UNITED STATES


SECURITIES AND EXCHANGE COMMISSION
 Washington, DC  20549
 
 Form 10-Q
 
 (Mark one)
  x
Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934For the quarterly period ended June 30, 2012o
Transition Report under Section 13 or 15(d) of the Securities Exchange Act of 1934For the transition period from ______________ to _____________
  
 Commission File Number: 000-54275
 
 SMSA Kerrville Acquisition Corp.
 (Exact name of registrant as specified in its charter)
 
 Nevada
27-3924073(State of incorporation)
(IRS Employer ID Number)
 2591 Dallas Parkway, Suite 100, Frisco, TX 75034
 (Address of principal executive offices)
 
 (972) 963-0001
 (Issuer's telephone number)
 
 
 
 Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  YES x   NO o
  Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES x   NO 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 o  NO  x
  State the number of shares outstanding of each of the issuer's classes of common equity as of the latest practicable date:July 19, 2012: 10,025,034
 
 Transitional Small Business Disclosure Format (check one):    YES o   NO x
 
  1
  SMSA Kerrville Acquisition Corp.
 
 Form 10-Q for the Quarter ended June 30, 2012
 
 Table of Contents
 
 
 
 PagePart I - Financial InformationItem 1 - Financial Statements
3Item 2 - Management's Discussion and Analysis of Financial Condition and Results of OperationsItem 3 - Quantitative and Qualitative Disclosures About Market Risk
13Item 4 - Controls and Procedures
14Part II - Other InformationItem 1 - Legal Proceedings
14Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds
14Item 3 - Defaults Upon Senior Securities
14Item 4 - Mine Safety Disclosures
14Item 5 - Other Information
14Item 6 - Exhibits
14Signatures
14
  2
  Part I - Financial Information
 Item 1 - Financial Statements
 
 
 SMSA Kerrville Acquisition Corp. and Subsidiary
 Consolidated Balance Sheets
 June 30, 2012 and December 31, 2011
 
 
 (Unaudited)


(Audited)June 30,


December 31,2012


2011ASSETSCurrent AssetsCash on hand and in bank

$
18,348


$
28,669Accounts receivableTrade


49,171



288Federal income taxes


-



-Prepaid expensesTrade


1,387



-Related party


-



400Total current assets


68,906



29,357Total Assets

$
68,906


$
29,357LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)Current LiabilitiesAccounts payableTrade

$
37,500


$
-Related party


3,400



3,400Accrued interest payable to officer


20



1,184Accrued federal income taxes payable


435



3,480Total current liabilities


41,355



8,064Total Liabilities


41,355



8,064Commitments and ContingenciesStockholders' Equity (Deficit)Preferred stock - $0.001 par value10,000,000 shares authorized.None issued and outstanding


-



-Common stock - $0.001 par value.100,000,000 shares authorized.10,025,034 shares issued and outstanding


10,025



10,025Additional paid-in capital


(8,475
)


(8,475
)Retained earnings (Deficit)


26,001



20,043Total Stockholders' Equity


27,551



21,293Total Liabilities and Stockholders’ Equity

$
68,906


$
29,357
 
 The financial information presented herein has been prepared by management
 without audit by independent certified public accountants.
 The accompanying notes are an integral part of these financial statements.
  3
  SMSA Kerrville Acquisition Corp. and Subsidiary
 Consolidated Statements of Operations and Comprehensive Loss
 Six and Three months ended June 30, 2012 and 2011
 
 (Unaudited)
  Six


Six


Three


Threemonths


months


months


monthsended


ended


ended


endedJune 30,


June 30,


June 30,


June 30,2012


2011


2012


2011Revenues

$
72,272


$
32,630


$
54,466


$
32,630Operating expensesService bureau fees


39,300



-



39,300



-Professional fees


9,315



8,455



3,500



4,140Contract personnel costs


7,200



3,600



3,600



3,600Occupancy costs paid to related party


2,800



1,200



1,200



1,200Other general and administrative costs


6,294



284



1,278



-Total operating expenses


64,909



13,539



48,878



8,940Income (Loss) from operations


7,363



19,091



5,588



23,690Other income (expense)Interest expense to officer/stockholder


-



(559
)


