UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
DC  20549





Form
10-K





(Mark
one)


x
            Annual
      Report Under Section 13 or 15(d) of The Securities Exchange Act of
      1934





For the fiscal year ended December 31,
2009





o
            Transition Report Under Section
      13 or 15(d) of The Securities Exchange Act of
  1934





For the transition period from
______________ to _____________





Commission
File Number: 000-53334





SMSA
El Paso II Acquisition Corp.


(Exact
Name of Registrant as Specified in Its Charter)





Nevada
                      
                      26-2809162(State
      of Incorporation)
                      
                      (I.
      R. S.  Employer ID
Number)





11753 Willard Avenue,
Tustin, CA. 92782


(Address
of Principal Executive Offices)





(714)
832-3249


(Registrant’s
Telephone Number)





28 Cottonwood Lane, Hilton
Head, SC. 2996


(Former
name or former address, if changed since last report)





Securities
registered pursuant to Section 12 (b) of the Act - None


Securities
registered pursuant to Section 12(g) of the Act: - Common Stock - $0.001 par
value





Indicate
by check mark if the registrant is a well known seasoned issuer, as defined in
Rule 405 of the Securities Act.


Yes o  No x





Indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or Section
15(d) of the Exchange Act.Yes oNo x





Indicate by check mark whether the
registrant has (1) filed all reports required to be filed by Section 13 or 15(d)
of the Exchange Act during the past 12 months (or for such shorter period the
Company was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.Yes xNoo





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post files).  Yes o No o





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





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


Large
      accelerated filer  o
              
              Accelerated
      filer                     
      oNon-accelerated
      filer    o
              
              Smaller
      reporting company    x





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act):


Yes x  No o





The
aggregate market value of voting and non-voting common equity held by
non-affiliates as of June 30, 2009 was approximately $ -0-.  The
registrant had issued and outstanding  23,443,754 shares of its common
stock on April 8, 2010.





Indicate
by check mark whether the registrant has filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court. x Yes o
No





SMSA
El Paso II Acquisition Corp.


Form
10-K for the year ended December 31, 2009





Index
to Contents




Page NumberPart
      IItem
      1
                        
                        Business
                        
                        1Item
      1A
                        
                        Risk
      Factors
                        
                        9Item
      2
                        
                        Properties
                        
                        9Item
      3
                        
                        Legal
      Proceedings
                        
                        9Item
      4
                        
                        (Removed
      and Reserved)Part
      IIItem
      5
                        
                        Market
      for Registrant’s Common Equity, Related
      Stockholder Matters and Issuer
      Purchases of Equity Securities
                        
                        10Item
      6
                        
                        Selected
      Financial Data
                        
                        11Item
      7
                        
                        Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                        
                        11Item
      7A
                        
                        Quantitative
      and Qualitative Disclosures About Market Risk
                        
                        11Item8
                        
                        Financial
      Statements and Supplementary Data
                        
                        11Item
      9
                        
                        Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure
                        
                        13Item
      9A
                        
                        Controls
      and Procedures
                        
                        13Item
      9B
                        
                        Other
      Information
                        
                        15Part
      IIIItem
      10
                        
                        Directors,
      Executive Officers and Corporate Governance
                        
                        16Item
      11
                        
                        Executive
      Compensation
                        
                        18Item
      12
                        
                        Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
                        
                        19Item
      13
                        
                        Certain
      Relationships and Related Transactions, and Director
      Independence
                        
                        20Item
      14
                        
                        Principal
      Accountant Fees and Services
                        
                        20Part
      IVItem
      15
                        
                        Exhibits
      and Financial Statement Schedules
                        
                        21Signatures
                        
                        
                        
                        21


ii


Forward-Looking
Statements and Associated Risks




This
Report, including all documents incorporated herein by reference, includes
certain “forward-looking statements” within the meaning of that term in Section
13 or 15(d) of the Securities Act of 1934, and Section 21E of the Exchange Act,
including, among others, those statements preceded by, followed by or including
the words “believes,” “expects,” “anticipates” or similar
expressions.




These
forward-looking statements are based largely on the Company’s current
expectations and are subject to a number of risks and
uncertainties.  The Company’s actual results could differ materially
from these forward-looking statements.  Important factors to consider
in evaluating such forward-looking statements include:




·
            changes
      in the Company’s business strategy or an inability to execute the
      Company’s strategy due to unanticipated changes in the
    market,





·
            the
      Company’s ability to raise sufficient capital to meet operating
      requirements,





·
            various
      competitive factors that may prevent the Company from competing
      successfully in the marketplace,
and





·
            changes
      in external competitive market factors or in the Company’s internal
      budgeting process which might impact trends in the Company’s results of
      operations.




In light
of these risks and uncertainties, there can be no assurance that the events
contemplated by the forward-looking statements contained in this Report will, in
fact, occur.


iii


PART
I





Item
      1.
            Business.


Overview





SMSA El Paso II Acquisition Corp. ( the
“Company”) was organized on May 21, 2008 as a Nevada corporation to effect the
reincorporation of Senior Management Services of El Paso Coronado, Inc., a Texas
corporation, mandated by the plan of reorganization discussed
below.  The Company is a development stage company, and currently
plans to engage in the business of providing drilling equipment and contract
drilling services to participants in the oil, gas and mineral industries,
initially in South America.





History





On January 17, 2007, Senior Management
Services of El Paso Coronado, Inc. and its affiliated companies (collectively,
the “SMS Companies”), filed a petition for reorganization under Chapter 11 of
the United States Bankruptcy Code. On August 1, 2007, the bankruptcy court
confirmed the First Amended, Modified Chapter 11 Plan (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, the 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, the 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 around-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, the 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 that 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, the 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, the 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 the SMS Companies
obtained a commitment from a new lender to refinance and restructure the credit
facility.  The SMS Companies were unsuccessful in obtaining a
commitment from a new lender, and on January 5, 2007, the lender declared the
SMS Companies, including the Company, 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.  On January 17, 2007, the SMS
Companies filed a petition for reorganization under Chapter 11 of the Bankruptcy
Code.


1


Plan
of Reorganization





Halter Financial Group, Inc. (“HFG”)
participated with the 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.  In consideration of
such funding, HFG was granted an option to be repaid through the issuance of
equity securities in 23 of the SMS Companies, including Senior Management
Services of El Paso Coronado, Inc.





HFG exercised the option and, as
provided in the Plan, 80% of the Company’s outstanding common stock, or 400,000
shares, was issued to HFG in satisfaction of HFG’s administrative claims. The
remaining 20% of the Company’s outstanding common stock, or 100,004 shares, was
issued to 449 holders of the Company’s unsecured debt.  The 500,004
shares, or “Plan Shares”, were issued pursuant to Section 1145 of the Bankruptcy
Code.





As
further consideration for the issuance of the 400,000 Plan Shares to HFG, the
Plan required HFG to assist the Company in identifying a potential merger or
acquisition candidate with an operating business or plan of
operations.  Prior to any such merger or acquisition, HFG was
responsible for the payment of the Company’s operating expenses and HFG agreed
to provide the Company, at no cost, with consulting services, including
assisting the Company with formulating the structure of any proposed merger or
acquisition.





Effective
May 21, 2008, HFG transferred its 400,000 Plan Shares to Halter Financial
Investments L.P. (“HFI”), a Texas limited partnership controlled by Timothy P.
Halter.  At such time, Timothy P. Halter was the sole officer,
director and shareholder of HFG and an officer and member of Halter Financial
Investments GP, LLC, the general partner of HFI. Mr. Halter served as the
Company’s President and sole director from May 21, 2008 until June 13, 2008,
when he was replaced by Richard Crimmins.





On August
10, 2009, the Company entered into a share exchange agreement  with
Trans Global Operations, Inc., a Delaware corporation (“TGO”), and all of the
shareholders of TGO, pursuant to which the shareholders of TGO transferred all
of the issued and outstanding stock of TGO to the Company, in exchange for
4,500,000 newly-issued shares of the Company’s common stock that, in the
aggregate, constituted 90% of the Company’s issued and outstanding capital stock
on a fully-diluted basis as of and immediately after the consummation of such
exchange.  Upon the consummation of the share exchange on August, 10,
2009, Gerard Pascale became the Company’s Chairman, President, Chief Financial
Officer and Secretary.





On
November 5, 2009, the Company entered into a Securities Purchase Agreement (the
“Purchase Agreement”) with Michael Campbell, pursuant to which Mr. Campbell
purchased from the Company an aggregate of 20,000,000 shares of the Company’s
common stock for an aggregate purchase price of $20,000.  On such
date, the Company also entered into a Contribution Agreement with Mr. Campbell
and Gerard Pascale, pursuant to which Mr. Pascale contributed 3,000,000 shares
of the common stock then owned by him to the treasury of the Company to induce
Mr. Campbell to enter into the Purchase Agreement.  Upon the
consummation of the transactions contemplated by the Purchase Agreement, Gerard
Pascale resigned as the Company’s President, Chief Financial Officer and
Secretary and Michael Campbell assumed such positions with the Company in
addition to the positions of Chief Executive Officer and
Treasurer.  At such time, Mr. Campbell was also appointed to the
Company’s board of directors.  Mr. Pascale resigned as a director
effective March 19, 2010.


2


The
Company’s Business Plan





The
Company is a currently a development stage company without significant assets,
liabilities or operating activities.  However, concurrently with the
consummation of the transactions contemplated by the Purchase Agreement, the
Company abandoned its  previous business plan and adopted a new
business plan to acquire and employ in the marketplace oil, gas and mineral
drilling rigs and well servicing equipment.  Management believes that
initially the Company will be able to acquire rigs and related equipment at
discount prices relative to their historical market values and employ them under
long-term service contracts with national oil companies (“NOCs”) and independent
oil companies (“IOCs”) in South America that pay profitable
day-rates.   According to Baker Hughes Inc. (“BHI”), as of
September 2009, the number of active drilling rigs in North America dropped 56%
from the prior year.  As a result, the Company anticipate that the
Company will be able to acquire many of the idle rigs from U.S.-based oil and
gas drilling and service companies at distressed prices using the Company’s
capital stock to finance a third or more of the acquisition cost.





The
Company intends to execute its business plan by creating and taking majority
interests in joint ventures with established land-based drilling and services
contractors operating throughout South America.  One potential joint
venture partner with which the Company is in preliminary discussions has been in
the oil and gas drilling and services business for over 17 years and is
presently operating nine drilling rigs under contracts with Petrobas, CVRD of
Brazil and Petrogal.   The Company believes this potential joint
venture partner has over 500 well-trained employees and is one of only ten
approved land-based drilling contractors for Petrobras in Brazil.  The
Company expects this joint venture partner to provide the organization
management and oversight to operate the drilling rigs, support the drilling
crews and manage the required infrastructure for each drilling
contract.   The Company believes a second potential joint venture
partner has approximately 400 oil field drilling and well servicing personnel on
staff, and operates drilling rigs and equipment under 11 contracts with
Petrobras.  The Company is in the early stages of discussions or
negotiations with these and other potential joint venture partners, and there
can be no assurance that the Company will be successful in establishing a joint
venture, or reaching any other agreement, with either of these or any other
potential joint venture partners.





