Amerasia Khan Enterprises Ltd 10QSB mainbody
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-QSB

[X]
Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
   
 
  For the quarterly period ended June 30, 2006
   
[ ]
Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934
   
 
  For the transition period ___________  to __________
   
 
Commission File Number: 333-130084

Amerasia Khan Enterprises Ltd.
(Exact name of small business issuer as specified in its charter)

Nevada
E.I.N. Number pending
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.)


353 West 7th Avenue Vancouver, BC V5Y 1M2
(Address of principal executive offices)

(604) 723-6877
(Issuer’s telephone number)
 
_______________________________________________________________
(Former name, former address and former fiscal year, if changed since last report)

Check whether the issuer (1) 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 issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days [X] Yes [ ] No

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

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 9,000,000 common shares as of May 31, 2006

Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
 
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Page
 
 
 

2

PART I - FINANCIAL INFORMATION

Item 1.      Financial Statements

Our unaudited financial statements included in this Form 10-QSB are as follows:
 
 
 
 
 
 
 
 
 
These unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-QSB. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended June 30, 2006 are not necessarily indicative of the results that can be expected for the full year.

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AMERASIA KHAN ENTERPRISES LTD.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
 
 
   
June 30, 2006
    
March 31, 2006
ASSETS
  
(unaudited)
      
           
Current assets
          
Cash
 $
55,710
 
 $
67,460
Accounts receivable
  
3,656
 
  
-
Expenses advances-related party
  
2,771
 
  
2,771
Prepaid expenses and deposits
  
-
 
  
 35,000
Total current assets
  
62,137
 
  
105,231
Rental assets, net
 
49,268
 
  
19,415
 
  
 
 
  
 
TOTAL ASSETS
 $
111,405
 
 $
124,646
 
  
 
 
  
 
LIABILITIES AND STOCKHOLDERS’ DEFICIT
  
 
 
  
 
Current liabilities
  
 
 
  
 
Accounts payable and accrued expenses
 $
18,186
 
 $
8,751
Stockholder advances
  
117,400
 
  
117,400
Total current liabilities
  
135,586
 
  
126,151
 
  
 
 
  
 
STOCKHOLDERS’ DEFICIT:
  
 
 
  
 
Common stock, $.001 par value, 50,000,000 shares
authorized, 9,000,000 shares issued and outstanding
  
 
9,000
 
  
 
9,000
Additional paid in capital
  
167,405
 
  
165,057
Deficit accumulated during the development stage
  
(200,586)
 
  
(175,562)
Total Stockholders’ Deficit
  
(24,181)
 
  
(1,505)
 
  
 
 
  
 
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT
 $
111,405
 
 $
124,646


See accompanying notes to financial statements.

F-1
 
AMERASIA KHAN ENTERPRISES LTD.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
Three Months Ended June 30, 2006 and 2005
and Period From April 2, 2004 (Inception) through June 30, 2006
(Unaudited)
 
   
Three months ended
June 30, 2006
    
Three months ended
June 30, 2005
    
Period from
April 2, 2004
(Inception)
through
June 30, 2006
 
 
 
 
 
 
 
 
 
Rental revenue
$
7,773
 
$
7,548
 
 $
15,321
 
 
 
 
 
 
 
 
 
Gown rental expense
 
( 4,118)
 
 
(8,416)
 
 
(12,534)
Depreciation
 
(5,147)
 
 
(743)
 
 
(12,498)
 
 
 
 
 
 
 
 
 
Gross margin
 
(1,492)
 
 
(1,611)
 
 
(9,711)
 
 
 
 
 
 
 
 
 
General and administrative expenses:
 
 
 
 
 
 
 
 
Professional fees
 
20,203
 
 
11,000
 
 
60,923
Compensation
 
-
 
 
67,600
 
 
92,600
Other general and administrative
 
981
 
 
5,286
 
 
23,547
Total General and Administrative
 
21,184
 
 
83,886
 
 
177,070
 
 
 
 
 
 
 
 
 
Operating loss
 
(22,676)
 
 
(85,497)
 
 
(186,781)
 
 
 
 
 
 
 
 
 
Interest expense
 
(2,348)
 
 
(2,348)
 
 
(13,805)
 
 
 
 
 
 
 
 
 
Net loss
$
(25,024)
 
$
(87,845)
 
 
(200,586)
 
 
 
 
 
 
 
 
 
Net loss per share:
 
 
 
 
 
 
 
 
Basic and diluted
$
(0.00)
 
$
(0.00)
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
 
 
 
Basic and diluted
 
9,000,000
 
 
2,600,000
 
 
 
 
 
See accompanying notes to financial statements.

