-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LcH2v6xdLRBxIIeJaWc4+2pj73w2enJg/h1OiAXOXUVMU40PbJtyok69INsZz6+D QteZw1RfWZSfVPhZ2F2JFw== 0001199835-04-000541.txt : 20041012 0001199835-04-000541.hdr.sgml : 20041011 20041012125158 ACCESSION NUMBER: 0001199835-04-000541 CONFORMED SUBMISSION TYPE: 10SB12G PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20041012 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALCHEMY ENTERPRISES, LTD. CENTRAL INDEX KEY: 0001301206 IRS NUMBER: 680515422 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10SB12G SEC ACT: 1934 Act SEC FILE NUMBER: 000-50983 FILM NUMBER: 041074184 BUSINESS ADDRESS: STREET 1: 5219 S PITTSBURG CITY: SPOKANE STATE: WA ZIP: 99223 BUSINESS PHONE: 509-448-2248 MAIL ADDRESS: STREET 1: 5219 S PITTSBURG CITY: SPOKANE STATE: WA ZIP: 99223 10SB12G 1 sb2.txt ALCHEMY ENTERPRISES, LTD. 10SB UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-SB GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS Under Section 12(b) or (g) of The Securities Exchange Act of 1934 Alchemy Enterprises, Ltd. - -------------------------------------------------------------------------------- (Name of Small Business Issuer in its charter) Nevada 68-0515422 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation ororganization) 5219 S. Pittsburg, Spokane, WA 99223 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Issuer's telephone number: (509) 448-2248 Securities to be registered under Section 12(b) of the Act: ----------------------------------------------------------- None Securities to be registered under Section 12(g) of the Act: ----------------------------------------------------------- Common Stock, $0.001 par value per share, 25,000,000 shares authorized, 3,630,000 issued and outstanding as of September 17, 2004. (Title of class) 1 TABLE OF CONTENTS PART I.......................................................................3 Item 1. Description of Business...........................................3 Item 2. Management's Discussion and Analysis or Plan of Operation.........7 Item 3. Description of Property...........................................8 Item 4. Security Ownership of Certain Beneficial Owners and Management....8 Item 5. Directors and Executive Officers, Promoters and Control Persons...9 Item 6. Executive Compensation............................................9 Item 7. Certain Relationships and Related Transactions....................10 Item 8. Description of Securities.........................................10 PART II......................................................................11 Item 1. Market Price of and Dividends on the Registrant's Common Equity and Related Stockholder Matters.........................11 Item 2. Legal Proceedings.................................................11 Item 3. Changes in and Disagreements with Accountants.....................12 Item 4. Recent Sales of Unregistered Securities...........................12 Item 5. Indemnification of Directors and Officers.........................12 PART F/S.....................................................................14 PART III.....................................................................33 Item 1. Exhibits..........................................................33 SIGNATURES...................................................................33 2 PART I Item 1. Description of Business. A. Business Development and Summary Headquartered in Spokane, Washington, Alchemy Enterprises, Ltd. ("Alchemy" or the "Company") was organized by the filing of articles of incorporation with the Secretary of State of the State of Nevada on April 21, 1999. The Company has no operations and is considered a development stage company. The Company was initially authorized to issue 25,000 shares of its no par value common stock. On October 29, 2002, the Company amended its articles of incorporation to increase its authorized capital to 25,000,000 shares with a par value of $0.001. Alchemy has never been party to any bankruptcy, receivership or similar proceeding, nor has the Company undergone any material reclassification, merger, consolidation, or purchase or sale of a significant amount of assets not in the ordinary course of business. B. Business of Issuer (1) Principal Products and Services and Principal Markets Alchemy intends to offer a premier commercial product line, which will consist of a wide variety of chemical products for all types of applications. The line will include detergents, degreasers, cleansers, bleaches, and solvents. In addition to its products, Alchemy will offer repair services for a variety of industrial laundry and restaurant equipment. Alchemy strives to become a full-service repair and chemical supply company, complete with a 24-hour emergency service. In particular, Alchemy plans to focus on the following product/service segments: o Institutional products, programs and services for the foodservice and hospitality industries, including ware washing, on-premise laundry, housekeeping, water filtration and conditioning, specialty kitchen and laundry products, kitchen exhaust cleaning, rooftop grease containment, and pool and spa management. o Cleaning and sanitizing products, services and training programs for the quick-service restaurant, convenience store, and food retail markets. o Cleaning and sanitizing products, equipment, systems, and services for the agribusiness, beverage, brewery, pharmaceutical, dairy, and food processing industries. o Professional line of products for janitorial cleaning and infection prevention products, programs, and systems for the commercial, industrial, and healthcare markets. o Part & repair services, parts replacement, and customized maintenance for commercial foodservice & laundry equipment. (2) Distribution Methods of the Products or Services Initially, Alchemy will target local restaurants, healthcare facilities, hotel chains, correctional facilities, and janitorial supply houses in the state of Washington. In particular, Alchemy plans to aim its marketing efforts at property owners, facilities maintenance professionals, wholesale distributors, and laundry supply and repair companies. Alchemy will select top volume restaurants, healthcare facilities, hotel chains, correctional facilities, janitorial supply houses and wholesale partners in a given metropolitan area in an attempt to build exclusivity as a supplier of janitorial products. Alchemy believes that it can capture market share by holding promotions at local establishments and offering an opportunity to sample chemical products first, 3 Description of Business - continued without purchasing. Such campaigns may occur quarterly in an effort to establish brand-name recognition. Alchemy will position itself as a chemical cleaning products expert and will focus on building long-lasting relationships with its trading partners. Alchemy will rely on direct-to-facilities distribution, wholesale distribution channels (such as janitorial supply stores), and strategic alliances to grow sales. Alchemy may also attempt to secure a nationwide primary distribution agreement with a strategic partner. The direct sales (direct to commercial consumer) appears to be an effective channel because of the education and service components involved in such sales. Alchemy will attempt to build its own direct mailing lists and, possibly, acquire lists from third parties. In the direct sales channel, the Internet presents a growth opportunity as a relatively new sales tool. The Internet lends itself well to the distribution of chemical products due to its ability to provide educational, search, and purchasing capabilities. Alchemy plans to launch an on-line center for continuous interaction with trading partners. The site will provide educational information on Alchemy chemical products and industry topics in general. Trading partners will also be able to order point-of-sale materials, access promotional calendars and educational materials, and participate in forums on chemical cleaning products and facilities management topics. Customers will eventually be able to place their orders online. Alchemy places significant expectations on its ability to build substantial brand awareness. Alchemy believes that its name has a substantial branding potential. Public relations, targeted advertising, and direct property-owner marketing will play a strong role in building the Alchemy brand. Alchemy may use targeted trade and wholesaler advertising in local newspapers and trade magazines for the cleaning products market. Each ad may include a coupon or promotion to buy Alchemy products. Such coupons will include a tracked-response mechanism to measure the effectiveness of advertising. Alchemy plans to support each product line with an in-store product display, point-of-sale signage, fact sheets and consumer brochures that help consumers locate and identify with Alchemy products. Alchemy will also support a calendar of promotions throughout the year. The promotional calendars may be published monthly in magazines and newspapers and made available at local janitorial supply houses and trade shows. For quick news flashes or information updates, Alchemy may correspond with trading partners via fax blasts and email updates. (3) Status of any announced new product or service Not applicable. (4) Industry background and competition The U.S. market for janitorial and housekeeping cleaning products is diverse and rapidly changing. The leading chemical cleaning product players are emphasizing core brands, select product launches, and expansion in offshore markets to maintain growth. However, the U.S. is still the largest market for cleaning chemicals. Alchemy believes that generic/mass products continue to lose sector shares to premium cleaning lines. Manufacturers are prone to pursue "premium-mass" lines that narrow the gap between mass and premium products by offering premium ingredients at reduced prices. Also mass-marketers, such as Procter & Gamble, are implementing e-business strategies using the Internet as a sales channel. 4 Description of Business - continued In such dynamic and highly competitive environment, product quality and selection are important but insufficient to gain competitive advantage. Service and repair are additional important competitive factors. In Alchemy's view, customer service in the industry has mainly focused on the retail side of the business or, more specifically, the end user. Alchemy plans to shift the focus to the reseller of products and services for industrial uses to maintenance professionals. Alchemy`s largest competitor is Ecolab, Inc. - a leading global developer and marketer of premium cleaning, sanitizing, pest elimination, and maintenance and repair products and services for the hospitality, institutional and industrial markets. Ecolab's customers include hotels and restaurants; foodservice, healthcare and educational facilities; quick service (fast-food) units; commercial laundries; light industry; dairy plants and farms; and food and beverage processors around the world. Headquartered in St. Paul, MN, Ecolab reaches customers in North America, Europe, Asia Pacific, Latin America, the Middle East and Africa. Other key competitors include major multinational producers/suppliers in the chemical industry such as Proctor & Gamble and Dow Chemical. On the local scale, there are many small janitorial supply distributors selling private label products. (5) Sources and availability of raw materials and the names of principal suppliers Alchemy will not procure any raw materials or supplies, but will develop a private label line of products through chemical manufacturing companies. Alchemy has sent request to four companies: ALCONOX (White Plains, NY), CASCO Products Company (Brookhaven, MS), AlfaKleen Chemical Laboratories (Costa Mesa, CA), and ULINE (Waukegan, IL). Two companies have responded to the request, ALCONOX and ULINE. Alchemy has placed an order for twelve products with ALCONOX and is preparing an order to be placed with ULINE. Alchemy will also follow up with the other two manufactures who have not responded to the inquiries. (6) Dependence on one or a few major customers Alchemy does not have an established client base. At this time, Alchemy does not anticipate that its business will depend disproportionately on any particular client or a group of