UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

(Mark One)

 

x  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2014

 

¨  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _______________ to _______________.

 

Commission file number: 333-179130

 

Zosano, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware		46-0525801
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
34790 Ardentech Court Fremont, CA		94555
(Address of principal executive offices)		(Zip Code)

 

(510) 745-1200

Registrant’s telephone number, including area code

 

(Former address, if changed since last report)

(Former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x  No ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No x

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x
(Do not check if a smaller reporting company)

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨

 

Applicable only to issuers involved in bankruptcy proceedings during the preceding five years:

 

Indicate by check mark whether the registrant filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ¨ No ¨

 

Applicable only to corporate issuers:

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of October 31, 2014, there were 10,027,000 shares of common stock, $0.0001 par value per share, issued and outstanding.

 

 

 

 

ZOSANO, INC.

 

TABLE OF CONTENTS

 

PART I – FINANCIAL INFORMATION			3
ITEM 1	Financial Statements			3
ITEM 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations			11
ITEM 3	Quantitative and Qualitative Disclosures About Market Risk			15
ITEM 4	Controls and Procedures			15
PART II – OTHER INFORMATION				16
ITEM 1	Legal Proceedings			16
ITEM 1A	Risk Factors			16
ITEM 2	Unregistered Sales of Equity Securities and Use of Proceeds			16
ITEM 3	Defaults Upon Senior Securities			16
ITEM 4	Mine Safety Disclosures			16
ITEM 5	Other Information			16
ITEM 6	Exhibits			17
SIGNATURES				18

 

2

 

PART I – FINANCIAL INFORMATION

 

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements are based on management’s beliefs and assumptions, and on information currently available to management. Forward-looking statements include the information concerning our possible or assumed future results of operations set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements also include statements in which words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” “consider,” or similar expressions are used.

 

Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties, and assumptions. Our future results and shareholder values may differ materially from those expressed in these forward-looking statements. Readers are cautioned not to put undue reliance on any forward-looking statements.

 

ITEM 1  Financial Statements

 

The unaudited condensed financial statements of registrant for the three and nine months ended September 30, 2014 and 2013 follow. The condensed financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. All such adjustments are of a normal and recurring nature.

 

3

 

ZOSANO, INC.

(A DEVELOPMENT STAGE COMPANY)

 

INDEX TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2014

 

Condensed Financial Statements
Condensed Balance Sheets as of September 30, 2014 and December 31, 2013			5
Condensed Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2014 and 2013, and Cumulative from Inception			6
Condensed Statements of Cash Flows for the Nine Months Ended September 30, 2014 and 2013, and Cumulative from Inception			7
Notes to Condensed Financial Statements			8

 

4

 

ZOSANO, INC.

(A DEVELOPMENT STAGE COMPANY)

CONDENSED BALANCE SHEETS

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013

 

		September 30,				December 31,
		2014				2013
		(Unaudited)				(Audited)
ASSETS
Current assets:
Cash and cash equivalents		$	-			$	-
Total current assets			-				-
Total assets		$	-			$	-
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued expenses		$	3,600			$	2,051
Related parties payable			-				2,000
Total current liabilities			3,600				4,051
Stockholders' deficit:
Preferred stock, $0.0001 par value; 5,000,000 shares authorized and none issued and outstanding as of September 30, 2014 and December 31, 2013			-				-
Common stock, $0.0001 par value; 195,000,000 shares authorized and 10,027,000 shares issued and outstanding as of September 30, 2014 and December 31, 2013			1,003				1,003
Additional paid-in capital			89,010				58,326
Deficit accumulated during development stage			(93,613	)			(63,380	)
Total stockholders' deficit			(3,600	)			(4,051	)
Total liabilities and stockholders' deficit		$	-			$	-

 

The accompanying notes are an integral part of these financial statements.

 

5

 

ZOSANO, INC.

