Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended March 31, 2010, for Zeta Acquisition Corp. III (not Kura Oncology, Inc., as indicated in the metadata). The registrant is a Delaware corporation organized as a "blank check" company and a shell company. Its sole purpose 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 | Three Months Ended Mar 31, 2010 | Cumulative from Inception to Mar 31, 2010 |
|---|---|---|
| Revenue | $0 | $0 |
| Net Loss | $(4,306) | $(72,902) |
| Cash and Cash Equivalents | $10,995 | $10,995 |
| Total Assets | $10,995 | $10,995 |
| Total Liabilities | $33,897 | $33,897 |
| Stockholders' Deficit | $(22,902) | $(22,902) |
| Notes Payable (Stockholders) | $25,000 | $25,000 |
| Net Cash Used in Operating Activities | $(147) | $(64,005) |
Material Changes vs. Prior Period
- Net Loss: The net loss for the three months ended March 31, 2010, was $4,306, an increase from the $3,405 net loss reported for the same period in 2009. The increase is primarily attributed to interest expense of $370 incurred in the current quarter, which was not present in the prior year quarter.
- Liquidity: Cash and cash equivalents decreased slightly from $11,142 at December 31, 2009, to $10,995 at March 31, 2010, due to operating cash outflows.
- Liabilities: Total liabilities increased from $31,613 to $33,897, driven by an increase in accounts payable and accrued expenses.
Outlook, Risks, and Management Commentary
Going Concern: Management explicitly states that the company's ability to continue as a going concern is dependent upon its ability to secure additional financing and complete a business combination. The financial statements do not include adjustments that might be necessary if the company cannot continue operations.
Liquidity and Capital Resources: The company has no revenue-generating operations and relies entirely on capital investment or loans from stockholders and related parties. As of March 31, 2010, the company had a working capital deficit. There is no assurance that the company can satisfy its cash requirements for the next twelve months.
Risks: The company faces significant risks inherent in "blank check" companies, including the inability to identify a suitable acquisition target, the potential acquisition of a financially unstable company, and the lack of a specific business plan. The company is also subject to regulations limiting the sale of securities of blank check companies in many jurisdictions.
Unusual Items: The company utilizes office space and equipment of an officer and director at no cost, which management estimates to be de minimis.
Investor Verification Checklist
- Identity Discrepancy: Verify that the filing is for Zeta Acquisition Corp. III, not Kura Oncology, Inc., as the metadata suggested.
- Capital Adequacy: Confirm the company's ability to fund operations beyond the current quarter given the $22,902 stockholders' deficit and reliance on related-party loans.
- Related Party Transactions: Review the terms of the $25,000 in notes payable to stockholders, which bear 6% interest and are due on demand.
- Acquisition Progress: Assess whether the company has identified any specific target companies for acquisition, as none are currently disclosed.
- Going Concern Status: Evaluate the likelihood of the company securing the necessary financing to avoid liquidation or dissolution.