clients. (7) Patents, trademarks, licenses, franchises, concessions, royalty agreements or labor contracts, including duration Alchemy has no patents, trademarks, licenses, franchises, concessions, royalty agreements or labor contracts. (8) Need for Government Approval None. (9) Effect of existing or probable government regulations Alchemy's business will be subject to various legislative enactments and regulations relating to the protection of the environment. While the Company plans to take all commercially practicable measures to meet regulatory requirements and avoid or limit environmental effects, some risks are inherent in the Company's business. The Company's management believes these are risks, which the Company has in common with other companies engaged in similar businesses. Among the risks are costs associated with managing hazardous 5 Description of Business - continued substances, waste disposal, fines and penalties if the Company were found in violation of law, as well as modifications, disruptions or discontinuation of certain operations or types of operations. In particular, certain phosphate legislation may have an impact on Alchemy's planned operations. Various laws and regulations have been enacted by state, local and foreign jurisdictions pertaining to the sale of products, which contain phosphorous. The primary thrust of such laws and regulations is to regulate the phosphorous content of home laundry detergents, a market not served by the Company. However, certain of the Company's products may be affected by such laws and regulations, including some commercial laundry and warewashing detergents, cleaners and sanitizers. Three types of legislative restrictions are common: o labeling of phosphorous content, o percentage limitation on the amount of phosphorous permitted, and o a ban on the use of phosphorous in certain products or in products sold for a particular purpose. (10) Cost of Research and Development During the last two fiscal years Alchemy did not spent any amount on research and development activities. (11) Costs and effects of compliance with environmental laws Alchemy does not anticipate bearing any direct costs of compliance with environmental laws. (12) Employees Alchemy presently has no employees. C. Reports to Security Holders (1) Alchemy will furnish its shareholders with annual financial reports certified by Alchemy's independent accountants. (2) Alchemy intends to become a reporting issuer with the Securities and Exchange Commission. Alchemy will file annual reports on Form 10-KSB, quarterly reports on Form 10-QSB, current reports on Form 8-K and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended as required to maintain the fully reporting status. (3) The public may read and copy any materials Alchemy will file with the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site (http://www.sec.gov). 6 Item 2. Management's Discussion and Analysis or Plan of Operation. Plan of Operation - ----------------- As of the date of this registration statement Alchemy is a development stage company with no revenues. Alchemy plans to provide a specialized professional line of industrial janitorial supplies and cleaning products for restaurants, healthcare facilities, national hotel chains, correctional facilities, and janitorial supply houses. The focus will be on turnkey supply packages complete with a full repair service. Alchemy believes that prospective customers have been looking for products that can enhance their facilities by providing superior levels of cleanliness. Alchemy strives to build a successful operation based on broad product offerings, demanding cleaning requirements, thorough chemical expertise, wide distribution network, and extensive development collaborations. The objectives of Alchemy are: o To build brand recognition of Alchemy through marketing efforts directed at restaurants, healthcare facilities, hotel chains, correctional facilities, and janitorial supply houses. o To provide owners and facilities management personnel with quality products and repair program to support their industrial equipment. o To employ multiple sources of supply of formulas and products produced in multiple manufacturing facilities, both domestically and internationally. With the initial market focus on Seattle and Spokane metropolitan areas, Alchemy plans to drive institutional sales based on location, customer demographic, size, and revenue generation. In the first year, Alchemy plans to reach 25 institutional customers generating recurring revenue. Once Alchemy has an established base of at least 30 customers, the Company will consider geographic expansion beyond the state of Washington. By the fifth year of operations, Alchemy aims at establishing presence in up to twenty major U.S. metropolitan areas with a total customer base of approximately 600 establishments. As of June 30, 2004, Alchemy had $34,455 in working capital, which consisted entirely of cash. This amount, the management believes, will be sufficient to satisfy Alchemy's cash requirements without a need to raise additional funds in the next twelve months. As of the date of the registration statement, Alchemy has no plans to perform any product research and development in the near term. There are no expected purchases of plant or significant equipment. Also, there are no plans to hire additional personnel in the near term. Mr. John Yamada is party to a non-competition agreement with a recent employer. The non-competition agreement may impede certain short-term business prospects of Alchemy. Off-Balance Sheet Arrangements - ------------------------------ None. 7 Item 3. Description of Property. Alchemy operates in a combination office warehouse space at 5219 S. Pittsburg Street, Spokane, Washington. Item 4. Security Ownership of Certain Beneficial Owners and Management. Security ownership of certain beneficial owners The following table sets forth certain information as of the date of this registration statement with respect to the beneficial ownership of the Company's common stock by any person (including any "group") who is known to the small business issuer to be the beneficial owner of more than five percent of any class of the small business issuer's voting securities:
======================================================================================================================= (1) (2) (3) (4) ======================================================================================================================= Title of Class Name and Amount and Percent of Class Address of Beneficial Owner Nature of Beneficial Owner ======================================================================================================================= Common Lynn-Cole Capital Corporation 400,000 11% (Victoria P. Quiel, President) 15811 E. Mustang Dr. Fountain Hills, AZ 85268 ======================================================================================================================= Common Harold W. Sciotto 440,000 12% 3812 N. Gallatin St. Mesa, AZ 85215 =======================================================================================================================
Security ownership of management - -------------------------------- The following table sets forth certain information as of the date of this registration statement with respect to the beneficial ownership of the Company's common stock by and by the sole director and executive officer:
======================================================================================================================= (1) (2) (3) (4) ======================================================================================================================= Title of Class Name and Amount and Percent of Class Address of Beneficial Owner Nature of Beneficial Owner ======================================================================================================================= Common John Yamada, President and Director 2,000,000 55% 5219 S. Pittsburg, Spokane, WA 99223 =======================================================================================================================
8 Security Ownership of Certain Beneficial Owners and Management - continued Changes in control - ------------------ As of the date of this registration statement, no arrangements exist, which may result in a change in control of the Company. Item 5. Directors and Executive Officers, Promoters and Control Persons. The following sets forth certain information with respect to executive officers, directors, key employees and advisors of Alchemy Enterprises, Ltd. as of the date of this Registration statement: Name Age Position - ------------------- ----------- -------------------------------------- John Yamada 40 President & Chief Executive Officer John S. Yamada, President & CEO, has over ten years of experience in the industry. From 1990 to 2002, Mr. Yamada worked for Ecolab, Inc. - a leading global developer and marketer of premium cleaning, sanitizing, pest elimination, and maintenance and repair products and services for the hospitality, institutional and industrial markets. While at Ecolab, Mr. Yamada held positions of District Sales Manager (1997-2002), Associate District Manager (1996-1997), and Territory Manager (1990-1996). Mr. Yamada's responsibilities included the supervision of nine territory managers and hiring, training and developing of a team for new business selling, account penetration and new product participation. Prior to his involvement with Ecolab, Mr. Yamada was an Executive Chef at Barnett's Grand Cafe in San Diego, California (1988-1990), an Executive Chef at Ramada Inn in Lewiston, Idaho (1987-1988), and a Kitchen Manager at Clinkerdaggers in Spokane, Washington (1979-1987). Item 6. Executive Compensation. Executive Compensation - ----------------------
========================================================================================================= SUMMARY COMPENSATION TABLE ========================================================================================================= Long Term Compensation Annual Compensation Awards ========================================================================================================= (a) (b) (c) (d) (e) (f) (g) ========================================================================================================= Securities Name and Principal Salary Other Annual Restricted Stock Underlying Position Year ($) Bonus ($) Compensation ($) Award(s) ($) Options / SARs (#) ========================================================================================================= John Yamada, President 2003 0 0 0 0 0 and Director ================================================================================ 2002 0 0 0 0 0 ================================================================================ 2001 0 0 0 0 0 =========================================================================================================
