Filing Summary
Filing identity: The submitted Form 10-Q is for Zeta Acquisition Corp. II, not Whitehawk Therapeutics, Inc. The filing covers the quarter ended September 30, 2011 and was signed November 14, 2011.
Business Context and Reporting Period
Zeta Acquisition Corp. II was a Delaware development-stage, blank-check and shell company formed on November 16, 2007. Its stated objective was to identify and complete a business combination with an operating company, without restricting potential targets by industry or geography. The company had not identified a target or held discussions with potential combination candidates as of the filing.
The company had 5,000,000 common shares outstanding as of November 14, 2011 and was classified as a smaller reporting company. It reported no operating business or revenue since inception.
Financial Performance and Position
| Metric | Three Months Ended September 30, 2011 | Nine Months Ended September 30, 2011 | Prior Comparable Period |
|---|---|---|---|
| Revenue | $0 | $0 | $0 |
| Operating loss | $5,430 | $15,559 | $4,238 and $13,295, respectively |
| Net loss | $6,337 | $18,251 | $4,767 and $14,649, respectively |
| Interest expense | $907 | $2,692 | $529 and $1,354, respectively |
| Loss per basic and diluted share | $0.00 | $0.00 | $0.00 |
Cumulative net loss from inception through September 30, 2011 was $109,242, consisting primarily of formation, legal, accounting, audit, reporting and interest costs. Profit margins are not meaningful because the company had no revenue.
| Balance Sheet Metric | September 30, 2011 | December 31, 2010 |
|---|---|---|
| Cash and cash equivalents | $6,130 | $26,898 |
| Prepaid expenses | $4,375 | $2,500 |
| Total assets | $10,505 | $29,398 |
| Total liabilities | $69,747 | $70,389 |
| Stockholders’ deficit | $(59,242) | $(40,991) |
| Stockholder notes payable | $60,000 | $60,000 |
For the nine months ended September 30, 2011, operating activities used $20,768 of cash, compared with $18,888 in the prior-year period. Financing activities provided no cash in 2011, compared with $10,000 in 2010. No investing cash flows were reported. The company ended the period with $6,130 of cash.
Material Changes, Outlook and Risks
- Net loss increased to $18,251 for the first nine months of 2011 from $14,649 in the prior-year period.
- Cash declined by $20,768 during the first nine months, from $26,898 at December 31, 2010 to $6,130 at September 30, 2011.
- The company remained dependent on additional capital from stockholders, management or other investors. Stockholder loans totaled $60,000, bear interest at 6% where applicable, are unsecured and due on demand; $5,417 of interest was accrued and unpaid at September 30, 2011.
- Management stated that the company may not be able to satisfy cash requirements for the next twelve months and identified substantial going-concern uncertainty. Continued operations depend on obtaining financing and completing a business combination.
- Management expected to incur costs for SEC reporting and acquisition investigations and planned to seek funding through equity financing, a reverse merger transaction or related-party advances. No assurance of funding or a business combination was provided.
- The company had no material legal proceedings, no material off-balance-sheet arrangements, and no reported unregistered equity sales or defaults upon senior securities.
- Management concluded that disclosure controls and procedures were effective as of September 30, 2011, with no material changes in internal control over financial reporting.
Investor Verification Priorities
- Verify the apparent issuer mismatch: the filing identifies Zeta Acquisition Corp. II, while the request identifies Whitehawk Therapeutics, Inc.
- Assess the company’s ability to continue as a going concern given only $6,130 of cash, $69,747 of liabilities and a $59,242 stockholders’ deficit.
- Review the terms, maturity and accrued interest of the $60,000 in stockholder notes payable.
- Confirm whether any business combination discussions or target-company activity occurred after September 30, 2011.
- Evaluate the availability and terms of any proposed additional financing or related-party funding.