Drilling Industry
Overview





Most oil and gas operators, both
foreign and domestic, do not own their own rigs and instead rely on specialized
land rig contractors, which is the business in which the Company proposed to
engage, to provide the drilling rig and the crew to do the drilling. Contract
drilling is characterized by the high fixed costs of owning and operating the
drilling rigs and low variable costs.  The industry is highly
fragmented and highly dependent on the level of drilling activity and rig
utilization. Globally, Nabors Industries, Inc., Patterson-UTI Energy, Inc. are
the top three land drilling contractors by revenues. Despite the fact that there
are between 200 and 300 land drilling contractors in North America, the top six
contractors account for nearly 50% of the revenues. Internationally, most
countries have no more than five-to-10 land drilling contractors with equipment
in country, not including the in-house drilling contractors of some NOCs that
may provide most or all of the drilling requirements of their
parent.


3


Contract
Drilling Operations





Through
the Company’s joint ventures, the Company initially expect to market its
contract drilling services to major NOCs and IOCs in South America that are
already customers of the Company’s potential joint venture
partners.  Potential customers include Petrobras, Petrogal, Aurizonia,
CVRD of Brazil, Ecopetrol of Columbia, PeruPetro, PetroEcuador and other NOCs
and IOCs.





The
Company expects that the principal contribution the Company will make to any
joint venture the Company create will be the drilling rigs and related equipment
to be employed by such joint venture or the cash or financing for the joint
venture to acquire such rigs and equipment, and that the principal contribution
that the Company’s joint venture partner will make to the joint venture will be
the drilling contract, or the customers willing to enter into a drilling
contract with the joint venture, and the drilling personnel required to operate
the rigs and manage the contract.





According
to BHI’s weekly rig count, the number of active rigs in the United States peaked
at 2031 in August 2008 before falling to a low of 876 by June of
2009.  In addition, according to National Oilwell Varco’s Annual Rig
Census (“Rig Census”), published in November 2009, an estimated 164 land-based
drilling rigs were removed from service in 2009, an increase of over 64% from
2008.  The Rig Census attributes the sharp increase in idle rigs to
the impact of the recession and the erosion of the oil prices from the record
levels set in 2008.  While the number of active drilling rigs in
operation has increased to 1407 in March 2010, an increase of over 61% from June
2009, management believes there is still a significant number of idled rigs and
equipment in the U.S. that can be purchased at deep discounts relative to their
historical market values.  On the other hand, based on industry
projections, the South American oil producers, including Petrobras, Petrogal,
Aurizonia, CVRD of Brazil, Ecopetrol of Columbia, PeruPetro, PetroEquador and
other NOC and IOC companies, are projected to collectively require over 100
land-based drilling rigs and a large amount of service equipment over the next
18 to 24 months to keep their drilling programs on schedule.





A land-based drilling rig consists of
engines, a hoisting system, a rotating system, pumps and related equipment to
circulate drilling fluid, blowout preventors and related equipment.





Diesel or gas engines are typically the
main power sources for a drilling rig.  Power requirements for
drilling jobs may vary considerably, but most drilling rigs employ two or more
engines to generate between 500 and 2,000 horsepower, depending on well depth
and rig design.  Most drilling rigs capable of drilling in deep
formations, involving depths greater than 15,000 feet, use diesel-electric power
units to generate and deliver electric current through cables to electrical
switch gears, then to direct-current electric motors attached to the equipment
in the hoisting, rotating and circulating systems.





Drilling rigs use long strings of drill
pipe and drill collars to drill wells.  Drilling rigs are also used to
set heavy strings of large-diameter pipe, or casing, inside the
borehole.  Because the total weight of the drill string and the casing
can exceed 500,000 pounds, drilling rigs require significant hoisting and
braking capacities. Generally, a drilling rig’s hoisting system is made up of a
mast, or derrick, a drilling line, a traveling block and hook assembly and
ancillary equipment that attaches to the rotating system, a mechanism known as
the drawworks.  The drawworks mechanism consists of a revolving drum,
around which the drilling line is wound, and a series of shafts, clutches and
chain and gear drives for generating speed changes and reverse
motion.  The drawworks also houses the main brake, which has the
capacity to stop and sustain the weights used in the drilling
process.  When heavy loads are being lowered, a hydromatic or electric
auxiliary brake assists the main brake to absorb the great amount of energy
developed by the mass of the traveling block, hook assembly, drill pipe, drill
collars and drill bit or casing being lowered into the well.


4


The rotating equipment from top to
bottom consists of a swivel, the kelly bushing, the kelly, the rotary table,
drill pipe, drill collars and the drill bit. The Company refers to the equipment
between the swivel and the drill bit as the drill stem.  The swivel
assembly sustains the weight of the drill stem, permits its rotation and affords
a rotating pressure seal and passageway for circulating drilling fluid into the
top of the drill string.  The swivel also has a large handle that fits
inside the hook assembly at the bottom of the traveling
block.  Drilling fluid enters the drill stem through a hose, called
the rotary hose, attached to the side of the swivel.  The kelly is a
triangular, square or hexagonal piece of pipe, usually 40 feet long, that
transmits torque from the rotary table to the drill stem and permits its
vertical movement as it is lowered into the hole.  The bottom end of
the kelly fits inside a corresponding triangular, square or hexagonal opening in
a device called the kelly bushing.  The kelly bushing, in turn, fits
into a part of the rotary table called the master bushing. As the master bushing
rotates, the kelly bushing also rotates, turning the kelly, which rotates the
drill pipe and thus the drill bit. Drilling fluid is pumped through the kelly on
its way to the bottom.  The rotary table, equipped with its master
bushing and kelly bushing, supplies the necessary torque to turn the drill
stem.  The drill pipe and drill collars are both steel tubes through
which drilling fluid can be pumped.  Drill pipe, sometimes called
drill string, comes in 30-foot sections, or joints, with threaded sections on
each end.  Drill collars are heavier than drill pipe and are also
threaded on the ends. Collars are used on the bottom of the drill stem to apply
weight to the drilling bit. At the end of the drill stem is the bit, which chews
up the formation rock and dislodges it so that drilling fluid can circulate the
fragmented material back up to the surface where the circulating system filters
it out of the fluid.





Drilling fluid, often called mud, is a
mixture of clays, chemicals and water or oil, which is carefully formulated for
the particular well being drilled.  Bulk storage of drilling fluid
materials, the pumps and the mud-mixing equipment are placed at the start of the
circulating system. Working mud pits and reserve storage are at the other end of
the system.  Between these two points the circulating system includes
auxiliary equipment for drilling fluid maintenance and equipment for well
pressure control. Within the system, the drilling mud is typically routed from
the mud pits to the mud pump and from the mud pump through a standpipe and the
rotary hose to the drill stem.  The drilling mud travels down the
drill stem to the bit, up the annular space between the drill stem and the
borehole and through the blowout preventer stack to the return flow
line.  It then travels to a shale shaker for removal of rock cuttings,
and then back to the mud pits, which are usually steel tanks.  The
reserve pits, usually one or two fairly shallow excavations, are used for waste
material and excess water around the location.





There are numerous factors that
differentiate drilling rigs, including their power generation systems and their
drilling depth capabilities.  The actual drilling depth capability of
a rig may be less than or more than its rated depth capability due to numerous
factors, including the size, weight and amount of the drill pipe on the
rig.  The intended well depth and the drill site conditions determine
the amount of drill pipe and other equipment needed to drill a well. Generally,
land rigs operate with crews of five to six persons.


5


As a provider of contract land drilling
services, the Company’s business and the profitability of the Company’s
operations will depend on the level of drilling activity by oil and natural gas
exploration and production companies operating in the geographic markets in
which the Company operate.  The oil and natural gas exploration and
production industry is a historically cyclical industry characterized by
significant changes in the levels of exploration and development
activities.  For example, as oil and natural gas prices steeply
declined and credit markets tightened in late calendar 2008, customers in many
geographic markets aggressively reduced drilling
budgets.   During periods of lower levels of drilling activity,
price competition tends to increase and results in decreases in the
profitability of daywork contracts.





The Company expects to obtain its
contracts for drilling oil and natural gas wells either through competitive
bidding or through direct negotiations with customers.  The Company
expects to typically enter into drilling contracts that provide for compensation
on a daywork basis.  The contract terms the Company expects to offer
generally will depend on the complexity and risk of operations, the on-site
drilling conditions, the type of equipment used and the anticipated duration of
the work to be performed.  The Company expects that, generally, its
contracts will provide for the drilling of a single well and typically permit
the customer to terminate on short notice, usually on payment of an agreed
fee.




Daywork
Contracts.  Under a daywork drilling contract, the Company will
provide a drilling rig with required personnel to its customer who the Company
expects will supervise the drilling of the well.  The Company
generally will be paid based on a negotiated fixed rate per day while the rig is
used. Daywork drilling contracts specify the equipment to be used, the size of
the hole and the depth of the well.  Under a daywork drilling
contract, the customer bears a large portion of the out-of-pocket drilling costs
and the Company generally bear no part of the usual risks associated with
drilling, such as time delays and unanticipated costs.





Footage
Contracts.  Under footage contracts, the Company generally will
be paid a fixed amount for each foot drilled, regardless of the time required or
the problems encountered in drilling the well.  The Company expects
that typically the Company will pay more of the out-of-pocket costs associated
with footage contracts as compared to daywork contracts.  The risks to
the Company on a footage contract will be greater because the Company will
assume most of the risks associated with drilling operations generally assumed
by the operator in a daywork contract, including the risk of blowout, loss of
hole, stuck drill pipe, machinery breakdowns, abnormal drilling conditions and
risks associated with subcontractors’ services, supplies, cost escalation and
personnel.  The Company expects that, if it enters into footage
contracts, it will endeavor to manage this additional risk through the use of
engineering expertise and bid the footage contracts accordingly, and the Company
will typically maintain insurance coverage against some, but not all, drilling
hazards.  However, the occurrence of uninsured or under-insured losses
or operating cost overruns on its footage jobs could have a negative impact on
its profitability.  While the Company does not expect to enter into
footage contracts, the Company may enter into one or more of such arrangements
to the extent warranted by market conditions.





Turnkey
Contracts.  Turnkey contracts typically provide for a drilling
company to drill a well for a customer to a specified depth and under specified
conditions for a fixed price, regardless of the time required or the problems
encountered in drilling the well.  The drilling company would provide
technical expertise and engineering services, as well as most of the equipment
and drilling supplies required to drill the well.  The drilling
company may subcontract for related services, such as the provision of casing
crews, cementing and well logging.  Under typical turnkey drilling
arrangements, a drilling company would not receive progress payments and would
be paid by its customer only after it had performed the terms of the drilling
contract in full.


