”.
Effective April 1, 2011, the Company’s wholly-owned subsidiary, STC Edgar, commenced business as a start-up company and took over the closed electronic document filing operations and clients formerly serviced by Securities Transfer Corporation, a related entity controlled by the Company’s President and majority stockholder, Kevin B. Halter, Jr. No consideration was paid from the Company to Securities Transfer Corporation for the this business. This action removed the Company from the requirements of reporting as a “development stage company”. This new business operation generated approximately $120,051 in gross revenues, including approximately $99,100 related to fees charged for XBRL processing services.
General and administrative expenses for each of the years ended December 31, 2011 and 2010 were approximately $95,000 and $300, respectively.
During 2011, concurrent with an SEC mandate that all filers provide information pursuant to the XBRL protocol for interactive data files, the Company acted as a broker with an unrelated third-party company to provide these services for the Company’s clients. The expenses for the year ended December 31, 2011 included approximately $69,000 paid to the unrelated third-party company for these services.
All other expenses, aggregating approximately $26,000, for the year ended December 31, 2011 were directly related to the provision of EDGAR services to various publicly held companies, including an aggregate $14,400 paid or accrued to Securities Transfer Corporation for office space and personnel usage.
It is anticipated that future expenditure levels will remain relatively constant, if not increase, as the Company’s business expands and matures.
Earnings per share for the respective years ended December 31, 2011 and 2010 were $(0.00) and $(0.00) based on the weighted-average shares issued and outstanding at the end of each respective period.
Liquidity and Capital Resources
At December 31, 2011 and 2010, respectively, the Company had working capital of approximately $21,000 and $1,000, respectively.
It is the belief of management and significant stockholders that current operations will provide sufficient working capital necessary to support future operations and preserve the integrity of the corporate entity. In the event that future operations do not provide sufficient working capital or that additional working capital is required, there is no legal obligation for either management or significant stockholders to provide additional future funding. Further, in the event that additional funds are required, the Company is at the mercy of future economic trends and business operations for the Company’s majority stockholder or other currently unidentified external sources to have the resources available to support the Company. Should this pledge fail to provide financing, the Company has not identified any alternative sources of working capital.
Regardless of whether the Company’s cash assets prove to be inadequate to meet the Company’s operational needs, the Company might seek to compensate providers of services by issuances of stock in lieu of cash.
Critical Accounting Policies
Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.
Our significant accounting policies are summarized in Note E of our financial statements. While all these significant accounting policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect on our results of operations, financial position or liquidity for the periods presented in this report.
Item 7A
Item 7A - Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
Item 8
Item 8 - Financial Statements and Supplementary Data
The required financial statements begin on page of this document.
Item 9
Item 9 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None
Item 9A
Item 9A - Controls and Procedures
Disclosure Controls and Procedures. Our management, under the supervision and with the participation of our Chief Executive and Financial Officer (Certifying Officer), has evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15 promulgated under the Exchange Act as of the end of the period covered by this Annual Report. Disclosure controls and procedures are controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms and include controls and procedures designed to ensure that information we are required to disclose in such reports is accumulated and communicated to management, including our Certifying Officer, as appropriate, to allow timely decisions regarding required disclosure. Based upon that evaluation, our Certifying Officer concluded that as of such date, our disclosure controls and procedures were not effective to ensure that the information required to be disclosed by us in our reports is recorded, processed, summarized and reported within the time periods specified by the SEC due to a weakness in our controls described below. However, our Certifying Officer believes that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the respective periods presented.
Management’s Annual Report on Internal Control over Financial Reporting. Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act.
Internal control over financial reporting is defined under the Exchange Act as a process designed by, or under the supervision of, our CEO and CFO and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
--
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
--
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
--
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
Because of its inherent limitation, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluations of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate. Accordingly, even an effective system of internal control over financial reporting will provide only reasonable assurance with respect to financial statement preparation.
Management's assessment of the effectiveness of the Company's internal control over financial reporting is as of the year ended December 31, 2011. Because we have only one officer and director, the Company's internal controls are deficient for the following reasons, (1) there are no entity level controls because there is only one person serving in the dual capacity of sole officer and sole director, (2) there are no segregation of duties as that same person approves, enters, and pays the Company's bills, and (3) there is no separate audit committee. As a result, the Company's internal controls have an inherent weakness which may increase the risks of errors in financial reporting under current operations and accordingly are deficient as evaluated against the criteria set forth in the Internal Control - Integrated Framework issued by the committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation, our management concluded that our internal controls over financial reporting were not effective as of December 31, 2011.
This Annual Report does not include an attestation report of our registered public accounting firm regarding our internal control over financial reporting, pursuant to the current appropriate Laws and Regulations.
Changes in Internal Control over Financial Reporting. There was no change in our internal control over financial reporting that occurred during the quarter ended December 31, 2011 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting which internal controls will remain deficient until such time as the Company completes a merger transaction or acquisition of an operating business at which time management will be able to implement effective controls and procedures.
Item 9B
Item 9B - Other Information
Not applicable.
PART III
Item 10
Item 10 - Directors, Executive Officers and Corporate Governance
The directors and executive officers serving the Company are as follows:
Name
Age
Position Held and Tenure
Kevin B. Halter, Jr.