(A DEVELOPMENT STAGE COMPANY)

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013,

AND CUMULATIVE FROM INCEPTION (SEPTEMBER 14, 2011)

THROUGH SEPTEMBER 30, 2014

 

		Three Months Ended September 30,								Nine Months Ended September 30,								Cumulative From
		2014				2013				2014				2013				Inception
		(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
Operating expense:
General and administrative		$	4,598			$	5,681			$	30,233			$	13,294			$	93,613
Total operating expense			4,598				5,681				30,233				13,294				93,613
Loss from operations			(4,598	)			(5,681	)			(30,233	)			(13,294	)			(93,613	)
Net loss		$	(4,598	)		$	(5,681	)		$	(30,233	)		$	(13,294	)		$	(93,613	)
Comprehensive loss		$	(4,598	)		$	(5,681	)		$	(30,233	)		$	(13,294	)		$	(93,613	)
Net loss per common share - basic and diluted		$	(0.00	)		$	(0.57	)*		$	(0.00	)		$	(1.33	)*
Weighted average number of common shares outstanding - basic and diluted			10,027,000				10,027	*			10,027,000				10,027	*

_______________

* Post-reverse stock split.

 

The accompanying notes are an integral part of these financial statements.

 

6

 

ZOSANO, INC.

(A DEVELOPMENT STAGE COMPANY)

CONDENSED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013,

AND CUMULATIVE FROM INCEPTION (SEPTEMBER 14, 2011)

THROUGH SEPTEMBER 30, 2014

 

		Nine Months Ended September 30,								Cumulative From
		2014				2013				Inception
		(Unaudited)				(Unaudited)				(Unaudited)
Operating activities:
Net loss		$	(30,233	)		$	(13,294	)		$	(93,613	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Accounts payable and accrued liabilities			1,549				2,616				3,600
Related parties payable			(2,000	)			-				-
Net cash used in operating activities			(30,684	)			(10,678	)			(90,013	)
Investing activities:
Cash provided by investing activities			-				-				-
Net cash provided by investing activities			-				-				-
Financing activities:
Proceeds from issuance of common stock			-				-				421,592
Dividend paid to investors			-				-				(365,000	)
Additional investment through settlement of obligations			30,684				-				33,421
Net cash provided by financing activities			30,684				-				90,013
Net (decrease) increase in cash			-				(10,678	)			-
Cash - Beginning of period			-				15,367				-
Cash - End of period		$	-			$	4,689			$	-

 

The accompanying notes are an integral part of these financial statements.

 

7

 

ZOSANO, INC. 

NOTES TO CONDENSED FINANCIAL STATEMENTS 

SEPTEMBER 30, 2014

 

1. Organization

 

Nature of Operations

 

Zosano, Inc. (the Company) is in the development stage and has limited operations. The Company was incorporated under the laws of the State of Delaware on September 14, 2011.

 

Acquisition by Zosano Pharma

 

On October 31, 2013, the Company entered into a Stock Purchase Agreement (the Purchase Agreement) with Zosano Pharma Corporation (formerly known as ZP Holdings, Inc.), a Delaware corporation (Zosano Pharma), pursuant to which the Company issued and sold to Zosano Pharma 10,016,973 shares of the Company common stock, $0.0001 par value, for an aggregate cash purchase price of $365,000.

 

As a result of the issuance and sale of the Company’s common stock to Zosano Pharma pursuant to the Purchase Agreement, a change in control of the Company occurred in which Zosano Pharma acquired control of the Company. Immediately following the change in control transaction, 10,027,000 shares of the Company’s Common Stock were issued and outstanding. The 10,016,973 shares of common stock issued and sold to Zosano Pharma pursuant to the Purchase Agreement represent approximately 99.9% of the Company’s issued and outstanding common stock.

 

Liquidity Risk and Going Concern

 

The Company has not established any source of revenues to cover its operating costs, and as such, has incurred an operating loss since inception. Further, as of September 30, 2014, the cash resources of the Company were insufficient to continue to conduct its normal business operations. These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company is dependent on Zosano Pharma, its majority stockholder, to pay its expenses. The accompanying financial statements have been prepared in conformity with U.S. GAAP, which contemplate continuation of the Company as a going concern. Accordingly, the accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to pay its expenses as they become due.

 

2. Summary of Significant Accounting Policies

 

Basis of Presentation

 

The accompanying interim condensed financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (U.S. GAAP) and with the instructions for Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and notes required for complete financial statements. These interim condensed financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 as filed with the Securities and Exchange Commission (SEC).

