BLACKBOXSTOCKS INC. - FORM 10-Q

Attached files

file	filename
EX-32.1 - BLACKBOXSTOCKS INC.	smsaball10qex321063015.htm
EX-10.3 - BLACKBOXSTOCKS INC.	smsaball10qex103063015.htm
EX-31.1 - BLACKBOXSTOCKS INC.	smsaball10qex311063015.htm

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 1934

For the quarterly period ended June 30, 2015

o	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ______________ to _____________

Commission File Number: 0-55108

SMSA Ballinger Acquisition Corp.

(Exact name of registrant as specified in its charter)

Nevada	45-3598066
(State of incorporation)	(IRS Employer ID Number)

2591 Dallas Parkway, Suite 102, Frisco, Texas 75034

(Address of principal executive offices)

(469) 633-0100

(Issuer's telephone number)

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO

Indicate by check mark whether the registrant 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

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

Accelerated filer

Non-accelerated filer

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

State the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date: August 3, 2015: 10,030,612 shares of common stock, par value $0.001

SMSA Ballinger Acquisition Corp.

Form 10-Q for the Quarter ended June 30, 2015

Table of Contents

Page
Part I - Financial Information

Item 1 - Financial Statements	3
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3 - Quantitative and Qualitative Disclosures About Market Risk	16
Item 4 - Controls and Procedures	16

Part II - Other Information

Item 1 - Legal Proceedings	17
Item 1A- Risk Factors	17
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds	17
Item 3 - Defaults Upon Senior Securities	17
Item 4 - Mine Safety Disclosures	17
Item 5 - Other Information	17
Item 6 – Exhibits	17
Signatures	19

Index of Exhibits	20

Part I – Financial Information

Item 1 – Financial Statements

SMSA Ballinger Acquisition Corp.

Balance Sheets

	June 30,			December 31,
	2015			2014
ASSETS	(unaudited)
Current Assets
Cash on hand and in bank	$	44		$	119

Total Assets	$	44		$	119

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable and accrued expenses	$	21,082		$	1,500

Total Liabilities		21,082			1,500


Commitments and Contingencies

Stockholders' 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.
10,030,612 and 10,030,612 shares issued and outstanding, respectively		10,031			10,031
Additional paid-in capital		36,363			31,738
Accumulated deficit		(67,432	)		(43,150	)
Total Stockholders' Deficit		(21,038	)		(1,381	)

Total Liabilities and Stockholders’ Deficit	$	44		$	119

The accompanying notes are an integral part of these unaudited financial statements.

SMSA Ballinger Acquisition Corp.

Statements of Operations

(Unaudited)

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2015			2014			2015			2014

Net sales	$	-		$	-			-		$	-

Expenses
Professional fees		15,012			2,398			24,087			7,398
Other general and administrative expenses		159			(707	)		195			60
Total expenses		15,171			1,691			24,282			7,458

Loss from operations		(15,171	)		(1,691	)		(24,282	)		(7,458	)

Other income
Other income		-			-			-			-
Total other income		-			-			-			-

Loss before income taxes		(15,171	)		(1,691	)		(24,282	)		(7,458	)

Provision for income taxes		-			-			-			-

Net loss	$	(15,171	)	$	(1,691	)	$	(24,282	)	$	(7,458	)

Loss per weighted-average share
of common stock outstanding,
computed on net loss - basic
and fully diluted	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)

Weighted-average number of
shares of common stock
outstanding - basic and
fully diluted		10,030,612			10,030,612			10,030,612			10,030,612

The accompanying notes are an integral part of these unaudited financial statements.

SMSA Ballinger Acquisition Corp.

Statements of Cash Flows

(unaudited)


	For the Six Months Ended
	June 30,
	2015			2014
Cash Flows from Operating Activities
Net loss for the period	$	(24,282	)		(7,458	)
Adjustments to reconcile net loss
to net cash used in operating activities
Increase in accounts payable and accrued expenses		19,582			(2,000	)

Net cash used in operating activities		(4,700	)		(9,458	)

Cash Flows from Investing Activities		-			-

Cash Flows from Financing Activities
Additional capital contributed to support operations		4,625			400

Net cash provided by financing activities		4,625			400

Increase (Decrease) in Cash		(75	)		(9,058	)

Cash at beginning of period		119			9,500

Cash at end of period	$	44		$	442

Supplemental Disclosure of
Interest and Income Taxes Paid
Interest paid during the period	$	-		$	-
Income taxes paid during the period	$	-		$	-

The accompanying notes are an integral part of these unaudited financial statements.