Chairman, President,
Chief Executive and Financial
Officer and Sole Director
Kevin B. Halter Jr. - Kevin B, Halter, Jr., age 51, has served as our sole officer and director since November 9, 2010. Mr. Halter manages all aspects of our operations, including marketing and sales of our services and is primarily responsible for implementing our business plan. Mr. Halter has been President and sole stockholder of Securities Transfer Corporation, an SEC registered stock transfer company, since 1987. Additionally, since 1987, Mr. Halter has been the President and a Director of Halter Capital Corporation. From 1994 until July 28, 2010, Mr. Halter served as Vice President and a Director of Millennia, Inc., a diversified management company engaged, through its affiliates and subsidiaries. in various businesses. Millennia, Inc.’s primary business was to acquire and operate business operations through affiliates and subsidiaries and to provide management expertise to the affiliates and subsidiaries. Consequently, Millennia, Inc. has never had any operations of its own that were not part of one of its affiliates and/or subsidiaries. From February 21, 2006 until February 5, 2008, he was President and a Director of Rub A Dub Soap, Inc., now known as Sentaida Tire Company Limited. From December 10, 2010 until January 16, 2011, he was the President, Secretary and Director of Ventura Assets Limited, a reporting company that provides unclaimed property location services to the public and businesses.
On March 3, 2011, in Administrative Proceeding File No. 3-14285 - In the Matter of Securities Transfer Corporation (STC) and Kevin Halter, Jr., an agreed order was entered censuring STC and requiring STC to retain a consultant to review all internal systems and recommend procedures to safeguard the funds and securities of its customers on deposit and to submit to continuing oversight review by such consultant. STC was fined $10,000, and Kevin Halter, Jr. was suspended for three months from associating in a supervisory capacity with a transfer agent, broker-dealer or investment advisor. Such order arose from a situation in which a former financial officer of STC commingled funds of STC and of its clients.
Mr. Halter is qualified to serve as our officer and director because of his years of experience in the management of several reporting companies and his special expertise in the Edgar filing business through his ownership of Securities Transfer Corp.
The following table identifies those companies with which Mr. Halter has been affiliated during the past five years whose securities were registered under the ‘34 Acct. The table also details Mr. Halter’s prior and present involvement with each referenced company and the status of each company’s business operations immediately after the change of control. The business descriptions provided below were derived from the respective entities’ periodic reports as filed with the SEC as a result of the change of control.
Mr. Halter was not affiliated with any of the operating businesses prior to the consummation of the reverse merger transaction and resigned as an officer and director upon consummation of the transaction. After each merger transaction, Mr. Halter did not participate in the management of any of the companies and ceased being a principal stockholder. As noted in the table below Mr. Halter sold, in some cases, all or a portion of his securities in such companies after the change in control. Mr. Halter has also sold such securities for cash in open market transactions.
Mr. Halter is no longer a controlling stockholder, officer or director of any of the below listed entities and his involvement terminated upon the fulfillment of the respective plan of operation involving a business combination transaction with a private entity wishing to become publicly owned. In most instances, when a business combination was transacted with one of these companies, that entity was required to file a current Report on Form 8-K describing the transaction. We refer the reader to the respective Form 8-K, if filed, for any of the companies listed below for detailed information concerning the business combination entered into by that company.
There is no family relationship between any of our officers or directors. There are no orders, judgments, or decrees of any governmental agency or administrator, or of any court of competent jurisdiction, revoking or suspending for cause any license, permit or other authority to engage in the securities business or in the sale of a particular security or temporarily or permanently restraining any of our officers or directors from engaging in or continuing any conduct, practice or employment in connection with the purchase or sale of securities, or convicting such person of any felony or misdemeanor involving a security, or any aspect of the securities business or of theft or of any felony, nor are any of the officers or directors of any corporation or entity affiliated with us so enjoined.
Audit Committee Financial Expert
We do not have a standing audit committee. The functions of the Audit Committee are currently assumed by our board of directors. It is unlikely that we would be able to attract an independent financial expert to serve on our board of directors at this stage of our development. In order to entice such a director to join our board of directors, we would probably need to acquire directors’ errors and omission liability insurance and provide some form of meaningful compensation to such a director; both of which we are unable to afford at this time.
Compliance With Section 16(a) of the Exchange Act
Section 16(a) of the Exchange Act requires our executive officers and directors and persons who own more than 10% of our common stock to file reports regarding ownership of and transactions in our securities with the Commission and to provide us with copies of those filings. Based solely on our review of the copies received by or a written representation from certain reporting persons we believe that during fiscal year ended December 31, 2011, we believe that all eligible persons are in compliance with the requirements of Section 16(a).
Involvement on Certain Material Legal Proceedings During the Past Five (5) Years
(1)
No director, officer, significant employee or consultant has been convicted in a criminal proceeding, exclusive of traffic violations or is subject to any pending criminal proceeding.
(2)
No bankruptcy petitions have been filed by or against any business or property of any director, officer, significant employee or consultant of the Company nor has any bankruptcy petition been filed against a partnership or business association where these persons were general partners or executive officers.