 

8

 

Unaudited Interim Financial Information

 

The accompanying interim condensed financial statements and related disclosures are unaudited, have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair statement of the results of operations for the periods presented. The year-end condensed balance sheet data was derived from audited financial statements, but does not contain all disclosures required by U.S. GAAP. The condensed results of operations for any interim period are not necessarily indicative of the results to be expected for the full year or for any other future year or interim period.

 

Certain amounts in the condensed consolidated financial statements have been reclassified to conform to the current year presentation.

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Actual results could differ materially from those estimates.

 

Cash and Cash Equivalents

 

The Company considers all cash on hand, checking account not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents.

 

Fair Value Measurements

 

The carrying values of certain financial instruments of the Company, such as cash and cash equivalents, accounts payable and accrued liabilities, and related parties payable approximate fair value due to their relatively short maturities.

 

Revenue

 

The Company is in the development stage and has yet to generate revenue from operations.

 

Net Loss per Common Share

 

Basic loss per share is computed by dividing the net loss attributable to the common stockholders by the weighted average number of shares of common stock outstanding during the period. Fully diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. There were no dilutive financial instruments issued or outstanding for all periods reported.

 

3. General and Administrative Expenses

 

Since inception, the Company has been engaged in developmental stage activities related to the setup and formation of the company. The following summarizes the type of expenses incurred:

 

		Three Months Ended September 30,								Nine Months Ended September 30,								Cumulative From
		2014				2013				2014				2013				Inception
		(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
General and administrative expense:
Professional fees		$	3,800			$	3,400			$	26,350			$	9,200				70,684
Consulting fees			-				-				-				-				3,350
Filing fees			798				892				2,593				2,495				14,075
Franchise tax expense			-				1,224				1,200				1,224				2,525
Travel			-				-				-				-				1,207
Other			-				165				90				375				1,772
Total general and administrative expense		$	4,598			$	5,681			$	30,233			$	13,294				93,613

 

9

 

4. Stockholders’ Equity

 

Preferred Stock

 

In September 2013, the Company adopted an amended and restated certificate of incorporation by which the Company is authorized to issue 5,000,000 shares of preferred stock with a $0.0001 par value. As of September 30, 2014, there were no shares of preferred stock issued or outstanding.

 

Common Stock, Stock Split and Dividend

 

At inception, the Company adopted a certificate of incorporation by which the Company is authorized to issue 150,000,000 shares of common stock with a $0.0001 par value. In September 2011, the Company issued 1,700,000 shares of common stock to its directors of the Company at a price of $0.012 per share, for a $20,400 subscription receivable. Payments of the subscription were fully received in December 2011.

 

In January 2012, the Company commenced a capital formation activity by filing a Registration Statement on Form S-1 to register and sell in a self-directed offering 800,000 shares of newly issued common stock at an offering price of $0.15 per share for proceeds of up to $120,000. On May 31, 2012, the Company completed the offering and issued 304,613 shares of common stock pursuant to the Registration Statement on Form S-1 for proceeds of $45,661. Offering costs of $9,500 related to this capital formation activity were charged against the capital raised.

 

In September 2013, the Company adopted an amended and restated certificate of incorporation by which the Company is authorized to issue 195,000,000 shares of common stock with a $0.0001 par value, which amended and restated certificate of incorporation went effective on October 21, 2013. As of December 31, 2013, 10,027,000 shares of common stock were issued and outstanding.

 

In anticipation of the acquisition of the Company’s common stock by Zosano Pharma and on October 21, 2013, the Company completed a 1-for-200 reverse stock split. As a result, existing stockholders held an aggregate of 10,027 shares on a post-split basis. All share and per share amounts have been retroactively restated for the effect of this split.

 

On October 31, 2013, the Company issued 10,016,973 shares of common stock to Zosano Pharma Corporation in exchange for an aggregate cash purchase price of $365,000. Concurrently with the receipt of the proceeds from the sale of its common stock to Zosano Pharma Corporation, the Company declared a dividend of the purchase price owed by the Company, to its stockholders of record immediately prior to the closing of the purchase transaction.

 

The Company did not have any dilutive securities, such as stock options, warrants, and rights, issued or outstanding for all periods reported.

 

5. Related Party Transactions

 

The Company's director provided rent-free office space to the Company from inception through the completion of the acquisition by Zosano Pharma Corporation on October 31, 2013. From October 31, 2013 through September 30, 2014, the Company operates in the same facility as Zosano Pharma Corporation, its parent company.

