EX-99.4 12 ex99_4.htm EXHIBIT 99.4 Exhibit 99.4
  SHIELDZONE CORPORATION
PRO FORMA COMBINED FINANCIAL STATEMENTS
SEPTEMBER 30, 2006
(UNAUDITED)
 

SHIELDZONE CORPORATION

Index to Unaudited Pro Forma Combined Financial Statements
 

2

SHIELDZONE CORPORATION
September 30, 2006

 
Amerasia Khan Enterprises, Ltd.
    Shieldzone
Corporation
       
 
September 30,
 
September 30,
     
Pro Forma Adjustments
 
Pro Forma
 
2006
 
2006
   
Dr
     
Cr.
 
Balances
ASSETS
(Unaudited)
 
(Unaudited)
                   
 
(See note 1)
                       
CURRENT ASSETS:
                         
Cash
$
35,828
 
$
161,414
   
(4)
 
$
500,000
   
(5)
 
$
35,828
   
661,414
Accounts receivable, net
 
3,656
   
88,218
         
-
   
(5)
 
 
3,656
   
88,218
Inventories
 
-
   
77,067
         
-
         
-
   
77,067
Prepaid expenses
 
-
   
19,307
         
-
         
-
   
19,307
Advances due from officer and employees
 
2,771
   
2,096
         
-
   
(5)
 
 
2,771
   
2,096
                                         
Total Current Assets
 
42,255
   
348,102
         
500,000
         
42,255
   
848,102
                                         
PROPERTY AND EQUIPMENT, net
 
44,121
   
230,938
         
-
   
(5)
 
 
44,121
   
230,938
                                         
OTHER ASSETS:
                                       
Deposits
 
-
   
4,516
         
-
         
-
   
4,516
Intangible assets
 
-
   
2,340
         
-
         
-
   
2,340
                                         
Total Other Assets
 
-
   
6,856
         
-
         
-
   
6,856
                                         
Total Assets
$
86,376
 
$
585,896
       
$
500,000
       
$
86,376
 
$
1,085,896
                                         
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
                                       
                                         
CURRENT LIABILITIES:
                                       
Accounts payable
$
6,773
 
$
116,097
   
(5)
 
$
6,773
       
$
-
 
$
116,097
Accrued expenses
 
-
   
78,412
         
-
         
-
   
78,412
Stockholder advances
 
117,400
   
-
   
(5)
 
 
117,400
         
-
   
-
Settlement fees payable
 
-
   
62,500
         
-
         
-
   
62,500
Income tax payable
 
-
   
1,604
         
-
         
-
   
1,604
Deferred income tax liability, net
 
-
   
25,190
         
-
         
-
   
25,190
Sales returns liability
 
-
   
26,000
         
-
         
-
   
26,000
 
                                       
Total Current Liabilities
 
124,173
   
309,803
         
124,173
         
-
   
309,803
                                         
STOCKHOLDERS' EQUITY (DEFICIT):
                                     
Common stock ($.001 par value; 50,000,000 shares authorized;
                                       
9,000,000 shares issued and outstanding prior to merger;
                                       
16,203,572 shares shares issued and outstanding after merger)
 
9,000
   
76,000
   
(2)(3)
 
 
80,400
   
(1)(4)
 
 
11,604
   
16,204
Additional paid-in capital
 
169,753
   
25,000
   
(1)(3)
 
 
226,725
   
(2)(3)(4)(5)
 
 
616,768
   
584,796
Retained earnings (deficit)
 
(216,550)
 
 
175,093
         
-
   
(3)
 
 
216,550
   
175,093
                                         
Total Stockholders' Equity (Deficit)
 
(37,797)
 
 
276,093
         
307,125
         
844,922
   
776,093
                                         
Total Liabilities and Stockholders' Equity (Deficit)
$
86,376
 
$
585,896
       
$
431,298
       
$
844,922
 
$
1,085,896
 
See accompanying notes to unaudited pro forma consolidated financial statements.
 
3

SHIELDZONE CORPORATION
For the Nine Months Ended September 30, 2006

 
Amerasia Khan
Enterprises, Ltd.
 
Shieldzone
Corporation
   
 
For the Six Months
Ended September 30,
2006
 
For the Nine Months
Ended September 30,
2006
 
Pro Forma
Balances
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
           
Net sales
$
7,773
 
$
1,978,533
 
$
1,986,306
                 
Cost of sales
 
14,412
   
537,375
   
551,787
                 
Gross Profit
 
(6,639)
 
 
1,441,158
   
1,434,519
                 
Operating Expenses:
               
Salaries and related taxes
 
-
   
669,895
   
669,895
Consulting fees
 
-
   
73,750
   
73,750
Advertising and marketing
 
-
   
269,689
   
269,689
Settlement expense
 
-
   
62,500
   
62,500
Other selling. general and administrative
 
29,653
   
350,331
   
379,984
                 
Total Operating Expenses
 
29,653
   
1,426,165
   
1,455,818
                 
Income (Loss) from Operations
 
(36,292)
 
