U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
(X) Quarterly report pursuant to section 13 or 15(d) of the SECURITIES AND
EXCHANGE ACT OF 1934
For the Quarterly period ended March 31, 2000
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 for the transition
period from ------- to ---------
Commission File No.33-55254-30
ZANDRIA CORPORATION
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(Name of Small Business Issuer in its Charter)
NEVADA 87-0438851
(State or other Jurisdiction (IRS Employer
of Incorporation or Organization) Identification No.)
1450 Front Street, San Diego, California 92101
(Address of Principal Executive Offices)
(619) 615=3110
(Issuer's Telephone Number)
Check whether the issuer (1) filed all reports required to be filed by
section 13 or 15(d) of the Exchange Act during the past 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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13, or 15(d) of the Exchange Act after the distribution of
Securities under a plan confirmed by court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of the latest practicable date: 32,198,596 shares as of March
31, 2000.
<PAGE>
TABLE OF CONTENTS AND INFORMATION REQUIRED IN REPORT
Page Numbers
Part I. Financial Information
- -------
Item 1. Financial Statements (unaudited):
Balance Sheet as of March 31, 2000 2
Statement of Operations for the quarter ended
March 31, 2000 3
Statements of Cash Flows for the quarter ended
March 31, 2000 4
Notes to Financial Statements 5
Item 2. Managements Discussion and Analysis or Plan of
Operation 6
Part II. Other Information
- --------
Item 1. Legal Proceedings 9
Item 2. Changes in Securities 9
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security holders 9
Item 5. Other Information 9
Item 6. Exhibits and reports on form 8-K 9
SIGNATURES 10
1
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ZANDRIA CORPORATION
CONSOLIDATED BALANCE SHEET
ZANDRIA CORPORATION AND ITS SUBSIDIARY LEVELRED.COM, INC.
CONDENSED BALANCE SHEET
Mar. 31, 2000 Dec. 31, 1999
(Unaudited) (Audited)
------------- -------------
ASSETS
Current Assets:
Cash and Cash Equivalents $ 1,516,607 $ -
Prepaids and Advances 14,669 -
------------- -------------
Total Current Assets 1,531,276 -
Non-Current Assets
Property and Equipment,
net of Accum. Depr. 173,948 -
Other Non-Current Assets 94,253 -
------------- -------------
Total Non-Current Assets 268,201 -
TOTAL ASSETS $ 1,799,477 $ -
============= ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Current Liabilities:
Accounts Payable $ 42,769 $ -
Consulting Accrual 18,208 -
Payroll and Payroll Tax Accrual 10,114 -
Sales Fees Accrual 358,000 -
------------- -------------
Total Current Liabilities 429,091 -
TOTAL LIABILITIES 429,091 -
SHAREHOLDERS' EQUITY
Common stock, par value $0.001 per share,
100,000,000 authorized, 32,198,596 issued
and outstanding as of 3/31/00 32,199 1,000
Additional Paid-in Capital 1,766,840 1,000
Retained Earnings (103,071) (2,000)
Current Year Earnings (325,582) -
------------- -------------
TOTAL SHAREHOLDERS' EQUITY 1,370,386 -
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,799,477 $ -
============= =============
2
<PAGE>
ZANDRIA CORPORATION
CONSOLIDATED INCOME STATEMENT
ZANDRIA CORPORATION AND ITS SUBSIDIARY LEVELRED.COM, INC.
CONDENSED INCOME STATEMENT
Mar. 31, 2000 Mar.31, 1999
(Unaudited) (Audited)
--------------- ----------------
Revenues $ - $ -
Cost of Revenues - -
--------------- ----------------
Gross Profit - -
Operating Expenses:
Marketing and Sales 42,500 -
General and Administrative 288,624 -
--------------- ----------------
Total Operating Expenses 331,124 -
Operating Profit (Loss) (331,124) -
Other Income/(Expense): 5,542 -
--------------- ----------------
Net Loss $ (325,582) $ -
=============== ================
3
<PAGE>
ZANDRIA CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
Three Months Ended March 31, 2000
March 31, 2000 December 31, 1999
(unaudited) (audited)
----------- ---------------
Cash Flows From Operating
Activities:
Net Loss
Levelred Q-1 2000 $ (325,582) $ -
Depreciation &
Amortization 3,497 -
Increase (decrease) in:
Prepaids and Advances (14,669) -
Accounts Payable 34,412 -
Accruals 22,511 -
----------- ---------------
Net Cash Used In Operating
Activities (279,831) -
----------- ---------------
Cash Flows Used in Investing
Activities:
Capital Purchases (138,129)
Long Term Deposits ( 59,378) -
----------- ----------------
Net Cash Used in Investing
Activities (197,507) -
----------- ---------------
Cash Flows From Financing
Activites:
Parent Funding 223,750 -
Asset Purchase Agreement 1,038,274 -
----------- ----------------
Cash Flows Provided by
Financing Activities 1,262,024 -
----------- ---------------
NET INCREASE IN CASH
AND CASH EQUIVALENTS 784,686 -
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD 731,921 -
----------- ---------------
CASH AND CASH EQUIVALENTS -
END OF PERIOD $1,516,607 $ -
----------- ---------------
The consolidated cash position of Zandria Corporation at 3/31/00 includes
the net cash position of Levelred.com, Inc., and the cash included in the asset
purchase transaction between Zandria Entertainment Networks, Inc. and Zandria
Corporation. At 12/31/99, there was no cash recorded on the balance sheet of
Zandria Corporation.