9 Executive Compensation - continued Employment Agreements - --------------------- Alchemy does not have an employment agreement with its President. Item 7. Certain Relationships and Related Transactions. In May 1999, Alchemy issued 2,000 shares of its $0.001 par value common stock as founders' shares to John Yamada, an officer and director of Alchemy, for services rendered, valued at $1,000.00. Adjusted for the 1,000-for-1 forward stock split of October 29, 2002, the amount of common stock issued to John Yamada in May 1999 was equivalent to 2,000,000 shares. On August 13, 2002, Alchemy issued 400 shares of its $0.001 par value common stock to Lynn-Cole Capital Corporation in exchange for cash in the amount of $5,000. Due to the forward split of 1,000-for-1, the number of shares has been retroactively restated to 400,000. On July 15, 2003, Alchemy issued 400,000 shares of its $0.001 par value common stock to Harold W. Sciotto in exchange for cash in the amount of $5,000. Item 8. Description of Securities. Alchemy, a Nevada corporation, is authorized to issue 25,000,000 shares of Common Stock, $0.001 par value. The holders of Common Stock (i) have equal rights to dividends from funds legally available therefore, ratably when as and if declared by the Board of Directors of Alchemy; (ii) are entitled to share ratably in all assets of Alchemy available for distribution to holders of Common Stock upon liquidation, dissolution, or winding up of the affairs of Alchemy; (iii) do not have preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions applicable thereto; and (iv) are entitled to one non-cumulative vote per share of Common Stock, on all matters which stockholders may vote on at all meetings of Shareholders. 10 PART II Item 1. Market Price of and Dividends on the Registrant's Common Equity and Related Stockholder Matters. Market Information - ------------------ As of the date of this registration statement, there is no public market in Alchemy's Common Stock. As of the date of this registration statement, o there are no outstanding options or warrants to purchase, or other instruments convertible into, common equity of Alchemy; o there is no stock that Alchemy agreed to register under the Securities Act for sale by security holders; o there are approximately 2,800,000 shares of Common Stock that could be sold pursuant to Rule 144 under the Securities Act; and o there is no stock that has been proposed to be publicly offered resulting in dilution to current shareholders. Holders - ------- As of the date of this registration statement, Alchemy has approximately 3,630,000 shares of $0.001 par value common stock issued and outstanding held by approximately 32 shareholders of record. Alchemy's Transfer Agent is Holladay Stock Transfer, Inc., 2939 North 67th Place, Scottsdale, AZ 85251, phone (480) 481-3940. Dividends - --------- Alchemy has never declared or paid any cash dividends on its common stock. For the foreseeable future, Alchemy intends to retain any earnings to finance the development and expansion of its business, and it does not anticipate paying any cash dividends on its common stock. Any future determination to pay dividends will be at the discretion of the Board of Directors and will be dependent upon then existing conditions, including Alchemy's financial condition and results of operations, capital requirements, contractual restrictions, business prospects, and other factors that the board of directors considers relevant. Securities authorized for issuance under equity compensation plans - ------------------------------------------------------------------ As of the date of this registration statement, there are no securities authorized for issuance by Alchemy under equity compensation plans. Item 2. Legal Proceedings. No director, officer, significant employee, or consultant of Alchemy has been convicted in a criminal proceeding, exclusive of traffic violations. No director, officer, significant employee, or consultant of Alchemy has been permanently or temporarily enjoined, barred, suspended, or otherwise limited from involvement in any type of business, securities or banking activities. 11 Market Price of and Dividends on the Registrant's Common Equity and Related Stockholder Matters - continued No director, officer, significant employee, or consultant of Alchemy has been convicted of violating a federal or state securities or commodities law. Alchemy is not a party to any pending legal proceedings. Item 3. Changes in and Disagreements with Accountants. There have been no changes in or disagreements with Alchemy's accountants. Item 4. Recent Sales of Unregistered Securities. The Articles of Incorporation of Alchemy originally authorized the issuance of twenty-five thousand (25,000) shares of common stock with par value of $0.001 per share ("Common Stock") and no shares of preferred stock. On October 29, 2002, the Board of Directors of Alchemy adopted a corporate action increasing the authorized number of shares of common stock to twenty-five million (25,000,000). Also on October 29, 2002, Alchemy effected a forward split of its common stock at the ratio of 1,000-for-1. In May 1999, Alchemy issued 2,000 shares of its $0.001 par value common stock as founders' shares to John Yamada, an officer and director of Alchemy, at $0.50 per share for services valued at $1,000.00. Adjusted for the 1,000-for-1 forward stock split of October 29, 2002, the amount of common stock issued to John Yamada in May 1999 was equivalent to 2,000,000 shares. Mr. Yamada is a sophisticated investor who, at the time of the investment, as the founder of Alchemy was in possession of all available material information about Alchemy. In August 2002 Alchemy issued 400 shares of its Common Stock to Lynn-Cole Capital Corporation, a sophisticated investor, for cash in the amount of $5,000. Adjusted for the 1,000-for-1 forward stock split of October 29, 2002, the amount of common stock issued to Lynn-Cole Capital Corporation in August 2002 was equivalent to 400,000 shares. On July 15, 2003, Alchemy issued 400,000 shares of its $0.001 par value common stock to Harold W. Sciotto in exchange for cash in the amount of $5,000. None of the above issuances of common stock by Alchemy involved any public solicitation. On the basis of the above facts Alchemy claims that the issuances of a total of 2,800,000 (split-adjusted) shares of its Common Stock in May 1999, August 2002, and July 2003 were qualified for the exemption from registration contained in Section 4(2) of the Securities Act of 1933. On May 17, 2004, Alchemy closed a Regulation D, Rule 504 offering, registered in Nevada, and issued a total of 830,000 shares of its $0.001 par value common stock in exchange for cash of $41,500. Item 5. Indemnification of Directors and Officers. Articles of Incorporation and Bylaws - ------------------------------------ Alchemy's Articles of Incorporation and its Bylaws provide for the indemnification of a present or former director or officer. Alchemy indemnifies any of its directors, officers, employees or agents who are successful on the merits or otherwise in defense on any action or suit. Such indemnification shall 12 Indemnification of Directors and Officers - continued include, expenses, including attorney's fees actually or reasonably incurred by him. Nevada law also provides for discretionary indemnification for each person who serves as or at Alchemy's request as one of its officers or directors. Alchemy may indemnify such individuals against all costs, expenses and liabilities incurred in a threatened, pending or completed action, suit or proceeding brought because such individual is one of Alchemy's directors or officers. Such individual must have conducted himself in good faith and reasonably believed that his conduct was in, or not opposed to, Alchemy's best interests. In a criminal action, he must not have had a reasonable cause to believe his conduct was unlawful. Nevada Law - ---------- Pursuant to the provisions of Nevada Revised Statutes 78.751, the Corporation shall indemnify its directors, officers and employees as follows: Every director, officer, or employee of the Corporation shall be indemnified by the Corporation against all expenses and liabilities, including counsel fees, reasonably incurred by or imposed upon him/her in connection with any proceeding to which he/she may be made a party, or in which he/she may become involved, by reason of being or having been a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of the Corporation, partnership, joint venture, trust or enterprise, or any settlement thereof, whether or not he/she is a director, officer, employee or agent at the time such expenses are incurred, except in such cases wherein the director, officer, employee or agent is adjudged guilty of willful misfeasance or malfeasance in the performance of his/her duties; provided that in the event of a settlement the indemnification herein shall apply only when the Board of Directors approves such settlement and reimbursement as being for the best interests of the Corporation. The Corporation shall provide to any person who is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of the corporation, partnership, joint venture, trust or enterprise, the indemnity against expenses of a suit, litigation or other proceedings which is specifically permissible under applicable law. 13 PART F/S a) Audited Financial Statements. Alchemy Enterprises, Ltd. (A Development Stage Company) Balance Sheets as of December 31, 2003 and 2002 and Statement of Operations, Stockholders' Equity, and Cash Flows for the years ended December 31 , 2003 and 2002 and for the period April 21, 1999 (Date of Inception) through December 31, 2003 14 TABLE OF CONTENTS PAGE ------------------- Independent Auditors' Report ....................................... 16 Balance Sheets ..................................................... 17 Statements of Operations ........................................... 18 Statement of Stockholders' Equity .................................. 19 Statements of Cash Flows ........................................... 20 Footnotes ..................................................... 21 - 25 b) Interim Financial Statements .................................... 26 15 Beckstead and Watts, LLP Certified Public Accountants 3340 Wynn Road, Suite B Las Vegas, NV 89102 702.257.1984 702.362.0540 (fax) INDEPENDENT AUDITORS' REPORT Board of Directors Alchemy Enterprises, Ltd. We have audited the Balance Sheet of Alchemy Enterprises, Ltd. (the "Company") (A Development Stage Company), as of December 31, 2003 and 2002, and the related Statement of Operations, Stockholders' Equity, and Cash Flows for the years then ended and for the period April 21, 1999 (Date of Inception) to December 31, 2003. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement presentation. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Alchemy Enterprises, Ltd. (A Development Stage Company) as of December 31, 2003 and 2002, and the results of its operations and cash flows for the years then ended, and for the period April 21, 1999 (Date of Inception) to December 31, 2003, in conformity with generally accepted accounting principles in the United States of America. The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has had limited operations and have not commenced planned principal operations. This raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ Beckstead and Watts, LLP March 16, 2004 16 Alchemy Enterprises, Ltd. (a Development Stage Company) Balance Sheets December 31, ----------------------------- 2003 2002 -------------- -------------- Assets Current assets: Cash $ 1,164 $ 534 -------------- -------------- Total current assets 1,164 534 -------------- -------------- $ 1,164 $ 534 ============== ============== Liabilities and Stockholders' Equity Current liabilities: $ - $ - -------------- -------------- Stockholders' equity: Common stock, $0.001 par value, 25,000,000 shares authorized, 2,800,000 and 2,400,000 shares issued and outstanding as of 12/31/03 and 12/31/02, respectively 2,800 2,400 Additional paid-in capital 8,200 3,600 (Deficit) accumulated during development stage (9,836) (5,466) -------------- -------------- 1,164 534 -------------- -------------- $ 1,164 $ 534 ============== ============== The accompanying notes are an integral part of these financial statements. 17 Alchemy Enterprises, Ltd. (a Development Stage Company) Statements of Operations
For the years ended April 21, 1999 December 31, (Inception) to ----------------------------- December 31, 2003 2002 2003 -------------- -------------- -------------- Revenue $ - $ - $ - -------------- -------------- -------------- Expenses: General and administrative expenses 4,370 4,466 8,836 General and administrative expenses - related party - - 1,000 -------------- -------------- -------------- Total expenses 4,370 4,466 9,836 -------------- -------------- -------------- Net (loss) $ (4,370) $ (4,466) $ (9,836) ============== ============== ============== Weighted average number of common shares outstanding - basic and fully diluted 2,586,301 2,154,521 ============== ============== Net (loss) per share - basic and fully diluted $ (0.00) $ (0.00) ============== ==============
The accompanying notes are an integral part of these financial statements. 18 Alchemy Enterprises, Ltd. (a Development Stage Company) Statement of Stockholders' Equity