(3)
No director, officer, significant employee or consultant has been permanently or temporarily enjoined, barred, suspended or otherwise limited from involvement in any type of business, securities or banking activities; however, on March 3, 2011, in Administrative Proceeding File No. 3-14285 - In the Matter of Securities Transfer Corporation (STC) and Kevin Halter, Jr., an agreed order was entered censuring STC and requiring STC to retain a consultant to review all internal systems and recommend procedures to safeguard the funds and securities of its customers on deposit and to submit to continuing oversight review by such consultant. STC was fined $10,000, and Kevin Halter, Jr. was suspended for three months from associating in a supervisory capacity with a transfer agent, broker-dealer or investment advisor. Such order arose from a situation in which a former financial officer of STC commingled funds of STC and of its clients.
(4)
No director, officer or significant employee has been convicted of violating a federal or state securities or commodities law.
Code of Ethics
The Company has not adopted a code of ethics. Since the Company has no employees and one person serving as both sole director and sole executive and financial officer, a code of ethics would have no practical benefit due to the lack of any meaningful reporting or accountability process.
Item 11
Item 11 - Executive Compensation
Executive Officers
No officer or director has received any compensation from us. Until we consummate a business combination, it is not anticipated that any officer or director will receive compensation from us.
We have no stock option, retirement, pension, or profit-sharing programs for the benefit of directors, officers or other employees.
Our board of directors appoints our executive officers to serve at the discretion of the board. Kevin B. Halter, Jr. is our sole officer and director. Our directors receive no compensation from us for serving on the board. Until we consummate a business combination, we do not intend to reimburse our officers or directors for travel and other expenses incurred in connection with attending the board meetings or for conducting business activities.
Executive Compensation
Kevin B. Halter, Jr. has not received any compensation from us nor have we accrued any cash or non-cash compensation for his services since he was elected as an officer and director. The current management and oversight of the Company requires less than four (4) hours per month. In future periods, subsequent to the consummation of a business combination transaction, the Company anticipates that it will pay compensation to its officer(s) and/or director(s).
We do not have any employment or consulting agreements with any parties nor do we have a stock option plan or other equity compensation plans.
SUMMARY COMPENSATION TABLE
Name and
Principal Position
Year
Salary
($)
Bonus
($)
Stock
Awards
($)
Option
Awards
($)
Non-Equity
Incentive Plan
Compensation
($)
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)
All Other
Compensation
($)
Total
($)
Kevin B. Halter,
Principal Executive
Officer
$-0-
$-0-
$-0-
$-0-
$-0-
$-0-
$-0-
$-0-
$-0-
$-0-
$-0-
$-0-
$-0-
$-0-
$-0-
$-0-
$-0-
$-0-
$-0-
$-0-
$-0-
$-0-
$-0-
$-0-
The Company has no other executive compensation issues which would require the inclusion of other mandated table disclosures.
Item 12
Item 12 - Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth, as of the date of this Annual Report, the number of shares of Common Stock owned of record and beneficially by executive officers, directors and persons who hold 5% or more of the outstanding Common Stock of the Company. Also included are the shares held by all executive officers and directors as a group.
(1)
On March 20, 2012, there were 10,025,034 shares of our common stock outstanding and no shares of preferred stock issued and outstanding. We have no outstanding stock options or warrants.
(2)
Under applicable SEC rules, a person is deemed the "beneficial owner" of a security with regard to which the person directly or indirectly, has or shares (a) the voting power, which includes the power to vote or direct the voting of the security, or (b) the investment power, which includes the power to dispose, or direct the disposition, of the security, in each case irrespective of the person's economic interest in the security. Under SEC rules, a person is deemed to beneficially own securities which the person has the right to acquire within 60 days through the exercise of any option or warrant or through the conversion of another security.
(3)
In determining the percent of voting stock owned by a person on December 31, 2011 (a) the numerator is the number of shares of common stock beneficially owned by the person, including shares the beneficial ownership of which may be acquired within 60 days upon the exercise of options or warrants or conversion of convertible securities, and (b) the denominator is the total of (i) the 10,025,034 shares of common stock outstanding on December 31, 2011, and (ii) any shares of common stock which the person has the right to acquire within 60 days upon the exercise of options or warrants or conversion of convertible securities. Neither the numerator nor the denominator includes shares which may be issued upon the exercise of any other options or warrants or the conversion of any other convertible securities.
(4)
Mr. Halter is our sole officer, including President, and sole director. Mr. Halter’s address is 2591 Dallas Parkway, Suite 102, Frisco, TX 75034.
Changes in Control
None.
Item 13
Item 13 - Certain Relationships and Related Transactions, and Director Independence
We currently contract with Securities Transfer Corporation to utilize the surplus capacity of their staff to perform our services at a rate of $1,200 per month. We do not currently anticipate that we will hire any employees in the foreseeable future unless we significantly increase our client roster and require more personnel time than Securities Transfer Corporation has available. From time-to-time, we anticipate that we will use the services of other independent contractors and consultants to support our expansion and business development.
We sublease approximately 200 square feet of office space for our executive, administrative and operating offices from Securities Transfer Corporation’s at a cost of $400 per month, which approximates the cost of such space to Securities Transfer Corp, on a month-to-month basis.
We paid or accrued an aggregate $14,400 in expenses related to the above mentioned arrangements.
We do not have a written lease or sublease agreement with Securities Transfer Corporation for either of the above situations. We believe that our facilities are adequate for our needs and that additional suitable space will be available on acceptable terms as required.
During the year ended December 31, 2011, the Company received approximately 24.95% of gross revenues from entities either controlled by or affiliated with HFG or HFI.