F-2

AMERASIA KHAN ENTERPRISES LTD.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
Three Months Ended June 30, 2006 and 2005
and Period From April 2, 2004 (Inception) through June 30, 2006
(Unaudited)
 
 
  Three months ended
June 30, 2006
 
  
Three months ended
June 30, 2005
 
  
Inception through
June 30, 2006
CASH FLOWS FROM OPERATING ACTIVITIES
                
Net loss
$
(25,024)
 
$
(87,845)
 
 $
(200,586)
Adjustments to reconcile net loss to
cash used by operating activities:
 
 
 
  
 
 
  
 
Depreciation
 
5,147
 
  
743
 
  
12,498
Non-cash management compensation
 
-
 
  
57,600
 
  
57,600
Imputed interest on stockholder advances
 
2,348
 
  
2,348
 
  
13,805
Change in non-cash working capital items
Accounts payable
 
 
9,435
 
  
 
(2,637)
 
  
 
20,586
Expense advances-related party
 
-
 
  
 
 
  
(2,771)
Prepaid expenses and deposits
 
35,000
 
  
 
 
  
-
Accounts receivable
 
(3,656)
 
  
(8,084)
 
  
(3,656)
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES
 
23,250
 
  
(37,875)
 
  
(102,524)
 
CASH FLOWS FROM INVESTING ACTIVITY
 
 
 
  
 
 
  
 
Purchase of rental assets
 
(35,000)
 
  
(3,500)
 
  
(61,766)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
  
 
 
  
 
Proceeds from sale of common stock
 
-
 
  
100,000
 
  
102,600
Stockholder advances
 
-
 
  
-
 
  
117,400
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
 
-
 
100,000
 
220,000
 
 
 
 
  
 
 
  
 
NET INCREASE (DECREASE) IN CASH
 
(11,750)
 
  
58,625
 
  
55,710
Cash, beginning of period
 
67,460
 
  
60,062
 
  
-
Cash, end of period
$
55,710
 
  $
118,687
 
  $
55,710
 
 
 
 
  
 
 
  
 
SUPPLEMENTAL CASH FLOW
INFORMATION
 
 
 
  
 
 
  
 
Interest paid
$
-
 
 $
-
 
 $
-
Income taxes paid
$
-
 
 $
-
 
 $
-
 
 
 
 
  
 
 
  
 
NON CASH TRANSACTIONS:
 
 
 
  
 
 
  
 
Issuance of stock for debt
$
-
 
 $
2,400
 
 $
2,400
Issuance of stock for compensation
$
-
 
 $
57,600
 
 $
57,600

 
See accompanying notes to financial statements.
 
F-3

AMERASIA KHAN ENTERPRISES LTD.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
(unaudited)

NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited interim financial statements of Amerasia Khan Enterprises Ltd. have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s registration statement filed with the SEC on Form 10KSB. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year March 31, 2006 as reported in Form 10KSB, have been omitted.

NOTE 2 - GOING CONCERN

Amerasia Khan Enterprises Ltd. has a deficit accumulated during the development stage of $200,586 as of June 30, 2006. Amerasia’s financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, Amerasia has limited revenue and has not achieved profitable operations. Without realization of additional capital, it would be unlikely for Amerasia to continue as a going concern. Amerasia's management plans on raising cash from public or private debt or equity financing, on an as needed basis and in the longer term, revenues from the development of planned operations. Amerasia's ability to continue as a going concern is dependent on these additional cash financings, and, ultimately, upon achieving profitable operations through the development of operations.
 
NOTE 3 - RENTAL ASSETS

Rental assets consist of the following at June 30, 2006 and March 31, 2006.
 