SMSA Ballinger Acquisition Corp.

Notes to Financial Statements – unaudited

June 30, 2015

Note A - Background and Description of Business

SMSA Ballinger Acquisition Corp. (“Company”) was organized on October 4, 2011 as a Nevada corporation to effect the reincorporation of Senior Management Services of Heritage Oaks at Ballinger, Inc., a Texas corporation, (the Company’s predecessor company) mandated by the August 1, 2007 plan of reorganization discussed below.

The Company’s emergence from Chapter 11 of Title 11 of the United States Code on August 1, 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, had no significant assets, liabilities or operating activities. Therefore, the Company, as a new reporting entity, qualified as a “development stage enterprise” as defined in Development Stage Entities topic of the FASB Accounting Standards Codification and Rule 12b-2 under the Securities Exchange Act of 1934, (“Exchange Act”).

On August 1, 2013, the Company entered into a share purchase agreement with Orsolya Peresztegi, also known as Orsolya Peresztegi Halter, pursuant to which she acquired 9.5 million shares of the Company’s common stock for $9,500 cash or $0.001 per share. As a result of this transaction, there was a change in control of the Company with Ms. Peresztegi owning 94.7% of its 10,030,612 outstanding shares of common stock.

The Company entered into a distributor agreement on August 1, 2013. The distributor agreement granted the Company the exclusive right to sell products of Snotarator, LLC, a Frisco, Texas based Texas limited liability company. The distribution rights are limited to countries within South America. On May 15, 2015, the Company and Snotarator, L.L.C. extended the term of the distributor agreement from May 15, 2015 to May 15, 2017 by mutual written agreement. Currently the distributor agreement, as extended, relates to two products, Snotarator and Snotaphant nasal aspirator products.

The Company’s current business plan is to market and sell healthcare related consumer products in South America. Under the Snotarator distributor agreement the Company initially intends to market the Snotarator nasal aspirator products to major discount and drugstore retail stores which offer consumer healthcare products in Brazil and Chile. Additionally, the Company may offer its products directly to consumers through social media sites, internet retailers and by advertising on internet search engine websites. The Company will market and sell in South America other consumer products as may from time to time become available to it through the distributor agreement with Snotarator. The Company also may enter into distributorship and license agreements for additional consumer healthcare products with manufacturers and other healthcare product distributors, which activity is not precluded by the distribution agreement with Snotarator, LLC.

On April 15, 2014, the Company engaged HFG Consulting LLC, a Dallas based business consulting firm, who has agreed, for no consideration, to assist the Company with its initial marketing efforts in South America. HFG Consulting LLC is an affiliate of Halter Financial Group, Inc. (“HFG”) and Halter Financial Investments LP (“HFI”), who owns 400,000 shares of the Company’s common stock. Timothy P. Halter, a former officer and director of the Company, is a principal of HFG and HFI.

HFG Consulting has developed relationships with accounting, legal and consulting firms in Sao Paulo, Brazil and Santiago, Chile. The Company’s initial marketing strategy will be to ascertain through the South American business contacts of HFG Consulting whether or not its products and their price structure would be acceptable by consumers in Brazil and Chile. Additionally it is anticipated that such firms will introduce the Company and its products to slotting agents, product distribution firms and representatives of drugstores and other retail stores.

The Company has initiated its marketing efforts by contacting merchandise representatives in Brazil and Chile to determine the viability of the Company obtaining shelf space for, and sales of, its products in drugstores and other retail outlets. The Company now estimates it will take until the end of fiscal 2015 to complete its marketing research as Snotarator, L.L.C. has made certain enhancements to that delayed the Company’s ability to aggressively pursue its marketing efforts.

If the Company receives affirmative responses from such representatives, the Company intends to seek the engagement of the services of slotting agents, product distribution firms and independent commissioned sales personnel to assist the Company with the promotion, marketing and commercialization of its products in Brazil and Chile. The Company also will seek to enter into distributorship and license agreements for additional consumer healthcare products with manufacturers and other healthcare product distributors seeking to enter the Brazil and Chile markets or desiring to expand their products distribution in South America.

The Company does not have any current arrangements, understandings or agreements with any sales companies, or sales personnel to sell or distribute its products nor does the Company have any arrangements, understandings or agreements with any person or entity relating to the manufacture, marketing or distribution of any products, including its Snotarator nasal aspirator products.

