WHWK

Business Context and Reporting Period

This Form 10-K covers the fiscal year ended December 31, 2009, for Zeta Acquisition Corp. II (the "Company"). The Company is a Delaware corporation organized as a "blank check" or "shell" company with no specific business plan other than to seek a business combination with an unidentified target. As of the reporting date, the Company had not conducted any active operations, identified any acquisition targets, or entered into any definitive agreements. The filing identifies the Company as a "smaller reporting company" and a "shell company."

Key Financial Metrics

Note: The Company has generated no revenue since inception (November 16, 2007). Expenses consist primarily of legal, accounting, and audit fees related to regulatory compliance.

Material Changes vs. Prior Period

• Liabilities: Total liabilities increased significantly from $6,108 in 2008 to $31,613 in 2009. This increase is driven entirely by the issuance of unsecured promissory notes totaling $25,000 to stockholders during 2009.
• Equity Position: The Company moved from a positive stockholders' equity of $1,400 in 2008 to a deficit of $(18,596) in 2009 due to the accumulation of net losses.
• Cash Position: Cash and cash equivalents increased by $3,634 to $11,142, funded by the $25,000 in notes payable, which offset the $21,366 cash used in operating activities.
• Prepaid Expenses: The Company recorded $1,875 in prepaid expenses in 2009, compared to none in 2008.

Outlook, Risks, and Management Commentary

Liquidity and Going Concern: Management asserts that the Company's ability to continue as a going concern is dependent on its ability to secure additional financing or consummate a business combination. The Company has no current source of revenue and relies on capital contributions or loans from stockholders and management to fund operations.

Business Plan: The Company intends to seek a merger or acquisition with an operating business. It faces intense competition from other shell companies and well-financed entities. Management has not identified any specific target and has not restricted its search to any industry or geography.

Risks:

• Financing Risk: If continued funding is unavailable, the Company may not be able to implement its plan of operations.
• Acquisition Risk: There is no assurance that a business combination will be completed. Any target acquired may be financially unstable or in early development stages.
• Dilution: Future acquisitions may result in substantial dilution to existing shareholders, potentially leaving prior stockholders with less than 20% of the surviving entity.
• Related Party Dependence: The Company relies on related parties for funding and utilizes office space provided by management at no cost.

Unusual Items: The filing notes that the Company is a "shell company" with no non-affiliate holders of common stock as of December 31, 2009. The 2009 net loss included $838 in interest expense related to the new notes payable.

Investor Verification Checklist

• Capital Adequacy: Verify if the $11,142 cash balance is sufficient to cover filing and operational costs for the next 12 months without additional funding.
• Related Party Loans: Confirm the terms of the $25,000 in notes payable to stockholders (6% interest, due on demand) and the likelihood of repayment or conversion.
• Management Continuity: Assess the commitment of key officers (John Pappajohn and Matthew P. Kinley) who devote limited time to the Company and have significant outside business interests.
• Stock Ownership: Note that as of March 31, 2010, there were only 4 holders of record, with management controlling 80% of the outstanding shares.
• Going Concern Status: Review the auditor's report for any emphasis of matter regarding the Company's ability to continue operations.