 
June 30,
2006
    
March 31,
2006
Rental assets
 $
61,766
  
 $
26,766
Accumulated depreciation  
(12,498)
    
(7,351)
 $
49,268
  
 $
19,415
 
The rental assets are being depreciated on a straight-line basis over their estimated useful life of three years.
 
F-4
 
AMERASIA KHAN ENTERPRISES LTD.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
(unaudited)

NOTE 4 - RELATED PARTY TRANSACTIONS

Shareholders of Amerasia have advances due from Amerasia of $117,400 at June 30, 2006. The advances are non-interest bearing and are due with 15 months notice. Amerasia has imputed interest at 8% or $2,348 (2005-$2,348) for the period ended June 30, 2006.


Item 2.     Management’s Discussion and Analysis or Plan of Operation

Forward-Looking Statements

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.
 
Business Overview
 
We are in the business of renting and/or selling academic regalia currently in Canada and later plan to move into the United States. We do not intend to launch an aggressive advertising campaign for our products; instead, we intend to focus on building a reputation for our products through a single distribution channel.
 
In furtherance of this plan, on May 31, 2004, we secured a two year agreement whereby Artona Group, Inc. (“Artona Group”) will solely purchase and/or rent our products from us. Artona Group has been operating in the specialized graduation photography industry for over 20 years and owns one of the largest specialized studios in Western Canada. Artona Group is looking to expand its business into supplying graduation regalia in addition to its photography products. Our arrangement with Artona Group is wholesale-retail in nature. We wholesale our academic products to Artona Group as rented or purchased products, and Artona Group then retails the merchandise to the end-consumer.
 
Our products are made in China by a company known as Chuang Yuan Garment Accessories Co., Limited (“Chuang”). We believe that we have established a good relationship with our
 
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manufacturer and believe that, absent unusual circumstances affecting the supply of materials or the demand on manufacturing time, the supply of regalia will be available according to our needs. We do not currently maintain a long-term purchase contract with our manufacturer and operate principally on a purchase order basis.
 
 Our President and Director, Mr. Johnny Lee, works with Chuang on the design features of our academic regalia and inspects the fabrics and finished goods prior to their shipment to North America. While Mr. Johnny Lee does not have any technical or engineering experience in fabric design or quality control, his presence in China acting as a liaison between us and our manufacturer greatly ensures that at our products are made to our needs and specifications.
 
In early April 2006, we received our second shipment of graduation regalia from Chuang, a portion of which was rented to Artona Group for the 2006 graduation season. In order to improve the quality of our products, we had Chuang treat our graduation regalia with “Nanoproc,” a nanotechnology treatment that provides the following benefits to the manufactured materials:
 
·
 
Water, Oil and Liquid Repellency
 
·
Wrinkle Resistance
 
·
Anti-Bacteria
 
·
Anti-static
 
·
Odor Reduction
 
·
Maintain Air Permeability
 
 
 In the two shipments we have received from our manufacturer, we have not encountered any major delays or problems in dealing with Artona Group, nor did we receive any negative feedback from Artona Group as to the quality of our products. This does not imply, however, that we will not face any problems in our future endeavors. If Artona Group does not continue ordering our products or if we are unable to find alternative outlets in which to introduce our products to the consuming public, our business will fail.
 
 Future orders may proceed in like manner to that described above, or we may sell academic regalia as contemplated under the agreement. Our decision to sell the academic regalia as opposed to renting the merchandise is dependent upon Artona Group’s ability to find an end consumer and achieve a profit margin that will mutually benefit us and Artona Group.
 
Our Marketing Strategy For The Next 12 Months
 
 Our company will focus on developing brand recognition by marketing our products to photography studios and/or photographers that already have a strong and stable market penetration, and partnering with these businesses in order to strengthen our market hold.
 