Conflicts of Interest
The sole officer of the Company will not devote more than a small portion of his time to the affairs of the Company. There will be occasions when the time requirements of the Company’s business conflict with the demands of the officer’s other business and investment activities. Such conflicts may require that the Company attempt to employ additional personnel. There is no assurance that the services of such persons will be available or that they can be obtained upon terms favorable to the Company.
It is not currently anticipated that any salary, consulting fee, or finders fee shall be paid to any of the Company’s directors or executive officers, or to any other affiliate of the Company except as previously discussed.
Director Independence
Pursuant to the Company’s current structure of having a sole director, who is also the Company’s sole officer and controlling shareholder, the Company has no independent directors, as defined in Rule 5605(a)(2) of the NASDAQ Listing Rules.
Item 14
Item 14 - Principal Accountant Fees and Services
The Company paid or accrued the following fees in each of the prior two fiscal years to it’s principal accountant, S. W. Hatfield, CPA of Dallas, Texas.
We have considered whether the provision of any non-audit services, currently or in the future, is compatible with S. W. Hatfield, CPA maintaining its independence and have determined that these services do not compromise their independence.
Financial Information System Design and Implementation: S. W. Hatfield, CPA did not charge the Company any fees for financial information system design and implementation fees.
The Company has no formal audit committee. However, the entire Board of Directors (Board) is the Company's defacto audit committee. In discharging its oversight responsibility as to the audit process, the Board obtained from the independent auditors a formal written statement describing all relationships between the auditors and the Company that might bear on the auditors' independence as required by the appropriate Professional Standards issued by the Public Company Accounting Oversight Board, the U. S. Securities and Exchange Commission and/or the American Institute of Certified Public Accountants. The Board discussed with the auditors any relationships that may impact their objectivity and independence, including fees for non-audit services, and satisfied itself as to the auditors' independence. The Board also discussed with management, the internal auditors and the independent auditors the quality and adequacy of the Company's internal controls.
The Company’s principal accountant, S. W. Hatfield, CPA, did not engage any other persons or firms other than the principal accountant’s full-time, permanent employees.
Item 15
Item 15 - Exhibits and Financial Statement Schedules
Exhibit Description
2.1 Stock Exchange Agreement (*)
3.1 Articles of Incorporation (*)
3.2 Bylaws (*)
4.1 Specimen Stock Certificate (*)
31.1 Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
32.1 Certification pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
101 Interactive data files pursuant to Rule 405 of Regulation S-T.
(*)
Incorporated by reference to the Company’s Registration Statement on Form 10 (File No. 000-54275) on February 15, 2011.
(Financial statements follow starting at page)
SMSA Kerrville Acquisition Corp. and Subsidiary
Contents
F - 1
LETTERHEAD OF S. W. HATFIELD, CPA
REPORT OF REGISTERED INDEPENDENT CERTIFIED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
SMSA Kerrville Acquisition Corp.
We have audited the accompanying consolidated balance sheet of SMSA Kerrville Acquisition Corp. (a Nevada corporation) and Subsidiary as of December 31, 2011 and 2010 and the related consolidated statements of operations and comprehensive loss, changes in stockholders' equity (deficit) and cash flows for the year ended December 31, 2011 and for the period from November 9, 2010 (date of inception) through December 31, 2010. These consolidated financial statements are the sole responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of SMSA Kerrville Acquisition Corp. and Subsidiary as of December 31, 2011 and 2010 and the results of its consolidated operations and cash flows for the year ended December 31, 2011 and for the period from November 9, 2010 (date of inception) through December 31, 2010, in conformity with generally accepted accounting principles generally accepted in the United States of America.
/s/ S. W. Hatfield CPA
S. W. HATFIELD, CPA
Dallas, Texas
March 22, 2012
F - 2
SMSA Kerrville Acquisition Corp. and Subsidiary
Consolidated Balance Sheets
December 31, 2011 and 2010
The accompanying notes are an integral part of these financial statements.
F - 3
SMSA Kerrville Acquisition Corp. and Subsidiary
Consolidated Statements of Operations and Comprehensive Loss
Year ended December 31, 2011 and
Period from November 9, 2010 (date of inception) through December 31, 2011
The accompanying notes are an integral part of these financial statements.
F - 4
SMSA Kerrville Acquisition Corp. and Subsidiary
Consolidated Statement of Changes in Stockholders’ Equity (Deficit)
Period from November 9, 2010 (date of inception) through December 31, 2011
The accompanying notes are an integral part of these financial statements.
F - 5
SMSA Kerrville Acquisition Corp. and Subsidiary
Consolidated Statements of Cash Flows
Year ended December 31, 2011 and
Period from November 9, 2010 (date of inception) through December 31, 2010
The accompanying notes are an integral part of these financial statements.
F - 6
SMSA Kerrville Acquisition Corp. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 2011 and 2010
Note A - Background and Description of Business
SMSA Kerrville Acquisition Corp. (Company) was organized on May 3, 2010 as a Nevada corporation to effect the reincorporation of Senior Management Services of Kerrville, Inc., a Texas corporation, mandated by the plan of reorganization discussed below.