 

Since the acquisition by Zosano Pharma Corporation, all of the Company’s expenses have been paid by ZP Opco, Inc., a wholly owned subsidiary of Zosano Pharma Corporation, which has enabled the Company to continue to pay its expenses as they become due.

 

10

 

ITEM 2  Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Disclaimer Regarding Forward Looking Statements

 

Our Management’s Discussion and Analysis of Financial Conditions and Results of Operations contain not only statements that are historical facts, but also statements that are forward-looking. Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include international, national and local general economic and market conditions; demographic changes; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; raw material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other risks that might be detailed from time to time in our filings with the Securities and Exchange Commission.

 

Although the forward-looking statements in this Quarterly Report on Form 10-Q reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this Quarterly Report on Form 10-Q and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.

 

Overview

 

We were incorporated on September 14, 2011 in Delaware as “Eco Planet Corp.” Until October 31, 2013, our business plan was to offer on-line, bundles of products (“kits”) by theme for home and small business owners: Energy-Efficiency, Renewable Energy, Water Conservation, Green Cleaning and Green Office. We had planned for the products comprising the kits, as well as the kits themselves, to be relatively small, inexpensive and simple to install, and to include items such as LED light bulbs, faucet/showerhead aerators, electricity monitors and water tank insulation blankets.

 

On October 21, 2013, we effected a 1-for-200 reverse stock split of our common stock, $0.0001 par value per share (the “Common Stock”), and changed our name to “Zosano, Inc.” On October 31, 2013, we entered into a Stock Purchase Agreement with Zosano Pharma Corporation pursuant to which we issued and sold 10,016,973 shares of Common Stock (the “Shares”) to Zosano Pharma Corporation. As a result of our issuance and sale of the Shares to Zosano Pharma Corporation, a change in control of the Company occurred and Zosano Pharma Corporation became the owner of 99.9% of our outstanding Common Stock. However, as a result of the change in control on October 31, 2013, we appointed new officers and directors and have a new business plan. Our current business plan is to seek to identify a privately held operating company desiring to become a publicly held company by merging with us through a reverse merger or acquisition. We are a shell company as defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”) and a development stage company. As a shell company, we have no operations and assets. Although we have no operations and assets, we believe our current reporting status under the Exchange Act, as well as our stockholder base, make us an attractive merger or acquisition candidate to a privately held company seeking to become publicly quoted.

 

11

 

Summary of Results of Operations

 

Results of Operations for Three Months Ended September 30, 2014 Compared to Three Months Ended September 30, 2013

 

		Three Months Ended September 30,
		2014				2013
Revenue		$	-			$	-
Operating expenses:
General and administrative			4,598				5,681
Total operating expenses			4,598				5,681
Operating loss			(4,598	)			(5,681	)
Net (Loss)		$	(4,598	)		$	(5,681	)

 

Revenue

 

For the three months ended September 30, 2014 and 2013, we have not generated any revenues. We do not plan on generating any revenues before we merge with a privately-held operating company desiring to become a publicly-held company. After a successful merger transaction which we do not know when, or if, we will generate revenue as that will be in the control of the operating company that merges with us.

 

Operating expenses

 

During the three months ended September 30, 2014 and September 30, 2013, our operating expenses were $4,598 and $5,681, respectively, with all of our operating expenses being general and administrative expenses, primarily professional fees related to us being a public company. We anticipate our operating expenses will be approximately $30,000 to $35,000 per year until such time as we successfully merge with an operating company.

 

Net loss

 

Net loss for the three months ended September 30, 2014 and September 30, 2013, totaled $4,598 and $5,681, respectively, relating entirely to our operating expenses for both periods. Our net loss will continue to consist of our operating expenses until such time as we successfully merge with an operating company desiring to become a publicly-held company. There can be no assurance that we will be able to successfully merge with an operating company.