(Deficit) Accumulated Common Stock Additional During Total ----------------------- Paid-in Development Stockholders' Shares Amount Capital Stage Equity ----------- ----------- ----------- ------------ ------------- May 1999 Founders shares issued for services 2,000,000 $ 1,000 $ - $ - $ 1,000 Net (loss) April 21, 1999 (Inception) to December 31, 1999 (1,000) (1,000) ----------- ----------- ----------- ------------ ------------- Balance, December 31, 1999 2,000,000 1,000 - (1,000) - Net (loss) For the year ended December 31, 2000 ----------- ----------- ----------- ------------ ------------- Balance, December 31, 2000 2,000,000 1,000 - (1,000) - Net (loss) For the year ended December 31, 2001 ----------- ----------- ----------- ------------ ------------- Balance, December 31, 2001 2,000,000 1,000 - (1,000) - August 2002 Shares issued for cash 400,000 5,000 5,000 October 2002 Recapitalization adjustment (3,600) 3,600 - Net (loss) For the year ended December 31, 2002 (4,466) (4,466) ----------- ----------- ----------- ------------ ------------- Balance, December 31, 2002 2,400,000 2,400 3,600 (5,466) 534 July 2003 Shares issued for cash 400,000 400 4,600 5,000 Net (loss) For the year ended December 31, 2003 (4,370) (4,370) ----------- ----------- ----------- ------------ ------------- Balance, December 31, 2003 2,800,000 $ 2,800 $ 8,200 $ (9,836) $ 1,164 =========== =========== =========== ============ =============
The accompanying notes are an integral part of these financial statements. 19 Alchemy Enterprises, Ltd. (a Development Stage Company) Statements of Cash Flows
For the years ended April 21, 1999 December 31, (inception) to ----------------------- December 31, 2003 2002 2003 ----------- ----------- --------------- Cash flows from operating activities Net (loss) $ (4,370) $ (4,466) $ (9,836) Shares issued in exchange for services - - 1,000 ----------- ----------- --------------- Net cash (used) by operating activities (4,370) (4,466) (8,836) ----------- ----------- --------------- Cash flows from financing activities Issuances of common stock 5,000 5,000 10,000 ----------- ----------- --------------- Net cash provided by financing activities 5,000 5,000 10,000 ----------- ----------- --------------- Net increase in cash 630 534 1,164 Cash - beginning 534 - - ----------- ----------- --------------- Cash - ending $ 1,164 $ 534 $ 1,164 =========== =========== =============== Supplemental disclosures: Interest paid $ - $ - $ - =========== =========== =============== Income taxes paid $ - $ - $ - =========== =========== =============== Non-cash transactions: Shares issued for services $ - $ - $ 1,000 =========== =========== =============== Number of shares issued for services - - 2,000,000 =========== =========== ===============
The accompanying notes are an integral part of these financial statements. 20 Alchemy Enterprises, Ltd. (a Development Stage Company) Notes Note 1 - History and organization of the company The Company was organized April 21, 1999 (Date of Inception) under the laws of the State of Nevada, as Alchemy Enterprises, Ltd. The Company has no operations and in accordance with SFAS #7, the Company is considered a development stage company. The Company was initially authorized to issue 25,000 shares of its no par value common stock. On October 29, 2002, the Company amended its articles of incorporation to increase its authorized capital to 25,000,000 shares with a par value of $0.001. Note 2 - Accounting policies and procedures Cash and cash equivalents - ------------------------- The Company maintains a cash balance in a non-interest-bearing account that currently does not exceed federally insured limits. For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. There were no cash equivalents as of December 31, 2003 and 2002. Impairment of long-lived assets - ------------------------------- Long-lived assets held and used by the Company are reviewed for possible impairment whenever events or circumstances indicate the carrying amount of an asset may not be recoverable or is impaired. No such impairments have been identified by management at December 31, 2003 and 2002. Revenue recognition - ------------------- The Company reports revenue as invoiced on an accrued basis. Costs of sales are recorded as items are sold and are comprised of product purchases and shipping costs. The Company will reserve 10% of revenue and will assess its return policy on an ongoing basis and reserve for charge backs and returns based on historical percentages. As of December 31, 2003 and 2002 no reserve has been made. Advertising costs - ----------------- The Company expenses all costs of advertising as incurred. There were no advertising costs included in selling, general and administrative expenses in 2003 or 2002. Loss per share - -------------- Net loss per share is provided in accordance with Statement of Financial Accounting Standards No. 128 (SFAS #128) "Earnings Per Share". Basic loss per share is computed by dividing losses available to common stockholders by the weighted average number of common shares outstanding during the period. The Company had no dilutive common stock equivalents, such as stock options or warrants as of December 31, 2003 and 2002. Reporting on the costs of start-up activities - --------------------------------------------- Statement of Position 98-5 (SOP 98-5), "Reporting on the Costs of Start-Up Activities," which provides guidance on the financial reporting of start-up costs and organizational costs, requires most costs of start-up activities and 21 Accounting policies and procedures - continued organizational costs to be expensed as incurred. SOP 98-5 is effective for fiscal years beginning after December 15, 1998. With the adoption of SOP 98-5, there has been little or no effect on the Company's financial statements. Estimates - --------- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Fair value of financial instruments - ----------------------------------- Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2003 and 2002. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash. Fair values were assumed to approximate carrying values for cash because they are short term in nature and their carrying amounts approximate fair values. Income Taxes - ------------ Deferred income tax assets and liabilities are computed annually for differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable on the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities. Segment reporting - ----------------- The Company follows Statement of Financial Accounting Standards No. 130, "Disclosures About Segments of an Enterprise and Related Information". The Company operates as a single segment and will evaluate additional segment disclosure requirements as it expands its operations. Dividends - --------- The Company has not yet adopted any policy regarding payment of dividends. No dividends have been paid or declared since inception. Recent pronouncements - --------------------- In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities", which addresses financial accounting and reporting for costs associated with exit or disposal activities and supersedes EITF No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. Under EITF No. 94-3, a liability for an exit cost was recognized at the date of an entity's commitment to an exit plan. SFAS No. 146 also establishes that the liability should initially be measured and recorded at fair value. The 22 Accounting policies and procedures - continued provisions of SFAS No. 146 will be adopted for exit or disposal activities that are initiated after December 31, 2002. In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure-an amendment of SFAS No. 123." This Statement amends SFAS No. 123, "Accounting for Stock-Based Compensation", to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this statement amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The adoption of SFAS No. 148 is not expected to have a material impact on the company's financial position or results of operations. In November 2002, the FASB issued FASB Interpretation ("FIN") No. 45, "Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees and Indebtedness of Others", an interpretation of FIN No. 5, 57 and 107, and rescission of FIN No. 34, "Disclosure of Indirect Guarantees of Indebtedness of Others". FIN 45 elaborates on the disclosures to be made by the guarantor in its interim and annual financial statements about its obligations under certain guarantees that it has issued. It also requires that a guarantor recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The initial recognition and measurement provisions of this interpretation are applicable on a prospective basis to guarantees issued or modified after June 30, 2003; while, the provisions of the disclosure requirements are effective for financial statements of interim or annual periods ending after December 15, 2002. The company believes that the adoption of such interpretation will not have a material impact on its financial position or results of operations and will adopt such interpretation during fiscal year 2003, as required. In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable Interest Entities", an interpretation of Accounting Research Bulletin No. 51. FIN No. 46 requires that variable interest entities be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity's activities or is entitled to receive a majority of the entity's residual returns or both. FIN No. 46 also requires disclosures about variable interest entities that companies are not required to consolidate but in which a company has a significant variable interest. The consolidation requirements of FIN No. 46 will apply immediately to variable interest entities created after January 31, 2003. The consolidation requirements will apply to entities established prior to January 31, 2003 in the first fiscal year or interim period beginning after June 15, 2003. The disclosure requirements will apply in all financial statements issued after January 31, 2003. The company will begin to adopt the provisions of FIN No. 46 during the first quarter of fiscal 2003. In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity." SFAS No. 150 changes the classification in the statement of financial position of certain common financial instruments from either equity or mezzanine presentation to liabilities and requires an issuer of those financial statements to recognize changes in fair value or redemption amount, as applicable, in earnings. SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003, and with one exception, is effective at the beginning of the first interim period beginning after June 15, 2003. The effect of adopting SFAS No. 150 will be recognized as a cumulative effect of an accounting change as of the beginning of the period of adoption. Restatement of prior periods is not 23 Accounting policies and procedures - continued permitted. SFAS No. 150 did not have any impact on the Company's financial position or results of operations. Stock-Based Compensation - ------------------------ The Company accounts for stock-based awards to employees in accordance with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" and related interpretations and has adopted the disclosure-only alternative of SFAS No. 123, "Accounting for Stock-Based Compensation." Options granted to consultants, independent representatives and other non-employees are accounted for using the fair value method as prescribed by SFAS No. 123. Year end - -------- The Company has adopted December 31 as its fiscal year end. Note 3 - Going concern The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As shown in the accompanying financial statements, the Company has incurred a net loss of $9,836 for the period from April 21, 1999 (inception) to December 31, 2003, and has no sales. The future of the Company is dependent upon its ability to obtain financing and upon future profitable operations from the development of its new business opportunities. Management has plans to seek additional capital through a private placement and public offering of its common stock. