UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D. C. 20549
FORM
10-Q/A
(Amendment
No. 2)
(Mark
One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For
the Quarterly Period Ended March 31, 2010
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
Commission
File Number: 000-053334
Resource Holdings,
Inc.
(Exact
name of registrant as specified in its charter)
|
Nevada
|
26-2809162
|
|
|
(State
or other jurisdiction
|
(IRS
Employer Identification No.)
|
|
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of
incorporation or organization)
|
11753
Willard Avenue
Tustin, CA.
92782
(Address
of principal executive offices)
(714)
832-3249
(Issuer’s
telephone number)
SMSA
El Paso II Acquisition Corp.
(Former
name, former address and former fiscal year, if changed since last
report)
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934, during the
preceding 12 months (or such shorter period that the Registrant was required to
file such report(s)), and (2) has been subject to such filing requirements for
the past 90 days.
Yes ¨ No x
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 ¨ 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
definition 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 ¨ No x
There
were 23,193,754 shares of common stock, $0.001 par value, issued and outstanding
as of May 17, 2010.
EXPLANATORY
NOTE
The
purpose of this Amendment No. 2 on Form 10-Q/A to Resource Holdings, Inc’s
(formerly SMSA El Paso II Acquisition Corp.) quarterly report on Form 10-Q for
the quarterly period ended March 31, 2010, filed with the Securities and
Exchange Commission on May 17, 2010 (the “initial filing”), is to (i) amend the
initial filing to note that the financial statements were reviewed by the
Company's independent registered public accounting firm as required by Rule 8-03
of Regulation S-X and (ii) to restate the financial statements for the quarter
ended March 31, 2010. The financial statements for December 31, 2009
have also been restated. This Form 10-Q/A speaks as of the original
filing date of the Form 10-Q, does not reflect events that may have occurred
subsequent to the original filing date, and does not modify or update in any way
the disclosures made in the initial filing.
Resource
Holdings, Inc.
(f/k/a SMSA El Paso II
Acquisition Corp.)
FORM
10-Q
QUARTER
ENDED MARCH 31, 2010
TABLE
OF CONTENTS
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Page
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PART
I-FINANCIAL INFORMATION
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Item
1. Financial Statements
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|
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Balance
Sheets (Unaudited and Restated) as of March 31, 2010 and
December 31, 2009
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5
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Statements
of Operations (Unaudited and Restated) for the Three Months Ended March
31, 2010 and 2009 and from date of bankruptcy settlement to March 31,
2010
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6
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Statements
of Cash Flows (Unaudited and Restated) for the Three Months
Ended March 31, 2010 and 2009 and from date of bankruptcy settlement to
March 31, 2010
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7
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Notes
to Financial Statements (Unaudited)
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8
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Item
2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
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15
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Item
3. Quantitative and Qualitative Disclosures About Market
Risk.
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16
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Item
4T. Controls and Procedures
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16
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PART
II - OTHER INFORMATION
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Item
1. Legal Proceedings
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17
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Item
1A. Risk Factors
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17
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Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
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17
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Item
3. Defaults Upon Senior Securities
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17
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Item
4. (Removed and Reserved)
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17
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Item
5. Other Information
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17
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Item
6. Exhibits
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17
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Signatures
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18
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3
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REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and
Stockholders
of Resource Holdings, Inc.
We
have reviewed the accompanying balance sheet of Resource Holdings, Inc. as
of March 31, 2010, and the related statements of operations, and cash
flows for the three-month period ended March 31, 2010. These
financial statements are the responsibility of the company’s
management.
We
conducted our review in accordance with the standards of the Public
Company Accounting Oversight Board (United States). A review of interim
financial information consists principally of applying analytical
procedures and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit
conducted in accordance with standards of the Public Company Accounting
Oversight Board (United States), the objective of which is the expression
of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based
on our review, we are not aware of any material modifications that should
be made to the accompanying interim financial statements for them to be in
conformity with accounting principles generally accepted in the United
States of America.
The
accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1
to the financial statements, the Company has cash flow
constraints, an accumulated deficit, and has not yet produced revenues
from operations. These factors, among others, raise substantial doubt
about the Company's ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 1.
The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
/s/
Child, Van Wagoner & Bradshaw, PLLC
Child,
Van Wagoner & Bradshaw, PLLC
Salt
Lake City, Utah
August
16,
2010,
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4
PART
I - FINANCIAL
INFORMATION
Item
1. Financial
Statements
Resource
Holdings, Inc.
(f/k/a
SMSA El Paso II Acquisition Corp.)