Note B - 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.

The interim condensed financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations, although we believe that the disclosures made are adequate to provide for fair presentation and a reasonable understanding of the information presented. The Interim Condensed Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this Form 10-Q should be read in conjunction with the financial statements and the related notes, as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in the Company’s Annual Report on Form 10-k for the fiscal year ended December 31, 2014, previously filed with the SEC.

In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present a fair statement of financial position as of June 30, 2015, results of operations for the three and six months ended June 30, 2015 and 2014, and cash flows for the six months ended June 30, 2015 and 2014, as applicable, have been made. The results of operations for the six months ended June 30, 2015 are not necessarily indicative of the operating results for the full fiscal year or any future periods.

The accounting policies followed by the Company are set forth in Note D to the Company’s financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2014, which is incorporated herein by reference. Specific reference is made to that report for a description of the Company’s securities and the notes to financial statements.

Note C - Going Concern Uncertainty

The Company has no revenues, nominal cash, no operating assets, has conducted limited business activities and has a business plan with inherent risk. Because of these factors, the Company’s auditors have issued an audit opinion on the Company’s annual financial statements which includes a statement describing our 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.

On August 1, 2013, the Company entered into a distributor agreement with Snotarator LLC, a Frisco, Texas based limited liability company, (Snotarator) to obtain the exclusive right to sell the products of Snotarator in South America. Additionally, on August 1, 2013, the Company sold 9,500,000 shares of restricted, unregistered common stock to Orsolya Peresztegi Halter for $9,500, or $0.001 per share. There is no assurance that the Company will be able to successfully exploit the distributor agreement or, if successful, that such exploitation will result in the appreciation of our stockholders’ investment in the then outstanding common stock.

The Company is dependent upon external sources of financing; including being fully dependent upon its majority stockholder to provide sufficient working capital to preserve the integrity of its corporate entity. It is the intent of the Company’s majority stockholder to provide sufficient working capital necessary to support and preserve the integrity of the corporate entity; however, no formal commitment or arrangements to advance or loan funds to the Company or repay any such advances or loans exist. There is no legal obligation for the Company’s majority stockholder to provide additional future funding. The Company and its majority stockholder are at the mercy of future economic trends and business operations for its majority stockholder to have the resources available to support the Company. Should this pledge fail to provide financing, the Company has not identified any alternative sources of working capital to support its operations.

The Company’s ultimate 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. The Company may compensate providers of service to it by issuance of common stock in lieu of cash.

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

The Company’s Articles of Incorporation authorize 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 its ability to obtain debt or equity financing as well as impede potential takeover, 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 its ability to raise additional capital through the sale of debt or equity securities.

In such a restricted cash flow scenario, the Company may be unable to complete its business plan steps, and would, instead, delay all cash intensive activities. Without necessary cash flow or additional funding, it may become dormant until such time as sufficient working capital becomes available.

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

Note D - Summary of Significant Accounting Policies

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.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles 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 the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

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 uses the asset and liability method of accounting for income taxes. At June 30, 2015 and December 31, 2014, 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.

Income (Loss) per share

Basic earnings (loss) per share is computed by dividing the net income (loss) available to common stockholders by the weighted-average number of common shares outstanding during the respective period presented in our accompanying financial statements.

Fully diluted earnings (loss) per share is computed similar to basic income (loss) per share except that the denominator is increased to include the number of common stock equivalents (primarily outstanding options and warrants).

Common stock equivalents represent the dilutive effect of the assumed exercise of the outstanding stock options and warrants, using the treasury stock method, at either the beginning of the respective period presented or the date of issuance, whichever is later, and only if the common stock equivalents are considered dilutive based upon the Company’s net income (loss) position at the calculation date.

As of June 30, 2015 and 2014, 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.

Note E –New Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” which is the new, comprehensive revenue recognition standard that will supersede all existing revenue recognition guidance under GAAP. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to a customer in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This ASU is effective for annual and interim periods beginning on or after December 15, 2016, and early adoption is not permitted. Entities will have the option of using either a full retrospective approach or a modified approach to adopt the guidance in the ASU. The Company currently has no revenues and does not expect any impact of adopting this guidance.

In June 2014 Accounting Standards Update 2014-10 removed the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification, thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. This ASU is effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. Early adoption is permitted. The Company adopted this ASU effective with the December 31, 2014 annual report on Form 10-K and its adoption resulted in the removal of previously required development stage.