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence. These conditions raise substantial doubt about the Company's ability to continue as a going concern. These financial statements do not include any adjustments that might arise from this uncertainty. Note 4 - Income taxes The Company accounts for income taxes under Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109"), which requires use of the liability method. SFAS No. 109 provides that deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, referred to as temporary differences. Deferred tax assets and liabilities at the end of each period are determined using the currently enacted tax rates applied to taxable income in the periods in which the deferred tax assets and liabilities are expected to be settled or realized. The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before provision for income taxes. The sources and tax effects of the differences are as follows: US federal statutory rate (34.0%) Valuation reserve 34.0% Total -% 24 Income taxes - continued As of December 31, 2003, the Company has a net operating loss carry forwards as follows: Year Amount Expiration - -------------------- --------------------- ---------------- 1999 $1,000 2019 2000 $ - 2020 2001 $ - 2021 2002 $4,446 2022 2003 $4,370 2023 Note 5 - Stockholders' equity The Company is authorized to issue 25,000,000 shares of its $0.001 par value common stock. On October 29, 2002, the Company effected a 1000-for-1 forward stock split of its $0.001 par value common stock. All share and per share amounts have been retroactively restated to reflect the splits discussed below. On May 1, 1999, the Company issued 2,000 shares of its no par value common stock as founders' shares to an officer and director in exchange for services rendered in the amount of $1,000. Due to the forward split of 1 000-for-1, the number of shares has been retroactively restated to 2,000,000. On August 13, 2002, the Company issued 400 shares of its $0.001 par value common stock to an unrelated third party in exchange for cash in the amount of $5,000. Due to the forward split of 1 000-for-1, the number of shares has been retroactively restated to 400,000. On July 15, 2003, the Company issued 400,000 shares of its $0.001 par value common stock to an unrelated third party in exchange for cash in the amount of $5,000. As of December 31, 2003, there have been no other issuances of common stock. Note 6 - Warrants and options As of December 31, 2003 and 2002, there were no warrants or options outstanding to acquire any additional shares of common stock. Note 7 - Related party transactions The Company does not lease or rent any property. Office space and services are provided without charge by an officer, director and shareholder. Such costs are immaterial to the financial statements and, accordingly, have not been reflected therein. The officers and directors of the Company are involved in other business activities and may, in the future, become involved in other business opportunities. If a specific business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business interests. The Company has not formulated a policy for the resolution of such conflicts. 25 b) Interim Financial Statements. Alchemy Enterprises, Ltd. (A Development Stage Company) Balance Sheet as of June 30, 2004 and Statements of Operations for the Three and Six Months Ended June 30, 2004 and 2003, and For the Period April 21, 1999 (Inception) to June 30, 2004 and Cash Flows for the Six Months Ended June 30, 2004 and 2003, and For the Period April 21, 1999 (Inception) to June 30, 2004 26 TABLE OF CONTENTS Page --------------------- Independent Accountants' Review Report ............................. 28 Balance Sheet ...................................................... 29 Statements of Operations ........................................... 30 Statements of Cash Flows ........................................... 31 Footnotes .......................................................... 32 27 Beckstead and Watts, LLP - ------------------------ Certified Public Accountants 3340 Wynn Road, Suite B Las Vegas, NV 89102 702.257.1984 tel 702.362.0540 fax INDEPENDENT ACCOUNTANTS' REVIEW REPORT Board of Directors Alchemy Enterprises, Ltd. (a Development Stage Company) We have reviewed the accompanying balance sheet of Alchemy Enterprises, Ltd. (a Nevada corporation) (a development stage company) as of June 30, 2004 and the related statements of operations for the three and six-months ended June 30, 2004 and 2003 and for the period April 21, 1999 (Inception) to June 30, 2004, and statements of cash flows for the six-months ended June 30, 2004 and 2003 and for the period April 21, 1999 (Inception) to June 30, 2004. These financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with standards established by the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, which will be performed for the full year with the objective of expressing an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the accompanying financial statements referred to above for them to be in conformity with generally accepted accounting principles in the United States of America. The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has had limited operations and has not commenced planned principal operations. This raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Beckstead and Watts, LLP has previously audited, in accordance with generally accepted auditing standards established by the Public Company Accounting Oversight Board (United States), the balance sheet of Alchemy Enterprises, Ltd. (a development stage company) as of December 31, 2003, and the related statements of operations, stockholders' equity, and cash flows for the year then ended (not presented herein) and in our report dated March 16, 2004, we expressed an unqualified opinion on those financial statements. /s/ Beckstead and Watts, LLP August 23,2004 28 Alchemy Enterprises, Ltd. (a Development Stage Company) Balance Sheet (unaudited) June 30, 2004 ------------- Assets Current assets: Cash $ 34,455 ------------- Total current assets 34,455 ------------- $ 34,455 ============= Liabilities and Stockholders' Equity Current liabilities: $ - ------------- Stockholders' equity: Common stock, $0.001 par value, 25,000,000 shares authorized, 3,630,000 shares issued and outstanding 3,630 Additional paid-in capital 48,870 (Deficit) accumulated during development stage (18,045) ------------- 34,455 ------------- $ 34,455 ============= The accompanying notes are an integral part of these financial statements. 29 Alchemy Enterprises, Ltd. (a Development Stage Company) Statements of Operations (unaudited)
Three Months Ended Six Months Ended April 21, 1999 June 30, June 30, (inception) to ----------------------------------------------------------- 2004 2003 2004 2003 June 30, 2004 -------------- -------------- -------------- -------------- ---------------- Revenue $ - $ - $ - $ - $ - -------------- -------------- -------------- -------------- ---------------- Expenses: General and administrative expenses 5,056 15 8,209 115 17,045 General and administrative expenses - related party - - - - 1,000 -------------- -------------- -------------- -------------- ---------------- Total expenses 5,056 15 8,209 115 18,045 -------------- -------------- -------------- -------------- ---------------- (Loss) before provision for taxes (5,056) (15) (8,209) (115) (18,045) Provision for income taxes - - - - Net (loss) $ (5,056) $ (15) $ (8,209) $ (115) $ (18,045) ============== ============== ============== ============== ================ Weighted average number of common shares outstanding - basic and fully diluted 3,210,440 2,400,000 3,006,354 2,400,000 ============== ============== ============== ============== Net (loss) per share - basic and fully diluted $ (0.00) $ (0.00) $ (0.00) $ (0.00) ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 30 Alchemy Enterprises, Ltd. (a Development Stage Company) Statements of Cash Flows (unaudited)
Six Months Ended June 30, April 21, 1999 ----------------------- (inception) to 2004 2003 June 30, 2004 ----------- ----------- --------------- Cash flows from operating activities Net (loss) $ (8,209) $ (115) $ (18,045) Shares issued for services - - 1,000 ----------- ----------- --------------- Net cash (used) by operating activities (8,209) (115) (17,045) ----------- ----------- --------------- Cash flows from financing activities Issuances of common stock 41,500 - 51,500 ----------- ----------- --------------- Net cash provided by financing activities 41,500 - 51,500 ----------- ----------- --------------- Net (decrease) increase in cash 33,291 (115) 34,455 Cash - beginning 1,164 534 - ----------- ----------- --------------- Cash - ending $ 34,455 $ 419 $ 34,455 =========== =========== =============== Supplemental disclosures: Interest paid $ - $ - $ - =========== =========== =============== Income taxes paid $ - $ - $ - =========== =========== ===============
The accompanying notes are an integral part of these financial statements. 31 Alchemy Enterprises, Ltd. (a Development Stage Company) Notes Note 1 - Basis of presentation The interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these consolidated interim financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2003 and notes thereto included in the Company's 10-SB registration statement. The Company follows the same accounting policies in the preparation of interim reports. Results of operations for the interim periods are not indicative of annual results. Note 2 - Going concern The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As shown in the accompanying financial statements, the Company has incurred a net loss of ($18,045) for the period from April 21, 1999 (inception) to June 30, 2004, and has no sales. The future of the Company is dependent upon its ability to obtain financing and upon future profitable operations from the development of its new business opportunities. Management believes that it has raised enough funds to sustain operations for a period of twelve months. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence. These conditions raise substantial doubt about the Company's ability to continue as a going concern. These financial statements do not include any adjustments that might arise from this uncertainty. Note 3 - Related party transactions The Company does not lease or rent any property. Office services are provided without charge by a director. Such costs are immaterial to the financial statements and, accordingly, have not been reflected therein. The officers and directors of the Company are involved in other business activities and may, in the future, become involved in other business opportunities. If a specific business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business interests. The Company has not formulated a policy for the resolution of such conflicts. Note 4 - Stockholders' equity On May 17, 2004, the Company closed their Regulation D, Rule 504 offering, registered in Nevada, and issued a total of 830,000 shares of its $0.001 par value common stock in exchange for cash of $41,500. 32 PART III Item 1. Exhibits. Exhibit Number Name and/or Identification of Exhibit - --------------- ------------------------------------------------------------ 3. Articles of Incorporation & By-Laws (a) Articles of Incorporation of Alchemy Enterprises, Ltd. filed on April 21, 1999. (b) Certificate of Amendment to Articles of Incorporation filed on October 29, 2002. (c) By-laws of Alchemy Enterprises, Ltd. adopted on May 1, 1999. SIGNATURES Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized. ALCHEMY ENTERPRISES, LTD. ----------------------------- (Registrant) Date: September 17, 2004 By: /s/ John Yamada ----------------- ----------------------------- (Signature) , John Yamada, President ----------------------------- (Name and Title) 33 EX-3 2 exhibit-3.txt ARTICLES AND BY-LAWS EXHIBIT 3(a) ARTICLES OF INCORPORATION OF ALCHEMY ENTERPRISES, LTD. FIRST: The name of the corporation is: Alchemy Enterprises, Ltd. SECOND: Its registered office in the state of Nevada is located at 6767 W. Tropicana Ave., Suite 207, Las Vegas, Nevada 89103 that this Corporation may maintain an office, or offices, in such other place within or without the State of Nevada as may be from time to time designated by the Board of Directors, or by the By-Laws of said Corporation, and that this Corporation may conduct all Corporation business of every kind and nature, including the holding of all meetings of Directors and Stockholders, outside the State of Nevada as well as within the State of Nevada. THIRD: The objects for which this Corporation is formed are: To engage in any lawful activity, including but not limited to the following: (A) Shall have such rights, privileges and powers as may be conferred upon corporations any by existing law. (B) May at any time exercise such rights, privileges and powers, when not inconsistent with the purposes and objects for which this corporation is organized. (C) Shall have power to have