Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended March 31, 2010, for Zeta Acquisition Corp. II (not Whitehawk Therapeutics, Inc., as indicated in the metadata). The registrant is a Delaware corporation organized as a "blank check" company and a shell company. Its primary objective is to investigate and acquire a target business to achieve long-term growth potential. The company has no specific business plan other than to merge with an unidentified company and has generated no revenues since its inception on November 16, 2007.
Key Financial Metrics
| Metric | Q1 2010 (3 Months) | Q1 2009 (3 Months) | Cumulative (Inception to Mar 31, 2010) |
|---|---|---|---|
| Revenue | $0 | $0 | $0 |
| Net Loss | $(4,306) | $(3,405) | $(72,902) |
| Operating Expenses | $3,936 | $3,405 | $71,694 |
| Cash and Cash Equivalents | $10,995 | $7,408 | $10,995 |
| Total Assets | $10,995 | $13,017 | $10,995 |
| Total Liabilities | $33,897 | $31,613 | $33,897 |
| Stockholders' Deficit | $(22,902) | $(18,596) | $(22,902) |
| Notes Payable (Stockholders) | $25,000 | $25,000 | $25,000 |
Liquidity: The company has minimal cash reserves ($10,995) and relies on related parties for continued funding. It has not identified any business combination and cannot ascertain capital requirements for a transaction.
Material Changes vs. Prior Period
- Net Loss Increase: Net loss for the three months ended March 31, 2010, increased to $4,306 from $3,405 in the same period in 2009. This increase is primarily due to the recognition of $370 in interest expense on notes payable to stockholders, which was not present in the prior year period.
- Asset Reduction: Total assets decreased from $13,017 at December 31, 2009, to $10,995 at March 31, 2010. This decrease is attributed to the utilization of prepaid expenses ($1,875) and a slight reduction in cash.
- Liability Increase: Total liabilities increased to $33,897 from $31,613, driven by an increase in accounts payable and accrued expenses.
Outlook, Risks, and Management Commentary
Management Commentary: Management asserts that the company has not conducted active operations other than efforts to locate acquisition candidates. The company anticipates incurring costs related to filing Exchange Act reports and investigating potential acquisitions over the next 12 months. Funding is expected to come from treasury funds, fee deferrals, or loans from stockholders and management.
Risks and Contingencies:
- Going Concern: The financial statements are presented on a going concern basis, but there is substantial doubt about the company's ability to continue as a going concern without additional financing. The company has a stockholders' deficit and no revenue.
- Blank Check Status: As a shell company with no specific business plan, the company faces risks associated with identifying a suitable target. Any target may be financially unstable or in early development stages.
- Dependency: The company is dependent on related parties for funding and capital resources. If funding is unavailable, the company may not be able to implement its plan of operations.
- Deferred Tax Assets: The company has gross deferred tax assets of approximately $10,935, but a full valuation allowance has been recorded due to uncertainty regarding future realization.
Key Facts for Investor Verification
- Company Identity: Verify that the filing is for Zeta Acquisition Corp. II, a shell company, and not Whitehawk Therapeutics, Inc.
- Capital Position: Confirm the company's reliance on $25,000 in notes payable to stockholders and its minimal cash balance of under $11,000.
- Going Concern Status: Note the explicit disclosure that the company may be unable to continue as a going concern without further financing.
- Operational Status: Acknowledge that the company has zero revenue and no active business operations other than seeking a merger target.
- Related Party Transactions: Verify the terms of the $25,000 in notes payable to stockholders (6% interest, due on demand) and the use of officer/director office space at no cost.