6


While the Company does not plan to
enter into turnkey contracts, the Company may decide to enter into such
arrangements in the future to the extent warranted by market
conditions.  It is also possible that the Company may acquire such
contracts in connection with future acquisitions.  The risks to a
drilling company under a turnkey contract are substantially greater than on a
well drilled on a daywork basis.  This is primarily because under a
turnkey contract the drilling company assumes most of the risks associated with
drilling operations generally assumed by the operator in a daywork contract,
including the risk of blowout, loss of hole, stuck drill pipe, machinery
breakdowns, abnormal drilling conditions and risks associated with
subcontractors’ services, supplies, cost escalations and personnel.





Well
Servicing





The Company’s business plan also
contemplates that, when funding and market conditions permit, the Company will
also establish a well servicing segment to provide a broad range of well
services to oil and natural gas exploration and production companies, including
maintenance, workover, new well completion, and plugging and
abandonment.  The Company’s well servicing segment services may
include:





•
            maintenance
      work involving removal, repair and replacement of down-hole equipment and
      returning the well to production after these operations are
      completed;





•
            hoisting
      tools and equipment required by the operation into and out of the well, or
      removing equipment from the well bore, to facilitate specialized
      production enhancement and well repair operations performed by other
      oilfield service companies;





•
            plugging
      and abandonment services when a well has reached the end of its productive
      life; and


•
            completion
      work involving selectively perforating the well casing at the depth of
      discrete producing zones, stimulating and testing these zones and
      installing down-hole equipment.





The Company expects that, generally,
the Company will charge its customers an hourly rate for these services, which
will vary based on a number of considerations including market conditions in
each region, the type of rig and ancillary equipment required, and the necessary
personnel.





The Company has no immediate plans to
enter into the well serving business and there can be no assurance as to when,
if ever, the Company will elect to do so.





Competition





The Company intends to operate in the
oil and gas industry, which is a highly competitive environment. The Company’s
competitors in the oil and gas contract drilling and well services business are
expected to include the major oil companies and numerous independent oil and gas
drilling contractors.  Many of these competitors possess and employ
financial and personnel resources substantially greater than those that are
available to the Company.  The Company’s ability to acquire long-term
drilling contracts in the future in such a highly-competitive environment will
depend on the Company’s ability and the ability of the Company’s joint venture
partners to leverage the existing relationships of the Company’s joint venture
partners and to consummate transactions in competition with these
companies.  The Company believes pricing and rig availability are the
primary factors its potential customers consider in determining which drilling
contractor to select.  In addition, the Company believes the following
factors are also important:


7


•
            the
      type and condition of each of the competing drilling
  rigs;





•
            the
      mobility and efficiency of the
rigs;





•
            the
      quality of service and experience of the rig
  crews;





•
            the
      offering of ancillary services; and





•
            the
      ability to provide drilling equipment adaptable to, and personnel familiar
      with, new technologies and drilling
techniques.





While the Company must be competitive
in its pricing, the Company believes its competitive strategy will generally
emphasize the quality of its equipment and the experience of the Company’s rig
crews to differentiate the Company from the Company’s
competitors.  This strategy is less effective as lower demand for
drilling services or an oversupply of rigs results in increased price
competition and makes it more difficult for the Company to compete on the basis
of factors other than price.  In all of the markets in which the
Company intends to compete, an oversupply of rigs can cause greater price
competition.





Contract drilling companies compete
primarily on a regional basis, and the intensity of competition may vary
significantly from region to region at any particular time.  If demand
for drilling services improves in a region in which the Company operates, the
Company’s competitors might respond by moving in suitable rigs from other
regions.  An influx of drilling rigs from other regions could rapidly
intensify competition and reduce profitability.





Environmental
Matters





The operations of the Company’s
intended business may be subject to environmental laws and regulations
concerning emissions to the air, discharges to waterways, and generation,
handling, storage, transportation, treatment and disposal of waste
materials.   The Company’s operations  may also be
subject to other Federal, state and local laws and regulations regarding health
and safety matters.  While the Company expects that the Company and
its joint venture partners will comply with applicable environmental and health
and safety laws and regulations, these laws and regulations are constantly
evolving and it is impossible to predict whether compliance with these laws and
regulations may have a material adverse effect on the Company in the
future.





Employees





The Company has no full time
employees.  The Company has consulting agreements with its Chief
Executive Officer and its Chief Financial Officer, pursuant which they will
provide the Company with administrative and management
services.  Personnel for the Company’s drilling operations will be
provided by the Company’s various joint venture partners.


8


Item
      1A.
            Risk
      Factors.





Not Applicable.





Item
      2.
            Properties.





The Company does not own any real
property.  The Company’s executive office is located at 11753 Willard
Avenue, Tustin, CA. 92782, in the office of Michael Campbell, the Company’s
Chief Executive Officer.  The Company’s telephone number is (714)
832-3249.  The Company does not currently maintain any other office
facilities, and management believes the existing facility is sufficient for its
current operations.  The Company pays no rent or other fees for the
use of this office.





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.
            (Removed
      and Reserved)


9


PART
II





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





The Company’s common stock is eligible
for trading on the OTC Bulletin Board under SEC Rule 15c2-11, Subsection
(a)(5).  The Company’s trading symbol is SMSA.OB.  As of the
date of this annual report, there have been no known trades of the Company’s
common stock.





The Company relied, based on the
confirmation order the Company received from the Bankruptcy Court, on Section
1145(a)(1) of the Bankruptcy Code to exempt from the registration requirements
of the Securities Act of 1933, as amended, both the offer of the Plan Shares
which may have been deemed to have occurred through the solicitation of
acceptances of the Plan of Reorganization and the issuance of the Plan Shares
pursuant to the Plan of  Reorganization.  In general, offers
and sale of securities made in reliance on the exemption afforded under Section
1145(a)(1) of the Bankruptcy Code are deemed to be made in a public offering, so
that the recipients thereof are free to resell such securities without
registration under the Securities Act.





Holders





As of April 8, 2010, there were a total
of 23,443,754 shares of the Company’s common stock outstanding, held by
approximately 502 stockholders of record.





Dividends





During the Company’s fiscal years ended
December 31, 2009 and 2008, the Company did not pay dividends.  The
Company presently intends to retain all earnings, if any, and accordingly the
Board of Directors does not anticipate declaring any dividends in the
foreseeable future.





Recent
Sales of Unregistered Securities





On March 2, 2010, the Company issued an
aggregate of 1,093,750 shares of common stock to various investors in a private
placement for an aggregate purchase price of $350,000.  These
transactions were exempt from registration pursuant to Section 4(2) of the
Securities Act.





On March 2, 2010, the Company also
issued an aggregate of 350,000 shares of common stock to the placement agent in
the above-referenced private placement as consideration for its
services.  These transactions were exempt from registration pursuant
to Section 4(2) of the Securities Act.


10


Item
      6.
            Selected
      Financial Data.





Not applicable.





Item
      7.
            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations.





Results
of Operations





The Company had no revenue for either
of the years ended December 31, 2009 or 2008.





General and administrative expenses for
the years ended December 31, 2009 and 2008 were approximately $292,155 and
$11,977, respectively.  These expenses were directly related to the
maintenance of the corporate entity and the preparation and filing of periodic
reports pursuant to the Exchange Act.  It is anticipated that future
expenditure levels will increase as the Company intends to fully comply with its
periodic reporting requirements.





It is anticipated that future
expenditure levels will remain relatively consistent until such time that the
Company enters into a joint venture agreement with one of its potential joint
venture partners. Upon entering into a joint venture agreement and thereby
securing drilling contracts, it is anticipated that the Company’s expenses will
increase significantly.





The Company does not expect to generate
any meaningful revenue or incur operating expenses for purposes other than
fulfilling the obligations of a reporting company under the Exchange Act unless
and until such time that the Company begins meaningful operations.





Liquidity
and Capital Resources





The
Company has financed its operations to date primarily through private placements
of equity securities.   During March 2010, the Company sold
1,093,750 shares of common stock to various investors for an aggregate purchase
price of $350,000.  This inflow of cash is expected to be used by the
Company primarily to locate and research potential joint venture partners and
establish potential joint ventures in South America.





Item
      7A.
            Quantitative
      and Qualitative Disclosures about Market
Risk.





Not applicable.





Item
      8.
            Financial
      Statements and Supplementary
Data.


11





SMSA
El Paso II Acquisition Corp.


(a
development stage company)





Contents





PageReport
      of Registered Independent Certified Public Accounting Firm
                                    
                                    F-1Financial
      StatementsBalance
      Sheetsas
      of December 31, 2009 and 2008
                                    
                                    F-2Statement
      of Operations and Comprehensive Lossfor
      years ended December 31, 2009 and 2008 andfor
      the period from August 1, 2007 (date of bankruptcysettlement)
      through December 31, 2009 (reorganized company)
                                    
                                    F-3Statement
      of Changes in Stockholders' Equityfor
      the period from August 1, 2007 (date of bankruptcysettlement)
      through December 31, 2009 (reorganized company)
                                    
                                    F-4Statement
      of Cash Flowsfor
      years ended December 31, 2009 and 2008 andfor
      the period from August 1, 2007 (date of bankruptcysettlement)
      through December 31, 2009 (reorganized company)
                                    
                                    F-5Notes
      to Financial Statements
                                    
                                    F-6


12


LETTERHEAD OF S. W.
HATFIELD, CPA





REPORT OF REGISTERED
INDEPENDENT CERTIFIED PUBLIC ACCOUNTING FIRM





Board of
Directors and Stockholders


SMSA El
Paso II Acquisition Corp.





We have
audited the accompanying balance sheets of SMSA El Paso II Acquisition Corp. (a
Nevada corporation and a development stage company) as of December 31, 2009 and
2008 and the related statements of operations and comprehensive loss, changes in
stockholders' equity and cash flows for the each of the years ended December 31,
2009 and 2008 and for the period from August 1, 2007 (date of bankruptcy
settlement) through December 31, 2009.  These financial statements are
the sole responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statements based on
our audits.





We
conducted our audits 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 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 financial
statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.  We believe
that our audits provide a reasonable basis for our opinion.





In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of SMSA El Paso II Acquisition Corp.
(a development stage company) as of December 31, 2009 and 2008 and the results
of its operations and cash flows for each of the years ended December 31, 2009
and 2008 and the period from August 1, 2007 (date of bankruptcy settlement)
through December 31, 2009, in conformity with generally accepted accounting
principles generally accepted in the United States of America.