succession by its corporate name for the period limited in its certificates or Articles of Incorporation, and when no period is limited, perpetually, or until dissolved and its affairs wound up according to law. (D) Shall have power to sue and to be sued in any court of law or equity. (E) Shall have power to make contracts. (F) Shall have power to hold, purchase and convey real and personal estate and to mortgage or lease any such real and personal estate with its franchises. The power to hold real and personal estate shall include the power to take same devise or bequest in the State of Nevada, or in any other state, territory or country. (G) Shall have power to appoint such officers and agents as the affairs of the Corporation shall require, and to allow them suitable compensation. (H) Shall have power to make By-Laws not consistent with the constitution or laws of the United States, or of the State of Nevada, for the management, regulation and government of its affairs and property, the transfer of its stock, the transaction of its business, and the calling and holding of meetings of its shareholders. (1) Shall have power to wind up and dissolve itself, or be wound up or dissolved. (J) Shall have power to adopt and use a common seal or stamp, and alter the same at pleasure. The use of the seal or stamp by the Corporation on any corporate documents is not necessary. The Corporation may use a seal or stamp, if it 1 THIRD - continued desires, but such use or nonuse shall not in any way affect the legality of the document. (K) Shall have power to borrow money and contract debts when necessary for the transaction of its business, or for the exercise of its corporate rights, privileges or franchises, or any other lawful purpose of its incorporation: to issue bonds, promissory notes, bills of exchange, debentures and other obligations and evidences of indebtedness, payable at a specified time or times, or payable upon the happening of a specific event or events, whether secured by mortgage, pledge or otherwise, or unsecured, for money borrowed, or in payment for property purchased, or acquired, or for any other lawful object. (L) Shall have power to guarantee, purchase, hold sell, assign, transfer, mortgage, pledge or otherwise dispose of the shares of the capital stock of, or any bonds securities or evidences of the indebtedness created by, any other corporation or corporations of the State of Nevada, or any other state or government, and while owners of such stock, bonds, securities or evidences of indebtedness, to exercise all the rights, powers and privileges of ownership, including the right to vote , if any. (M) Shall have power to purchase, hold, sell and transfer shares of its capital stock, and use therefore its capital, capital surplus, surplus, or other property or fund. (N) Shall have power to conduct business, have one or more offices, and hold, purchase, mortgage and convey real and personal property in the State of Nevada, and in any other of the several states, territories, possessions and dependencies of the United States, the District of Columbia, and any foreign countries. (0) Shall have power to do all and everything necessary and proper for the accomplishment of the objects enumerated in its certificate or Articles of Incorporation, or any amendment thereof, or necessary or incidental to the protection and benefit of the Corporation and in general, to carry on any lawful business necessary or incidental to the attainment of the objects of the Corporation, whether or not such business is similar in nature to the objects set forth in the certificate or Articles of Incorporation of the Corporation, or any amendment thereof. (P) Shall have power to make donations for the public welfare or for charitable, scientific or educational purposes. (Q) Shall have power to enter into partnerships, general or limited, or joint ventures, in connection with the lawful activities as may be allowed by law. FOURTH: That the total number of common stock shares authorized that may be issued by the Corporation is TWENTY-FIVE THOUSAND (25,000) shares of stock without nominal or par value. Said shares may be issued by the Corporation from time to time for such considerations as may be fixed by the Board of Directors. FIFTH: The governing board of this Corporation shall be known as directors, and the number of directors may from time to time be increased or decreased in such a manner as shall be provided by the By-Laws of this Corporation, providing that the number of directors shall not be reduced to fewer than one (1). 2 FIFTH - continued The name and address of the first Board of Directors, which shall be one (1) in number, is as follows. NAME ADDRESS Paul W. Andre 6767 W. Tropicana Ave., Suite 207 Las Vegas, Nevada 89103-4754 SIXTH: The capital stock, after the amount of the subscription price, or par value has been paid in, shall not be subject to assessment to pay the debts of the corporation. SEVENTH: The name and address of the Incorporator signing the Articles of Incorporation is as follows: NAME ADDRESS Paul W. Andre 6767 W. Tropicana Ave., Suite 207 Las Vegas, Nevada 89103-4754 EIGHTH: The Resident Agent for this corporation shall be: SAVOY FINANCIAL GROUP, INC. The address of said agent, and the registered or statutory address of this corporation in the State of Nevada, shall be: 6767 W. Tropicana Ave., Suite 207 Las Vegas, Nevada 89103-4754 NINTH: The corporation is to have perpetual existence. TENTH: In furtherance and not in limitation of the owners conferred by statue, the Board of Directors is expressly authorized: Subject to the By-Laws, if any, adopted by the Stockholders, to make, alter or amend the By-Laws of the Corporation. To fix the amount to be reserved as working capital over and above its capital stock paid in: to authorize and cause to be executed, mortgages and liens upon the real and personal, property of this corporation. By resolution passed by a majority of the whole Board of Directors, to designate one or more committees, each committee to consist of one or more of the directors of the Corporation, which, to the extent provided in the resolution, or in the By-Laws of the Corporation, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the Corporation, Such committee, or committees, shall have such name, or names, as may be stated in the By-Laws of the Corporation, or as may be determined from time to time by resolution adopted by the Board of Directors. When and as authorized by the affirmative vote of the Stockholders holding stock entitling them to exercise at least a majority of the voting power given at a Stockholders meeting called for that purpose, or when authorized by the written consent of the holders of at least a majority of the voting stock issued and outstanding, the Board of Directors shall have the power and authority at any meeting to sell, lease or exchange all of the property and assets of the Corporation, including its goodwill and its corporate franchises, upon such 3 TENTH - continued terms and conditions as its Board of Directors deems expedient and for the best interests of the Corporation. ELEVENTH: No shareholder shall be entitled as a matter of right to subscribe for or receive additional shares of any class of stock of the Corporation, whether now or hereafter authorized, or any bonds, debentures or securities convertible into stock, but such additional shares of stock or other securities convertible may be issued or disposed of by the Board of Directors to such persons and on such terms as in its discretion it shall deem advisable. TWELFTH: No director or officer of the Corporation shall be personally liable to the Corporation or any of its stockholders for damages for breach of fiduciary duty as a director or officer involving any act or omission of any such director or officer; provided, however, that the foregoing provision shall not eliminate or limit the liability of a director or officer (i) for acts or omissions which involve intentional misconduct, fraud or a knowing violation of law, or (ii) the payment of dividends in violation of Section 78.300 of the Nevada Revised Statues, Any repeal or modification of this Article by the Stockholders of the Corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director or officer of the Corporation for the acts or omissions prior to such repeal or modification. THIRTEENTH: This Corporation reserves the right to amend, alter, change or repeal any provision contained in the Articles of Incorporation, in the manner now or hereafter prescribed by statute, or by the Articles of Incorporation and all rights conferred upon. Stockholders herein are granted subject to this reservation. I, THE INDERSIGNED, being the Incorporator hereinbefore named for the purpose of forming a Corporation pursuant to the General Corporation Law of the State of Nevada, do make and file these Articles of Incorporation, hereby declaring and certifying that the facts herein are true, and accordingly have hereunto set my hand this 14th day of April 1999. /s/ Paul W. Andre ---------------------------- Paul W. Andre On this 14th day April 1999, before me, Lynn Ann Tucker a Notary Public, personally appeared Paul W. Andre, personally known tome to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on this instrument the person, or entity upon behalf of which the person acted, executed this instrument. [Notarial Seal] WITNESS my hand and official seal. /s/ ---------------------------------- Notary Public (Notarial Seal) CERTIFICATE OF ACCEPTANCE OF APPOINTMENT BY RESIDENT AGENT I, Savoy Financial Group, Inc. hereby accept appointment as Resident Agent of ALCHEMY ENTERPRISES, LTD the previously named Corporation. /s/ Paul Andre President 4-14-99 - ----------------------------------------------------------------------------- Name Title Date 4 EXHIBIT 3(b) [State Seal} DEAN HELLER Office use only: Secretary of State ============================= 202 North Carson Street Certificate Of Carson City, Nevada 89701-4201 Amendment (775) 684 5708 (PURSUANT TO NRS 78.385 and 78.390) ============================= Important: Read attached instructions before completing form - -------------------------------------------------------------------------------- Certificate of Amendment to Articles of Incorporation ----------------------------------------------------- For Nevada Profit Corporations ------------------------------ (Pursuant to NRS 78.385 and 78.390 - After Issuance of Stock) - Remit in Duplicate - 1. Name of corporation: Alchemy Enterprises, Ltd. 2. The articles have been amended as follows (provide article numbers, if available): FOURTH Article of the Articles of Incorporation to; The total number of shares authorized that may be issued by the Corporation is TWENTY-FIVE MILLION (25,000,000) with a par value of $0.001 3. The vote by which the stockholders holding shares in the corporation entitling them to exercise at least a majority of the voting power, or such greater proportion of the voting power as may be required in the case of a vote by classes or series, or as may be required by the provisions of the articles of incorporation have voted in favor of the amendment is: 100% 4. Officer Signature (Required): John Yamada, President John Yamada, Secretary-Treasurer *If any proposed amendment would alter or change any preference or any relative or other right given to any class or series of outstanding shares, then the amendment must be approved by the vote, in addition to the affirmative vote otherwise required, of the holders of shares representing a majority of the voting power of each class or series affected by the amendment regardless of limitations or restrictions on the voting power thereof. IMPORTANT: Failure to include any of the above information and remit the proper fees may cause this filing to be rejected. 