On December 15, 2010, the Company, STC Edgar, Inc. (Edgar) and the individual stockholders of Edgar entered into a Share Exchange Agreement (Exchange Agreement) whereby the stockholders of Edgar exchanged 100.0% of the issued and outstanding stock of Edgar for 9,500,000 shares of restricted, unregistered common stock of the Company. Edgar then became a wholly-owned subsidiary of the Company.
In February 2011, the Company filed a Registration Statement on Form 10 on a voluntary basis to become a reporting issuer pursuant to Section 12(g) of the Securities Exchange Act of 1934, which is a prerequisite for our common stock to become eligible for quotation on the OTC Bulletin Board. This Registration Statement was declared effective by the SEC on or about April 13, 2011.
Effective April 1, 2011, the Company’s wholly-owned subsidiary, Edgar, commenced business as a start-up company and took over the electronic document filing operations and clients formerly serviced by Securities Transfer Corporation, a related entity controlled by the Company’s President and majority stockholder, Kevin B. Halter, Jr., which was closed. No consideration was paid from the Company to Securities Transfer Corporation for the this business. This action removed the Company from the requirements of reporting as a “development stage company”.
Through the Company’s wholly-owned subsidiary, Edgar, the Company provides EDGARizing services to various commercial and corporate entities. Our primary service is the EDGARization of corporate documents that require filing on EDGAR, the Electronic Data Gathering, Analysis, and Retrieval system maintained by the Securities and Exchange Commission. EDGAR performs automated collection, validation, indexing, acceptance, and forwarding of submissions by companies and others who are required by law to file forms with the Securities and Exchange Commission. These documents include registration statements, prospectuses, annual reports, quarterly reports, periodic reports, debt agreements, special proxy statements, offering circulars, tender offer materials and other documents related to corporate financings, acquisitions and mergers. We receive our clients’ information in a variety of media, and reformat it for distribution, either in print, digital or Internet form. Neither the Company nor its wholly-owned subsidiary have any past or present affiliation with the U. S. Securities and Exchange Commission in any manner.
Note B - Reorganization Under Chapter 11 of the U. S. Bankruptcy Code
On January 17, 2007, Senior Management Services of Kerrville, Inc. and its affiliated companies (SMS Companies or Debtors) filed a petition for reorganization under Chapter 11 of the United States Bankruptcy Code. During the three years prior to filing the reorganization petition, SMS Companies operated a chain of skilled nursing homes, located principally in Texas, which prior to the bankruptcy proceedings consisted of a total of 14 separate nursing facilities, ranging in size from approximately 114 beds to 325 beds. In the aggregate, SMS Companies provided care to approximately 1,600 resident patients and employed over 1,400 employees. A significant portion of the SMS Companies cash flow was provided by patients covered by Medicare and Medicaid. The SMS Companies facilities provided round-the-clock care for the health, well-being, safety and medical needs of its patients. The administrative and operational oversight of the nursing facilities was provided by an affiliated management company located in Arlington, Texas. In 2005, SMS Companies obtained a secured credit facility from a financial institution. The credit facility eventually was comprised of an $8.3 million term loan and a revolving loan of up to $15 million which was utilized for working capital and to finance the purchase of the real property on which 2 of its nursing care facilities operated. By late 2006, SMS Companies were in an "overadvance" position, whereby the amount of funds extended by the lender exceeded the amount of collateral eligible to be borrowed under the credit facility. Beginning in September 2006, SMS Companies entered into the first of a series of forbearance agreements whereby the lender agreed to forebear from declaring the financing in default provided SMS Companies obtained a commitment from a new lender to refinance and restructure the credit facility. SMS Companies were unsuccessful in obtaining a commitment from a new lender and, on January 5, 2007, the lender declared SMS Companies in default and commenced foreclosure and collection proceedings. On January 9, 2007, the lender agreed to provide an additional $1.7 million to fund payroll and permit a controlled transaction to bankruptcy. Subsequently, on January 17, 2007, the SMS Companies filed a petition for reorganization under Chapter 11 of the Bankruptcy Code.
F - 7
SMSA Kerrville Acquisition Corp. and Subsidiary
Notes to Consolidated Financial Statements - Continued
December 31, 2011 and 2010
Note B - Reorganization Under Chapter 11 of the U. S. Bankruptcy Code - Continued
Under Chapter 11, certain claims against the Debtors in existence prior to the filing of the petitions for relief under Federal Bankruptcy Laws are stayed while the Debtors continue to operate their businesses as debtors-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. These claims were reflected in the predecessor company’s balance sheets as “Liabilities Subject to Compromise” through the settlement date. Additional claims (liabilities subject to compromise) may arise subsequent to the petition date resulting from the rejection of executory contracts, including leases, and from the determination of the court (or agreed to by parties in interest) of allowed claims for contingencies and other disputed amounts.
The First Amended, Modified Chapter 11 Plan, (the Plan) as presented by SMS Companies and their creditors was approved by the United States Bankruptcy Court, Northern District of Texas - Dallas Division on August 1, 2007. The Plan, which contemplates the Company entering into a reverse merger transaction, provided that certain identified claimants as well as unsecured creditors, in accordance with the allocation provisions of the Plan of Reorganization, and the Company’s new controlling stockholder would receive “new” shares of the Company’s post-reorganization common stock, pursuant to Section 1145(a) of the Bankruptcy Code (Plan Shares). As a result of the Plan’s approval, all liens, security interests, encumbrances and other interests, as defined in the Plan of Reorganization, attach to the creditor’s trust. Specific injunctions prohibit any of these claims from being asserted against the Company prior to the contemplated reverse merger.