(An
Exploration Stage Company)
BALANCE
SHEETS
|
March 31,
|
December 31,
|
|||||||
|
2010
|
2009
|
|||||||
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(Unaudited)
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(Restated)
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|||||||
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(Restated)
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||||||||
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ASSETS
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||||||||
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Current
Assets
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||||||||
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Cash
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$ | 42,601 | $ | 0 | ||||
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Other
Assets
|
||||||||
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Deferred
Offering Costs
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- | 23,775 | ||||||
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Total
Assets
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$ | 42,601 | $ | 23,775 | ||||
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LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
|
||||||||
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Current
Liabilities
|
||||||||
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Trade
accounts payable
|
174,724 | 106,694 | ||||||
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Contract
payable to stockholder - trade
|
- | 250,000 | ||||||
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Accrued
liabilities payable to an officer
|
15,000 | - | ||||||
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Accrued
Interest
|
2,877 | - | ||||||
|
Notes
Payable to stockholders
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$ | 350,000 | - | |||||
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Total
Current Liabilities
|
542,601 | 356,694 | ||||||
|
Stockholders'
Equity (Deficit)
|
||||||||
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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; 23,193,754 and
22,000,004 shares issued and outstanding
|
23,194 | 22,000 | ||||||
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Additional
paid-in-capital
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457,605 | 41,132 | ||||||
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Deficit
accumulated during the development stage
|
(980,799 | ) | (396,051 | ) | ||||
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Total
Stockholders' Equity (Deficit)
|
(500,000 | ) | (332,919 | ) | ||||
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Total
Liabilities and Stockholders' Equity (Deficit)
|
$ | 42,601 | $ | 23,775 | ||||
The accompanying notes are an integral
part of these condensed financial statements.
5
Resource
Holdings, Inc.
(f/k/a
SMSA El Paso II Acquisition Corp.)
(An
Exploration Stage Company)
STATEMENTS
OF OPERATIONS
FOR
THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
AND
THE PERIOD FROM DATE OF BANKRUPTCY SETTLEMENT TO MARCH 31, 2010
(UNAUDITED)
|
March
31, 2010
|
March
31, 2009
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Period from
August 1, 2007
(date of
bankruptcy
settlement)
through
March 31, 2010
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||||||||||
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(Restated)
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||||||||||||
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Revenues
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$ | - | $ | - | $ | - | ||||||
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Expenses
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||||||||||||
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Reorganization
Costs
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- | - | 3,581 | |||||||||
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Professional
Fees
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62 ,722 | 5,128 | 441,529 | |||||||||
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General
and Administrative expenses
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169,149 | 1,177 | 173,812 | |||||||||
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Total
Operating Expenses
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231,871 | 6,305 | 618,922 | |||||||||
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Operating
Loss
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(231,871 | ) | (6,305 | ) | (618,922 | ) | ||||||
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Other
Income (Expense)
|
||||||||||||
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Interest
Expense
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352,877 | - | 352,877 | |||||||||
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Impairment
of Goodwill From Acquisition of TransGlobal Operations,
Inc.
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- | - | (9,000 | ) | ||||||||
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Total
Other Income (Expense)
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(352,877 | ) | - | (361,877 | ) | |||||||
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Loss
before Provision for Income Taxes
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(584,748 | ) | (6,305 | ) | (980,799 | ) | ||||||
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Provision
for Income Taxes
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- | - | - | |||||||||
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Net
Loss
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$ | (584,748 | ) | $ | (6,305 | ) | $ | (980,799 | ) | |||
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Basic
and Diluted Net Loss per Share:
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$ | (0.03 | ) | $ | (0.01 | ) | ||||||
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Basic
and Diluted Weighted Average Common Shares
Outstanding
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22,000,004 | 500,004 | ||||||||||
The
accompanying notes are an integral part of these condensed financial
statements.
6
Resource
Holdings, Inc.
(f/k/a
SMSA El Paso II Acquisition Corp.)
(An
Exploration Stage Company)
STATEMENTS
OF CASH FLOWS
FOR
THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
AND
THE PERIOD FROM DATE OF BANKRUPTCY SETTLEMENT TO MARCH 31, 2010
(UNAUDITED)
|
For the Three Months
Ended March 31,
|
Period from
August 1,
2007 (date of
bankruptcy
settlement)
through
March
|
|||||||||||
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2010
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2009
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31, 2010
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||||||||||
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(Restated)
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||||||||||||
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Cash
Flows from Operating Activities:
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||||||||||||
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Net
Loss
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$ | (584,748 | ) | $ | (6,305 | ) | $ | (980,799 | ) | |||
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Adjustments
to reconcile Net Loss to Net Cash used in Operating
Activities:
|
||||||||||||
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Changes
in Operating Assets and Liabilities:
|
||||||||||||
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Impairment
of goodwill from acquisition of Trans Global Operations,
Inc.