5 EXHIBIT 3(c) BY-LAWS OF ALCHEMY ENTERPRISES LTD. ARTICLE I OFFICES Section 1. PRINCIPAL OFFICE. The principal office for the transaction of business of the corporation shall be fixed or may be changed by approval of a majority of the authorized Directors, and additional offices may be established and maintained at such other place or places as the Board of Directors may from time to time designate. Section 2. OTHER OFFICES. Branch or subordinate offices may at any time be established by the Board of Directors at any place or places where the corporation is qualified to do business. ARTICLE II DIRECTORS - MANAGEMENT Section 1. RESPONSIBILITY OF BOARD OF DIRECTORS. Subject to the provisions of applicable law and to any limitations in the Articles of Incorporation of the corporation relating to action required to be approved by the Shareholders, or by the outstanding shares, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the Board of Directors. The Board may delegate the management of the day-to-day operation of the business of the corporation to an executive committee or others, provided that the business and affairs of the corporation shall be managed and all corporate powers shall be exercised under the ultimate direction of the Board. Section 2. STANDARD OF CARE. Each Director shall perform the duties of a Director, including the duties as a member of any committee of the Board upon which the Director may serve, in good faith, in a manner such Director believes to be in the best interests of the corporation, and with such care, including reasonable inquiry, as an ordinary prudent person in a like position would use under similar circumstances. Section 3. NUMBER AND QUALIFICATION OF DIRECTORS. The authorized number of Directors shall be three (3) until changed by a duly adopted amendment to the Articles of Incorporation or by an amendment to this by-law adopted by the vote or written consent of holders of a majority of the outstanding shares entitled to vote. 1. 2 Section 4. ELECTION AND TERM OF OFFICE OF DIRECTORS. Directors shall be elected at each annual meeting of the Shareholders to hold office until the next annual meeting. Each Director, including a Director elected to fill a vacancy, shall hold office until the expiration of the term for which elected and until a successor has been elected and qualified. 6 Section 5. VACANCIES. Vacancies in the Board of Directors may be filled by a majority of the remaining Directors, though less than a quorum, or by a sole remaining Director, except that a vacancy created by the removal of a Director by the vote or written consent of the Shareholders or by court order may be filled only by the vote of a majority of the shares entitled to vote represented at a duly held meeting at which a quorum is present, or by the written consent of holders of a majority of the outstanding shares entitled to vote. Each Director so elected shall hold office until the next annual meeting of the Shareholders and until a successor has been elected and qualified. A vacancy or vacancies in the Board of Directors shall be deemed to exist in the event of the death, resignation, or removal of any Director, or if the Board of Directors by resolution declares vacant the office of a Director who has been declared of unsound mind by an order of court or convicted of a felony, or if the authorized number of Directors is increased, or if the Shareholders fail, at any meeting of Shareholders at which any Director or Directors are elected, to elect the number of Directors to be voted for at that meeting. The Shareholders may elect a Director or Directors at any time to fill any vacancy or vacancies not filled by the Directors, but any such election by written consent shall require the consent of a majority of the outstanding shares entitled to vote. Any Director may resign effective on giving written notice to the Chairman of the Board, the President, the Secretary, or the Board of Directors, unless the notice specifies a later time for that resignation to become effective. If the resignation of a Director is effective at a future time, the Board of Directors may elect a successor to take office when the resignation becomes effective. No reduction of the authorized number of Directors shall have the effect of removing any Director before that Directors' term of office expires. Section 6. REMOVAL OF DIRECTORS. Subject to applicable law, the entire Board of Directors or any individual Director may be removed from office. In such case, the remaining Board members may elect a successor Director to fill such vacancy for the remaining unexpired term of the Director so removed. 2. 3 Section 7. NOTICE, PLACE AND MANNER OF MEETINGS. Meetings of the Board of Directors may be called by the Chairman of the Board, or the President, or any Vice President, or the Secretary, or any two (2) Directors and shall be held at the principal executive office of the corporation, unless some other place is designated in the notice of the meeting. Members of the Board may participate in a meeting through use of a conference telephone or similar communications equipment so long as all members participating in such a meeting can hear one another. Accurate minutes of any meeting of the Board or any committee thereof, shall be maintained by the Secretary or other Officer designated for that purpose. Section 8. ORGANIZATIONAL MEETINGS. The organizational meetings of the Board of Directors shall be held immediately following the adjournment of the Annual Meetings of the Shareholders. Section 9. OTHER REGULAR MEETINGS. Regular meetings of the Board of Directors shall be held at the corporate offices, or such other place as may be designated by the Board of Directors, as follows: Time of Regular Meeting: 9:00 A.M. Date of Regular Meeting: Last Friday of every month If said day shall fall upon a holiday, such meetings shall be held on the next succeeding business day thereafter. No notice need be given of such regular meetings. 7 Section 10. SPECIAL MEETINGS - NOTICES - WAIVERS. Special meetings of the Board may be called at any time by the President or, if he or she is absent 'or unable or refuses to act, by any Vice President or the Secretary or by any two (2) Directors, or by one (1) Director if only one is provided. At least forty-eight (48) hours notice of the time and place of special meetings shall be delivered personally to the Directors or personally communicated to them by a corporate Officer by telephone or telegraph. If the notice is sent to a Director by letter, it shall be addressed to him or her at his or her address as it is shown upon the records of the corporation, or if it is not so shown on such records or if not readily ascertainable, at the place in which the meetings of the Directors are regularly held. In case such notice is mailed, it shall be deposited in the United States mail, postage prepaid, in the place in which the principal executive officer of the corporation is located at least four (4) days prior to the time of the holding of the meeting. Such mailing, telegraphing, telephoning or delivery as above provided shall be due, legal and personal notice to such Director. When all of the Directors are present at any Directors' meeting, however, called or noticed, and either (i) sign a written consent thereto on the records of such meeting, or, (ii) if a majority of the Directors is present and if those not present sign 3. 4 a waiver of notice of such meeting or a consent to holding the meeting or an approval of the minute thereof, whether prior to or after the holding of such meeting, which said waiver, consent or approval shall be filed with the Secretary of the corporation, or, (iii) if a Director attends a meeting without notice but without protesting, prior thereto or at its commencement, the lack of notice, then the transactions thereof are as valid as if had at a meeting regularly called and noticed. Section 11. DIRECTORS' ACTION BY UNANIMOUS WRITTEN CONSENT. Any action required or permitted to be taken by the Board of Directors may be taken without a meeting and with the same force and effect as if taken by a unanimous vote of Directors, if authorized by a writing signed individually or collectively by all members of the Board. Such consent shall be filed with the regular minutes of the Board. Section 12. QUORUM. A majority of the number of Directors as fixed by the Articles of Incorporation or By-Laws shall be necessary to constitute a quorum for the transaction of business, and the action of a majority of the Directors present at any meeting at which there is a quorum, when duly assembled, is valid as a corporate act; provided that a minority of the Directors, in the absence of a quorum, may adjourn from time to time, but may not transact any business. A meeting at which a quorum is initially present may continue to transact business, notwithstanding the withdrawal of Directors, if any action taken is approved by a majority of the required quorum for such meeting. Section 13. NOTICE OF ADJOURNMENT. Notice of the time and place of holding an adjourned meeting need not be given to absent Directors if the time and place be fixed at the meeting adjourned and held within twenty-four (24) hours, but if adjourned more than twentyfour (24) hours, notice shall be given to all Directors not present at the time of the adjournment. 8 Section 14. COMPENSATION OF DIRECTORS. Directors, as such, shall not receive any stated salary for their services, but by resolution of the Board a fixed sum and expense of attendance, if any, may be allowed for attendance at each regular and special meeting of the Board; provided that nothing herein contained shall be construed to preclude any Director from serving the corporation in any other capacity and receiving compensation therefor. Section 15. COMMITTEES. Committees of the Board may be appointed by resolution passed by a majority of the whole Board. Committees shall be composed of two (2) or more members of the Board and shall have such powers of the Board as may be expressly delegated to it by resolution of the Board of Directors, except those powers expressly made non-delegable by applicable law. Section 16. ADVISORY DIRECTORS. The Board of Directors from time to time may elect one or more persons to be Advisory Directors who shall not by such appointment be members of the Board of Directors. Advisory Directors shall be available from time to 4. 5 time to perform special assignments specified by the President, to attend meetings of the Board of Directors upon invitation and to furnish consultation to the Board. The period during which the title shall be held may be prescribed by the Board of Directors. If no period is prescribed, the title shall be held at the pleasure of the Board. Section 17. RESIGNATIONS. Any Director may resign effective upon giving written notice to the Chairman of the Board, the President, the Secretary or the Board of Directors of the Corporation, unless the notice specifies a later time for the effectiveness of such resignation. If the resignation is effective at a future time, a successor may be elected to take office when the resignation becomes effective. ARTICLE III OFFICERS Section 1. OFFICERS. The Officers of the corporation shall be a President, a Secretary, and a Chief Financial Officer. The corporation may also have, at the discretion of the Board of Directors, a Chairman of the Board, one or more Vice Presidents, one or more Assistant Secretaries, or one or more Assistant Treasurers, and such other Officers as may be appointed in accordance with the provisions of Section 3 of this Article. Any number of offices may be held by the same person. Section 2. ELECTION. The Officers of the corporation, except such Officers as may be appointed in accordance with the provisions of Section 3 or Section 5 of this Article, shall be chosen annually by the Board of Directors, and each shall hold office until he or she shall resign or shall be removed or otherwise disqualified to serve or a successor shall be elected and qualified. Section 3. SUBORDINATE OFFICERS, ETC. The Board of Directors may appoint such other Officers as the business of the corporation may require, each of whom shall hold office for such period, have such authority and perform such duties as are provided by the By-Laws or as the Board of Directors may from time to time determine. 9 Section 4. REMOVAL AND RESIGNATION OF OFFICERS. Subject to the rights, if any, of any Officer under any contract of employment, any Officer may be removed, either with or without cause, by the Board of Directors, at any regular or special meeting of the Board, or except in case of an Officer chosen by the Board of Directors by any Officer upon whom such power of removal may be conferred by the Board of Directors. Any Officer may resign at any time by giving written notice to the corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that 5. 