The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern.  As discussed in Note D to the
financial statements, the Company has no viable operations or significant assets
and is dependent upon significant stockholders to provide sufficient working
capital to maintain the integrity of the corporate entity.  These
circumstances create substantial doubt about the Company's ability to continue
as a going concern and are discussed in Note D.  The financial
statements do not contain any adjustments that might result from the outcome of
these uncertainties.





/s/ S. W. Hatfield, CPAS.
      W. HATFIELD, CPA


Dallas,
Texas


April 7,
2010


F-1


SMSA
El Paso II Acquisition Corp.


(a
development stage company)


Balance
Sheets


December
31, 2009 and 2008





December 31,
                    
                    
                    December 31,2009
                    
                    
                    2008ASSETSCurrent
      AssetsCash
      on hand and in bank
                    
                    $
                    -
                    
                    
                    $
                    -Total
      Assets
                    
                    $
                    -
                    
                    
                    $
                    -LIABILITIES AND STOCKHOLDERS' EQUITY
      (DEFICIT)Current
      LiabilitiesContract
      payable to stockholder - trade
                    
                    $
                    250,000
                    
                    
                    $
                    -Working
      capital advances from stockholder
                    
                    
                    -
                    
                    
                    
                    10,977Total
      Liabilities
                    
                    
                    250,000
                    
                    
                    
                    10,977Commitments
      and ContingenciesStockholders'
      Equity (Deficit)Preferred
      stock - $0.001 par value 10,000,000 shares authorized. None issued and
      outstanding
                    
                    
                    -
                    
                    
                    
                    -Common
      stock - $0.001 par value. 100,000,000 shares authorized. 22,000,004 and
      500,004 shares issued and outstanding
                    
                    
                    22,000
                    
                    
                    
                    500Additional
      paid-in capital
                    
                    
                    41,132
                    
                    
                    
                    500Deficit
      accumulated during the development stage
                    
                    
                    (313,132
                    )
                    
                    
                    (11,977
                    )Total
      Stockholders' Equity (Deficit)
                    
                    
                    (250,000
                    )
                    
                    
                    (10,977
                    )Total
      Liabilities and Stockholders’ Equity (Deficit)
                    
                    $
                    -
                    
                    
                    $
                    1,000


F-2


SMSA
El Paso II Acquisition Corp.


(a
development stage company)


Statements
of Operations and Comprehensive Income (Loss)


Years
ended December 31, 2009 and 2008 and


Period
from August 1, 2007 (date of bankruptcy settlement) through December 31,
2009





Period fromAugust 1, 2007(date ofbankruptcysettlement)Year ended
                
                
                Year ended
                
                
                throughDecember 31,
                
                
                December 31,
                
                
                December 31,2009
                
                
                2008
                
                
                2009Revenues
                
                $
                -
                
                
                $
                -
                
                
                $
                -Operating
      expensesReorganization
      costs
                
                
                -
                
                
                
                3,581
                
                
                
                3,581Professional
      fees
                
                
                288,205
                
                
                
                7,683
                
                
                
                295,888Other
      general and administrative costs
                
                
                3,950
                
                
                
                713
                
                
                
                4,663Total
      operating expenses
                
                
                292,155
                
                
                
                11,977
                
                
                
                304,132Loss
      from operations
                
                
                (292,155
                )
                
                
                (11,977
                )
                
                
                (304,132
                )Other
      income (loss)Impairment
      of goodwill from acquisition of Trans Global Operations.
    Inc.
                
                
                (9,000
                )
                
                
                -
                
                
                
                (9,000
                )Loss
      before provision for income taxes
                
                
                (301,155
                )
                
                
                (11,977
                )
                
                
                (313,132
                )Provision
      for income taxes
                
                
                -
                
                
                
                -
                
                
                
                -Net
      Income (Loss)
                
                
                (301,155
                )
                
                
                (11,977
                )
                
                
                (313,132
                )Other
      comprehensive income
                
                
                -
                
                
                
                -
                
                
                
                -Comprehensive
      Income (Loss)
                
                $
                (301,155
                )
                
                $
                (11,977
                )
                
                $
                (313,132
                )Loss
      per weighted-average share of common stock outstanding, computed on net
      loss - basic and fully diluted
                
                $
                (0.06
                )
                
                $
                (0.02
                )
                
                $
                (0.13
                )Weighted-average
      number of shares of common stock outstanding - basic and fully
      diluted
                
                
                4.918,037
                
                
                
                500,004
                
                
                
                2,329,190


F-3


SMSA
El Paso II Acquisition Corp.


(a
development stage company)


Statement
of Changes in Stockholders’ Equity (Deficit)


Period
from August 1, 2007 (date of bankruptcy settlement) through December 31,
2009





DeficitaccumulatedAdditional
                        
                        
                        during theCommon Stock
                        
                        
                        paid-in
                        
                        
                        developmentShares
                        
                        
                        Amount
                        
                        
                        capital
                        
                        
                        stage
                        
                        
                        TotalStock
      issued pursuant to plan of reorganization at bankruptcy settlement date on
      August 1, 2007
                        
                        
                        500,004
                        
                        
                        $
                        500
                        
                        
                        $
                        500
                        
                        
                        $
                        -
                        
                        
                        $
                        1,000Net
      loss for the period from August 1, 2007 (date of bankruptcy settlement) to
      December 31, 2007
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -Balances
      at December 31, 2007
                        
                        
                        500,004
                        
                        
                        
                        500
                        
                        
                        
                        500
                        
                        
                        
                        -
                        
                        
                        
                        1,000Net
      loss for the year
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (11,977
                        )
                        
                        
                        (11,977
                        )Balances
      at December 31, 2008
                        
                        
                        500,004
                        
                        
                        
                        500
                        
                        
                        
                        500
                        
                        
                        
                        (11,977
                        )
                        
                        
                        (10,977
                        )Stock
      issued in Share Exchange Agreement with Trans Global Operations, Inc. on
      August 10, 2009
                        
                        
                        4,500,000
                        
                        
                        
                        4,500
                        
                        
                        
                        4,500
                        
                        
                        
                        -
                        
                        
                        
                        9,000Sale
      of common stock pursuant to Securities Purchase Agreement on November 5,
      2009
                        
                        
                        20,000,000
                        
                        
                        
                        20,000
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        20,000Surrender
      of common stock by former controlling stockholder on November 5,
      2009
                        
                        
                        (3,000,000
                        )
                        
                        
                        (3,000
                        )
                        
                        
                        3,000
                        
                        
                        
                        -
                        
                        
                        
                        -Working
      capital loans forgiven by stockholder on November 5, 2009
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        36,132
                        
                        
                        
                        -
                        
                        
                        
                        36,132Net
      loss for the year
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (301,155
                        )
                        
                        
                        (301,155
                        )Balances
      at December 31, 2009
                        
                        
                        22,000,004
                        
                        
                        $
                        22,000
                        
                        
                        $
                        41,132
                        
                        
                        $
                        (313,112
                        )
                        
                        $
                        (250,000
                        )


F-4


SMSA
El Paso II Acquisition Corp.


(a
development stage company)


Statement
of Cash Flows


Years
ended December 31, 2009 and 2008 and


Period
from August 1, 2007 (date of bankruptcy settlement) through December 31,
2009





Period fromAugust 1, 2007(date ofbankruptcysettlement)Year ended
                
                
                Year ended
                
                
                throughDecember 31,
                
                
                December 31,
                
                
                December 31,2009
                
                
                2008
                
                
                2009Cash
      Flows from Operating ActivitiesNet
      income (loss) for the period
                
                $
                (301,155
                )
                
                $
                (11,977
                )
                
                $
                (313,132
                )Adjustments
      to reconcile net loss to net cash provided by operating
      activitiesDepreciation
                
                
                -
                
                
                
                -
                
                
                
                -Impairment
      of goodwill from acquisition of Trans Global Operations,
    Inc.
                
                
                9,000
                
                
                
                -
                
                
                
                9,000Increase
      in contract payable to stockholder
                
                
                250,000
                
                
                
                -
                
                
                
                250,000Net
      cash used in operating activities
                
                
                (42,155
                )
                
                
                (11,977
                )
                
                
                (54,132
                )Cash
      Flows from Investing Activities
                
                
                -
                
                
                
                -
                
                
                
                -Cash
      Flows from Financing ActivitiesSale
      of common stock
                
                
                20,000
                
                
                
                -
                
                
                
                20,000Cash
      funded from bankruptcy trust
                
                
                -
                
                
                
                1,000
                
                
                
                1,000Cash
      advanced for working capital by former controlling
    stockholder
                
                
                42,155
                
                
                
                10,977
                
                
                
                53,132Cash
      repaid to former controlling stockholder
                
                
                (20,000
                )
                
                
                -
                
                
                
                (20,000
                )Net
      cash provided by financing activities
                
                
                41,155
                
                
                
                11,977
                
                
                
                54,132Increase
      in Cash
                
                
                -
                
                
                
                -
                
                
                
                -Cash
      at beginning of period
                
                
                -
                
                
                
                -
                
                
                
                -Cash
      at end of period
                
                $
                -
                
                
                $
                -
                
                
                $
                -Supplemental
      Disclosure of Interest and Income Taxes PaidInterest
      paid during the period
                
                $
                -
                
                
                $
                -
                
                
                $
                -Income
      taxes paid during the period
                
                $
                -
                
                
                $
                -
                
                
                $
                -Supplemental
      Disclosure of Non-Cash Investing and Financing ActivitiesWorking
      capital loans forgiven by stockholder as contributed
    capital
                
                $
                31,632
                
                
                $
                -
                
                
                $
                31,632


F-5




SMSA El
Paso II Acquisition Corp.


(a
development stage company)


Notes to
Financial Statements


December
31, 2009 and 2008





Note
A - Background and Description of Business





SMSA El
Paso II Acquisition Corp. (“Company”) was organized on May 21, 2008 as a Nevada
corporation to effect the bankruptcy court’s ordered reincorporation of Senior
Management Services of El Paso Coronado, Inc. (“Predecessor Company”), a Texas
corporation, mandated by the plan of reorganization discussed
below.





The
Company’s emergence from Chapter 11 of Title 11 of the United States Code on
August 1, 2007, which was effective on August 10, 2007, created the combination
of a change in majority ownership and voting control - that is, loss of control
by the then-existing stockholders, a court-approved reorganization, and a
reliable measure of the entity’s fair value - resulting in a fresh start,
creating, in substance, a new reporting entity.  Accordingly, the
Company, post bankruptcy, has no significant assets, liabilities or operating
activities.  Therefore, the Company, as a new reporting entity,
qualifies as a “development stage enterprise” as defined in Development Stage
Entities topic of the FASB Accounting Standards Codification and a shell company
as defined in Rule 405 under the Securities Act of 1933 (“Securities Act”), and
Rule 12b-2 under the Securities Exchange Act of 1934 (“Exchange
Act”).





