Filing Overview
Filing mismatch: The request identifies Whitehawk Therapeutics, Inc., but the provided Form 10-K is for Zeta Acquisition Corp. II, a Delaware blank-check and shell company. The report covers the fiscal year ended December 31, 2012 and was filed March 28, 2013.
Business Context and Reporting Period
Zeta Acquisition Corp. II was incorporated in 2007 to identify and complete a business combination. As of December 31, 2012, it had not identified a target, entered into discussions with a potential target, or conducted active operating activities. It had no employees other than management, no operating revenue, and no publicly traded market for its common stock.
The company qualifies as a development-stage, blank-check, and shell company. Management expects to pursue a business combination without restricting the target by industry, geography, or development stage.
Financial Condition and Performance
| Metric | 2012 | 2011 |
|---|---|---|
| Revenue | $0 | $0 |
| Net loss | $(27,365) | $(27,185) |
| Operating loss | $(22,391) | $(23,585) |
| Interest expense | $4,974 | $3,600 |
| Net loss per basic and diluted share | $(0.01) | $(0.01) |
| Cash and cash equivalents | $4,607 | $4,125 |
| Total assets | $8,107 | $6,625 |
| Total liabilities | $103,648 | $74,801 |
| Stockholders’ deficit | $(95,541) | $(68,176) |
| Net cash used in operating activities | $(24,518) | $(22,773) |
| Net cash provided by financing activities | $25,000 | $0 |
The company had no meaningful margins because it generated no revenue. Cumulative net loss since inception was $145,541, and cumulative operating cash usage was $130,393.
At year-end, current liabilities included $85,000 of notes payable to stockholders, $11,298 of accrued interest, $5,500 of accrued expenses, and $1,850 of accounts payable. The stockholder notes bear interest at 6%, are unsecured, and are due on demand.
Material Changes Versus the Prior Period
- Net loss increased slightly by $180, or approximately 0.7%, primarily because lower general and administrative expense was more than offset by higher interest expense.
- Total assets increased by $1,482, while total liabilities increased by $28,847.
- Cash increased by $482 because $25,000 of stockholder financing exceeded $24,518 of operating cash outflows.
- Stockholder notes payable increased from $60,000 to $85,000, and accrued interest increased from $6,324 to $11,298.
- The company continued to have no revenue, no completed acquisition, and no identified target business.
Guidance, Outlook, Risks, and Unusual Items
Management plans to continue searching for a suitable acquisition candidate. It expects future costs for SEC reporting and evaluating, negotiating, and completing a potential business combination. Management expects to fund these costs through existing cash, deferred fees, additional stockholder or management loans, equity financing, or financing associated with a reverse merger.
The financial statements were prepared on a going-concern basis. Management stated that the company’s ability to continue depends on obtaining financing, generating future profitable operations, identifying a suitable target, and potentially completing a reverse merger. The company had only $4,607 of cash at year-end and provided no assurance that additional funding would be available.
- The company has no operating business, revenue stream, or diversification.
- A potential transaction could result in substantial dilution to existing stockholders and could transfer control to the target company’s owners.
- Management may be able to complete an acquisition without stockholder approval in certain circumstances.
- Limited personnel, limited funding, and management’s limited time may restrict due diligence on a target.
- Competition for acquisition targets may be intense, including from better-funded public shells and operating companies.
- Related-party financing is material: stockholders provided $25,000 during 2012 through demand notes bearing 6% interest.
- The company has no material pending legal proceedings and no material off-balance-sheet arrangements.
- Management reported effective disclosure controls and internal control over financial reporting; the auditor did not provide an internal-control attestation because the company qualified for the applicable exemption.
Important Facts for Investors to Verify
- Confirm the registrant’s identity: the supplied filing is for Zeta Acquisition Corp. II, not Whitehawk Therapeutics, Inc.
- Verify whether any business combination occurred after December 31, 2012 and whether the company subsequently changed its name, business, management, or capital structure.
- Review the terms, maturity, and repayment status of the $85,000 of stockholder notes and related accrued interest.
- Assess the going-concern disclosure and the company’s ability to fund operations with only $4,607 of cash.
- Evaluate potential dilution, control changes, and financing requirements associated with any future reverse merger or acquisition.
- Confirm the ownership concentration: management held 80% of the 5,000,000 outstanding common shares as disclosed.
- Review subsequent SEC filings for the status of any target search, financing, acquisition, or reverse-merger transaction.