KURA

SEC Filing Summary: Zeta Acquisition Corp. III (10-K)

Business Context and Reporting Period

This Form 10-K covers the fiscal year ended December 31, 2009. The registrant is Zeta Acquisition Corp. III, a Delaware corporation organized in November 2007. The company is a "blank check" shell company with no specific business plan other than to seek a merger or acquisition with an unidentified target company. It has no active operations, no employees other than management, and has not identified any potential business combination targets as of the filing date.

Key Financial Metrics

Note: The company has no revenue, margins, or profit. Expenses consist entirely of legal, accounting, audit, and professional service fees related to regulatory filings and organizational costs.

Material Changes vs. Prior Period

• Liabilities: Total liabilities increased significantly from $6,108 in 2008 to $31,613 in 2009. This increase is primarily due to the issuance of unsecured promissory notes totaling $25,000 to stockholders during 2009.
• Equity: Stockholders' equity shifted from a positive balance of $1,400 in 2008 to a deficit of $(18,596) in 2009 due to the accumulation of net losses.
• Cash Flow: The company generated a net cash increase of $3,634 in 2009, compared to a decrease of $31,765 in 2008, driven by the $25,000 in financing proceeds from stockholder loans.
• Assets: Total assets grew to $13,017, including $1,875 in prepaid expenses, compared to $7,508 in 2008.

Outlook, Risks, and Management Commentary

Going Concern: Management asserts that the company's circumstances may hinder its ability to continue as a going concern. The company has generated no revenues since inception and is dependent on capital investment or financing from related parties to fund ongoing operations and search for a target.

Outlook: The principal objective for the next 12 months is to locate a suitable acquisition candidate. The company anticipates incurring costs for filing Exchange Act reports and investigating potential targets. It expects to meet these costs through treasury funds, fee deferrals, or additional loans from stockholders and management.

Risks:

• Competition: The company faces vast competition from other shell companies and well-financed entities for a limited number of business opportunities.
• Target Uncertainty: There is no assurance the company will identify or consummate a business combination. Any target may be financially unstable or in early development stages.
• Dilution: In a potential reorganization, prior stockholders may retain 20% or less of the surviving entity, resulting in substantial dilution.
• Related Party Dependence: The company relies on related parties for funding and office space (provided at no cost).

Unusual Items: The company is a "smaller reporting company" and is exempt from providing certain disclosures, including Risk Factors (Item 1A), Selected Financial Data (Item 6), and Contractual Obligations (Item 7).

Investor Verification Checklist

• Capital Adequacy: Verify the company's ability to secure additional funding beyond the current $25,000 in stockholder notes to sustain operations while searching for a target.
• Related Party Transactions: Confirm the terms of the $25,000 notes payable to stockholders (6% interest, due on demand) and the extent of reliance on management for office space.
• Management Track Record: Review the history of the officers (John Pappajohn and Matthew P. Kinley) regarding their previous blank check companies (e.g., Healthcare Acquisition Corp.) to assess their success rate in consummating mergers.
• Going Concern Status: Assess the likelihood of the company liquidating if a business combination is not achieved within a reasonable timeframe.
• Stock Ownership: Note that as of March 31, 2010, there were only 4 holders of record, with management controlling 80% of the outstanding shares.