On August
10, 2009, the Company entered into a Share Exchange Agreement, (the “Share
Exchange Agreement”), with Trans Global Operations, Inc., a Delaware corporation
(“TGO”), and all of the shareholders of TGO.  Pursuant to the Share
Exchange Agreement, the stockholders of TGO transferred 100% of the issued and
outstanding shares of the capital stock of TGO in exchange for 4,500,000 newly
issued shares of the Company’s common stock that, in the aggregate, constituted
approximately 90% of the Company’s issued and outstanding capital stock on a
fully-diluted basis as of and immediately after the consummation of such
exchange.  As a result of this transaction, 5,000,004 shares of the
Company’s common stock is currently issued and outstanding.





TGO was
organized on August 10, 2009 as a Delaware corporation and was formed to seek
and identify a privately-held operating company desiring to become a publicly
held company with access to United States capital markets by combining with us
through a reverse merger or acquisition transaction.





On
November 5, 2009, the Company entered into a Securities Purchase Agreement
(“Purchase Agreement”) with Michael Campbell whereby Mr. Campbell purchased from
the Company an aggregate of 20,000,000 shares of restricted, unregistered common
stock.   Additionally, on the same date, the Company entered into
a Contribution Agreement between the Company, Mr. Campbell and Gerard Pascale,
the Company’s then-current sole officer, director and controlling shareholder,
pursuant to which Mr. Pascale surrendered 3,000,000 shares of the common stock
then owned by him to the Company at no cost to the Company to induce Mr.
Campbell to enter into the Purchase Agreement.





The
Company’s business plan, subsequent to the November 5, 2009 transaction, is to
acquire and employ, in the marketplace, oil, gas and mineral drilling rigs and
well servicing equipment.  Management believes that, initially, the
Company will be able to acquire said rigs and related equipment at discount
prices relative to their historical market values and employ them under
long-term service contracts with national and independent oil companies located
in South America that pay profitable day-rates.


F-6


SMSA El
Paso II Acquisition Corp.


(a
development stage company)


Notes to
Financial Statements


December
31, 2009 and 2008





Note
B - Reorganization Under Chapter 11 of the U. S. Bankruptcy Code





On
January 17, 2007, Senior Management Services of El Paso Coronado, Inc. and its
affiliated companies (collectively “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 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 two 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.





The 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.





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 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.  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.




F-7


SMSA El
Paso II Acquisition Corp.


(a
development stage company)


Notes to
Financial Statements


December
31, 2009 and 2008





All
assets, liabilities and other claims, including “Allowed Administrative Claims”
which arise in the processing of the bankruptcy proceedings, against the Company
and its 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.





Pursuant
to the confirmation order, if the Company did not consummate a business
combination prior to August 10, 2009, as mandated in the Plan of Reorganization,
the Plan Shares would be deemed canceled, the pre-merger or acquisition
injunction provisions of the confirmation order, as they pertain to the Company,
would be deemed dissolved and no discharge would be granted to the Company, all
without further order of the bankruptcy court. The Company believes it satisfied
this conditions as a result of the share exchange transaction with TGO and it
therefore filed a Certificate of Compliance with the bankruptcy court on August
11, 2009.





(Remainder
of this page left blank intentionally)




F-8


SMSA El
Paso II Acquisition Corp.


(a
development stage company)


Notes to
Financial Statements


December
31, 2009 and 2008





Note
B - Reorganization Under Chapter 11 of the U. S. Bankruptcy Code -
Continued





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 the Company’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:





Current
      assets to be transferred to the post-confirmation entity
                  
                  $
                  1,000Fair
      market value of property and equipment
                  
                  
                  -Deposits
      with vendors and other assets transferred to the post-confirmation
      entity
                  
                  
                  -Reorganization
      value
                  
                  $
                  1,000





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:





Postpetition
      current liabilities
                  
                  $
                  -Liabilities
      deferred pursuant to Chapter 11 proceeding
                  
                  
                  -“New”
      common stock issued upon reorganization
                  
                  
                  1,000Total
      postpetition liabilities and allowed claims
                  
                  
                  1,000Reorganization
      value
                  
                  
                  (1,000
                  )Excess
      of liabilities over reorganization value
                  
                  $
                  -





The
reorganization value of the Company 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 the Company 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 the Company’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 the Company’s
reorganization capital structure should be as follows:


F-9





SMSA El
Paso II Acquisition Corp.


(a
development stage company)


Notes to
Financial Statements


December
31, 2009 and 2008





Common
      Stock (500,004 “new” shares to be issued at $0.001 par
    value)
                  
                  $
                  500Additional
      paid-in capital
                  
                  
                  500Total
      reorganized capital structure
                  
                  $
                  1,000





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, 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 Codification as of
August 1, 2007, the confirmation date of the Plan.  The following
accounting entries and condensed balance sheet illustrate the financial effect
of implementing the Company’s Plan and the adoption of fresh start reporting as
of the approval of the Plan by the Bankruptcy Court on August 1,
2007.





Entries to record debt
      discharge
                    
                    Debit
                    
                    
                    CreditLiabilities
      subject to compromise
                    
                    $
                    1,107,487Cash
                    
                    
                    
                    
                    
                    $
                    1,120Accounts
      receivable - trade and other
                    
                    
                    
                    
                    
                    
                    202,564Prepaid
      expenses and other assets
                    
                    
                    
                    
                    
                    
                    17,190Property
      and equipment
                    
                    
                    
                    
                    
                    
                    376,784Accumulated
      depreciation
                    
                    
                    136,220Gain
      on debt discharge
                    
                    
                    
                    
                    
                    
                    646,049Entries to record cancellation of “old” stock and
      issuance of “new” stock
                    
                    Debit
                    
                    
                    CreditCommon
      stock - old
                    
                    $
                    10Additional
      paid-in capital
                    
                    
                    490Common
      stock - new
                    
                    
                    
                    
                    
                    $
                    500Entries to record the adoption of fresh-start
      reporting and to eliminate the deficitCash
      due from bankruptcy creditor’s trust
                    
                    $
                    1,000Accumulated
      deficit
                    
                    
                    
                    
                    
                    $
                    1,000




F-10





SMSA El
Paso II Acquisition Corp.


(a
development stage company)


Notes to
Financial Statements


December
31, 2009 and 2008





The
effect of the Plan of Reorganization on the Company’s balance sheet at August 1,
2007, is as follows:





Adjustments to record confirmation of
      PlanJuly 31, 2007
                
                
                
                
                
                
                
                
                
                
                
                August 1, 2007ReorganizedPre-
                
                
                Debt
                
                
                Exchange
      of
                
                
                Fresh
                
                
                BalanceConfirmation
                
                
                discharge
                
                
                stock
                
                
                start
                
                
                SheetCash
      on hand and in bank
                
                $
                1,120
                
                
                $
                (1,120
                )
                
                $
                -
                
                
                $
                1,000
                
                
                $
                1,000Accounts
      receivable
                
                
                202,564
                
                
                
                (202,564
                )
                
                
                -
                
                
                
                -
                
                
                
                -Prepaid
      expenses and other assets
                
                
                17,190
                
                
                
                (17,190
                )
                
                
                -
                
                
                
                -
                
                
                
                -Total
      current assets
                
                
                220,874
                
                
                
                (220,874
                )
                
                
                -
                
                
                
                1,000
                
                
                
                1,000Property
      and equipment
                
                
                376,784
                
                
                
                (376,784
                )
                
                
                -
                
                
                
                -
                
                
                
                -Accumulated
      depreciation
                
                
                (136,220
                )
                
                
                136,220
                
                
                
                -
                
                
                
                -
                
                
                
                -Net
      property and equipment
                
                
                240,564
                
                
                
                (240,564
                )
                
                
                -
                
                
                
                -
                
                
                
                -Total
      Assets
                
                $
                461,438
                
                
                $
                (461,438
                )
                
                $
                -
                
                
                $
                1,000
                
                
                $
                1,000





Adjustments to record confirmation of
      PlanJuly 31, 2007
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  August 1, 2007ReorganizedPre-
                  
                  
                  Debt
                  
                  
                  Exchange
      of
                  
                  
                  Fresh
                  
                  
                  BalanceConfirmation
                  
                  
                  discharge
                  
                  
                  stock
                  
                  
                  start
                  
                  
                  SheetLiabilities
      subject to compromise
                  
                  $
                  1,107,487
                  
                  
                  $
                  (1,107,487
                  )
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -Stockholders’
      equity (deficit)Common
      stock - new
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  500
                  
                  
                  
                  -
                  
                  
                  
                  500Common
      stock - old
                  
                  
                  10
                  
                  
                  
                  -
                  
                  
                  
                  (10
                  )
                  
                  
                  -
                  
                  
                  
                  -Additional
      paid-in capital
                  
                  
                  990
                  
                  
                  
                  -
                  
                  
                  
                  (490
                  )
                  
                  
                  -
                  
                  
                  
                  500Accumulated
      deficit
                  
                  
                  (647,049
                  )
                  
                  
                  646,049
                  
                  
                  
                  -
                  
                  
                  
                  1,000
                  
                  
                  
                  -Total
      stockholders’ deficit
                  
                  
                  (646,049
                  )
                  
                  
                  646,049
                  
                  
                  
                  -
                  
                  
                  
                  1,000
                  
                  
                  
                  1,000Total
      Liabilities andStockholders’
      Equity
                  
                  $
                  461,438
                  
                  
                  $
                  (461,438
                  )
                  
                  $
                  -
                  
                  
                  $
                  1,000
                  
                  
                  $
                  1,000





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.





Note
C - Preparation of Financial Statements





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.


F-11





SMSA El
Paso II Acquisition Corp.


(a
development stage company)


Notes to
Financial Statements


December
31, 2009 and 2008





Note
D - Going Concern Uncertainty





The
Company’s business plan, subsequent to the November 5, 2009 transaction, is to
acquire and employ in the marketplace oil, gas and mineral drilling rigs and
well servicing equipment.  Management believes that initially the
Company will be able to acquire rigs and related equipment at discount prices
relative to their historical market values and employ them under long-term
service contracts with national and independent oil companies located in South
America that pay profitable day-rates.  However, at the present time,
the Company has no sustainable operations or assets.  Because of these
factors, the Company’s auditors have issued an audit opinion on the Company’s
financial statements which includes a statement describing the Company’s going
concern status.  This means, in the auditor’s opinion, substantial
doubt about the Company’s ability to continue as a going concern exists at the
date of their opinion.





The
Company's continued existence is dependent upon its ability to generate
sufficient cash flows from operations to support its daily operations as well as
provide sufficient resources to retire existing liabilities and obligations on a
timely basis.  Further, the Company faces considerable risk in it’s
business plan and a potential shortfall of funding due to the Company’s
inability to raise capital in the equity securities market.  If no
additional operating capital is received during the next twelve months, the
Company will be forced to rely on existing cash in the bank and additional funds
loaned by management and/or significant stockholders.