-



(374
)Income (Loss) before provision for income taxes


7,363



18,532



5,588



23,316Provision for income taxes


(1,105
)


(3,450
)


(840
)


(3,450
)Net Income (Loss)


6,258



15,082



4,748



19,866Other comprehensive income


-



-



-



-Comprehensive Income (Loss)

$
6,258


$
15,082


$
4,748


$
19,866Loss per weighted-average shareof common stock outstanding,computed on net loss - basicand fully diluted

nil


nil


nil


nilWeighted-average number of sharesof common stock outstanding -basic and fully diluted


10,025,034



10,025,034



10,025,034



10,025,034
 
 The financial information presented herein has been prepared by management
 without audit by independent certified public accountants.
 The accompanying notes are an integral part of these financial statements.
  4
  SMSA Kerrville Acquisition Corp. and Subsidiary
 Consolidated Statements of Cash Flows
 Six months ended June 30, 2012 and 2011
 
 (Unaudited)
 
 Six months


Six monthsended


endedJune 30,


June 30,2012


2011Cash Flows from Operating ActivitiesNet income (loss) for the period

$
72,212


$
15,082Adjustments to reconcile net lossto net cash provided by operating activitiesDepreciation


-



-(Increase) Decrease inAccounts receivableTrade


(48,883
)


-Federal income taxes


-



-Prepaid expenses to related party


(400
)


-Prepaid expenses - other


(487
)


(12,199
)Increase (Decrease) inAccounts payableTrade


37,500



-Related party


-



3,600Accrued interest payable to officer/stockholder


(1,164
)


559Accrued federal income taxes payable


(3,045
)


3,450Net cash provided by operating activities


(10,321
)


10,492Cash Flows from Investing Activities


-



-Cash Flows from Financing ActivitiesProceeds from short term loan payable from officer/stockholder


-



25,000Repayment of short term loan payable from officer/stockholder


-



-Capital contributed to support operations


-



250Net cash provided by financing activities


-



25,250Increase in Cash


(10,321
)


35,742Cash at beginning of period


28,669



1,000Cash at end of period

$
18,348


$
36,742Supplemental Disclosure ofInterest and Income Taxes PaidInterest paid during the period

$
1,164


$
-Income taxes paid during the period

$
4,150


$
-
 The financial information presented herein has been prepared by management
 without audit by independent certified public accountants.
 The accompanying notes are an integral part of these financial statements.
  5
  SMSA Kerrville Acquisition Corp. and Subsidiary
 Notes to Consolidated Financial Statements
 June 30, 2012 and December 31, 2011
 
 
 
 Note A - Background and Description of Business
 
 SMSA Kerrville Acquisition Corp. (Company) was organized on May 3, 2010 as a Nevada corporation to effect the reincorporation of Senior Management Services of Kerrville, Inc., a Texas corporation, mandated by the plan of reorganization discussed below.
 
 On December 15, 2010, the Company, STC Edgar, Inc. (Edgar) and the individual stockholders of Edgar entered into a Share Exchange Agreement (Exchange Agreement) whereby the stockholders of Edgar exchanged 100.0% of the issued and outstanding stock of Edgar for 9,500,000 shares of restricted, unregistered common stock of the Company.  Edgar then became a wholly-owned subsidiary of the Company.
 
 In February 2011, the Company filed a Registration Statement on Form 10 on a voluntary basis to become a reporting issuer pursuant to Section 12(g) of the Securities Exchange Act of 1934, which is a prerequisite for our common stock to become eligible for quotation on the OTC Bulletin Board.  This Registration Statement was declared effective by the SEC on or about April 13, 2011.
 
 Effective April 1, 2011, the Company’s wholly-owned subsidiary, Edgar, commenced business as a start-up company and took over the electronic document filing operations and clients formerly serviced by Securities Transfer Corporation, a related entity controlled by the Company’s President and majority stockholder, Kevin B. Halter, Jr., which was closed.   No consideration was paid from the Company to Securities Transfer Corporation for the this business.  This action removed the Company from the requirements of reporting as a “development stage company”.
 