4
<PAGE>
ZANDRIA CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
I. Audit
On March 14, 2000 Zandria Corporation acquired the assets and assumed the
liabilities of Zandria Entertainment Networks, Inc., a privately held Nevada
corporation. Prior to this date, Zandria Corporation was named Longhorn, Inc.
The financial records of Longhorn, Inc. were audited as of December 31, 1999
(see 10K for 1999). In compliance with SEC requirements, an audit of the
financial records begin on May 8, 2000 for the following entities:
1. Zandria Entertainment Networks, Inc. for the periods ending December
31, 1998, December 31, 1999 and March 31, 2000.
2. Zandria Corporation for the period ending March 31, 2000.
3. Levelred.com, Inc. (a wholly owned subsidiary of Zandria Entertainment
Networks, Inc.) for the periods ending December 31, 1999 and March 31,
2000.
As of the date of this filing, the audit has not yet been completed. However,
the unaudited financials presented in this filing are considered a fair and
reasonable representation of the financial statements currently under review.
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
On March 14, 2000 Zandria Corporation acquired the assets and assumed the
liabilities of Zandria Entertainment Networks, Inc., a privately held Nevada
corporation. Prior to this date, Zandria Corporation was named Longhorn, Inc.
The financial records of Longhorn, Inc. were audited as of December 31, 1999
(see 10KSB for 1999). In compliance with SEC requirements, an audit of the
financial records begin on May 8, 2000 for the following entities:
Zandria Entertainment Networks, Inc. for the periods ending December 31,
1998, December 31, 1999 and March 31, 2000.
Zandria Corporation for the period ending March 31, 2000.
Levelred.com, Inc. (a wholly owned subsidiary of Zandria Entertainment
Networks, Inc.) for the periods ending December 31, 1999 and March 31,
2000.
As of the date of this filing, the audit has not yet been completed. However,
the unaudited financials presented in this filing are considered a fair and
reasonable representation of the financial statements currently under review.
Zandria Corporation, whose name was changed on March 16, 2000 from Longhorn,
Inc. ("LNGH"), was originally incorporated under the laws of the state of Utah
on May 2 1986 and subsequently reorganized under the laws of Nevada on December
30, 1993. The Company's reorganization plan was formulated for the purpose of
changing the state of domicile and provided that the Company form a new
corporation in Nevada which acquired the contractual obligations, shareholder
rights and identity of the Utah corporation. After this was completed the Utah
Corporation was dissolved. The company remained an unfounded venture until March
14, 2000. On that date, Longhorn, Inc. acquired the assets and assumed the
liabilities of Zandria Entertainment Networks, Inc ("ZEN"), a privately held
Florida Corporation, in return for four million shares of LNGH common stock.
Immediately after this transaction the company's name was changed to Zandria
Corporation and it executed a 6 for 1 forward split. This resulted in Zandria
Entertainment Networks owning twenty-four million shares of Zandria Corporation
("ZAND") stock. This represents approximately 75% of the total 32,198,596
outstanding shares of ZAND. As of 3/31/00, of the remaining 8,198,596 shares, no
other entity held more than 5% of the total outstanding shares.
After the shares of Zandria Corporation stock, held by Zandria Entertainment
Networks, are registered with the SEC and/or the required holding period ends so
that these shares become unrestricted, Zandria Entertainment Networks will be
dissolved upon the securing regulatory permission, if necessary, to allow the
shareholders of Zandria Entertainment Networks stock to exchange their shares of
stock and receive their prorated shares of Zandria Corporation stock.
6
<PAGE>
From November 1998 up to the asset purchase transaction date, Zandria
Entertainment Networks had been generating investor funding through 504 and a
506 private placements. The net proceeds of this funding were used for the
initial development of the Internet web community, Levelred.com. This web site
is owned and being developed by Levelred.com, Inc., a Delaware Corporation.
To-date, Zandria Entertainment Networks has been the only funding source for
this project.
The initial development of Levelred.com began in November 1999. Through February
16, 2000 the total funding was $841,000. This was recorded as a bridge loan. On
this date, a stock purchase agreement between Levelred.com, Inc. and Zandria
Entertainment Networks, Inc. resulted in the assignment of 3,000,000 shares of
Levelred.com, Inc. stock to Zandria Entertainment Networks for $800,000,
including warrants to purchase options. The remaining $41,000, and any further
funding, is recorded as a line of credit until such time that the line of credit
will be repaid by Levelred.com, Inc. or converted to shares per the option
agreement.