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- | - | 9,000 | |||||||||
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Expenses
from issuance of common stock
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441,442 | - | 441,442 | |||||||||
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Contract
payable to stockholder
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(250,000 | ) | - | - | ||||||||
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Trade
in accounts payable
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68,030 | - | 174,724 | |||||||||
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Accrued
Interest
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2,877 | - | 2,877 | |||||||||
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Accrued
liability payable to an officer
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15,000 | - | 15,000 | |||||||||
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Net
Cash (Used) by Operating Activities
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(307,399 | ) | (6,305 | ) | (337,756 | ) | ||||||
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Cash
Flows from Investing Activities:
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- | - | - | |||||||||
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Cash
Flows from Financing Activities:
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||||||||||||
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Notes
payable to stockholders
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350,000 | - | 350,000 | |||||||||
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Cash
funded from bankruptcy trust
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- | - | 1,000 | |||||||||
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Cash
repaid to former stockholder
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- | - | (20,000 | ) | ||||||||
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Cash
advanced by former stockholder
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- | 6,305 | 29,357 | |||||||||
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Proceeds
from sale of common stock
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- | - | 20,000 | |||||||||
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Net
Cash Provided by Financing Activities:
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350,000 | 6,305 | 380,357 | |||||||||
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Net
Increase in Cash
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42,601 | - | 42,601 | |||||||||
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Cash,
Beginning of Period
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- | - | - | |||||||||
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Cash,
End of Period
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$ | 42,601 | $ | - | $ | 42,601 | ||||||
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Non
– Cash Items:
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||||||||||||
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None
|
||||||||||||
The
accompanying notes are an integral part of these condensed financial
statements.
7
Resource
Holdings, Inc.
(f/k/a
SMSA El Paso II Acquisition Corp.)
Notes
to Financial Statements
March
31, 2010
(Unaudited)
NOTE
1–ORGANIZATION AND BASIS OF PRESENTATION
Organization
– SMSA El Paso II
Acquisition Corp. (“Company”) was organized on May 21, 2008 as a Nevada
corporation to effect the bankruptcy court’s ordered reincorporation of Senior
Management Services of El Paso Coronado, Inc., a Texas corporation, mandated by
the plan of reorganization discussed below.
The
Company’s emergence from Chapter 11 of Title 11 of the United States Code on
August 1, 2007, which was effective on August 10, 2007, created the combination
of a change in majority ownership and voting control - that is, loss of control
by the then-existing stockholders, a court-approved reorganization, and a
reliable measure of the entity’s fair value - resulting in a fresh start,
creating, in substance, a new reporting entity. Accordingly, the Company, post
bankruptcy, has no significant assets, liabilities or operating activities.
Therefore, the Company, as a new reporting entity, qualifies as a “development
stage enterprise” as defined in Development Stage Entities topic of the FASB
Accounting Standards Codification and a shell company as defined in Rule 405
under the Securities Act of 1933 (“Securities Act”), and Rule 12b-2 under the
Securities Exchange Act of 1934 (“Exchange Act”).
On August
10, 2009, the Company entered into a Share Exchange Agreement, (the “Share
Exchange Agreement”), with Trans Global Operations, Inc., a Delaware corporation
(“TGO”), and all of the shareholders of TGO. Pursuant to the Share Exchange
Agreement, the stockholders of TGO transferred 100% of the issued and
outstanding shares of the capital stock of TGO in exchange for 4,500,000 newly
issued shares of the Company’s common stock that, in the aggregate, constituted
approximately 90% of the Company’s issued and outstanding capital stock on a
fully-diluted basis as of and immediately after the consummation of such
exchange. As a result of this transaction, 5,000,004 shares of the Company’s
common stock is currently issued and outstanding.
TGO was
organized on August 10, 2009 as a Delaware corporation and was formed to seek
and identify a privately-held operating company desiring to become a publicly
held company with access to United States capital markets by combining with us
through a reverse merger or acquisition transaction.
On
November 5, 2009, the Company entered into a Securities Purchase Agreement
(“Purchase Agreement”) with Michael Campbell whereby Mr. Campbell purchased from
the Company an aggregate of 20,000,000 shares of restricted, unregistered common
stock. Additionally, on the same date, the Company entered into a Contribution
Agreement between the Company, Mr. Campbell and Gerard Pascale, the Company’s
then-current sole officer, director and controlling shareholder, pursuant to
which Mr. Pascale surrendered 3,000,000 shares of the common stock then owned by
him to the Company at no cost to the Company to induce Mr. Campbell to enter
into the Purchase Agreement.
The
Company’s business plan, subsequent to the November 5, 2009 transaction, is to
acquire and employ, in the marketplace, oil, gas and mineral drilling rigs and
well servicing equipment. Management believes that, initially, the Company will
be able to acquire said rigs and related equipment at discount prices relative
to their historical market values and employ them under long-term service
contracts with national and independent oil companies located in South America
that pay profitable day-rates.