 Through the Company’s wholly-owned subsidiary, Edgar, the Company provides EDGARizing services to various commercial and corporate entities.   Our primary service is the EDGARization of corporate documents that require filing on EDGAR, the Electronic Data Gathering, Analysis, and Retrieval system maintained by the Securities and Exchange Commission.  EDGAR performs automated collection, validation, indexing, acceptance, and forwarding of submissions by companies and others who are required by law to file forms with the Securities and Exchange Commission.  These documents include registration statements, prospectuses, annual reports, quarterly reports, periodic reports, debt agreements, special proxy statements, offering circulars, tender offer materials and other documents related to corporate financings, acquisitions and mergers. We receive our clients’ information in a variety of media, and reformat it for distribution, either in print, digital or Internet form.  Neither the Company nor its wholly-owned subsidiary have any past or present  affiliation with the U. S. Securities and Exchange Commission in any manner.
 
 
 Note B - Preparation of Financial Statements
 
 The acquisition of STC Edgar, Inc. on December 15, 2010 by SMSA Kerrville Acquisition Corp. effected a change in control and was accounted for as a “reverse acquisition” whereby STC Edgar, Inc. is the accounting acquiror for financial statement purposes.  Accordingly, for all periods subsequent to the December 15, 2010 “reverse acquisition” transaction, the historical financial statements of the Company reflect the financial statements of STC Edgar, Inc. since it’s inception on November 9, 2010 and the operations of SMSA Kerrville Acquisition Corp. subsequent to December 15, 2010.
 
 The Company follows the accrual basis of accounting in accordance with generally accepted accounting principles and has established a year-end for accounting purposes of December 31.
 
 The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.
 
 Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud.  The Company’s system of internal accounting control is designed to assure, among other items, that 1) recorded transactions are valid; 2) valid transactions are recorded; and 3) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods being presented.
 
  6
  SMSA Kerrville Acquisition Corp. and Subsidiary
 Notes to Consolidated Financial Statements - Continued
 June 30, 2012 and December 31, 2011
 
 
 
 Note B - Preparation of Financial Statements - Continued
 
 During interim periods, the Company follows the accounting policies set forth in its annual audited financial statements filed with the U. S. Securities and Exchange Commission on its Annual Report on Form 10-K containing the Company’s financial statements for the year ended December 31, 2011.  The information presented within these interim financial statements may not include all disclosures required by generally accepted accounting principles and the users of financial information provided for interim periods should refer to the annual financial information and footnotes when reviewing the interim financial results presented herein.
 
 In the opinion of management, the accompanying interim financial statements, prepared in accordance with the U. S. Securities and Exchange Commission’s instructions for Form 10-Q, are unaudited and contain all material adjustments, consisting only of normal recurring adjustments necessary to present fairly the financial condition, results of operations and cash flows of the Company for the respective interim periods presented.  The current period results of operations are not necessarily indicative of results which ultimately will be reported for the full fiscal year ending December 31, 2012.
 
 
 Note C - Related Party Transactions and Conflicts of Interest
 
 Timothy P. Halter, the Company’s former sole officer and director from August 1, 2007 (date of bankruptcy settlement) through December 14, 2010, is the sole officer, director and stockholder of Halter Financial Group, Inc. (HFG), and an officer and member of Halter Financial Investments GP, LLC, general partner of Halter Financial Investments, L. P. (HFI), our former controlling stockholder.  Timothy P. Halter is the brother of Kevin B. Halter, Jr. who has served as the Company’s sole officer and director since December 15, 2010.  Kevin B. Halter, Jr. is responsible for the implementation and operation of our business plan.
 
 Approximately 2.35% and 24.95% of the Company’s gross revenues during the six months ended June 30, 2012 and the year ended December 31, 2011, respectively, were received from entities controlled by or affiliated with HFG or HFI.
 
