Filing Scope and Business Context
The provided filing is a Form 10-Q for Zeta Acquisition Corp. III, not Kura Oncology, Inc. It covers the quarter and six months ended June 30, 2013, and was filed August 14, 2013. Zeta was a development-stage blank-check and shell company formed to identify and complete a business combination. It had no operating business, no identified target, and no revenue since inception.
Financial Position and Results
| Metric | Three Months Ended June 30 | Six Months Ended June 30 |
|---|---|---|
| 2013 net loss | $6,749 | $12,722 |
| 2012 net loss | $6,268 | $11,640 |
| 2013 operating expenses | $5,456 | $10,172 |
| 2013 interest expense | $1,293 | $2,550 |
| Revenue | $0 |
- Cash and cash equivalents were $18,705 at June 30, 2013, compared with $4,802 at December 31, 2012.
- Total current liabilities were $126,773, including $110,000 of notes payable to stockholders, $13,848 of accrued interest, $2,750 of accrued expenses, and $175 of accounts payable.
- Stockholders’ deficit was $108,068, compared with $95,346 at December 31, 2012.
- Net cash used in operating activities was $11,097 for the six months ended June 30, 2013, versus $19,739 in the comparable 2012 period.
- Net cash provided by financing activities was $25,000, consisting of stockholder loans.
- There were no investing activities and no reported profit or operating margin.
Material Changes Versus the Prior Comparable Period
- Six-month net loss increased to $12,722 from $11,640, primarily because general and administrative expense and interest expense increased.
- Six-month operating cash use improved by $8,642, from $19,739 to $11,097.
- Cash increased by $13,903 during the first half of 2013, compared with a $5,261 increase in the first half of 2012, due to $25,000 of new stockholder financing.
- Notes payable to stockholders increased from $85,000 at December 31, 2012 to $110,000 at June 30, 2013.
- Prepaid expenses declined from $3,500 to zero.
Guidance, Outlook, Risks, and Unusual Items
- Management planned to continue searching for a suitable acquisition candidate and expected to incur costs for SEC reporting and acquisition investigations.
- Management stated that funding requirements would likely be met through existing cash, deferred service-provider fees, and additional stockholder, management, or investor financing; however, there was no assurance that additional funding would be available.
- The financial statements were prepared on a going-concern basis. Management indicated that continued operations depend on additional financing, future profitable operations, and successfully identifying and completing a business combination.
- In June 2013, the company issued $25,000 of unsecured, demand promissory notes to stockholders, bearing interest at 6% annually. Interest on unpaid principal would increase to 12% after a default.
- The company had approximately $53,700 of deferred tax assets, fully offset by a valuation allowance because realization was uncertain.
- The company used office space and equipment provided by an officer and director at no cost on a month-to-month basis; management considered the value de minimis.
- No material legal proceedings or material off-balance-sheet arrangements were reported. Disclosure controls and procedures were deemed effective as of June 30, 2013.
Investor Verification Items
- Verify the issuer identity: the supplied filing identifies Zeta Acquisition Corp. III, while the request metadata identifies Kura Oncology, Inc.
- Confirm the terms, maturity-on-demand provisions, related-party status, and default interest provisions of the $25,000 stockholder notes.
- Assess the company’s ability to continue as a going concern given $18,705 of cash versus $126,773 of current liabilities.
- Determine whether any business combination was identified or completed after June 30, 2013; this filing reports none as of the reporting period.
- Review subsequent financing, changes in control, reverse-merger activity, and any later amendments or restatements.