On June
11, 2010 the Company’s name was changed to Resource Holdings, Inc.
Basis of
Presentation – The accompanying unaudited condensed financial statements
of the Company have been prepared in accordance with accounting principles
generally accepted in the United States of America for interim financial
information and with the instructions to Form 10-Q. Accordingly, these financial
statements do not include all of the information and disclosures required by
generally accepted accounting principles for complete financial statements.
These unaudited condensed financial statements should be read in conjunction
with the Company’s annual financial statements and the notes thereto for the
year ended December 31, 2009, included in the Company’s annual report on Form
10-K, especially the information included in Note 1 to those financial
statements, “Summary of Significant Accounting Policies.” In the opinion of the
Company’s management, the accompanying unaudited condensed financial statements
contain all adjustments (consisting of only normal recurring adjustments)
necessary to fairly present the Company’s financial position as of March 31,
2010, and its results of operations and cash flows for the three months ended
March 31, 2010 and 2009. The results of operations for the three months ended
March 31, 2010, may not be indicative of the results that may be expected for
the year ending December 31, 2010.
8
Business
Condition – The Company’s working capital is ($500,000) as of March 31,
2010. The Company has issued a private placement memorandum to obtain investors.
During March 2010 the Company sold an aggregate of $350,000 in 10% promissory
notes and issued 1,093,750 shares of common stock to investors, based on $0.32
per share. The stock issuance was accounted for as $350,000 of interest expense.
A cash fee of $15,000 was paid and 350,000 shares of common stock were issued as
a commission as part of this capital raising transaction. The proceeds of the
financing will be used to help the Company maintain operations and to fund the
acquisitions of equipment and drilling rigs located in South
America.
Basic and Diluted
Loss Per Share – Basic loss per common share is computed by dividing net
loss by the weighted-average number of common shares outstanding during the
period. Diluted loss per share is calculated to give effect to potentially
issuable common shares which include stock options and stock warrants except
during loss periods when those potentially issuable common shares would decrease
loss per share. At March 31, 2010, the Company had no potentially issuable
common shares outstanding.
Recently Enacted Accounting
Standards – In June 2009 the FASB established the Accounting Standards
Codification (“Codification” or “ASC”) as the source of authoritative accounting
principles recognized by the FASB to be applied by nongovernmental entities in
the preparation of financial statements in accordance with generally accepted
accounting principles in the United States (“GAAP”). Rules and interpretive
releases of the Securities and Exchange Commission (“SEC”) issued under
authority of federal securities laws are also sources of GAAP for SEC
registrants. Existing GAAP was not intended to be changed as a result of the
Codification, and accordingly the change did not impact our financial
statements. The ASC does change the way the guidance is organized and
presented.
Statement
of Financial Accounting Standards (“SFAS”) SFAS No. 166 (ASC Topic 810),
“Accounting for Transfers of Financial Assets—an Amendment of FASB Statement No.
140”, SFAS No. 167 (ASC Topic 810), “Amendments to FASB Interpretation No.
46(R)”, and SFAS No. 168 (ASC Topic 105), “The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles—a
replacement of FASB Statement No. 162” were recently issued. SFAS No. 166, 167,
and 168 have no current applicability to the Company or their effect on the
financial statements would not have been significant.
Accounting
Standards Update (“ASU”) ASU No. 2009-05 (ASC Topic 820), which amends Fair
Value Measurements and Disclosures – Overall, ASU No. 2009-13 (ASC Topic 605),
Multiple-Deliverable Revenue Arrangements, ASU No. 2009-14 (ASC Topic 985),
Certain Revenue Arrangements that include Software Elements, and various other
ASU’s No. 2009-2 through ASU No. 2010-21 which contain technical corrections to
existing guidance or affect guidance to specialized industries or entities were
recently issued. These updates have no current applicability to the Company or
their effect on the financial statements would not have been
significant.
NOTE
2 – COMMITMENTS AND CONTINGENCIES
None
NOTE
3 – SUBSEQUENT EVENTS
Effective
April 2010, the Company adopted an Equity Incentive Plan. The SMSA 2010 Equity
Incentive Plan is intended to promote the interests of the Company and its
shareholders by providing the Company’s officers, directors, employees and
consultants, on whose judgment, initiative and efforts the successful conduct of
the business of the Company depends, and who are responsible for the management,
growth and protection of the business, with appropriate incentives and rewards
to encourage them to continue in the employ of the Company and to maximize their
performance. The total number of shares of Company Stock available for grants of
Incentive Awards under the Plan shall be 6,000,000.
The
Company has issued a private placement memorandum to obtain investors. On April
12, 2010 the Company issued 312,500 shares of restricted, unregistered common
stock in connection with the issuance of 10% promissory notes in the aggregate
principal amount of $100,000. The stock issuance was accounted for as $100,000
of interest expense.