 Kevin Halter, Jr., our controlling stockholder, is also the President and majority stockholder of Securities Transfer Corporation, an affiliated entity which formerly provided services comparable to those of the Company.  Mr. Halter is not obligated to contribute any specific number of hours to our affairs, which may result in an conflict of interest in allocating his time between our operations and his other business affairs.   If his other business affairs require him to devote more substantial amounts of time to such interests, it could limit his ability to devote time to our affairs and could have a negative impact on our ability to manage our business plan.
 
 Subsequent to the December 15, 2010 transaction date, the Company and it’s current controlling stockholder, Kevin Halter, Jr., agreed that additional funds were necessary to support the corporate entity, comply with the periodic reporting requirements of the Securities Exchange Act of 1934, as amended, and commence operations under the Company’s business plan.  To this end, in February 2011, Mr. Halter loaned the Company $25,000 through a loan agreement bearing interest at 6.0% with the note being due upon demand.  This loan was repaid in November 2011 from funds generated through operating activities.  The Company accrued approximately $1,184 in interest payable of which $1,164 was repaid during the quarter ended June 30, 2012.
 
 On April 1, 2011, concurrent with the commencement of operation of our business plan, the Company contracted with Securities Transfer Corporation to provide personnel, office space, equipment and administrative support for our business plan.  Accordingly, the Company has paid or accrued approximately $1,200 per month for personnel costs and approximately $400 per month for office space, equipment usage and administrative support in the operation of our business plan, totaling approximately $9,600 and $14,400 for the six months ended June 30, 2012 and the year ended December 31, 2011, respectively.
 
 
  7
  SMSA Kerrville Acquisition Corp. and Subsidiary
 Notes to Consolidated Financial Statements - Continued
 June 30, 2012 and December 31, 2011
 
 
 
 Note D - Summary of Significant Accounting Policies
 
 1.
Cash and cash equivalents
 
 The Company considers all cash on hand and in banks, certificates of deposit and other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents.
 
 2.
Accounts receivable
 
 In the normal course of business, the Company extends unsecured credit to virtually all of its customers which are located throughout the United States.  Because of the credit risk involved, management has provided an allowance for doubtful accounts which reflects its opinion of amounts which will eventually become uncollectible.  In the event of complete non-performance, the maximum exposure to the Company is the recorded amount of trade accounts receivable shown on the balance sheet at the date of non-performance.
 
 The Company charges all customers on an “as-completed” project basis with virtually all projects being completed in 1 working day or less.  Accordingly, revenue is recognized by the Company at the point at which the project is transmitted to the U. S. Securities and Exchange Commission.  The Company then has no remaining performance obligations, management is of the opinion that collection is reasonably assured and the Company’s services do not allow for any no right of return on the part of the customer.
 
 3.
Reorganization costs
 
 The Company has adopted the provisions of provisions required by the Start-Up Activities topic of the FASB Accounting Standards Codification whereby all costs incurred with the incorporation and reorganization of the Company were charged to operations as incurred.
 
 4.
Income taxes
 
 The Company files income tax returns in the United States of America and various states, as appropriate and applicable.  The Company does not anticipate any examinations of any tax returns filed since the Company’s inception in 2010.
 
 The Company uses the asset and liability method of accounting for income taxes.  At June 30, 2012 and December 31, 2011, 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, as well as the potential impact of any net operating loss carryforwards (s) and their potential utilization.
 
 The Company has adopted the provisions required by the Income Taxes topic of the FASB Accounting Standards Codification.  The Codification Topic requires the recognition of potential liabilities as a result of management’s acceptance of potentially uncertain positions for income tax treatment on a “more-likely-than-not” probability of an assessment upon examination by a respective taxing authority.  As a result of the implementation of Codification’s Income Tax Topic, the Company did not incur any liability for unrecognized tax benefits.
 
 Basic earnings (loss) per share is computed by dividing the net income (loss) available to common stockholders by the weighted-average number of common shares outstanding during the respective period presented in our accompanying financial statements.
 