In June 2014, the FASB issued ASU 2014-12, “Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could be Achieved after the Requisite Service Period.” This ASU provides more explicit guidance for treating share-based payment awards that require a specific performance target that affects vesting and that could be achieved after the requisite service period as a performance condition. The new guidance is effective for annual and interim reporting periods beginning after December 15, 2015. The Company does not expect the adoption of this guidance to have a material impact on the financial statements.

In August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements – Going Concern (Topic 205-40)”, which requires management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern for each annual and interim reporting period. If substantial doubt exists, additional disclosure is required. This new standard will be effective for the Company for annual and interim periods beginning after December 15, 2016. Early adoption is permitted. The Company expects to adopt this new standard for the fiscal year ending December 31, 2015 and the Company will continue to assess the impact on its financial statements.

Note F - Related Party Transactions

The Company does not have any special committee, policy or procedure related to the review, approval or ratification of related party transactions. HFG and/or HFI collectively contributed approximately $4,625 and $400 for the six months ended June 30, 2015 and 2014, respectively, to support the Company’s operations during such periods and was recorded as additional paid in capital.

Note G - Fair Value of Financial Instruments

The carrying amount of cash and accounts 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.

ASC 820, “Fair Value Measurements and Disclosure,” (“ASC 820”) defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, not adjusted for transaction costs. ASC 820 also establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels giving the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).

The three levels are described below:

Level 1 Inputs — Unadjusted quoted prices in active markets for identical assets or liabilities that is accessible by the Company;

Level 2 Inputs — Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly;

Level 3 Inputs — Unobservable inputs for the asset or liability including significant assumptions of the Company and other market participants.

Note H - Income Taxes

As of June 30, 2015, the Company has a net operating loss carryforward of approximately $67,000 to offset future taxable income after the effect of the August 2013 change in control transaction. 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).

The Company's income tax expense (benefit) for the six months ended June 30, 2015 and 2014 varied from the statutory rate of 34% as follows:

	Six Month Ended
	June 30,
	2015			2014
Statutory rate applied to income before income taxes	$	(8,300	)	$	(2,500	)
Increase (decrease) in income taxes resulting from:
State income taxes
Other, including reserve for deferred tax asset and application of net operating loss carryforward		8,300			2,500
Income tax expense	$	-		$	-

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, 2015 and December 31, 2014, respectively, relate 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 June 30, 2015 and December 31, 2014, respectively:

	June 30,			December 31,
Deferred tax assets	2015			2014
Net operating loss carryforwards	$	22,900		$	14,700
Less valuation allowance	$	(22,900	)	$	(14,700	)
Net Deferred Tax Asset		-			-

During the six months ended June 30, 2015 and the year ended December 31, 2014, respectively, the valuation allowance for the deferred tax asset increased by approximately $8,200 and $7,900. Open tax years are from 2007 to 2015.

Note I - 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% of the Plan Shares of the Company were issued to HFG in exchange for the release of its Allowed Administrative Claims, 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.

The Company issued an aggregate 530,612 shares of the Company’s “new” common stock to all unsecured creditors, including 400,000 shares issued to HFG in settlement of all unpaid pre-confirmation obligations of the Company and/or the bankruptcy trust. The 530,612 Plan Shares were issued pursuant to Section 1145 of the U.S. Bankruptcy Code.

Effective October 4, 2011, as allowed under the Plan, HFG transferred its 400,000 Plan Shares to Halter Financial Investments, L.P. (“HFI”), a Texas limited partnership controlled by Timothy P. Halter, a former officer and director of the Company.

On August 1, 2013, the Company entered into a share purchase agreement with Orsolya Peresztegi, pursuant to which she acquired 9.5 million shares at $0.001 per shares of the Company’s common stock for a deferred payment of $9,500 received on December 30, 2013. As a result of this transaction, 10,030,612 shares of the Company’s common stock are currently issued and outstanding. The Company relied upon Section 4(2) of the Securities Act of 1933, as amended, for an exemption from registration on these shares and no underwriter was used in this transaction.

Note J - Subsequent Events

Management has evaluated all other activity of the Company through 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 restated financial statements.

Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations

Certain statements contained in this Quarterly Report on Form 10-Q, 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, or industry results, to be materially different from any future results, performances 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; our ability to sustain, manage or forecast our growth; our ability to raise funds through a private or public offering of our securities and our ability to successfully implement our business plan; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition’ fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; and other factors referenced in this registration statement.

Given these uncertainties, readers of this Quarterly Report on Form 10-Q are cautioned not to place undue reliance on such forward-looking statements. We disclaim any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.

General

SMSA Ballinger Acquisition Corp. was organized on October 4, 2011 as a Nevada corporation to effect the reincorporation of Senior Management Services of Heritage Oaks at Ballinger, Inc., a Texas corporation, mandated by the plan of reorganization discussed in Item 1 Description of Business.

On August 1, 2013, we entered into a share purchase agreement with Orsolya Peresztegi pursuant to which she acquired 9.5 million shares of our common stock for $9,500 cash, or $0.001 per share. As a result of this transaction, there was a change in our control with Ms. Peresztegi owning 94.7% of our 10,030,612 outstanding shares of our common stock.

We entered into a distributorship agreement on August 1, 2013 with Snotarator LLC. The distributor agreement, which was initially to expire on May 15, 2015, granted to us the exclusive right to sell products of Snotarator LLC, a Frisco, Texas based limited liability company. The distributor rights are limited to countries within South America. On May 15, 2015, we agreed with Snotarator to extend the terms of the distributor agreement to May 15, 2017. Currently, the distributor agreement, as extended, relates to two nasal aspirator products.

We are a development stage company and a shell company as defined in Rule 405 under the Securities Act of 1933, or the Securities Act, and Rule 12b-2 under the Securities Exchange Act of 1934, or the Exchange Act.

Results of Operations

We had no revenues for the three and six month periods ended June 30, 2015 and 2014, respectively. Consequently, we had no earnings for such periods.

General and administrative expenses for each of the three month periods ended June 30, 2015 and 2014 were approximately $15,171 and $1,691, respectively and for each of the six month periods ended June 30, 2015 and 2014 were $24,282 and $7,458, respectively. These expenses were directly related to the maintenance of the corporate entity. It is anticipated that future expenditure levels will increase as we implement our business plan and to comply with our periodic reporting requirements under the Exchange Act.

It is anticipated that future expenditure levels will remain relatively nominal until such time that we obtain additional funds through a private or public offering of our securities enabling us to initiate the development of our business plan.

We do 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 we obtain additional funds from investors through the private or public offering of our debt or equity securities and we successfully implement our business plan.

Plan of Operations

Our current business plan is to market and sell healthcare related consumer products in South America. We intend to market under our distributor agreement with Snotarator LLC the Snotarator nasal aspirator products to drugstore and other retail stores which offer consumer healthcare products in Brazil and Chile. Additionally, we may offer our products directly to consumers through social media sites, internet retailers and by advertising on internet search engine websites. We will market and sell other consumer healthcare products as may from time to time become available to us through our distributor agreement with Snotarator LLC and under agreements with other healthcare product manufacturers.

We have initiated our marketing efforts by contacting merchandise representatives in Brazil and Chile to determine the viability of our obtaining shelf space for, and sales of, our consumer healthcare products in drugstores and retail outlets. However, as a result of Snotarator making certain enhancements to its products, we now believe it will take until the end of fiscal 2015 to complete our initial marketing research. Assuming we receive affirmative responses from such representatives to the product enhancements, we will seek the engagement of the services of slotting agents, product distribution firms and independent commissioned sales personnel to assist us with the promotion, marketing and commercialization of our products in Brazil and Chile. We may also seek to enter into distributorship and license agreements for additional consumer healthcare products with manufacturers and other healthcare product distributors seeking to enter the Brazil and Chile markets or desiring to expand their products distribution in South America.

We do not have any current arrangements, understandings or agreements with any sales companies, or sales personnel to sell or distribute our products nor do we have any arrangements, understandings or agreements with any person or entity relating to the manufacture, marketing or distribution of any products, including our Snotarator nasal aspirator products

Our management consists of only one person, Orsolya Peresztegi, our president and sole director. Ms. Peresztegi is primarily responsible for conducting our day-to-day operations and is responsible for implementing our business plan. Ms. Peresztegi will only devote as much of her time as she deems necessary to assist us with the implementation of our business plan. Ms. Peresztegi has not entered into a written employment or consulting agreement with us and she is not expected to do so. The loss of the services of Ms. Peresztegi would adversely affect our ability to implement our business plan.