In the first year of operations, we entered into an Agreement with Artona Group through which we hope to generate greater interest and product awareness. Following the pilot year of operations, we began identifying other comparable companies that possess working relationships with high schools in order to distribute our products for the upcoming graduation seasons, and to
 
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engage in distribution of our academic regalia throughout other Canadian provinces and into the US. We have been concentrating our marketing efforts in a joint effort with Artona Group and hope to establish agreements with several entities for future shipments in these areas. In furtherance of this design, we have been in discussions with the following photography companies, although we have not established any additional contracts to date:
 
·
Tom Wensel, Huntington Photography, Huntington, Texas
 
·
Stan Fejnas, Josephs Photography, New Jersey and Missouri
 
·
Hal Wagner, Wagner Photography, St. Louis, Missouri
 
·
Elizabeth Hockmeyer, Hockmeyer Studios, Boston, Massachusetts
 
·
Lance Kimura, House of Photography, Honolulu, Hawaii
 
·
Brad Kramer, Grads Photography, Phoenix, Arizona
 
·
Donnie Rubenack, Donette Studios, Bellingham, Washington
 
·
John Stickney, Boyd Anderson Studios, Santee, California
 
 
We plan to seek these and other customers who have a long-standing history of reputation and service within their business community, and who we think might purchase and/or rent academic regalia as a value-added service to their existing business. Once we are established in the marketplace for service and quality, we may then decide to approach academic institutions and students directly as purchasers of regalia. Our vision is to market quality, yet affordable academic regalia.
 
Promotional strategies include, but are not limited to:
 
·
Branding of product to directly identify and build loyalty among distributors and end users of the product;
 
·
Marketing collateral development for use by customers and other parties acting as distributors of regalia;
 
·
Affiliation with Canadian and US professional photography and digital associations to provide a medium for identifying potential distributors;
 
·
Participation in trade shows related to the regalia, photography and digital imaging industries to provide a venue for identifying potential distributors. Research will be conducted to identify trade shows where the target markets participate directly; and
 
·
Anticipated creation of a website that will promote regalia products, solicit e-commerce, supervise supply chain management and manage distributor relations.
 
 
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Financing, Liquidity and Capital Resources
 
There is no historical financial information about us upon which to base an evaluation of our performance as a corporation involved in the business of academic regalia. We are a development stage corporation and have not generated any significant revenue to date from our activities. In order to meet our long-term needs, we must raise cash from other sources or successfully generate enough revenue to stay in business. Notwithstanding, in the short-term, various shareholders have made loans to us, and we believe this infusion of capital will allow us to remain operational in the next twelve months. We had a working capital deficit of $73,449 as of June 30, 2006. However, a large portion of the liabilities that contribute to our working capital deficient comes from the shareholder loans, which are only payable upon 15 months notice. Thus, we believe current cash reserves are sufficient for the next twelve months. We also believe our cash reserves are sufficient to pay for the legal and accounting expenses of complying with our obligations as a reporting issuer under the Securities Exchange Act of 1934. Accordingly, we believe we will not be required to raise additional capital during the next twelve months.
 
We currently do not, and will not, generate significant revenue from activities, and to date have relied on the sale of equity and related party loans for cash required for our activities. We have no external sources of liquidity in the form of credit lines from banks. No investment banking agreements are in place and there is no guarantee that we will be able to raise capital in the future should that become necessary. We have not attained profitable operations and are dependent upon obtaining financing to complete our business plan. For these reasons, our auditors have stated in their report that they have substantial doubt about our ability to continue as a going concern.
 
Should our market share increase and it is economically feasible to continue operating, we will attempt to raise additional money through a subsequent private placement, public offering or through loans. We have discussed this matter with our officers and directors, however, our officers and directors are unwilling to make any commitments to loan us any additional money if and when the need arises. At the present time, we have not made any arrangements to raise additional cash. If we need additional cash and cannot raise it we will either be required to suspend activities until we do raise the cash, or cease activity entirely.
 
Employees
 
We do not intend to hire any employees at this time, nor do we intend to do so in the next twelve months. Aside from the Management Services Agreement established with Mr. Johnny Lee, which at this present time is suspended, our officers and directors of our company serve without compensation. 
 
Research and Development
 
We do not currently have a formal research and development effort but we plan to continue to develop new products.
 
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Results of Operations for the three months ended June 30, 2006 and 2005

We have not earned significant revenues since our inception in April 2, 2004.