 Fully diluted earnings (loss) per share is computed similar to basic income (loss) per share except that the denominator is increased to include the number of common stock equivalents (primarily outstanding options and warrants).
 
  8
  SMSA Kerrville Acquisition Corp. and Subsidiary
 Notes to Consolidated Financial Statements - Continued
 June 30, 2012 and December 31, 2011
 
 
 
 Note D - Summary of Significant Accounting Policies - Continued
 
 5.
Income (Loss) per share
 
 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 June 30, 2012 and 2011, respectively, the Company had no outstanding stock warrants, options or convertible securities which could be considered as dilutive for purposes of the loss per share calculation.
 
 6.
Recent Accounting Pronouncements
 
 The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flows.
 
 
 Note E - 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 F - Income Taxes
 
 The components of income tax (benefit) expense for the six months ended June 30, 2012 and 2011, respectively, is as follows:
  Six months


Six monthsended


endedJune 30


June 302012


2011Federal:Current

$
1,105


$
3,450Deferred


-



-1,105



3,450State:Current


-



-Deferred


-



--



-Total

$
1,105


$
3,450
  
 9
  SMSA Kerrville Acquisition Corp. and Subsidiary
 Notes to Consolidated Financial Statements - Continued
 June 30, 2012 and December 31, 2011
 
 
 
 Note F - Income Taxes - Continued
 
 As of June 30, 2012, the Company has no net operating loss carryforwards.  The amount and availability of any future net operating loss carryforward will be subject to the limitations set forth in the Internal Revenue Code.  Such factors as the number of shares ultimately issued within a three year look-back period; whether there is a deemed more than 50 percent change in control; the applicable long-term tax exempt bond rate; continuity of historical business; and subsequent income of the Company all enter into the annual computation of allowable annual utilization of any net operating loss carryforward(s).
 
 The Company's income tax expense (benefit) for the six months ended June 30, 2012 and 2011, respectively, varied from the statutory rate of 34% as follows:
 
 
 
 Six months


Six monthsended


endedJune 30,


June 30,2012


2011Statutory rate applied to income before income taxes

$
2,500


$
6,300Increase (decrease) in income taxes resulting from:State income taxes


-



-Effect of net operating loss carryforward rules


-



(1,600
)Other, including use of graduated tax bracketsallocated between taxpayers under common control


(1,395
)


1,300Income tax expense

$
1,105


$
3,450
 
 The Company’s only temporary difference due to statutory requirements in the recognition of assets and liabilities for tax and financial reporting purposes, as of June 30, 2012 and December 31, 2011, respectively, relates solely to the Company’s net operating loss carryforward(s).  This difference gives rise to the financial statement carrying amounts and tax bases of assets and liabilities causing either deferred tax assets or liabilities, as necessary, as of December 31, 2011 and 2010, respectively:
 
 
 June 30,


December 31,2012


2011Deferred tax assetsNet operating loss carryforwards

$
-


$
-Less valuation allowance


-



-Net Deferred Tax Asset

$
-


$
-
 
 
 During the six months ended June 30, 2012 and the year ended December 31, 2011, the valuation allowance for the deferred tax asset increased (decreased) by approximately $-0- and $(100), respectively.
 
 
 Note G - Capital Stock Transactions
 
 On December 15, 2010, the Company, STC Edgar, Inc. (Edgar) and the individual stockholders of Edgar entered into a “Share Exchange Agreement” (Exchange Agreement) whereby the stockholders of Edgar exchanged 100.0% of the issued and outstanding stock of Edgar for 9,500,000 shares of restricted, unregistered common stock of the Company.  Edgar then became a wholly-owned subsidiary of the Company.
 
 
 Note H - Subsequent Events
 
 Management has evaluated all activity of the Company through July 19, 2012 (the issue date of the financial statements) and concluded that no subsequent events have occurred that would require recognition in the financial statements or disclosure in the notes to consolidated financial statements.
 
  10
  Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations
  1)
Caution Regarding Forward-Looking Information  Certain statements contained in this quarterly filing, including, without limitation, statements containing the words "believes", "anticipates", "expects" and words of similar import, constitute forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.
 