All assets, liabilities and other claims, including “Allowed Administrative Claims” which arise in the processing of the bankruptcy proceedings, against the Company and it’s affiliated entities were combined into a single creditor’s trust for the purpose of distribution of funds to creditors. Each of the individual SMS Companies entities otherwise remained separate corporate entities. From the commencement of the bankruptcy proceedings through August 1, 2007 (the confirmation date of the plan of reorganization), all secured claims and/or administrative claims during this period were satisfied through either direct payment or negotiation.
The bankruptcy court had no continuing jurisdiction over the Company other than the acceptance by the court of a certificate of completion of a reverse merger or acquisition transaction when consummated which was filed with the court in accordance with the procedures provided in the confirmation order. Upon closing of the transaction with STC Edgar, Inc., we timely filed a certificate of compliance with the bankruptcy court which stated that the requirements of the Plan had been met and the discharge was granted. Thereafter, the post discharge injunction provisions set forth in the Plan and the confirmation order became effective.
Pursuant to the Plan, the pre-confirmation unsecured creditors of Senior Management Services of Kerrville, Inc. (our predecessor company) agreed to accept Plan Shares in SMSA Kerrville Acquisition Corp., as reorganized, in lieu of asserting recovery of their claims against the Plan’s liquidating trust.
The Company’s Plan of Reorganization was confirmed by the Bankruptcy Court on August 1, 2007 and became effective on August 10, 2007. It was determined that SMSA Kerrville Acquisition Corp’s reorganization value computed immediately before August 1, 2007, the confirmation date of the Plan of Reorganization, was approximately $1,000, which consisted of the following:
F - 8
SMSA Kerrville Acquisition Corp. and Subsidiary
Notes to Consolidated Financial Statements - Continued
December 31, 2011 and 2010
Note B - Reorganization Under Chapter 11 of the U. S. Bankruptcy Code - Continued
Pursuant to the Plan of Reorganization, all of the operations of the Company were transferred to a combined creditor’s trust and, as approved by the Bankruptcy Court, a completely new entity was formed for purposes of completing the aforementioned reverse merger transaction. The Company adopted fresh-start reporting because the holders of existing voting shares immediately before filing and confirmation of the Plan received less than 50.0% of the voting shares of the emerging entity and its reorganization value is not greater than its postpetition liabilities and allowed claims, as shown below:
The reorganization value of SMSA Kerrville Acquisition Corp. was determined in consideration of several factors and by reliance on various valuation methods, including discounting cash flow and price/earnings and other applicable ratios. The factors considered by SMSA Kerrville Acquisition Corp. included the following:
·
Forecasted operating and cash flows results which gave effect to the estimated impact of
-
Corporate restructuring and other operating program changes
-
Limitations on the use of available net operating loss carryforwards and other tax attributes resulting from the Plan of Reorganization and other events
·
The discounted residual value at the end of the forecast period based on capitalized cash flows for the last year of that period.
·
Market share and position
·
Competition and general economic conditions
·
Projected sales growth
·
Potential profitability
·
Seasonality and working capital requirements
After consideration of SMSA Kerrville Acquisition Corp.’s debt capacity and other capital structure considerations, such as industry norms, projected earnings to fixed charges, projected earnings before interest and projected free cash flow to debt service and other applicable ratios, management determined that SMSA Kerrville Acquisition Corp.’s reorganization capital structure should be as follows:
As previously discussed, the cancellation of all existing shares outstanding at the date of the bankruptcy filing and the issuance of all “new” shares of the reorganized entity caused an issuance of shares of common stock and a related change of control of the Company with more than 50.0% of the “new” shares being held by persons and/or entities which were not pre-bankruptcy stockholders. Accordingly, per the Reorganization topic of the FASB Accounting Standards Codification (Reorganization topic), the Company adopted “fresh-start” accounting as of the bankruptcy discharge date whereby all continuing assets and liabilities of the Company were restated to the fair market value. The Reorganization topic further states that fresh start financial statements prepared by entities emerging from bankruptcy will not be comparable with those prepared before their plans were confirmed because they are, in fact, those of a new entity. For accounting purposes, the Company adopted fresh start accounting in accordance with the Reorganization topic as of August 1, 2007, the confirmation date of the Plan.
As of August 1, 2007, in accordance with the Plan of Reorganization, the only asset of the Company was approximately $1,000 in cash transferred from the bankruptcy creditor’s trust.
F - 9
SMSA Kerrville Acquisition Corp. and Subsidiary
Notes to Consolidated Financial Statements - Continued
December 31, 2011 and 2010
Note C - Preparation of Financial Statements
The acquisition of STC Edgar, Inc. on December 15, 2010 by SMSA Kerrville Acquisition Corp. effected a change in control and was accounted for as a “reverse acquisition” whereby STC Edgar, Inc. is the accounting acquiror for financial statement purposes. Accordingly, for all periods subsequent to the December 15, 2010 “reverse acquisition” transaction, the historical financial statements of the Company reflect the financial statements of STC Edgar, Inc. since it’s inception on November 9, 2010 and the operations of SMSA Kerrville Acquisition Corp. subsequent to December 15, 2010.