The
Company may become dependent upon additional external sources of financing;
including being dependent upon its management and/or significant stockholders to
provide sufficient working capital in excess of the Company’s initial
capitalization to preserve the integrity of the corporate entity.





The
Company anticipates offering future sales of equity
securities.  However, there is no assurance that the Company will be
able to obtain additional funding through the sales of additional equity
securities or, that such funding, if available, will be obtained on terms
favorable to or affordable by the Company.





The
Company’s certificate of incorporation authorizes the issuance of up to
10,000,000 shares of preferred stock and 100,000,000 shares of common
stock.  The Company’s ability to issue preferred stock may limit the
Company’s ability to obtain debt or equity financing as well as impede potential
takeover of the Company, which takeover may be in the best interest of
stockholders.  The Company’s ability to issue these authorized but
unissued securities may also negatively impact the Company’s ability to raise
additional capital through the sale of the Company’s debt or equity
securities.





If
necessary, it is the intent of management and significant stockholders to
provide sufficient working capital necessary to support and preserve the
integrity of the corporate entity.  However, no formal commitments or
arrangements to advance or loan funds to the Company or repay any such advances
or loans exist.  There is no legal obligation for either management or
significant stockholders to provide additional future funding.





In such a
restricted cash flow scenario, the Company would be unable to complete its
business plan steps, and would, instead, delay all cash intensive
activities.  Without necessary cash flow, the Company may become
dormant during the next twelve months, or until such time as necessary funds
could be raised in the equity securities market.


F-12




SMSA El
Paso II Acquisition Corp.


(a
development stage company)


Notes to
Financial Statements


December
31, 2009 and 2008





While the
Company is of the opinion that good faith estimates of the Company’s ability to
secure additional capital in the future to reach its goals have been made, there
is no guarantee that the Company will receive sufficient funding to sustain
operations or implement any future business plan steps.





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.
            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, post-bankruptcy, of the
Company were charged to operations as incurred.





3.
            Income
      taxes





The
Company files income tax returns in the United States of America and various
states, as appropriate and applicable.  As a result of the Company’s
bankruptcy action, the Company is no longer subject to U.S. federal, state and
local, as applicable, income tax examinations by regulatory taxing authorities
for any period prior to August 1, 2007.  The Company does not
anticipate any examinations of returns filed for periods ending after August 1,
2007.





The
Company uses the asset and liability method of accounting for income
taxes.  At December 31, 2009 and 2008, respectively, 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.





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.





4.
            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 the Company’s accompanying
financial statements.


F-13


SMSA El
Paso II Acquisition Corp.


(a
development stage company)


Notes to
Financial Statements


December
31, 2009 and 2008





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, 2009 and 2008, and subsequent thereto, 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.





5.
            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 - Acquisition of Trans Global Operations, Inc.





On August
10, 2009, the Company entered into the Share Exchange Agreement with TGO and all
of the shareholders of TGO.  Pursuant to the Share Exchange Agreement,
the shareholders of TGO transferred 100% of the issued and outstanding shares of
capital stock of TGO in exchange for 4,500,000 newly issued shares of the
Company’s common stock that, in the aggregate, constituted 90% of the Company’s
issued and outstanding capital stock on a fully-diluted basis as of and
immediately after the consummation of such exchange.





The
Company’s then-business plan was to continue to seek and identify a
privately-held operating company desiring to become a publicly held company with
access to United States capital markets by combining with the Company through a
reverse merger or acquisition transaction.


F-14


SMSA El
Paso II Acquisition Corp.


(a
development stage company)


Notes to
Financial Statements


December
31, 2009 and 2008





The
goodwill of approximately $9,000 arising from the acquisition consists largely
of the synergies and access to new business contacts that the management of TGO
brought to the Company in order to more effectively implement the Company’s
business plan.  It is anticipated that goodwill will not be deductible
for Federal and State income taxes.





The
following table summarizes the consideration paid for TGO and the amounts of the
assets acquired and liabilities assumed recognized at the August 10, 2009
acquisition date.





Equity
      interest (4,500,000 shares of common stock)
                      
                      $
                      9,000Fair
      value of total consideration transferred
                      
                      $
                      9,000Acquisition-related
      costs (included in professional fees in the accompanying financial
      statements for the year ended December 31, 2009)
                      
                      $
                      25,990Recognized
      amounts of identifiable assets acquiredand
      liabilities assumedCash
                      
                      $
                      -Total
      net identifiable assets
                      
                      
                      -Goodwill
                      
                      
                      9,000$
                      9,000





The fair
value of the 4,500,000 shares given in consideration for the acquisition of TGO
was determined using approximately the transaction value of the shares of the
Company issued at the date of the bankruptcy settlement ($1,000) using the
initial number of shares (500,004) outstanding.  There were no
contingent consideration arrangements and no contingent liabilities assumed by
the Company.  TGO had no operations prior to the
acquisition.





Note
H - Contract Payable to Stockholder





On
November 5, 2009, the Company entered into an Advisory Agreement (Advisory
Agreement) with Halter Financial Group, L.P. (HFG), an affiliate of Halter
Financial Investments, L.P., a stockholder of the Company, pursuant to which HFG
agreed to provide certain advisory services on an as-needed basis to the Company
for a fee of $250,000 (Advisory Fee).  The Advisory Agreement is for a
term of 12 months; however, the term may be extended by mutual agreement of the
parties.  The Advisory Fee was initially due and payable by December
15, 2009 and the closing date on the Advisory Agreement was separately extended
by mutual agreement to January 31, 2010 and February 28, 2010,
respectively.  The Advisory Fee was paid in full prior to February 28,
2010.


F-15


SMSA El
Paso II Acquisition Corp.


(a
development stage company)


Notes to
Financial Statements


December
31, 2009 and 2008





Note
I - Income Taxes





The
components of income tax (benefit) expense for each of the years ended December
31, 2009 and 2008 and for the period from August 1, 2007 (date of bankruptcy
settlement) through December 31, 2009, respectively, are as
follows:





Period
      fromAugust
      1, 2007(date
      ofbankruptcysettlement)Year
      ended
                    
                    
                    Year
      ended
                    
                    
                    throughDecember
      31,
                    
                    
                    December
      31,
                    
                    
                    December
      31,2009
                    
                    
                    2008
                    
                    
                    2009Federal:Current
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -Deferred
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    --
                    
                    
                    
                    -
                    
                    
                    
                    -State:Current
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Deferred
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    --
                    
                    
                    
                    -
                    
                    
                    
                    -Total
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -





As of
December 31, 2008, after the November 5, 2009 change in control transaction, the
Company has a net operating loss carryforward of approximately $280,000 to
offset future taxable income.  The amount and availability of any net
operating loss carryforwards 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).





Note
I - Income Taxes - Continued





The
Company's income tax expense (benefit) for each of the years ended December 31,
2009 and 2008 and the period from August 1, 2007 (date of bankruptcy settlement)
through December 31, 2009, respectively, varied from the statutory rate of 34%
as follows:




Period
      fromAugust
      1, 2007(date
      ofbankruptcysettlement)Year
      ended
                        
                        
                        Year
      ended
                        
                        
                        throughDecember
      31,
                        
                        
                        December
      31,
                        
                        
                        December
      31,2009
                        
                        
                        2008
                        
                        
                        2009Statutory
      rate applied to income before income taxes
                        
                        $
                        (102,000
                        )
                        
                        $
                        (4,000
                        )
                        
                        $
                        (106,000
                        )Increase
      (decrease) in income taxes resulting from:State
      income taxes
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -Other,
      including reserve for deferred tax asset and application of net operating
      loss carryforward
                        
                        
                        102,000
                        
                        
                        
                        4,000
                        
                        
                        
                        106,000Income
      tax expense
                        
                        $
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        -




F-16




SMSA El
Paso II Acquisition Corp.
 (a
development stage company)
 Notes to
Financial Statements
 December
31, 2009 and 2008




The
Company’s only temporary difference as of December 31, 2009 and 2008,
respectively, relates to the Company’s net operating loss pursuant to the
applicable Federal Tax Law.  As of December 31, 2009 and 2008,
respectively, the deferred tax asset is as follows:





December
      31,
                  
                  
                  December
      31,2009
                  
                  
                  2008Deferred
      tax assetsNet
      operating loss carryforwards
                  
                  $
                  95,000
                  
                  
                  $
                  4,000Less
      valuation allowance
                  
                  
                  (95,000
                  )
                  
                  
                  (4,000
                  )Net
      Deferred Tax Asset
                  
                  $
                  -
                  
                  
                  $
                  -





During
the year ended December 31, 2009 and the period from August 1, 2007 (date of
bankruptcy settlement) through December 31, 2008, respectively, the valuation
allowance against the deferred tax asset increased by approximately $91,000 and
$4,000.





Note
J - Capital Stock Transactions





Pursuant
to the Plan affirmed by the U. S. Bankruptcy Court - Northern District of Texas
- Dallas Division, the Company issued 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 and for the performance of certain services and the
payment of certain fees related to the anticipated reverse merger or acquisition
transactions 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.





Based
upon the calculations provided by the Creditor’s Trustee, the Company issued an
aggregate 500,004 shares of the Company’s “new” common stock to HFG and the
appropriate holders of various claims, as defined in the Plan, in settlement of
all unpaid pre-confirmation obligations of the Company and/or the bankruptcy
trust.





Effective
May 21, 2008, 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.





As
discussed previously, the Company entered into the Share Exchange Agreement with
TGO and all of the shareholders of TGO on August 10, 2009.  Pursuant
to the Share Exchange Agreement, the shareholders of TGO transferred 100% of the
issued and outstanding shares of capital stock of TGO in exchange for 4,500,000
newly issued shares of the Company’s common stock that, in the aggregate,
constituted 90% of its issued and outstanding capital stock on a fully-diluted
basis as of and immediately after the consummation of such
exchange.


F-17





SMSA El
Paso II Acquisition Corp.


(a
development stage company)


Notes to
Financial Statements


December
31, 2009 and 2008





On
November 5, 2009, the Company entered into a Securities Purchase Agreement
(Purchase Agreement) with Michael Campbell whereby Mr. Campbell purchased from
the Company an aggregate of 20,000,000 shares of restricted, unregistered common
stock.   Additionally, on the same date, the Company entered into
a Contribution Agreement between the Company, Mr. Campbell and Gerard Pascale,
the Company’s then-current sole officer, director and controlling shareholder,
pursuant to which Mr. Pascale surrendered 3,000,000 shares of the common stock
then owned by him to the Company at no cost to the Company to induce Mr.
Campbell to enter into the Purchase Agreement.  As a result of these
transactions, there were 22,000,004 shares of the Company’s common stock issued
and outstanding.





