Business Context and Reporting Period
This Form 10-Q covers the quarter and nine months ended September 30, 2013, and was filed November 14, 2013. The filing identifies the registrant as Zeta Acquisition Corp. II, not Whitehawk Therapeutics, Inc.; investors should verify the company identity and any subsequent name or transaction history.
Zeta Acquisition Corp. II was a Delaware development-stage, blank-check and shell company formed to identify and complete a business combination. It had no operating business, no revenue, and no identified target as of the reporting date. The financial statements are unaudited.
Financial Condition and Results
| Metric | Three Months Ended September 30 | Nine Months Ended September 30 |
|---|---|---|
| Revenue | None | None |
| Net loss | $6,139 in 2013; $6,038 in 2012 | $18,951 in 2013; $17,703 in 2012 |
| Operating loss | $4,475 in 2013; $4,753 in 2012 | $14,737 in 2013; $14,015 in 2012 |
| Interest expense | $1,664 in 2013; $1,285 in 2012 | $4,214 in 2013; $3,688 in 2012 |
| Net loss per share | $0.00 loss per share | $0.00 loss per share |
At September 30, 2013, cash and cash equivalents were $10,295, prepaid expenses were $4,375, and total assets were $14,670. Current liabilities totaled $129,162, including $110,000 of notes payable to stockholders, $15,512 of accrued interest, $650 of accounts payable, and $3,000 of accrued expenses. Stockholders’ deficit was $114,492.
For the nine months, operating activities used $19,312 of cash, while financing activities provided $25,000 through stockholder loans. There were no investing cash flows. Cash increased by $5,688 from $4,607 at December 31, 2012.
The company had no meaningful operating margins because it generated no revenue. Cumulative net loss from inception on November 16, 2007 through September 30, 2013 was $164,492, and cumulative net cash used in operating activities was $149,705.
Material Changes Versus the Prior Comparable Period
- Nine-month net loss increased by $1,248, or approximately 7%, to $18,951 from $17,703.
- Nine-month operating cash use improved to $19,312 from $23,734.
- Interest expense increased to $4,214 from $3,688.
- Stockholder financing remained $25,000 for the nine-month period, but notes payable to stockholders increased to $110,000 from $85,000 at December 31, 2012.
- Cash increased to $10,295 from $4,607, while total liabilities increased to $129,162 from $103,648.
- No revenue, business operations, business combination, or equity issuance occurred during the nine months ended September 30, 2013.
Guidance, Outlook, Risks, and Unusual Items
Management planned to continue searching for a suitable acquisition candidate. It stated that the company had not held discussions with representatives of other entities regarding a business combination since its registration statement became effective.
Management stated that continued operations depend on additional financing, related-party advances, equity financing through a reverse merger, and/or future profitable operations. The company could not assure that additional funding would be available or that it could satisfy cash requirements for the next twelve months. The financial statements were prepared on a going-concern basis.
Stockholder loans issued during 2013 totaled $25,000, are unsecured, bear interest at 6%, and are payable on demand. Accrued and unpaid interest was $15,512 at September 30, 2013. The company used office space and equipment provided by an officer and director at no cost under a month-to-month arrangement, with estimated amounts described as de minimis.
The company disclosed no material legal proceedings, off-balance-sheet arrangements, unregistered securities sales, or defaults. Disclosure controls and procedures were concluded to be effective as of September 30, 2013, with no material changes in internal control reported.
Important Facts for Investors to Verify
- Verify the apparent mismatch between the requested company, Whitehawk Therapeutics, Inc., and the filing registrant, Zeta Acquisition Corp. II.
- Confirm whether any later business combination, reverse merger, name change, or change in operating status occurred after this filing.
- Assess the company’s going-concern risk given $10,295 of cash, $129,162 of current liabilities, and reliance on related-party funding.
- Review the terms, maturity, related-party status, and repayment capacity of the $110,000 of stockholder notes and accrued interest.
- Confirm that the company had no revenue, no identified acquisition target, and no active operating business as of September 30, 2013.