 
14,993
   
(21,299)
                 
Other income (expense):
               
Other expenses
 
-
   
(18,559)
 
 
(18,559)
Gain on sales of fixes assets
 
-
   
1,000
   
1,000
Interest income
 
-
   
5,819
   
5,819
Interest expense
 
(4,696)
 
 
-
   
(4,696)
                 
Total Other Income (Expense)
 
(4,696)
 
 
(11,740)
 
 
(16,436)
                 
Income (Loss) Before Income Taxes
 
(40,988)
 
 
3,253
   
(37,735)
                 
Income tax benefit
 
-
   
13,464
   
13,464
                 
Net Income (Loss)
$
(40,988)
 
$
16,717
 
$
(24,271)
                 
Net income (loss) per common share:
               
Basic and Diluted
$
(0.00)
 
$
0.00
 
$
(0.00)
                 
Weighted average shares outstanding:
               
Basic and Diluted
 
9,000,000
   
10,033,333
   
10,175,000
 
See accompanying notes to unaudited pro forma consolidated financial statements.
4

SHIELDZONE CORPORATION
For the Year Ended March 31, 2006

 
Amerasia Khan
Enterprises, Ltd.
 
Shieldzone
Corporation
   
 
For the Year
Ended March 31, 2006
 
For the Period from
March 22, 2005 (Inception)
to December 31, 2005
 
Pro Forma
Balances
     
(Unaudited)
 
(Unaudited)
           
Net sales
$
7,548
 
$
728,786
 
$
736,334
                 
Cost of sales
 
15,767
   
119,410
   
135,177
                 
Gross Profit
 
(8,219)
 
 
609,376
   
601,157
                 
Operating Expenses:
               
Salaries and related taxes
 
67,600
   
164,038
   
231,638
Bad debt
 
-
   
22,500
   
22,500
Other selling. general and administrative
 
42,658
   
180,557
   
223,215
                 
Total Operating Expenses
 
110,258
   
367,095
   
477,353
                 
Income (Loss) from Operations
 
(118,477)
 
 
242,281
   
123,804
                 
Other income (expense):
               
Interest expense
 
(9,392)
 
 
(900)
 
 
(10,292)
                 
Total Other Income (Expense)
 
(9,392)
 
 
(900)
 
 
(10,292)
                 
Income (Loss) Before Income Taxes
 
(127,869)
 
 
241,381
   
113,512
                 
Provision for income taxes
 
-
   
83,005
   
83,005
                 
Net Income (Loss)
$
(127,869)
 
$
158,376
 
$
30,507
                 
Net income (loss) per common share:
               
Basic and Diluted
$
(0.02)
 
$
0.02
 
$
0.00
                 
Weighted avergae shares outstanding:
               
Basic and Diluted
 
7,400,000
   
10,000,000
   
10,000,000
 
See accompanying notes to unaudited pro forma consolidated financial statements.
5

SHIELDZONE CORPORATION


The following unaudited pro forma combined financial statements are presented to illustrate the estimated effects of our acquisition of Shieldzone Corporation (“Shieldzone”) (the “Share Exchange Transaction”), the cancellation of shares of our common stock held by certain shareholders, the distribution of certain assets and liabilities, and the receipt of net proceeds from the sale of common stock on our historical financial position and our results of operations. We have derived our historical financial data for the six months ended September 30, 2006 from our unaudited financial statements contained on Form 10-QSB as filed with the Securities and Exchange Commission and our historical financial data for the year ended March 31, 2006 from our audited financial statements contained on Form 10-KSB as filed with the Securities and Exchange Commission. We have derived Shieldzone’s historical financial statements as of September 30, 2006 and for the nine months ended September 30, 2006 from Shieldzone’s unaudited financial statements and Shieldzone’s historical financial statements for the year ended December 31, 2005 from Shieldzone’s audited financial statements contained elsewhere in this Form 8-K.
 
On February 8, 2007, we executed an Agreement and Plan of Merger (the “Merger Agreement”) by and between Amerasia Khan Ltd. and its wholly-owned subsidiary, SZC Acquisition Inc., a Nevada corporation (“Subsidiary”) on the one hand and ShieldZone on the other hand. Pursuant to the Merger Agreement, Subsidiary will be merged with and into ShieldZone, with Shieldzone surviving the merger. In consideration, the shareholders of ShieldZone received 10,175,000 shares of our common stock. We now carry on the operations of ShieldZone.

The acquisition of Shieldzone will be accounted for as a recapitalization of Shieldzone Corporation, a Utah corporation because on a post-merger basis, the former shareholders of Shieldzone held a majority of our outstanding common stock on a voting and fully-diluted basis. As a result, Shieldzone is deemed to be the acquirer for accounting purposes. Accordingly, the financial statement data presented are those of Shieldzone for all periods prior to the acquisition of Shieldzone on February 8, 2007, and the financial statements of the consolidated companies from the acquisition date forward.