The Company follows the accrual basis of accounting in accordance with generally accepted accounting principles and has established a year-end for accounting purposes of December 31.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
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.
Note D - Related Party Transactions and Conflicts of Interest
Timothy P. Halter, the Company’s former sole officer and director from August 1, 2007 (date of bankruptcy settlement) through December 14, 2010, is the sole officer, director and stockholder of Halter Financial Group, Inc. (HFG), and an officer and member of Halter Financial Investments GP, LLC, general partner of Halter Financial Investments, L. P. (HFI), our former controlling stockholder. Timothy P. Halter is the brother of Kevin B. Halter, Jr. who has served as the Company’s sole officer and director since December 15, 2010. Kevin B. Halter, Jr. is responsible for the implementation and operation of our business plan.
Approximately 24.95% of the Company’s gross revenues during the year ended December 31, 2011 were received from entities controlled by or affiliated with HFG or HFI.
Kevin Halter, Jr., our controlling stockholder, is also the President and majority stockholder of Securities Transfer Corporation, an affiliated entity which formerly provided services comparable to those of the Company. Mr. Halter is not obligated to contribute any specific number of hours to our affairs, which may result in an conflict of interest in allocating his time between our operations and his other business affairs. If his other business affairs require him to devote more substantial amounts of time to such interests, it could limit his ability to devote time to our affairs and could have a negative impact on our ability to manage our business plan.
Subsequent to the December 15, 2010 transaction date, the Company and it’s current controlling stockholder, Kevin Halter, Jr., agreed that additional funds were necessary to support the corporate entity, comply with the periodic reporting requirements of the Securities Exchange Act of 1934, as amended, and commence operations under the Company’s business plan. To this end, in February 2011, Mr. Halter loaned the Company $25,000 through a loan agreement bearing interest at 6.0% with the note being due upon demand. This loan was repaid in November 2011 from funds generated through operating activities. The Company accrued approximately $1,164 in interest payable which remains unpaid as of the release date of these financial statements.
F - 10
SMSA Kerrville Acquisition Corp. and Subsidiary
Notes to Consolidated Financial Statements - Continued
December 31, 2011 and 2010
Note D - Related Party Transactions and Conflicts of Interest - Continued
On April 1, 2011, concurrent with the commencement of operation of our business plan, the Company contracted with Securities Transfer Corporation to provide personnel, office space, equipment and administrative support for our business plan. Accordingly, the Company has paid or accrued approximately $1,200 per month for personnel costs and approximately $400 per month for office space, equipment usage and administrative support in the operation of our business plan, totaling approximately $14,400.
Note E - Summary of Significant Accounting Policies
1.
Cash and cash equivalents
The Company considers all cash on hand and in banks, certificates of deposit and other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents.
2.
Accounts receivable
In the normal course of business, the Company extends unsecured credit to virtually all of its customers which are located throughout the United States. Because of the credit risk involved, management has provided an allowance for doubtful accounts which reflects its opinion of amounts which will eventually become uncollectible. In the event of complete non-performance, the maximum exposure to the Company is the recorded amount of trade accounts receivable shown on the balance sheet at the date of non-performance.
The Company charges all customers on an “as-completed” project basis with virtually all projects being completed in 1 working day or less. Accordingly, revenue is recognized by the Company at the point at which the project is transmitted to the U. S. Securities and Exchange Commission. The Company then has no remaining performance obligations, management is of the opinion that collection is reasonably assured and the Company’s services do not allow for any no right of return on the part of the customer.
3.
Reorganization costs
The Company has adopted the provisions of provisions required by the Start-Up Activities topic of the FASB Accounting Standards Codification whereby all costs incurred with the incorporation and reorganization of the Company were charged to operations as incurred.
4.
Income taxes
The Company files income tax returns in the United States of America and various states, as appropriate and applicable. The Company does not anticipate any examinations of any tax returns filed since the Company’s inception in 2010.
The Company uses the asset and liability method of accounting for income taxes. At December 31, 2011 and 2010, the deferred tax asset and deferred tax liability accounts, as recorded when material to the financial statements, are entirely the result of temporary differences. Temporary differences generally represent differences in the recognition of assets and liabilities for tax and financial reporting purposes, primarily accumulated depreciation and amortization, allowance for doubtful accounts and vacation accruals, as well as the potential impact of any net operating loss carryforwards (s) and their potential utilization.
The Company has adopted the provisions required by the Income Taxes topic of the FASB Accounting Standards Codification. The Codification Topic requires the recognition of potential liabilities as a result of management’s acceptance of potentially uncertain positions for income tax treatment on a “more-likely-than-not” probability of an assessment upon examination by a respective taxing authority. As a result of the implementation of Codification’s Income Tax Topic, the Company did not incur any liability for unrecognized tax benefits.
F - 11
SMSA Kerrville Acquisition Corp. and Subsidiary
Notes to Consolidated Financial Statements - Continued
December 31, 2011 and 2010
Note E - Summary of Significant Accounting Policies - Continued
5.
Income (Loss) per share
Basic earnings (loss) per share is computed by dividing the net income (loss) available to common stockholders by the weighted-average number of common shares outstanding during the respective period presented in our accompanying financial statements.
Fully diluted earnings (loss) per share is computed similar to basic income (loss) per share except that the denominator is increased to include the number of common stock equivalents (primarily outstanding options and warrants).