9
The
Company has evaluated subsequent events from the balance sheet date through the
date the financial statements were issued, and has determined there are no other
events to disclose.
NOTE
4 – RESTATEMENT OF 2009 BALANCE SHEET
Subsequent
to the issuance of the 2009 financial statements, management determined the
certain expenses reported in the first quarter of 2010 should have been recorded
in 2009. The financial statements have been revised to accurately record the
dates of the expenses. Accordingly, the balance sheet for the year ended
December 31, 2009 has been revised as follows:
Resource
Holdings, Inc.
(f/k/a
SMSA El Paso II Acquisition Corp.)
(An
Exploration Stage Company)
BALANCE
SHEET
DECEMBER
31, 2009
|
Restated
December
31, 2009
|
Original
December
31, 2009
|
Effect of
Changes
|
||||||||||
|
Assets
|
||||||||||||
|
Current
Assets
|
||||||||||||
|
Cash
|
$ | - | - | $ | - | |||||||
|
Other
Assets
|
||||||||||||
|
Deferred
Offering Costs
|
23,775 | - | 23,775 | (1) | ||||||||
|
Net
Loss
|
$ | 23,775 | $ | - | $ | 23,775 | ||||||
|
Liabilities and Stockholders’
Equity (Deficit)
|
||||||||||||
|
Current
Liabilities
|
||||||||||||
|
Trade
accounts payable
|
$ | 106,694 | - | 106,694 | (1) | |||||||
|
Contract
payable to stockholder – trade
|
250,000 | 250,000 | - | |||||||||
|
Total
Liabilities
|
356,694 | 250,000 | 106,694 | |||||||||
|
Stockholders’
Equity (Deficit)
|
||||||||||||
|
Preferred
stock - $0.001 par value, 10,000,000 shares authorized. None issued and
outstanding
|
||||||||||||
|
Common
stock - $0.001 par value, 100,000,000 shares authorized 22,000,004 shares
issued and outstanding
|
22,000 | 22,000 | - | |||||||||
|
Additional
paid-in capital
|
41,132 | 41,132 | - | |||||||||
|
Deficit
accumulated during the development stage
|
(396,051 | ) | (313,132 | ) | (82,919 | )(1) | ||||||
|
Total
Stockholders’ Equity (Deficit)
|
(332,919 | ) | (250,000 | ) | (82,919 | ) | ||||||
|
Total
Liabilities and Stockholders’Equity (Deficit)
|
$ | 23,775 | $ | - | $ | 23,775 | ||||||
10
Note
(1)
This
change is a result of properly recording an invoice in 2009 that was not
previously recorded. The total invoice was for $106,694 of which $82,919 was
expensed and the remaining $23,775 was due to funding activities which funding
was received in 2010, thus this amount was recorded as an Other
Asset.
NOTE
5 – RESTATEMENT OF MARCH 2010 FINANCIAL STATEMENTS
Subsequent
to the issuance of the 2009 financial statements, management determined that
certain expenses reported in the first quarter of 2010 should have been recorded
in 2009. Management also determined that the funding of the private placement
originally recorded as only a cash and common stock transaction was recorded
incorrectly as the private placement involved the issuance of promissory notes
and the issuance of common stock. The financial statements have been revised to
accurately record the transactions. Accordingly, the balance sheet, statement of
operations, and statement of cash flows for the quarter ended March 31, 2010
have been revised as follows:
Resource
Holdings, Inc.
(f/k/a
SMSA El Paso II Acquisition Corp.)
(An
Exploration Stage Company)
BALANCE
SHEET
|
Restated
March
31, 2010
|
Original
March
31, 2010
|
Effect of
Changes
|
||||||||||
|
Assets
|
||||||||||||
|
Current
Assets
|
||||||||||||
|
Cash
|
$ | 42,601 | $ | 42,601 | $ | - | ||||||
|
Total
Current Assets
|
42,601 | 42,601 | - | |||||||||
|
Total
Assets
|
$ | 42,601 | $ | 42,601 | $ | - | ||||||
|
Liabilities and Stockholders’
Equity (Deficit)
|
||||||||||||
|
Current
Liabilities
|
||||||||||||
|
Trade
accounts payable
|
$ | 174,724 | 149,724 | 25,000 | (1) | |||||||
|
Accrued
liabilities payable to an officer
|
15,000 | 15,000 | - | |||||||||
|
Accrued
Interest
|
2,877 | - | 2,877 | (1) | ||||||||
|
Notes
payable to stockholders
|
350,000 | - | 350,00 | (1) | ||||||||
|
Total
Liabilities
|
542,601 | 164,724 | 377,877 | |||||||||
|
Stockholders’
Equity (Deficit)
|
||||||||||||
|
Preferred
stock - $0.001 par value, 10,000,000 shares authorized. None issued and
outstanding
|
||||||||||||
|
Common
stock - $0.001 par value, 100,000,000 shares authorized 23,193,754 shares
issued and outstanding
|
23,194 | 23,194 | - | |||||||||
|
Additional
paid-in capital
|
457,605 | 486,688 | (29,083 | )(1) | ||||||||
|
Deficit
accumulated during the development stage
|
(980,799 | ) | (632,005 | ) | (348,794 | )(1) | ||||||
|
Total
Stockholders’ Equity (Deficit)
|
(500,000 | ) | (122,123 | ) | (377,877 | )(1) | ||||||
|
Total
Liabilities and Stockholders’Equity (Deficit)
|
$ | 42,601 | $ | 42,601 | $ | - | ||||||
11
Resource
Holdings, Inc.