In
addition, on November 5, 2009, the Company entered into an Advisory Agreement
(the “Advisory Agreement”) with HFG, pursuant to which HFG agreed to provide
certain advisory services to the Company in exchange for an advisory fee of
$250,000.  On the same day, the Company also entered into an Escrow
Agreement (the “Escrow Agreement”), pursuant to which the escrow agent agreed to
hold the purchase shares in escrow until payment of the Advisory
Fee.  On December 15, 2009, each of the Advisory Agreement and the
Escrow Agreement were amended to extend the payment date of the Advisory Fee to
January 31, 2010. On January 31, 2010, each of the Advisory Agreement and the
Escrow Agreement were further amended to extend the payment date of the Advisory
Fee to February 28, 2010.  The Advisory Fee has been paid in full and
all of the Shares have been released from escrow.





Note
K - Subsequent Events





Consulting
Agreements





On March
1, 2010, the Company entered into a one-year non-exclusive consulting agreement
(Campbell Consulting Agreement) with Michael Campbell, Chairman of the Board of
Directors of the Company.  Pursuant to the Campbell Consulting
Agreement, Mr. Campbell will serve as the President and Chief Executive Officer
of the Company and Mr. Campbell will receive a monthly consulting fee of
$15,000, in addition to reimbursement of his reasonable and necessary business
expenses.





On April
8, 2010, the Company also entered into a one-year non-exclusive consulting
agreement (Hanks Consulting Agreement, and collectively with the Campbell
Consulting Agreement, the Consulting Agreements) with Jeff A. Hanks, a member of
the Board of Directors of the Company.  Pursuant to the Hanks
Consulting Agreement, Mr. Hanks will serve as the Chief Financial Officer of the
Company and Mr. Hanks will receive a monthly base consulting fee of $2,000, plus
a $1,000 preparation fee for each Annual Report on Form 10-K or Quarterly Report
on Form 10-Q he prepares for the Company.





The
Consulting Agreements are automatically renewable for successive one-year terms
unless cancelled by either party not less than ninety (90) days before the end
of the then current term.  In addition, neither Mr. Campbell nor Mr.
Hanks  (collectively, Executives) will be required to provide services
to the Company on a full-time basis under the Consulting Agreements and each may
engage in other activities provided that such activities do not interfere with
the performance of their duties under their respective Consulting
Agreement.





The
Consulting Agreements also provide that, in addition to their consulting fees,
the Executives will each be entitled to reimbursement of their reasonable and
necessary business expenses and each will be entitled to participate in any
compensation or benefit plans the Company provides to its own
employees.


F-18


SMSA El
Paso II Acquisition Corp.


(a
development stage company)


Notes to
Financial Statements


December
31, 2009 and 2008





The
Consulting Agreements also contain covenants restricting the Executives from (a)
engaging in any activity competitive with the Company’s business, and (b)
soliciting the Company’s employees, customers, suppliers or contractors, in each
case during the term of the Consulting Agreement and for a period of one (1)
year thereafter.





Sale of Common
Stock





On March
2, 2010, the Company sold, via a private placement with various investors, an
aggregate 1,093,750 shares of the Company’s common stock for $350,000
cash.





Management
has evaluated all activity of the Company through April 7, 2010 (the issue date
of the financial statements) and concluded that no other subsequent events have
occurred that would require recognition in the financial statements or
disclosure in the notes to financial statements other than as disclosed
above.


F-19





Item
9.        Changes in and Disagreements
with Accountants on Accounting and Financial Disclosure





None.





Item
9A.     Controls and Procedures.





Disclosure Controls and
Procedures.





The Company’s management, under the
supervision and with the participation of its Chief Executive Officer and its
Chief Financial Officer, has evaluated the effectiveness of the Company’s
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.
Based on such evaluation, the Company’s Chief Executive Officer and Chief
Financial Officer have concluded that, as of the end of the period covered by
this Annual Report, the Company’s disclosure controls and procedures are
effective. Disclosure controls and procedures are controls and procedures
designed to ensure that information required to be disclosed in the Company’s
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 the Company is required to disclose in such reports is accumulated
and communicated to management, including the Company’s Chief Executive Officer
and Chief Financial Officer, as appropriate, to allow timely decisions regarding
required disclosure.





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, the Company’s Chief Executive Officer and Chief Financial
Officer and effected by the Company’s 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 the Company’s
assets;


13





—Provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that the Company’s receipts and expenditures are
being made only in accordance with authorizations of the Company’s management
and directors; and





—Provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the Company’s 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.





Under the
supervision and with the participation of the Company’s management, including
its Chief Executive Officer and Chief Financial Officer, the Company conducted
an evaluation of the effectiveness of its internal control over financial
reporting based on the framework established by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) as set forth in Internal Control
- Integrated Framework. During the course of this assessment, management
identified a material weakness relating primarily to recording complex financial
transactions.




The Company has a lack of staffing
within its accounting department, in terms of the small number of employees
performing its financial and accounting functions, which does not provide the
necessary separation of duties.  Management believes the lack of
accounting and financial personnel amounts to a material weakness in its
internal control over financial reporting and, as a result, at December 31, 2009
and on the date of this Report, its internal control over financial reporting is
not effective.  The Company will continue to evaluate the employees
involved and the hiring of additional accounting staff.  However, the
Company will be unable to remedy this material weakness in its internal controls
until the Company has the financial resources that allow the Company to hire
additional qualified employees.





This Annual Report does not include an
attestation report of the Company’s registered public accounting firm regarding
the Company’s internal control over financial reporting.  Management’s
report was not subject to attestation by the Company’s registered public
accounting firm pursuant to temporary rules of the SEC that permit the Company
to provide only management’s report in this Annual Report.


14





Changes in Internal Control over
Financial Reporting.





There was no change in the Company’s
internal control over financial reporting that occurred during the quarter ended
December 31, 2009 that has materially affected, or is reasonably likely to
materially affect, the Company’s 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.     Other Information.





Not applicable.




15




PART
III





Item
10       Directors, Executive Officers and
Corporate Governance





The
directors and executive officers serving the Company are as
follows:





Name
                  
                  Age
                  
                  Position Held and TenureMichael
      B. Campbell
                  
                  53
                  
                  President,
      Chief Executive Officer and DirectorJeff
      A. Hanks
                  
                  44
                  
                  Chief
      Financial Officer and
Director





The biographies of each of the
directors and executive officers below contains information regarding the
person’s service, business experience, positions held currently or at any time
during the last five years, and for each director or any nominee for director
the particular experiences, qualifications, attributes or skills that caused the
Board of Directors to determine that such person should serve as a director for
the Company in 2010, and the names of other any other publicly-held companies of
which such person served as a director in the past five years.





Michael
B. Campbell, President, Chief Executive Officer and Director:





Michael B. Campbell has served as
Chairman of the Board of Directors of the Company and as the Company’s Chief
Executive Officer and President since December, 2009.  Mr. Campbell
has served as the managing director of both M1 Advisors LLC and M1 Capital Group
Ltd. since founding those companies in 2002 and 2004,
respectively.  M1 Advisors LLC and M1 Capital Ltd. are business
advisory and merchant banking firms that provide growth capital and financial
advisory services to high-growth companies in emerging markets.





The Company believes Mr. Campbell’s
qualifications to sit on its Board of Directors include his over 27 years of
experience founding, financing, building and operating high-growth companies
worldwide.





Since December 2009, Mr. Campbell has
also served as a director of Ensurge, Inc., a public “shell”
company.





Jeff A. Hanks, CPA, Chief
Financial Officer and
Director:





Jeff A. Hanks, has served as a member
of the Board of Directors of the Company and as the Chief Financial Officer of
the Company since April 8, 2010.  Since 2002, Mr. Hanks as served as
the Chief Financial Officer of Ensurge Inc., a public shell company. From 2002
until December, 2009, Mr. Hanks also served as the President of Ensurge,
Inc..  Mr. Hanks has also worked as a consultant and auditor for
Deloitte & Touche, one the Big Four international accounting firms
where he obtained his CPA license.  Mr. Hanks graduated from the
University of Utah with a degree in Accounting.


16





The Company believes Mr. Hanks’
qualifications to sit on its Board of Directors include his CPA license and his
over 14 years of experience in finance and accounting and his senior executive
experience with several companies, including eight years as an officer with
Ensurge, Inc.





Since 2002, Mr. Hanks has also served
as a director for Ensurge, Inc.





Term
of Office





All
directors serve until the next annual stockholders meeting or until their
successors are duly elected and qualified.  All officers serve at the
discretion of the Board of Directors.





There have been no material changes to
the procedures by which security holders may recommend nominees to the Company’s
Board of Directors during the period covered by this report.





Family
Relationships





There are
no family relationships between or among any of the Company's directors or
executive officers.





Code
of Ethics





The
Company has not yet adopted a code of ethics.  The Company intends to adopt
a code of ethics in the near future.




Involvement
in Certain Legal Proceedings





To the best of the Company’s knowledge,
its directors and executive officers were not involved in any legal proceedings
during the last 10 years as described in Item 401(f) of Regulation
S-K.





Compliance
with Section 16(a) Beneficial Ownership Reporting.





Section 16(a) of the Securities
Exchange Act of 1934 requires the Company’s directors, executive officers and
persons who own more than five percent of a registered class of the Company’s
equity securities to file with the Securities and Exchange Commission initial
reports of ownership and reports of changes in ownership of the Company’s common
stock. Officers, directors and ten-percent or more beneficial owners of the
Company’s common stock are required by SEC regulations to furnish the Company
with copies of all Section 16(a) reports they file and provide written
representation that no Form 5 is required.


17





Michael
B. Campbell, the Chief Executive Officer and a director of the Company, failed
to file on a timely basis a Statement of Changes in Beneficial Ownership on Form
4 to report five sales of an aggregate of 180,000 shares of common stock, that
occurred between November 30, 2009 and December 15, 2009.  The Form 4
was filed prior to the date of this annual report on Form 10-K.





Jeff A.
Hanks, the Chief Financial Officer of the Company and a director of the Company,
failed to file on a timely basis an Initial Statements of Beneficial Ownership
on Form 3.  The Form 3 was filed prior to the date of this annual
report on Form 10-K.





ITEM
11.    EXECUTIVE COMPENSATION




Michael
B. Campbell was appointed as a director and as the President and Chief Executive
Officer of the Company on November 5, 2009.  He has received
compensation starting March 1, 2010 per the consulting agreement discussed
below.





Jeff A.
Hanks was appointed as a director and the Chief Financial Officer of the Company
on April 8, 2010.  Mr. Hanks has received compensation starting April
8, 2010 per the consulting agreement discussed below.





Neither
Mr. Campbell nor Mr. Hanks received any compensation from the Company in 2009 or
2008.  No other officer of the company was compensated in excess of
$100,000.