 Such factors include, among others, the following: international, national and local general economic and market conditions: demographic changes; the ability of the Company to sustain, manage or forecast its growth; the ability of the Company to successfully make and integrate acquisitions; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; the ability to attract and retain qualified personnel; and other factors referenced in this and previous filings.
 
 Given these uncertainties, readers of this Form 10-Q and investors are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.
 
 (2)
General
 
 SMSA Kerrville Acquisition Corp. (Company) was organized on May 3, 2010 as a Nevada corporation to effect the reincorporation of Senior Management Services of Kerrville, Inc., a Texas corporation, mandated by the plan of reorganization discussed below.
 
 On December 15, 2010, the Company, STC Edgar, Inc. (Edgar) and the individual stockholders of Edgar entered into a Share Exchange Agreement (Exchange Agreement) whereby the stockholders of Edgar exchanged 100.0% of the issued and outstanding stock of Edgar for 9,500,000 shares of restricted, unregistered common stock of the Company.  Edgar then became a wholly-owned subsidiary of the Company.
 
 In February 2011, the Company filed a Registration Statement on Form 10 on a voluntary basis to become a reporting issuer pursuant to Section 12(g) of the Securities Exchange Act of 1934, which is a prerequisite for our common stock to become eligible for quotation on the OTC Bulletin Board.  This Registration Statement was declared effective by the SEC on or about April 13, 2011.
 
 Effective April 1, 2011, the Company’s wholly-owned subsidiary, Edgar, commenced business as a start-up company and took over the electronic document filing operations and clients formerly serviced by Securities Transfer Corporation, a related entity controlled by the Company’s President and majority stockholder, Kevin B. Halter, Jr., which was closed.   No consideration was paid from the Company to Securities Transfer Corporation for the this business.
 
 Through the Company’s wholly-owned subsidiary, Edgar, the Company provides EDGARizing services to various commercial and corporate entities.   Our primary service is the EDGARization of corporate documents that require filing on EDGAR, the Electronic Data Gathering, Analysis, and Retrieval system maintained by the Securities and Exchange Commission.  EDGAR performs automated collection, validation, indexing, acceptance, and forwarding of submissions by companies and others who are required by law to file forms with the Securities and Exchange Commission.  These documents include registration statements, prospectuses, annual reports, quarterly reports, periodic reports, debt agreements, special proxy statements, offering circulars, tender offer materials and other documents related to corporate financings, acquisitions and mergers. We receive our clients’ information in a variety of media, and reformat it for distribution, either in print, digital or Internet form.  Neither the Company nor its wholly-owned subsidiary have any past or present  affiliation with the U. S. Securities and Exchange Commission in any manner.
 
 The acquisition of STC Edgar, Inc. on December 15, 2010 by SMSA Kerrville Acquisition Corp. effected a change in control and was accounted for as a “reverse acquisition” whereby STC Edgar, Inc. is the accounting acquiror for financial statement purposes.  Accordingly, for all periods subsequent to the December 15, 2010 “reverse acquisition” transaction, the historical financial statements of the Company reflect the financial statements of STC Edgar, Inc. since it’s inception on November 9, 2010 and the operations of SMSA Kerrville Acquisition Corp. subsequent to December 15, 2010.
   11
 
 (3)
Results of Operations
 
 The Company recognized revenue of approximately $72,300 and $32,600 during the six months ended June 30, 2012 and 2011, respectively.  Prior to April 1, 2011, the Company had no operations, revenue or revenue sources.  Effective with all ‘34 Act filings as of and after June 30, 2011, the SEC required interactive data files prepared using XBRL (as defined in the appropriate Regulations) to be filed as an exhibit to a Registrant’s financial statements.  To facilitate this new requirement, Edgar engaged the services of a subcontract service bureau.  This situation was responsible for the significant increase in revenues during the 3rd quarter of Calendar 2011 and the related corresponding expenses.  These fees are seasonal in nature with billings occurring,  generally, between May and July on an annual basis.
 