Common stock equivalents represent the dilutive effect of the assumed exercise of the outstanding stock options and warrants, using the treasury stock method, at either the beginning of the respective period presented or the date of issuance, whichever is later, and only if the common stock equivalents are considered dilutive based upon the Company’s net income (loss) position at the calculation date.
As of December 31, 2011 and 2010, the Company had no outstanding stock warrants, options or convertible securities which could be considered as dilutive for purposes of the loss per share calculation.
6.
Recent 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 flows.
Note F - Fair Value of Financial Instruments
The carrying amount of cash, accounts receivable, accounts payable and notes payable, as applicable, approximates fair value due to the short term nature of these items and/or the current interest rates payable in relation to current market conditions.
Interest rate risk is the risk that the Company’s earnings are subject to fluctuations in interest rates on either investments or on debt and is fully dependent upon the volatility of these rates. The Company does not use derivative instruments to moderate its exposure to interest rate risk, if any.
Financial risk is the risk that the Company’s earnings are subject to fluctuations in interest rates or foreign exchange rates and are fully dependent upon the volatility of these rates. The Company does not use derivative instruments to moderate its exposure to financial risk, if any.
Note G - Income Taxes
The components of income tax (benefit) expense for the year ended December 31, 2011 and for the period from November 9, 2010 (date of inception) through December 31, 2010 is as follows:
F - 12
SMSA Kerrville Acquisition Corp. and Subsidiary
Notes to Consolidated Financial Statements - Continued
December 31, 2011 and 2010
Note G - Income Taxes - Continued
As of December 31, 2011, the Company has no net operating loss carryforwards. The amount and availability of any future net operating loss carryforward will be subject to the limitations set forth in the Internal Revenue Code. Such factors as the number of shares ultimately issued within a three year look-back period; whether there is a deemed more than 50 percent change in control; the applicable long-term tax exempt bond rate; continuity of historical business; and subsequent income of the Company all enter into the annual computation of allowable annual utilization of any net operating loss carryforward(s).
The Company's income tax expense (benefit) for the year ended December 31, 2011 and for the period from November 9, 2010 (date of inception) through December 31, 2010 varied from the statutory rate of 34% as follows:
The Company’s only temporary difference due to statutory requirements in the recognition of assets and liabilities for tax and financial reporting purposes, as of December 31, 2011 and 2010, relates solely to the Company’s net operating loss carryforward(s). This difference gives rise to the financial statement carrying amounts and tax bases of assets and liabilities causing either deferred tax assets or liabilities, as necessary, as of December 31, 2011 and 2010, respectively:
During the year ended December 31, 2011 and for the period from November 9, 2010 (date of inception) through December 31, 2010, the valuation allowance for the deferred tax asset increased (decreased) by approximately $(100)and $100, respectively.
Note H - Capital Stock Transactions
Pursuant to the Plan affirmed by the U. S. Bankruptcy Court - Northern District of Texas - Dallas Division, the Company will issue a sufficient number of Plan shares to meet the requirements of the Plan. Such number was estimated in the Plan to be approximately 500,000 Plan Shares relative to each Post Confirmation Debtor.
As provided in the Plan, 80.0% of the Plan Shares of the Company were issued to Halter Financial Group, Inc. (HFG) in exchange for the release of its Allowed Administrative Claims, the performance of certain services and the payment of certain fees related to the then-anticipated reverse merger or acquisition transactions as described in the Plan. The remaining 20.0% of the Plan Shares of the Company were issued to other holders of various claims as defined in the Plan.
F - 13
SMSA Kerrville Acquisition Corp. and Subsidiary
Notes to Consolidated Financial Statements - Continued
December 31, 2011 and 2010
Note H - Capital Stock Transactions - Continued
Based upon the calculations provided by the Creditor’s Trustee, the Company issued an aggregate 525,034 shares of the Company’s “new” common stock to all unsecured creditors and the controlling stockholder in settlement of all unpaid pre-confirmation obligations of the Company and/or the bankruptcy trust.
Effective May 3, 2010, HFG transferred its 400,000 Plan Shares to Halter Financial Investments, L.P. (HFI), a Texas limited partnership controlled by Timothy P. Halter, who is also the controlling officer of HFG.
On December 15, 2010, the Company, STC Edgar, Inc. (Edgar) and the individual stockholders of Edgar entered into a “Share Exchange Agreement” (Exchange Agreement) whereby the stockholders of Edgar exchanged 100.0% of the issued and outstanding stock of Edgar for 9,500,000 shares of restricted, unregistered common stock of the Company. Edgar then became a wholly-owned subsidiary of the Company.
Note I - Subsequent Events
Management has evaluated all activity of the Company through March 22, 2011 (the issue date of the financial statements) and concluded that no subsequent events have occurred that would require recognition in the financial statements or disclosure in the notes to consolidated financial statements.
(Signatures follow on next page)
F - 14
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: March 22, 2012 SMSA Kerrville Acquisition Corp.
Kevin B. Halter, Jr.
President, Chief Executive Officer
Chief Financial Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates as indicated.
Dated: March 22, 2012 SMSA Kerrville Acquisition Corp.
Kevin B. Halter, Jr.
President, Chief Executive Officer
Chief Financial Officer and Director