Liquidity and Capital Resources

At June30, 2015 and December 31, 2014, we had working capital of approximately $(21,038) and $ (1,381), respectively.

We currently have nominal cash on hand, no operating assets and a business plan with inherent risk. Because of these factors, our auditors have issued an audit opinion on our financial statements for the fiscal year ended December 31, 2014 which includes a statement describing our going concern status. This means, in the auditor’s opinion, substantial doubt about our ability to continue as a going concern exists at the date of their opinion.

We believe we will need up to $50,000 during the next 12 months to provide us with sufficient working capital to support and preserve the integrity of our corporate entity, including the payment of legal and accounting expenses necessary to prepare and file required reports with the SEC, and to fund our initial marketing research efforts in Brazil and Chile. Since we have no operating history, no revenues, nominal cash and no operating assets, we are dependent upon obtaining additional funds from Orsolya Peresztegi, our sole officer, director and major stockholder, or through a public or private offering of our debt or equity securities to other investors to fund our plan of operations. Neither Snotarator LLC nor our major stockholder has an obligation to provide us with additional funds; however, we believe our major stockholder will provide us with up to $50,000 during the next 12 months to fund our working capital needs and to pay costs related to the execution of our initial market analysis activities.

We believe we will need a minimum of $500,000 to implement a viable distribution system for our products in Brazil and Chile, assuming we have received favorable indications of interest for our products from consumers, sales organizations and retail stores. Thereafter, we intend to seek approximately $500,000 from investors through a public or private offering of our debt or equity securities. We believe it will take us until June 30, 2016 to complete the $500,000 funding and thereafter it will take us until December 31, 2016 to fully implement a distribution system for our products.

We intend to use the proceeds from the $500,000 financing to purchase product inventory, pay sales personnel commissions and expenses, payment for slotting fees for product insertion in retail outlets, advertising expenses, corporate internet website development costs and other general and administrative purposes, including salaries for administrative personnel. We will not be able to proceed with the implementation of our product distribution system until we successfully complete the $500,000 financing. There is no assurance that we will be able to obtain additional funding through the offering of our debt or equity securities, or, that such funding, if available, will be obtained on terms favorable to us.

If for any reason Orsolya Peresztegi is unable or decides not to provide us with additional funds or we are not successful in obtaining financing from a private or public offering of our securities, we most likely would be unable to complete our business plan, and would instead, delay all cash intensive activities. Without the necessary additional funding, we may become dormant until such time as sufficient working capital becomes available to us, at which time we may then seek to develop an alternative business plan.

In conjunction with the implementation of our business plan, we anticipate that we will issue an amount of our authorized but unissued common stock that may represent a significant majority of the voting power and equity of our company, which will, in all likelihood, result in investors obtaining a controlling interest in us and thereby reducing the ownership interest of our current stockholders. We may also issue preferred stock to the potential investors. Holders of preferred stock may have rights, preferences and privileges senior to those of our existing holders of common stock.

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

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.

Critical accounting policies are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment, estimates and assumptions, in the preparation of our financial statements. Since we have no operations, or revenues, or assets and only nominal cash, we have not adopted nor utilized any critical accounting policies in the preparation of our financial statements.

New Accounting Pronouncements

Effect of Climate Change Legislation

We currently have no known or identified exposure to any current or proposed climate change legislation which could negatively impact our 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.

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 Quarterly 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 our status as a shell corporation and having a sole officer and director. However, our Certifying Officer believes that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the respective periods presented.

(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, 2015 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

None

Item 1A – Risk Factors

We are a smaller reporting company as defined by Reg. 240.12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3 - Defaults Upon Senior Securities

None

Item 4 - Mine Safety Disclosures

N/A

Item 5 - Other Information

None

Item 6 - Exhibits

Exhibit Number Description of Exhibit

2.1*	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.

2.2*	Order Confirming First Amended, Modified Chapter 11 Plan Proposed by Debtors, Case No. 07-30230, signed August 1, 2007.

2.3*	Notice of Entry of Confirmation Order dated August 10, 2007.

2.4*	Post Confirmation Certificate of Completion dated August 5, 2013.

2.5*	Stock Purchase Agreement dated August 1, 2013 between SMSA Ballinger Acquisition Corp. and Orsolya Peresztegi.

3.1*	Agreement and Plan of Merger by and between Senior Management Services of Heritage Oaks at Ballinger, Inc. and SMSA Ballinger Acquisition Corp. dated October 4, 2011.