 General and administrative expenses for the respective six month periods ended June 30, 2012 and 2011 were approximately $64,900 and $13,500, respectively.  The 2012 expenses include all ordinary operating costs related to the Company’s operations, including approximately $9,600 paid or accrued to Securities Transfer Corporation for personnel and administrative costs and approximately $39,500 for accrued subcontract service bureau fees to correspond to May billings for the related services.  The approximate $13,500 in 2011 expenses include approximately $8,500 for professional fees and services related to the Company’s Form 10 filing and approximately $4,800 paid or accrued to Securities Transfer Corporation for personnel and administrative costs.
 
 It is anticipated that the Company’s operations, by quarter, should become more comparable and reflective of current and future trends with the passage of time and maturation of the Company’s operations.  Further, it is anticipated that future revenue and expenditure levels may fluctuate as the Company’s business plan matures.
 
 Earnings per share for the six months ended June 30, 2012 and 2011, respectively, were approximately $0.00 and $0.00 based on the weighted-average shares issued and outstanding.
 
 (4)
Liquidity and Capital Resources
 
 At June 30, 2012 and December 31, 2011, the Company had working capital of approximately $27,500 and $(3,500), respectively.
 
 The Company’s current business operations consist of providing the conversion and filing of various documents prepared in accordance with either the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, for small to mid-sized public companies with the U.S. Securities and Exchange Commission (SEC) electronically through EDGAR, the Commission's Electronic Data Gathering, Analysis, and Retrieval system.  The Company is not and has never been affiliated with the U.S. Securities and Exchange Commission in any manner.
 
 Kevin Halter, Jr., our controlling stockholder, is also the President and majority stockholder of Securities Transfer Corporation, an affiliated entity which formerly provided services comparable to those of the Company.  Mr. Halter is not obligated to contribute any specific number of hours to our affairs, which may result in an conflict of interest in allocating his time between our operations and his other business affairs.   If his other business affairs require him to devote more substantial amounts of time to such interests, it could limit his ability to devote time to our affairs and could have a negative impact on our ability to manage our business plan.
 
 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 our potential 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.
 
 If necessary in the future, the Company may offer 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 our ability to raise additional capital through the sale of our debt or equity securities.
 
 In a restricted cash flow scenario, the Company may be unable to maintain its business plan, and could, instead, delay all cash intensive activities.  Without necessary cash flow, the Company could become dormant during the next twelve months, or until such time as necessary funds could be raised in the equity securities market.
 
 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.
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 (5)
Related Party Transactions and Conflicts of Interest
 
 Timothy P. Halter, the Company’s former sole officer and director from August 1, 2007 (date of bankruptcy settlement) through December 14, 2010, is the sole officer, director and stockholder of Halter Financial Group, Inc. (HFG), and an officer and member of Halter Financial Investments GP, LLC, general partner of Halter Financial Investments, L. P. (HFI), our former controlling stockholder.  Timothy P. Halter is the brother of Kevin B. Halter, Jr. who has served as the Company’s sole officer and director since December 15, 2010.  Kevin B. Halter, Jr. is responsible for the implementation and operation of our business plan.
 
 Approximately 2.35% and 24.95% of the Company’s gross revenues during the six months ended June 30, 2012 and the year ended December 31, 2011, respectively, were received from entities controlled by or affiliated with HFG or HFI.
 
 Kevin Halter, Jr., our controlling stockholder, is also the President and majority stockholder of Securities Transfer Corporation, an affiliated entity which formerly provided services comparable to those of the Company.  Mr. Halter is not obligated to contribute any specific number of hours to our affairs, which may result in an conflict of interest in allocating his time between our operations and his other business affairs.   If his other business affairs require him to devote more substantial amounts of time to such interests, it could limit his ability to devote time to our affairs and could have a negative impact on our ability to manage our business plan.
 