Michael
B. Campbell’s Consulting Agreement




On March 1, 2010, the Company entered
into a one-year non-exclusive consulting agreement (the “Campbell Consulting
Agreement”) with Michael Campbell, Chairman of the Board of Directors of the
Company. Pursuant to the Campbell Consulting Agreement, Mr. Campbell will serve
as the President and Chief Executive Officer of the Company and Mr. Campbell
will receive a monthly consulting fee of $15,000, in addition to reimbursement
of his reasonable and necessary business expenses.




Jeff
A. Hanks’s Consulting Agreement




On April 8, 2010, the Company entered
into a one-year non-exclusive consulting agreement (the “Hanks Consulting
Agreement” and collectively with the Campbell Consulting Agreement, the
“Consulting Agreements”) with Jeff A. Hanks, a member of the Board of Directors
of the Company. Pursuant to the Hanks Consulting Agreement, Mr. Hanks will serve
as the Chief Financial Officer of the Company and Mr. Hanks will receive a
monthly base consulting fee of $2,000, plus a $1,000 preparation fee for each
Annual Report on Form 10-K or Quarterly Report on Form 10-Q he prepares for the
Company.




General
Terms of the Consulting Agreements




The Consulting Agreements are
automatically renewable for successive one-year terms unless cancelled by either
party not less than ninety (90) days before the end of the then current term. In
addition, neither Mr. Campbell nor Mr. Hanks  (collectively, the
“Executives”) will be required to provide services to the Company on a full-time
basis under the Consulting Agreements and each may engage in other activities
provided that such activities do not interfere with the performance of their
duties under their respective Consulting Agreement.




18


The Consulting Agreements also provide
that, in addition to their consulting fees, the Executives will each be entitled
to reimbursement of their reasonable and necessary business expenses and each
will be entitled to participate in any compensation or benefit plans the Company
provides to its own employees.




The ConsultingAgreements also contain covenants restricting the Executives from (a)
engaging in any activity competitive with the Company’s business, and (b)
soliciting the Company’s employees, customers, suppliers or contractors, in each
case during the term of theConsultingAgreement and for a period of one (1) year thereafter.





Outstanding
Equity Awards At Fiscal Year-End





As of December 31, 2009, there were no
outstanding equity awards to any of the Company’s executive officers or
directors.





Benefit
Plans





The Company has not adopted any
retirement, pension, profit sharing, stock options, insurance programs or other
similar programs for the benefit of its employees.





Director
Compensation





The Company does not currently provide
compensation to its directors for serving on its Board of
Directors.





Employment
Contracts and Termination of Employment and Change in Control
Arrangement.





There are
no compensatory plans or arrangements with respect to any officer, director,
manager or other executive which would in any way result in payments to any such
person because of his resignation, retirement, or other termination of
employment with the Company, or any change in control of the Company, or a
change in the person’s responsibilities following a change of control of the
Company.





ITEM
      12.
            SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
  MANAGEMENT




The following table sets forth certain
information regarding the beneficial ownership of the Company's outstanding
Common Stock as of April 8, 2010, by (i) each director of the Company, (ii) each
executive officer of the Company, (iii) each person known or believed by the
Company to own beneficially five percent or more of the Common Stock and (iv)
all directors and executive officers as a group. Unless indicated otherwise,
each person has sole voting and dispositive power with respect to such
shares.


19





Name
      and Address
                      Of Beneficial Owner
                    
                    Beneficial
                      Ownership
                    
                    
                    Percent
      of
                      ClassOfficers
      and Directors As a Group (two)
                    
                    
                    18,220,000
                    
                    
                    
                    77.72
                    %Michael
      B. Campbell
                      11753
      Willard Avenue
                      Tustin,
      CA  92782
                    
                    
                    18,220,000
                    
                    
                    
                    77.72
                    %Jeff
      A. Hanks
                      11753
      Willard Avenue
                      Tustin,
      CA  92782
                    
                    
                    -
                    
                    
                    
                    -





Beneficial
      Owners
                      Owning greater than 5%
                    
                    Beneficial
                      Ownership
                    
                    
                    Percent
      of
                      ClassGerald
      Pascale
                      28
      Cottonwood Lane
                      Hilton
      Head, SC 29926
                    
                    
                    1,500,000
                    
                    
                    
                    6.4
                    %





(1)
            Unless
      otherwise indicated, the Company has been advised that all individuals or
      entities listed have the sole power to vote and dispose of the number of
      shares set forth opposite their names. For purposes of computing the
      number and percentage of shares beneficially owned by a security holder,
      any shares which such person has the right to acquire within 60 days of
      April 8, 2010 are deemed to be outstanding, but those shares are not
      deemed to be outstanding for the purpose of computing the percentage
      ownership of any other security
holder.





ITEM
      13.
            CERTAIN
      RELATIONSHIPS AND RELATED
TRANSACTIONS





None.





ITEM
      14.
            PRINCIPAL
      ACCOUNTANT FEES AND SERVICES




Audit Fees:The aggregate
audit and review fees billed for fiscal years ending December 31, 2009 and 2008
were $3,650 and $1,335, respectively.  These fees were for
professional services rendered by S.W.Hatfield, CPA firm for the audit of the
Company’s annual financial statements and review of financial
statements.  There were no other audit related fees for 2009 and
2008.


20


Tax Fees:The
aggregate tax fees billed for fiscal years ending December 31, 2009 and 2008
were $610 and $500, respectively.  These fees were for professional
services rendered by S.W. Hatfield, CPA, which were for the completion of the
Company’s year-end tax return.





All Other
Fees:None.




The
Company has considered whether the provision of any non-audit services,
currently or in the future, is compatible with S. W. Hatfield, CPA, our
principal accountant, maintaining its independence and have determined that
these services do not compromise their independence.
  The
Company has no formal audit committee.  However, the entire Board of
Directors of the Company performs the function of an audit
committee.  In discharging its oversight responsibility as to the
audit process, the Board of Directors 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 of
Directors 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 of Directors 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.
            EXHIBITS,
      FINANCIAL STATEMENT SCHEDULES




(a)(1)(2)
Financial Statements.





The
financial statements under Item 8 are filed as part of this annual report on
Form 10-K.





(a)(3)
Exhibits.





The
exhibits required by this item are set forth on the Exhibit Index attached
hereto.





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.





SMSA
      El Paso II Acquisition Corp.April
      9, 2010
              By:
              /s/
      MICHAEL B. CAMPBELLMichael
      B. Campbell, Chief ExecutiveOfficer(Principal
      Executive Officer)





Pursuant to the requirements of the
Securities and 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 indicated.





/s/
      MICHAEL B. CAMPBELL
                
                President,
      Chief Executive Officer andMichael
      B. Campbell
                
                Director
      (Principal Executive
Officer)





/s/
      JEFF A. HANKS
                
                Chief
      Financial Officer and DirectorJeff
      A. Hanks
                
                (Principal
      Financial Officer and PrincipalAccounting
      Officer)


21


EXHIBIT
INDEX





Exhibit
                    
                    Description
      of Exhibit2.1
                    
                    First
      Amended, Modified Chapter 11 Plan Proposed by Debtors, In the United
      States Bankruptcy Court, Northern District of Texas, Dallas Division, In
      Re: Senior Management Services of Treemont, Inc., et. al., Debtors, Case
      No. 07-30230, Jointly Administered, dated August 1,
      2007. (1)2.2
                    
                    Order
      Confirming First Amended, Modified Chapter 11 Plan Proposed by Debtors,
      Case No. 07-30230, signed August 1, 2007. (1)2.3
                    
                    Notice
      of Entry of Confirmation Order dated August 10, 2007.
  (1)2.4
                    
                    Share
      Exchange Agreement among the Company., TransGlobal Operations Inc. (
      “TGO”) and all of the shareholders of TGO, dated August 10,
      2009.(2)3.1
                    
                    Agreement
      and Plan of Merger by and between Senior Management Services of El Paso
      Coronado, Inc. and the Company, dated May 22, 2008.
    (1)3.2
                    
                    Articles
      of Merger as filed with the Secretary of State of the State of Nevada on
      June 3, 2008. (1)3.3
                    
                    Articles
      of Merger as filed with the Secretary of State of the State of Texas on
      June 5, 2008. (1)3.4
                    
                    Articles
      of Incorporation of the Company (1)3.5
                    
                    Bylaws
      of the Company (1)4.1
                    
                    Form
      of common stock certificate. (1)10.1
                    
                    Securities
      Purchase Agreement by and between the Company and Michael Campbell, dated
      as of November 5, 2009 (3)10.2
                    
                    Contribution
      Agreement, dated November 5, 2009, among the Company , Gerard Pascale
      and Michael Campbell. (3)10.3
                    
                    Advisory
      Agreement, dated November 5, 2009, between the Company and Halter
      Financial Group, L.P. (3)10.4
                    
                    Escrow
      Agreement, dated November 5, 2009, among the Company , Michael
      Campbell, Halter Financial Group, L.P. and Securities Transfer
      Corporation. (3)10.5
                    
                    Amendment
      No. 1 to Advisory Agreement, dated December 15, 2009, between the
      Company and Halter Financial Group, L.P.
  (4)


22





10.6
              
              Amendment
      No. 1 to Escrow Agreement, dated December 15, 2009, among the
      Company , Michael Campbell, Halter Financial Group, L.P. and
      Securities Transfer Corporation. (4)10.7
              
              Amendment
      No. 2 to Advisory Agreement, dated as of January 31, 2010, between the
      Company and Halter Financial Group, L.P. (5)10.8
              
              Amendment
      No. 2 to Escrow Agreement, dated as of January 31, 2010, among the
      Company , Michael Campbell, Halter Financial Group, L.P. and
      Securities Transfer Corporation. (5)10.9
              
              Consulting
      Agreement between the Company and Michael B. Campbell, dated March 1,
      2010.10.10
              
              Consulting
      Agreement between the Company and Jeff A. Hanks, dated April 8,
      2010.31.1
              
              Certification
      of Michael B. Campbell pursuant to 18 U.S.C. §1350, as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of 200231.2
              
              Certification
      of Jeff A. Hanks pursuant to 18 U.S.C. §1350, as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of 200232.1
              
              Certification
      pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.





(1)
              Previously
      filed as an exhibit to the Company's Registration Statement on Form 10
      which was filed with the Commission on February 11, 2009, and which is
      incorporated herein by reference.


(2)
              Previously
      filed as exhibit 2.1 to  the Company's Current Report on Form
      8-K which was filed with the Commission on August 11, 2009, and which is
      incorporated herein by reference.


(3)
              Previously
      filed as an exhibit to the Company's Current Report on Form 8-K which was
      filed with the Commission on November 10, 2009, and which is incorporated
      herein by reference.


(4)
              Previously
      filed as an exhibit to the Company's Current Report on Form 8-K which was
      filed with the Commission on December 21, 2009, and which is incorporated
      herein by reference.


(5)
            Previously
      filed as an exhibit to  the Company's Current Report on Form 8-K
      which was filed with the Commission on February 3, 2010, and which is
      incorporated herein by
reference.


23