We incurred operating expenses in the amount of $21,184 for the three months ended June 30, 2006, compared to operating expenses of $83,886 for same period ended June 30, 2005.

We incurred a net loss of $25,024 for the three months ended June 30, 2006, compared with a net loss of $87,845 for same period ended June 30, 2005. Our losses for the three months ended June 30, 2006 and in the same period ended June 30, 2005 are mostly attributable to operating expenses.
 
Off Balance Sheet Arrangements

As of June 30, 2006, there were no off balance sheet arrangements.

Going Concern
 
We have incurred a net loss of $200,586 for the period from inception on April 2, 2004 to June 30, 2006. We have limited revenue and have not achieved profitable operations. Without realization of additional capital, it would be unlikely for us to continue as a going concern. Our management plans on raising cash from public or private debt or equity financing, on an as needed basis and in the longer term, revenues from the development of planned operations. Our ability to continue as a going concern is dependent on these additional cash financings, and, ultimately, upon achieving profitable operations through the development of operations.

Critical Accounting Policies

In December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Management Discussion and Analysis. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. We believe that the following accounting policies fit this definition.

Our discussion and analysis of financial condition and results of operations, including the discussion on liquidity and capital resources, are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, management re-evaluates its estimates and judgments.

The going concern basis of presentation assumes we will continue in operation throughout the next fiscal year and into the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. Certain conditions, discussed below,
 
8
 
currently exist which raise substantial doubt upon the validity of this assumption. The financial statements do not include any adjustments that might result from the outcome of the uncertainty.

We recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales is price is fixed or determinable and collectibility is probable. These criteria are generally met at the time the gown rental service is complete and for product sales generally at the time product is shipped. Shipping and handling costs are included in cost of good sold.
 
We purchase and own the rental assets consisting of gowns, caps and other miscellaneous items. The rental assets are rented to Artona Group which in-turn will rent the items to various customers. Our agreement with Artona Group sets our revenue from Artona Group rentals as a percent of Artona Group’s profits from rentals. We are to receive 50% of net profits for rentals in British Columbia and 40% of net profits for rentals outside of British Columbia. The net profit will be calculated as total rental income less any direct cost such as cleaning, labor, repairs or delivery. Artona Group will invoice and collect from their rental customers as well as pay any direct cost. If a situation should arise where direct cost exceeds rental income, we have agreed to reimburse Artona Group 100% of the overage. Artona Group will notify us of our portion or profits or cost overage upon the completion of the rental process. We will keep track of how many assets are given to Artona Group for rental as a way to track expected revenues based on estimates. We will record revenue and related cost at the time they are notified by Artona Group of there amount of profits to be received. Not until that point will the revenue or cost be fixed or determinable or reasonably collectible.

Recently Issued Accounting Pronouncements 

We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.

Item 3.     Controls and Procedures

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of June 30, 2006. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer, Mr. Johnny Lee, and our Chief Financial Officer, Mr. David Ho. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2006, our disclosure controls and procedures are effective. There have been no changes in our internal controls over financial reporting during the quarter ended June 30, 2006.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
 
9

Limitations on the Effectiveness of Internal Controls

Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving our objectives and our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective at that reasonable assurance level. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

10

PART II - OTHER INFORMATION

Item 1.     Legal Proceedings

We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.

Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3.     Defaults upon Senior Securities

None

Item 4.     Submission of Matters to a Vote of Security Holders

On April 12, 2006, by written consent given pursuant to Nev. Rev. Stat. 78.320(2), a majority of the shareholders entitled to vote elected Johnny Lee and David Ho to serve as the Directors for the company.

On April 12, 2006, by unanimous written consent given pursuant to Nev. Rev. Stat. 78.315(2), the Board of Directors appointed Johnny Lee to serve as President and CEO and elected David Ho to serve as Secretary and Treasurer of the company.

Item 5.     Other Information

None
 
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Item 6.      Exhibits

Exhibit
Number
Description of Exhibit
 
12

SIGNATURES

In accordance with the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 
Amerasia Khan Enterprises Ltd.
   
Date:
August 14, 2006
 
 
 
 
By:       /s/ Johnny Lee
             Mr. Johnny Lee
Title:    Chief Executive Officer and Director