(f/k/a
SMSA El Paso II Acquisition Corp.)
(An
Exploration Stage Company)
STATEMENTS
OF OPERATIONS
FOR
THE THREE MONTHS ENDED MARCH 31, 2010
(UNAUDITED)
|
Restated
March
31, 2010
|
Original
March
31, 2010
|
Effect of
Change
|
||||||||||
|
Revenues
|
$ | - | $ | - | $ | - | ||||||
|
Expenses
|
||||||||||||
|
Reorganization
Costs
|
- | - | - | |||||||||
|
Professional
Fees
|
62 ,722 | 149,724 | (87,002 | )(1) | ||||||||
|
General
and Administrative expenses
|
169,149 | 169,149 | - | |||||||||
|
Total
Operating Expenses
|
231,871 | 318,873 | (87,002 | )(1) | ||||||||
|
Operating
Loss
|
(231,871 | ) | (318,873 | ) | 87,002 | (1) | ||||||
|
Other
Income (Expense)
|
||||||||||||
|
Interest
Expense
|
352,877 | - | 352,877 | (1) | ||||||||
|
Impairment
of Goodwill From Acquisition of TransGlobal Operations,
Inc.
|
- | - | - | |||||||||
|
Total
Other Income (Expense)
|
(352,877 | ) | - | (352,877 | )(1) | |||||||
|
Loss
before Provision for Income Taxes
|
(584,748 | ) | (318,873 | ) | (265,875 | )(1) | ||||||
|
Provision
for Income Taxes
|
- | - | - | |||||||||
|
Net
Loss
|
$ | (584,748 | ) | $ | (318,873 | ) | $ | (265,875 | )(1) | |||
|
Basic
and Diluted Net Loss per Share:
|
$ | (0.03 | ) | $ | (0.02 | ) | ||||||
|
Basic
and Diluted Weighted Average Common Shares Outstanding
|
22,000,004 | 22,000,004 | ||||||||||
12
Resource
Holdings, Inc.
(f/k/a
SMSA El Paso II Acquisition Corp.)
(An
Exploration Stage Company)
STATEMENTS
OF CASH FLOWS
FOR
THE THREE MONTHS ENDED MARCH 31, 2010
(UNAUDITED)
|
For the Three Months
Ended March 31,
|
Effect of
|
|||||||||||
|
2010
|
2010
|
Change
|
||||||||||
|
(Restated)
|
(Original)
|
|||||||||||
|
Cash
Flows from Operating Activities:
|
||||||||||||
|
Net
Loss
|
$ | (584,748 | ) | $ | (318,873 | ) | $ | (265,875 | )(1) | |||
|
Adjustments
to reconcile Net Loss to Net Cash used in Operating
Activities:
|
||||||||||||
|
Changes
in Operating Assets and Liabilities:
|
||||||||||||
|
Impairment
of goodwill from acquisition of Trans Global Operations,
Inc.
