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.)
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

 
Page
   
PART I-FINANCIAL INFORMATION
   
Item 1. Financial Statements
 
   
Balance Sheets (Unaudited and Restated) as of March 31, 2010 and December 31, 2009
5
   
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
6
   
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
7
   
Notes to Financial Statements (Unaudited)
8
   
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
15
   
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
16
   
Item 4T. 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. (Removed and Reserved)
17
   
Item 5. Other Information
17
   
Item 6. Exhibits
17
   
Signatures
18

 
3

 
 
 
 
 
 
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,

 
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
 
   
(Unaudited)
   
(Restated)
 
   
(Restated)
       
ASSETS
           
Current Assets
           
Cash
  $ 42,601     $ 0  
                 
Other Assets
               
Deferred Offering Costs
    -       23,775  
                 
Total Assets
  $ 42,601     $ 23,775  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
               
                 
Current Liabilities
               
                 
Trade accounts payable
    174,724       106,694  
Contract payable to stockholder - trade
    -       250,000  
Accrued liabilities payable to an officer
    15,000       -  
Accrued Interest
    2,877       -  
Notes Payable to stockholders
  $ 350,000       -  
                 
Total Current Liabilities
    542,601       356,694  
                 
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; 23,193,754 and 22,000,004 shares issued and outstanding
    23,194       22,000  
Additional paid-in-capital
    457,605       41,132  
Deficit accumulated during the development stage
    (980,799 )     (396,051 )
                 
Total Stockholders' Equity (Deficit)
    (500,000 )     (332,919 )
                 
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
   
Period from
August 1, 2007
(date of
bankruptcy
settlement)
through
March 31, 2010
 
   
(Restated)
             
Revenues
  $ -     $ -     $ -  
Expenses
                       
Reorganization Costs
    -       -       3,581  
Professional Fees
    62 ,722       5,128       441,529  
General and Administrative expenses
    169,149       1,177       173,812  
Total Operating Expenses
    231,871       6,305       618,922  
Operating Loss
    (231,871 )     (6,305 )     (618,922 )
Other Income (Expense)
                       
Interest Expense
    352,877       -       352,877  
Impairment of Goodwill From Acquisition of TransGlobal Operations, Inc.
    -       -       (9,000 )
Total Other Income (Expense)
    (352,877 )     -       (361,877 )
Loss before Provision for Income Taxes
    (584,748 )     (6,305 )     (980,799 )
Provision for Income Taxes
    -       -       -  
Net Loss
  $ (584,748 )   $ (6,305 )   $ (980,799 )
                         
Basic and Diluted Net Loss per Share:
  $ (0.03 )   $ (0.01 )        
Basic and Diluted Weighted  Average Common Shares Outstanding
    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
 
   
2010
   
2009
   
31, 2010
 
   
(Restated)
               
Cash Flows from Operating Activities:
                   
                     
Net Loss
  $ (584,748 )   $ (6,305 )   $ (980,799 )
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.
    -       -       9,000  
                         
Expenses from issuance of common stock
    441,442       -       441,442  
                         
Contract payable to stockholder
    (250,000 )     -       -  
                         
Trade in accounts payable
    68,030       -       174,724  
                         
Accrued Interest
    2,877       -       2,877  
                         
Accrued liability payable to an officer
    15,000       -       15,000  
Net Cash (Used) by Operating Activities
    (307,399 )     (6,305 )     (337,756 )
                         
Cash Flows from Investing Activities:
    -       -       -  
                         
Cash Flows from Financing Activities:
                       
                         
Notes payable to stockholders
    350,000       -       350,000  
                         
Cash funded from bankruptcy trust
    -       -       1,000  
                         
Cash repaid to former stockholder
    -       -       (20,000 )
                         
Cash advanced by former stockholder
    -       6,305       29,357  
                         
Proceeds from sale of common stock
    -       -       20,000  
                         
Net Cash Provided by Financing Activities:
    350,000       6,305       380,357  
                         
Net Increase in Cash
    42,601       -       42,601  
                         
Cash, Beginning of Period
    -       -       -  
                         
Cash, End of Period
  $ 42,601     $ -     $ 42,601  
                         
Non – Cash Items:
                       
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