 Subsequent to the December 15, 2010 transaction date, the Company and it’s current controlling stockholder, Kevin Halter, Jr., agreed that additional funds were necessary to support the corporate entity, comply with the periodic reporting requirements of the Securities Exchange Act of 1934, as amended, and commence operations under the Company’s business plan.  To this end, in February 2011, Mr. Halter loaned the Company $25,000 through a loan agreement bearing interest at 6.0% with the note being due upon demand.  This loan was repaid in November 2011 from funds generated through operating activities.  The Company paid approximately $1,164 in interest payable during the quarter ended June 30, 2012.
 
 On April 1, 2011, concurrent with the commencement of operation of our business plan, the Company contracted with Securities Transfer Corporation to provide personnel, office space, equipment and administrative support for our business plan.  Accordingly, the Company has paid or accrued approximately $1,200 per month for personnel costs and approximately $400 per month for office space, equipment usage and administrative support in the operation of our business plan, totaling approximately $9,600 and $14,400 for the six months ended June 30, 2012 and the year ended December 31, 2011, respectively.
 
 (6)
Critical Accounting Policies
 
 Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”).  GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts reported.  These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition.  We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied.  We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances.  Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.
 
 Our significant accounting policies are summarized in Note D of our financial statements.  While all these significant accounting policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment and estimates.  Actual results may differ from those estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect on our consolidated results of operations, financial position or liquidity for the periods presented in this report.
 
 (7)
Effect of Climate Change Legislation
 
 The Company currently has no known or identified exposure to any current or proposed climate change legislation which could negatively impact the Company’s operations or require capital expenditures to become compliant.
 
 
 Item 3 - Quantitative and Qualitative Disclosures About Market Risk
 
 In future periods, the Company may become subject to certain market risks, including changes in interest rates and currency exchange rates.  At the present time, the Company has no identified exposure and does not undertake any specific actions to limit exposures, if any.
 
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  Item 4 - Controls and Procedures
 
 (a)
Evaluation of Disclosure Controls and Procedures
 
 Our management, under the supervision and with the participation of our Chief Executive and Financial Officer (Certifying Officer), has evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15 promulgated under the Exchange Act as of the end of the period covered by this Annual Report.  Disclosure controls and procedures are controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms and include controls and procedures designed to ensure that information we are required to disclose in such reports is accumulated and communicated to management, including our Certifying Officer, as appropriate, to allow timely decisions regarding required disclosure.  Based upon that evaluation, our Certifying Officer concluded that as of such date, our disclosure controls and procedures were not effective to ensure that the information required to be disclosed by us in our reports is recorded, processed, summarized and reported within the time periods specified by the SEC due to a inherent weakness in our internal controls over financial reporting due to commencing business operations within the current reporting quarter and having a sole officer and director.  However, our Certifying Officer believe that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the respective periods presented.
 
 (b)
Changes in Internal Controls
 
 There were no significant changes (including corrective actions with regard to significant deficiencies or material weaknesses) in our internal controls over financial reporting that occurred during the quarter ended June 30, 2012 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
 
 
 Part II - Other Information
 
 Item 1 - Legal Proceedings
  From time to time, in future periods, the Company may become subject to various legal proceedings that are incidental to the ordinary conduct of its business.  The Company has not been a party to any such proceedings to date and anticipates that any future proceeding, either individually or in the aggregate, will not be material to its business or likely to result in a material adverse effect on its future operating results, financial condition, or cash flows.
 
 Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds
  None
 
 Item 3 - Defaults Upon Senior Securities
  None
 
 Item 4 - Mine Safety Disclosures
  None
 
 Item 5 - Other Information
  None
 
 Item 6 - Exhibits
  31.1 Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002
 32.1 Certification pursuant to Section 906 of Sarbanes-Oxley Act of 2002
 101 Interactive data files pursuant to Rule 405 of Regulation S-T.
 
 
 
 SIGNATURES
 
 In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
   SMSA Kerrville Acquisition Corp.Dated: August 14, 2012
/s/ Kevin B.Halter, Jr.Kevin B. Halter, Jr.President, Chief Executive Officer,Chief Financial Officer and Sole Director
  
 
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