|
- | - | - | |||||||||
|
Expenses
from issuance of common stock
|
441,442 | 111,750 | 329,692 | (1) | ||||||||
|
Contract
payable to stockholder
|
(250,000 | ) | - | (250,000 | )(1) | |||||||
|
Trade
in accounts payable
|
68,030 | (100,276 | ) | 168,306 | (1) | |||||||
|
Accrued
Interest
|
2,877 | - | 2,877 | (1) | ||||||||
|
Accrued
liability payable to an officer
|
15,000 | 15,000 | - | |||||||||
|
Net
Cash (Used) by Operating Activities
|
(307,399 | ) | (292,399 | ) | (15,000 | )(1) | ||||||
|
Cash
Flows from Investing Activities:
|
- | - | - | |||||||||
|
Cash
Flows from Financing Activities:
|
||||||||||||
|
Notes
payable to stockholders
|
350,000 | - | 350,000 | (1) | ||||||||
|
Cash
funded from bankruptcy trust
|
- | - | - | |||||||||
|
Cash
repaid to former stockholder
|
- | - | - | |||||||||
|
Cash
advanced by former stockholder
|
- | - | - | |||||||||
|
Proceeds
from sale of common stock
|
- | 335,000 | (335,000 | )(1) | ||||||||
|
Net
Cash Provided by Financing Activities:
|
350,000 | 335,000 | 15,000 | (1) | ||||||||
|
Net
Increase in Cash
|
42,601 | 42,601 | - | |||||||||
|
Cash,
Beginning of Period
|
- | - | - | |||||||||
|
Cash,
End of Period
|
$ | 42,601 | $ | 42,601 | $ | - | ||||||
13
Note
(1)
This
change is a result of properly recording an invoice in 2009 and
2010. The invoice had expenses that related to 2009 and 2010
combined. We have now recorded the expenses in the proper
periods. A portion of this was due to funding activities, thus these
amounts were recorded as additional paid-in capital. This change is
also a result of properly recording the purchase of common stock through a
private placement. The private placement was originally recorded as a
stock transaction, which affected only cash, common stock and additional paid-in
capital, however, the private placement involved the issuance of
promissory notes with 10% interest and the issuance of common
stock. These changes affected accrued interest, interest expense, and
additional paid-in capital.
14
Item
2. Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
When used in this discussion, the words
“expect(s)”, “feel(s)”, “believe(s)”, “will”, “may”, “anticipate(s)” and similar
expressions are intended to identify forward-looking statements. Such statements
are subject to certain risks and uncertainties, which could cause actual results
to differ materially from those projected. Readers are cautioned not to place
undue reliance on these forward-looking statements, and are urged to carefully
review and consider the various disclosures elsewhere in this Form
10-Q.
Recent
Development and Business Plan
Since emerging from bankruptcy in
August 2007, the Company has not been engaged in any operations and its primary
business has been to locate and consummate a merger with or an acquisition of a
private entity. For that reason, the Company was deemed to be a “shell company”
as defined in Rule 12b-2 of the Securities Exchange Act of 1934.
The Company’s business plan, subsequent
to the November 5, 2009 transaction, is to acquire and employ, in the
marketplace, oil, gas and mineral drilling rigs and well servicing equipment.
Management believes that, initially, the Company will be able to acquire said
rigs and related equipment at discount prices relative to their historical
market values and employ them under long-term service contracts with national
and independent oil companies located in South America that pay profitable
day-rates. As a result of the Company’s current business plan, management has
determined that the Company is no longer a shell company under Rule 12b-2 of the
Exchange Act.
In March,
2010, the Company issued 1,093,750 shares of restricted, unregistered common
stock in connection with the issuance of 10% promissory notes in the aggregate
principal amount of $350,000. In April, 2010 the Company issued 312,500 shares
of restricted, unregistered common stock in connection with the issuance of 10%
promissory notes in the amount of $100,000. The stock issuances were accounted
for as an aggregate of $450,000 of interest expense. The proceeds from such
sales have been used to maintain operations and to commence investigating
acquisitions of equipment and drilling rigs in South America in anticipation of
entering into the oil and natural gas drilling industry.
Despite the Company’s efforts in
seeking opportunities in this industry, the Company does not yet have definitive
agreements in place, and there can be no assurance that its efforts to enter
this industry will ultimately prove successful.
Results
of Operations
Sales for the three months ended March
31, 2010 and 2009 were respectively, $0 and $0. The Company has no source of
revenue. It is looking for opportunities to create revenue, but at this time has
no viable options.
Operating expenses for the three months
ended March 31, 2010 and 2009 were, respectively, $231,871 and $6,305. These
costs are made up of audit, legal fees, and consulting fees along with travel
expenses looking for acquisitions.
Interest expense for the three months
ended March 31, 2010 and 2009 were, respectively, $352,877 and $0. This expense
is the cost of funding of the Notes Payable, which are being used to operate the
Company.
Liquidity
and Capital Resources
The Company has financed its operations
to date primarily through private placements of equity securities and current
sales. During March and April 2010 the Company issued 1,406,250 shares of
restricted, unregistered common stock to various investors in connection with
the issuance of several 10% promissory notes in the aggregate amount of
$450,000. The stock issuances were accounted for as an aggregate of $450,000 of
interest expense. This inflow of cash is expected to be used by the Company
primarily to locate and research potential joint venture partners and establish
potential joint ventures in South America.
15
Item
3. Qualitative and
Quantitative Disclosures About Market Risk
Not
applicable.
Item
4T. Controls and
Procedures
(a)
Evaluation of Disclosure Controls and Procedures. The Company’s chief executive
officer and chief financial officer, after evaluating the effectiveness of the
Company’s “disclosure controls and procedures” (as defined in the Securities
Exchange Act of 1934, Rules 13a-14(c) and 15-d-14(c)) as of March 31, 2010, have
concluded that, as of the evaluation date, the Company’s disclosure controls and
procedures were adequate and designed to ensure that material information
relating to the Company and its subsidiaries would be made known to them by
others within those entities.