At March 31, 2000, the total funding from Zandria Entertainment Networks was
$1,064,750, of which $800,000 was for the purchase of stock and warrants, and
the remaining $264,750 recorded as a line of credit.
As part of the asset purchase transaction, the stock purchase agreement was
assigned to Zandria Corporation. At this time, Levelred.com, Inc. is a wholly
owned subsidiary of Zandria Corporation.
With its anticipated launch in June 2000, Levelred.com is intended to be a
provocative, media and content rich site targeting the twenty to thirty-four
year age groups. The content focuses on nightlife, events, music, culture,
lifestyle and fashion that are of specific interest to the targeted age group.
The site includes editorial content pertaining to topics of interest, events,
interviews, and reviews of books, music, films, DJ's and music groups.
Supplementing this , the company plans to include video clips of events and
interviews submitted by contributing editors throughout the United States.
Although the site can be comfortably viewed using a 56Kps modem, DSL and cable
access provide for a better performance of the streaming video and audio. The
site is being developed within the facilities of Zandria Corporation and
Levelred.com, Inc. in San Diego, California.
One of the objectives of the site is to develop a free membership community of
the targeted age groups. After completing a profile questionnaire, members
should have access to special benefits, such as email, chat rooms, discounts for
various events and products, and prizes.
7
<PAGE>
The primary revenue model includes e-commerce of clothing, sporting goods,
music, books, event tickets, travel packages and personal items that the company
plans to make available on the site. Revenue streams would also include
advertising, the licensing of certain software to other e-tailers that is being
developed by Levelred, the licensing of the Levelred copyrighted editorial video
content that is developed for use on the site, and the licensing of demographic
data pertaining to the profiles of the community's free membership. The business
model includes off-line sponsored events and a print publication.
The phased launch will focus initially on the San Diego and Southern California
markets. After the successful launch within this geographic market, expansion of
the site is planned to proceed into the larger US cities. The final phase would
target global expansion. However, certain larger cities outside of the United
States may come on-line sooner if there is sufficient interest from the target
market to justify the investment.
The exit strategy for Levelred.com, Inc. has not been determined. As a dotcom
company, the options under consideration are to spin it out as an acquisition,
or move into an IPO. To state one over the other would be purely speculative at
this time. However, the plans are to spin out Levelred.com at an optimum moment
and use the proceeds for other dotcom related businesses.
With additional investor funding that the company hopes to secure in the future,
Zandria Corporation is intending to acquire startup Internet companies and
companies that provide synergistic services to Internet companies. Although it
could be viewed that Zandria is moving into an incubator model, the current
strategy precludes Zandria from developing a full or partial service
infrastructure. The investment into developing a full or partial service
incubator is considered to be significant. However, with its evolving network
systems infrastructure and resource alliances, Zandria plans to be able to
acquire and host dotcom startups within its facility in San Diego, California,
and in startups located elsewhere.
The primary focus for acquisition will be dotcom companies that develop web
sites targeted to well defined, nominally tapped markets. These companies may
pertain to business to consumer ("B2C") or business to business ("B2B")
commerce. With the current shift of investor interest, and the increasing use of
the Internet for business processes, Zandria intends to place an emphasis on
seeking acquisition opportunities related to B2B and B2B2C, i.e., manufacturer
to retailer to consumer.
8
<PAGE>
PART II
ITEM 1. LEGAL PROCEEDINGS
To the best knowledge of the officers and directors of the Company, neither
the Company nor any of its officers or directors is a party to any material
legal proceeding or litigation and such persons know of no other material legal
proceeding or litigation contemplated or threatened.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
Number Description
------- ------------
27 Financial Data Schedule
(b) Reports on Form 8-K
The Company filed a Current Report on Form 8-K dated March 21, 2000 to
change control to Zandria Entertainment Networks, Inc. and to acquire its
assets. The Current Report noted a change in the Certifying Accountant, a change
in Officers and Directors and a six (6)for one (1) forward split of the Common
Stock.
9
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant has caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
ZANDRIA CORPORATION
Date: May 18, 2000 By: /s/ Michael J. Howard
-----------------------
Michael J. Howard
Chief Financial Officer
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 1,516,607
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,531,276
<PP&E> 188,881
<DEPRECIATION> 14,932
<TOTAL-ASSETS> 1,799,477
<CURRENT-LIABILITIES> 429,091
<BONDS> 0
0
0
<COMMON> 32,199
<OTHER-SE> 1,338,187
<TOTAL-LIABILITY-AND-EQUITY> 1,799,477
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 331,124
<OTHER-EXPENSES> (5,542)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (325,582)
<INCOME-TAX> 0
<INCOME-CONTINUING> (325,582)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (325,582)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