3.2*	Articles of Merger as filed with the Secretary of State of the State of Nevada on October 18, 2011.

3.3*	Certificate of Merger as filed with the Secretary of State of the State of Texas on October 18, 2011.

3.4*	Articles of Incorporation of SMSA Ballinger Acquisition Corp.

3.5*	Bylaws of SMSA Ballinger Acquisition Corp.

4.1*	Form of common stock certificate.

10.1*

Distributor Agreement dated August 1, 2013 between Snotarator LLC and SMSA Ballinger Acquisition Corp.

10.2*

Letter Agreement dated April 15, 2014 between HFG Consulting LLC and SMSA Ballinger Acquisition Corp.

10.3***

Letter Agreement dated May 15, 2015 extending the expiration of the Distributor Agreement dated August 1, 2013 between Snotarator LLC and SMSA Ballinger Acquisition Corp. to May 15, 2017.

16.1*

Letter from Goldman Accounting Services CPA PLLC dated August 4, 2014 addressed to SEC regarding Goldman’s concurrence with the Registrant’s statements in the registration statement on Form 10-12G regarding the Registrant’s change in certifying accountants.

16.2**

Letter from DKM Certified Public Accountants dated July 8, 2015 addressed to SEC regarding DKM’s concurrence with the Registrant’s disclosure in its Current Report on Form 8-K reporting the Registrant’s change in certifying accountants. The DKM letter was included in the Registrant’s Current Report on Form 8-K as Exhibit 16.1.

31.1***

Certifications pursuant to Section 302 of Sarbanes-Oxley Act of 2002.

32.1***

Certifications pursuant to Section 906 of Sarbanes-Oxley Act of 2002.

101***

Interactive Data File

_________________

*Previously filed as an exhibit to the Registrant’s registration statement on Form 10-12G which was filed with the Securities and Exchange Commission on August 5, 2014 and which is incorporated herein for all purposes.

**Previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 9, 2015 and which is incorporated herein for all purposes.

***Filed herewith

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 Ballinger Acquisition Corp.

Dated: August 7, 2015		/s/ Orsolya Peresztegi
		Orsolya Peresztegi
		President, Chief Executive Officer,
		Chief Financial Officer and Sole Director

Index of Exhibits

Exhibit Number Description of Exhibit

2.1*	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.

2.2*	Order Confirming First Amended, Modified Chapter 11 Plan Proposed by Debtors, Case No. 07-30230, signed August 1, 2007.

2.3*	Notice of Entry of Confirmation Order dated August 10, 2007.

2.4*	Post Confirmation Certificate of Completion dated August 5, 2013.

2.5*	Stock Purchase Agreement dated August 1, 2013 between SMSA Ballinger Acquisition Corp. and Orsolya Peresztegi.

3.1*	Agreement and Plan of Merger by and between Senior Management Services of Heritage Oaks at Ballinger, Inc. and SMSA Ballinger Acquisition Corp. dated October 4, 2011.

3.2*	Articles of Merger as filed with the Secretary of State of the State of Nevada on October 18, 2011.

3.3*	Certificate of Merger as filed with the Secretary of State of the State of Texas on October 18, 2011.

3.4*	Articles of Incorporation of SMSA Ballinger Acquisition Corp.

3.5*	Bylaws of SMSA Ballinger Acquisition Corp.

4.1*	Form of common stock certificate.

10.1*

Distributor Agreement dated August 1, 2013 between Snotarator LLC and SMSA Ballinger Acquisition Corp.

10.2*

Letter Agreement dated April 15, 2014 between HFG Consulting LLC and SMSA Ballinger Acquisition Corp.

10.3***

Letter Agreement dated May 15, 2015 extending the expiration of the Distributor Agreement dated August 1, 2013 between Snotarator LLC and SMSA Ballinger Acquisition Corp. to May 15, 2017.

16.1*

16.2**

31.1***

Certifications pursuant to Section 302 of Sarbanes-Oxley Act of 2002.

32.1***

Certifications pursuant to Section 906 of Sarbanes-Oxley Act of 2002.

101***

Interactive Data File

_________________

**Previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 9, 2015 and which is incorporated herein for all purposes.

***Filed herewith

_________________

BLACKBOXSTOCKS INC. - FORM 10-Q - August 7, 2015

Attached files

BLACKBOXSTOCKS INC. Reports