 

12

 

Results of Operations for Nine Months Ended September 30, 2014 Compared to Nine Months Ended September 30, 2013

 

		Nine Months Ended September 30,								Period from September 14, 2011 (Inception) to September 30,
		2014				2013				2014
Revenue		$	-			$	-			$	-
Operating expenses:
General and administrative			30,233				13,294				93,613
Total operating expenses			30,233				13,294				93,613
Operating loss			(30,233	)			(13,294	)			(93,613	)
Net (Loss)		$	(30,233	)		$	(13,294	)		$	(93,613	)

 

Revenue

 

For the nine months ended September 30, 2014 and 2013, and since our inception, we have not generated any revenues. We do not plan on generating any revenues before we merge with a privately-held operating company desiring to become a publicly-held company. After a successful merger transaction which we do not know when, or if, we will generate revenue as that will be in the control of the operating company that merges with us.

 

Operating expenses

 

During the nine months ended September 30, 2014 and September 30, 2013, our operating expenses were $30,233 and $13,294, respectively, with all of our operating expenses being general and administrative expenses, primarily professional fees related to us being a public company. We anticipate our operating expenses will be approximately $30,000 to $35,000 per year until such time as we successfully merge with an operating company.

 

Net loss

 

Net loss for the nine months ended September 30, 2014 and September 30, 2013, totaled $30,233 and $13,294, respectively, relating entirely to our operating expenses for both periods. We have incurred operating losses since inception of $93,613. Our net loss will continue to consist of our operating expenses until such time as we successfully merge with an operating company desiring to become a publicly-held company. There can be no assurance that we will be able to successfully merge with an operating company.

 

Liquidity and Capital Resources for the Nine Months Ended September 30, 2014 and 2013

 

Introduction

 

 We have not established any source of revenues to cover our operating costs, and as such, have incurred operating losses since inception. Further, as of September 30, 2014, we have no cash on hand to conduct our normal business operations. We are dependent on Zosano Pharma Corporation, our majority stockholder, to pay any and all of our expenses. These and other factors raise substantial doubt about our ability to continue as a going concern. Our financial statements have been prepared in conformity with U.S. GAAP, which contemplate continuation as a going concern. Accordingly, our financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from our inability to pay our expenses as they become due. We do not believe we will be able to satisfy our cash needs until we consummate a merger transaction with an operating company, and even then there is no assurance we will be able to do so.

 

13

 

Our cash, current assets, total assets, current liabilities, and total liabilities as of September 30, 2014 compared to December 31, 2013, respectively, are as follows:

 

		September 30, 2014				December 31, 2013				Change
Cash		$	-			$	-			$	-
Total Current Assets			-				-				-
Total Assets			-				-				-
Total Current Liabilities			3,600				4,051				(451	)
Total Liabilities		$	3,600			$	4,051			$	(451	)

 

Assets and Liabilities

 

We had no assets as of September 30, 2014. We had liabilities totaling $3,600 as of September 30, 2014, which consisted of accounts payable and accrued expenses of $3,600.

 

Stockholders’ Deficit

 

Stockholders’ deficit was $3,600 as of September 30, 2014. Stockholder’s deficit consisted primarily of deficit accumulated during our development stage of 93,613, mostly offset by proceeds from issuance of common stock at par of $1,003 and additional paid in capital of $89,010.

 

Sources and Uses of Cash

 

Overall, we had no change in cash in the nine months ending September 30, 2014 with zero cash on hand. We used $30,684 of net cash in operating activities with the entire amount came from financing activities as majority of our expenses were settled by Zosano Pharma Corporation, our majority stockholder.

 

Cash Flows from Operating Activities – For the nine months ending September 30, 2014, our net cash used in operations was $30,684 compared to net cash used in operations of $10,678 for the period in 2013. As of September 30, 2014, we had no cash on hand. Cash flow used in operating activities in the nine months ended September 30, 2014 consisted of our net loss of $30,233 and adjusted for $2,000 of net cash used in related parties payables and $1,549 provided by the change in accounts payable and accrued liabilities.

 

Cash Flows from Investing Activities – We did not have any cash flows from investing activities during the nine months ended September 30, 2014 or 2013.

 

Cash Flows from Financing Activities – For the nine months ended September 30, 2014, we had $30,684 in net cash provided by financing activities, compared to $0 for the same period in 2013. Our cash flows from financing activities during the nine months ended September 30, 2014 were all related to additional investment through settlement of our obligations by Zosano Pharma Corporation, our majority stockholder.

 

14

 

Development Stage Company

 

We are a development stage company as defined by section 915-10-20 of the FASB Accounting Standards Codification. We are still devoting substantially all of our efforts on establishing the business. All losses accumulated since inception have been considered as part of our development stage activities.