(b)
Changes in Internal Controls. There were no significant changes in the Company’s
internal controls, or, to the Company’s knowledge, in other factors that could
significantly affect these controls subsequent to the evaluation
date.
Management’s
Annual Report on Internal Control Over Financial Reporting
The Company’s management is responsible
for establishing and maintaining adequate internal control over financial
reporting, as defined in Exchange Act Rule 13a-15(f). The Company’s internal
control over financial reporting is designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles.
Under the supervision and with the
participation of the Company’s management, including its Chief Executive Officer
and Chief Financial Officer, the Company conducted an evaluation of the
effectiveness of its internal control over financial reporting based on the
framework established by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) as set forth in Internal Control - Integrated
Framework. During the course of this assessment, management identified a
material weakness relating primarily to recording complex financial
transactions.
The Company has a lack of staffing
within its accounting department, in terms of the small number of employees
performing its financial and accounting functions, which does not provide the
necessary separation of duties. Management believes the lack of accounting and
financial personnel amounts to a material weakness in its internal control over
financial reporting and, as a result, at December 31, 2009 and on the date of
this Report, its internal control over financial reporting is not effective. The
Company will continue to evaluate the employees involved and the hiring of
additional accounting staff. However, the Company will be unable to remedy this
material weakness in its internal controls until the Company has the financial
resources that allow the Company to hire additional qualified
employees.
16
PART
II - OTHER
INFORMATION
Item
1. Legal
Proceedings
None
Item
1A. Risk
Factors
Not
applicable.
Item
2. Unregistered Sales
of Equity Securities and Use of Proceeds
On March
2, 2010, the Company issued 1,093,750 shares of restricted, unregistered common
stock to various investors in a private placement in connection with the
issuance of 10% promissory notes in the aggregate amount of $350,000. A cash fee
of $15,000 was paid as a commission as part of this capital raising transaction
and on March 2, 2010, the Company also issued an aggregate of 350,000 shares of
restricted, unregistered common stock to the placement agents in the
above-referenced private placement as additional consideration for their
services. These transactions were exempt from registration pursuant to Section
4(2) of the Securities Act.
On April 12, 2010, the Company issued
312,500 shares of restricted, unregistered common stock to various investors in
a private placement in connection with the issuance of 10% promissory notes in
the aggregate amount of $100,000. These transactions were exempt from
registration pursuant to Section 4(2) of the Securities Act.
Item
3. Defaults Upon
Senior Securities
None
Item
4. (Removed and Reserved)
None
Item
5. Other
Information
Submission
of Matters to a Vote of Security Holders
On April 16, 2010, the holders of an
aggregate of 18,220,000 shares of the Company’s common stock, par value $0.001
per share, or approximately 77.72% of the issued and outstanding common stock of
the Company on such date, acting by written consent pursuant to Section 78.320
of the Nevada Revised Statutes, approved (i) an amendment to the Company’s
articles of incorporation changing the Company’s corporate name to Resource
Holdings, Inc. from SMSA El Paso II Acquisition Corp.; and (ii) the adoption of
the Company’s 2010 Equity Incentive Plan. On May 3, 2010, the Company filed an
Information Statement (the “Information Statement”) relating to the above
referenced stockholder approvals by written consent with the Securities and Exchange Commission in accordance
with Rule 14c-2 of the Securities Exchange Act of 1934. In accordance with Rule
14c-2, the filing of a certificate of amendment to the articles of incorporation
of the Company will occur no sooner than twenty calendar days after the
Information Statement is sent to the stockholders of record on April 16,
2010.
Item
6. Exhibits
The exhibits required by this item are
set forth on the Exhibit Index attached hereto.
17
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this Report to be signed on its behalf by
the undersigned, thereunto duly authorized.
|
Resource
Holdings, Inc.
|
||
|
August
19,
2010
|
By:
|
/s/ Michael B. Campbell
|
|
Michael
B. Campbell, Chief Executive Officer
|
||
|
(Principal Executive
Officer)
|
||
|
August
19,
2010
|
By:
|
/s/ Jeff A. Hanks
|
|
Jeff
A. Hanks, Chief Financial Officer (Principal
|
||
|
Financial
Officer and Principal Accounting
Officer)
|
||
18
EXHIBIT
INDEX
|
Exhibit
Number
|
Description of Exhibit
|
|
|
31.1
|
Certification
of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.*
|
|
|
31.2
|
Certification
of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.*
|
|
|
32.1
|
Certification
of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 (18 U.S.C. Section 1350).*
|
|
|
32.2
|
Certification
of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 (18 U.S.C. Section
1350).*
|
*Filed
herewith.
19