The unaudited pro forma combined statements of operations for the nine months ended September 30, 2006 assume that the Exchange Transaction, cancellation of shares, distribution of certain assets and liabilities were consummated at the beginning of the period presented. The unaudited pro forma combined balance sheet as of September 30, 2006 assumes the Share Exchange Transaction, cancellation of shares, distribution of assets and liabilities were consummated on that date. The information presented in the unaudited pro forma combined financial statements does not purport to represent what our financial position or results of operations would have been had the Share Exchange Transaction, cancellation of shares, distribution of assets and liabilities occurred as of the dates indicated, nor is it indicative of our future financial position or results of operations for any period. You should not rely on this information as being indicative of the historical results that would have been achieved had the companies always been combined or the future results that the combined company will experience after the Share Exchange Transaction and cancellation of shares.

The pro forma adjustments are based upon available information and certain assumptions that we believe are reasonable under the circumstances. These unaudited pro forma combined financial statements should be read in conjunction with the accompanying notes and assumptions and the historical financial statements and related notes of us and Shieldzone.
 
6

SHIELDZONE CORPORATION
Introduction to Unaudited Pro Forma Combined Financial Statements (continued)


Prior to February 8, 2007, we were in the business of marketing and selling, or renting, academic regalia, such as caps, gowns and stoles for use in college and high school ceremonies.  On February xx, 2007, we merged with Shieldzone and Shieldzone’s shareholders own the majority of the Company’s voting stock. To accomplish the Share Exchange, we issued an aggregate of 10,175,000 shares of our common stock in exchange for all of the issued and outstanding capital stock of Shieldzone.  The shares were issued pursuant to a claim of exemption under Section 4(2) of the Securities Act of 1933, as amended, for issuances not involving a public offering.  

Pursuant to the terms of the Share Exchange Agreement, of the 9,000,000 common shares issued and outstanding prior to the merger, certain shareholders agreed to voluntarily cancel 4,400,000 of the common shares that they own.  Additionally, at closing, we sold 714,286 shares of common stock for proceeds of $250,000 and converted debt amounting to $250,000 for 714,285 shares of common stock.

After the Share Exchange, the Company will have 16,203,572 shares of common stock outstanding; Shieldzone shareholders will own 62.8% of our common stock (69% prior to a sale of 714,285 common shares simultaneous to the closing of the merger). Therefore, the closing of the Share Exchange will cause a change in control.
 
7

SHIELDZONE CORPORATION
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
September 30. 2006

[1]
The Share Exchange Transaction is deemed to be a recapitalization. In accordance with the Accounting and Financial Reporting Interpretations and Guidance prepared by the staff of the U.S. Securities and Exchange Commission, Amerasia Khan Ltd (the legal acquirer) is considered the accounting acquiree and Shieldzone (the legal acquiree) is considered the accounting acquirer. The combined financial statements of the combined entity will in substance be those of Shieldzone, with the assets and liabilities, and revenues and expenses, of Amerasia Khan Ltd. being included effective from the date of consummation of the Share Exchange Transaction.
[2] To reflect the cancellation of shares of common stock in connection with the Share Exchange Transaction.
[3]  To recapitalize for the Share Exchange Transaction (or Recapitalization).
[4] To reflect the sales of 714,285 shares of common stock at $.35 per share and to reflect the borrowing of  $250,000 under a convertible note and then the conversion of the note into 714,286 shares of common  stock.]
[5] To reflect the distribution of certain assets and liabilities upon closing of the Share Exchange Transaction.
 
Unaudited pro forma adjustments reflect the following transaction:
1)
   
Additional paid in capital
10,175
 
Common stock, at par
 
10,175
To reflect the issuance of 10,175,000 shares of common stock in connection with the share exchange agreement.
   
     
2)
   
Common stock, at par
4,400
 
Additional Paid-in Capital
 
4,400
To reflect the cancellation of 4,400,000 shares of common stock in connection with the Share Exchange Transaction.
   
     
3)
   
Additional paid-in capital
216,550
 
Capital stock- Shieldzone
76,000
 
Retained earnings
 
216,550
Additional paid-in capital
 
76,000
To recapitalize for the Share Exchange Transaction (or recapitalization).
   
     
4)
   
Cash
500,000
 
Capital stock
 
1,429
Additional paid-in capital
 
498.571
To reflect the sales of 714,285 shares of common stock at $.35 per share and to reflect the borrowing of $250,000 under a convertible note and then the conversion of the note into 714,286 shares of common stock.
   
     
5)
   
Accounts payable and accrued expenses
6,773
 
Stockholder advances
117,400
 
Cash
 
35,828
Accounts receivable
 
3,656
Property and equipment
 
44,121
Advances due from officers
 
2,771
Additional paid-in capital
 
37,797
To reflect the distribution of certain assets and liabilities upon closing of the Share Exchange Transaction.