 

Off Balance Sheet Arrangements

 

We have no off balance sheet arrangements.

 

ITEM 3  Quantitative and Qualitative Disclosures About Market Risk

 

As a smaller reporting company, we are not required to provide information pertaining to this Item.

 

ITEM 4  Controls and Procedures

 

(a)  Evaluation of Disclosure Controls Procedures

 

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Disclosure and control procedures are also designed to ensure that such information is accumulated and communicated to management, including the chief executive officer and principal financial officer, to allow timely decisions regarding required disclosures.

 

As of September 30, 2014, we carried out an evaluation, under the supervision and with the participation of management, including our chief executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. In designing and evaluating the disclosure controls and procedures, management recognizes that there are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their desired control objectives. Additionally, in evaluating and implementing possible controls and procedures, management is required to apply its reasonable judgment. We also do not have an audit committee. Based on the evaluation described above, and as a result, in part, of not having an audit committee and having one individual serve as our chief executive officer and principal financial officer, we have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were ineffective.

 

(b)  Changes in Internal Controls over Financial Reporting

 

There was no change in our internal controls over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

 

(c)  Officer’s Certifications

 

Appearing as an exhibit to this Quarterly Report on Form 10-Q are “Certifications” of our principal executive and financial officer. The Certifications are required pursuant to Sections 302 of the Sarbanes-Oxley Act of 2002 (the “Section 302 Certifications”). This section of the Quarterly Report on Form 10-Q contains information concerning the Controls Evaluation referred to in the Section 302 Certifications. This information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.

 

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PART II – OTHER INFORMATION

 

ITEM 1  Legal Proceedings

 

There have been no events which are required to be reported under this Item.

 

However, in the ordinary course of business, we may from time to time become involved in certain legal proceedings. The litigation process is inherently uncertain and it is possible that the resolution of any such matters might have a material adverse effect upon our financial condition and/or results of operations.

 

ITEM 1A  Risk Factors

 

As a smaller reporting company, we are not required to provide the information required by this Item.

 

ITEM 2  Unregistered Sales of Equity Securities and Use of Proceeds

 

There have been no events which are required to be reported under this Item.

 

ITEM 3  Defaults Upon Senior Securities

 

There have been no events which are required to be reported under this Item.

 

ITEM 4  Mine Safety Disclosures

 

There have been no events which are required to be reported under this Item.

 

ITEM 5  Other Information

 

There have been no events which are required to be reported under this Item.

 

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ITEM 6  Exhibits

 

Item No.		Description
3.1 (1)		Certificate of Incorporation of Eco Planet Corp.
3.2 (2)		Amended and Restated Certificate of Incorporation of Zosano, Inc.
3.3 (2)		Certificate of Amendment to Amended and Restated Certificate of Incorporation of Zosano, Inc.
3.4 (2)		Certificate of Amendment to Amended and Restated Certificate of Incorporation of Zosano, Inc.
3.5 (2)		Certificate of Amendment to Amended and Restated Certificate of Incorporation of Zosano, Inc.
3.6 (1)		Bylaws of Zosano, Inc.
10.1 (2)		Stock Purchase Agreement dated as of October 31, 2013 by and between Zosano, Inc. and ZP Holdings, Inc.
31.1		Rule 13a-14(a)/15d-14(a) Certification of President (principal executive officer).
31.2		Rule 13a-14(a)/15d-14(a) Certification of Treasurer (principal financial officer)
32.1		Section 1350 Certification of President (principal executive officer)
32.2		Section 1350 Certification of Treasurer (principal financial officer)

 

101.INS **		XBRL Instance Document
101.SCH **		XBRL Taxonomy Extension Schema Document
101.CAL **		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF **		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB **		XBRL Taxonomy Extension Label Linkbase Document
101.PRE **		XBRL Taxonomy Extension Presentation Linkbase Document

___________

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 

(1)  Incorporated by reference from our Registration Statement on Form S-1, filed with the Commission on January 23, 2012.

 

(2)  Incorporated by reference from our Current Report on Form 8-K, filed with the Commission on November 6, 2013.

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

	Zosano, Inc.
Dated: November 10, 2014	By:	/s/ Vikram Lamba
		Vikram Lamba
		President

 

 

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