6 notice; and, unless otherwise specified in that notice, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the corporation under any contract to which the Officer is a party. Section 5. VACANCIES. A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filed in the manner prescribed in the By-Laws for regular appointment to that office. Section 6. CHAIRMAN OF THE BOARD. The Chairman of the Board, if such an officer be elected, shall, if present, preside at meetings of the Board of Directors and exercise and perform such other powers and duties as may be from time to time assigned by the Board of Directors or prescribed by the By-Laws. If there is no President, the Chairman of the Board shall in addition be the Chief Executive Officer of the corporation and shall have the powers and duties prescribed in Section 7 of this Article. Section 7. PRESIDENT/CHIEF EXECUTIVE OFFICER. Subject to such supervisory powers, if any, as may be given by the Board of Directors to the Chairman of the Board, if there be such an Officer, the President shall be the Chief Executive Officer of the corporation and shall, subject to the control of the Board of Directors, have general supervision, direction and control of the business and Officers of the corporation. He or she shall preside at all meetings of the Shareholders and in the absence of the Chairman of the Board, or if there be none, at all meetings of the Board of Directors. The President shall be ex officio a member of all the standing committees, including the Executive Committee, if any, and shall have the general powers and duties of management usually vested in the office of President of a corporation, and shall have such other powers and duties as may be prescribed by the Board of Directors or the By-Laws. Section 8. VICE PRESIDENT. In the absence or disability of the President, the Vice Presidents, if any, in order of their rank as fixed by the Board of Directors, or if not ranked, the Vice President designated by the Board of Directors, shall perform all the duties of the President, and when so acting shall have all the powers of, and be subject to, all the restrictions upon, the President. The Vice Presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the Board of Directors or the By-Laws. Section 9. SECRETARY. The Secretary shall keep, or cause to be kept, a book of minutes at the principal office or such other place as the Board of Directors may order, of all meetings of Directors and Shareholders, with the time and place of holding, whether regular or special, and if special, how authorized, the notice thereof 10 SECRETARY - continued given, the names of those present at Directors' meetings, the number of shares present or represented at Shareholders' meetings and the proceedings thereof. 6. 7 The Secretary shall keep, or cause to be kept, at the principal office or at the office of the corporation's transfer agent, a share register, or duplicate share register showing the names of the Shareholders and their addresses, the number and classes of shares held by each, the number and date of certificates issued for the same, and the number and date of cancellation of every certificate surrendered for cancellation. The Secretary shall give, or cause to be given, notice of all the meetings of the Shareholders and of the Board of Directors required by the ByLaws or by law to be given. He or she shall keep the seal of the corporation in safe custody, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or by the By-Laws. Section 10. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall keep and maintain, or cause to be kept and maintained in accordance with generally accepted accounting principles, adequate and correct accounts of the properties and business transactions of the corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, earnings (or surplus) and shares. The books of accounts shall at all reasonable times be open to inspection by any Director. This Officer shall deposit all moneys and other valuables in the name and to the credit of the corporation with such depositaries as may be designated by the Board of Directors. He or she shall disburse the funds of the corporation as may be ordered by the Board of Directors, shall render to the President and Directors, whenever they request it, an account of all of his or her transactions and of the financial condition of the corporation, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or the By-Laws. ARTICLE IV SHAREHOLDERS' MEETINGS Section 1. PLACE OF MEETINGS. All meetings of the Shareholders shall be held at the principal executive office of the corporation unless some other appropriate and convenient location be designated for that purpose from time to time by the Board of Directors. Section 2. ANNUAL MEETINGS. The annual meetings of the Shareholders shall be held, each year, at the time and on the day following: Time of Meeting: 12:00 P.M. Date of Meeting: June 1. If this day shall be a legal holiday, then the meeting shall be held on the next succeeding business day, at the same hour. At the annual meeting, the Shareholders shall elect a Board of Directors, consider reports of the affairs of the corporation and transact such other business as may be properly brought before the meeting. Section 3. SPECIAL MEETINGS. Special meetings of the Shareholders may be called at any time by the Board of Directors, the Chairman of the Board, the President, a Vice President, the Secretary, or by one or more Shareholders holding not less than one-tenth (1/10) of the voting power of the corporation. Except as next provided, notice shall be given as for the annual meeting. Upon receipt of a written request addressed to the Chairman, President, Vice President, or Secretary, mailed or delivered personally to such Officer by any person (other than the Board) entitled to call 11 SPECIAL MEETINGS - continued a special meeting of Shareholders, such Officer shall cause notice to be given, to the Shareholders entitled to vote, that a meeting will be held at a time requested by the person or persons calling the meeting, not less than thirty-five (35) nor more than sixty (60) days after the receipt of such request. If such notice is not given within twenty (20) days after receipt of such request, the persons calling the meeting may give notice thereof in the same manner provided by these ByLaws. Section 4. NOTICE OF MEETINGS - REPORTS. Notice of meetings, annual or special, shall be given in writing not less than ten (10) nor more than sixty (60) days before the date of the meeting to Shareholders entitled to vote thereat. Such notice shall be given by the Secretary or the Assistant Secretary, or if there be no such Officer, or in the case of his or her neglect or refusal, by any Director or Shareholder. Such notices or any reports shall be given personally or by mail and shall be sent to the Shareholder's address appearing on the books of the corporation, or supplied by him or her to the corporation for the purpose of the notice. Notice of any meeting of Shareholders shall specify the place, the day and the hour of meeting, and (1) in case of a special meeting, the general nature of the business to be transacted and no other business may be transacted, or (2) in the case of an annual meeting, those matters which Board at date of mailing, intends to present for action by the Shareholders. At any meetings where Directors are to be elected notice shall include the names of the nominees, if any, intended at date of notice to be presented by management for election. If a Shareholder supplies no address, notice shall be deemed to have been given if mailed to the place where the principal executive office of the corporation is situated, or published at least once in some newspaper of general circulation in the County of said principal office. Notice shall be deemed given at the time it is delivered personally or deposited in the mail or sent by other means of 8. 9 written communication. The Officer giving such notice or report shall prepare and file an affidavit or declaration thereof. When a meeting is adjourned for forty-five (45) days or more, notice of the adjourned meeting shall be given as in case of an original meeting. Save, as aforesaid, it shall not be necessary to give any notice of adjournment or of the business to be transacted at an adjourned meeting other than by announcement at the meeting at which said adjournment is taken. Section 5. WAIVER OF NOTICE OR CONSENT BY ABSENT SHAREHOLDERS. The transactions of any meeting of Shareholders, however called and notice, shall be valid as through had at a meeting duly held after regular call and notice, if a quorum be present either in person or by proxy, and if, either before or after the meeting, each of the Shareholders entitled to vote, not present in person or by proxy, sign a written waiver of notice, or a consent to the holding of such meeting or an approval shall be filed with the corporate records or made a part of the minutes of the meeting. Attendance shall constitute a waiver of notice, unless objection shall be made as provided in applicable law. Section 6. SHAREHOLDERS ACTING WITHOUT A MEETING - DIRECTORS. Any action which may be taken at a meeting of the Shareholders, may be taken without a meeting or notice of meeting if authorized by a writing signed by all of the Shareholders entitled to vote at a meeting for such purpose, and filed with the Secretary of the corporation, provided, further, that while ordinarily Directors can be elected by unanimous written consent, if the Directors fail to fill a vacancy, then a Director to fill that vacancy may be elected by the 12 SHAREHOLDERS ACTING WITHOUT A MEETING - DIRECTORS - continued written consent of persons holding a majority of shares entitled to vote for the election of Directors. Section 7. OTHER ACTIONS WITHOUT A MEETING. Unless otherwise provided for under applicable law or the Articles of Incorporation, any action which may be taken at any annual or special meeting of Shareholders may be taken without a meeting and without prior notice, if a consent in writing, setting forth the action so taken, signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize to take such action at a meeting at which all shares entitled to vote thereon were present and voted. Unless the consents of all Shareholders entitled to vote have been solicited in writing, (1) Notice of any Shareholder approval without a meeting by less than unanimous written consent shall be given at least ten (10) days before the consummation of the action authorized by such approval, and 9. 10 (2) Prompt notice shall be given of the taking of any other corporate action approved by Shareholders without a meeting be less than unanimous written consent, to each of those Shareholders entitled to vote who have not consented in writing. Any Shareholder giving a written consent, or the Share-holder's proxyholders, or a transferee of the shares of a personal representative of the Shareholder or their respective proxyholders, may revoke the consent by a writing received by the corporation prior to the time that written consents of the number of shares required to authorize the proposed action have been filed with the Secretary of the corporation, but may not do so thereafter. Such revocation is effective upon its receipt by the Secretary of the corporation. Section 8. QUORUM. The holder of a majority of the shares entitled to vote thereat, present in person, or represented by proxy, shall constitute a quorum at all meetings of the Shareholders for the transaction of business except as otherwise provided by law, by the Articles of Incorporation, or by these By-Laws. If, however, such majority shall not be present or represented at any meeting of the Shareholders, the shareholders entitled to vote thereat, present in person, or by proxy, shall have the power to adjourn the meeting from time to time, until the requisite amount of voting shares shall be present. At such adjourned meeting at which the requisite amount of voting shares shall be represented, any business may be transacted which might have been transacted at a meeting as originally notified. If a quorum be initially present, the Shareholders may continue to transact business until adjournment, notwithstanding the withdrawal of enough Shareholders to leave less than a quorum, if any action taken is approved by a majority of the Shareholders required to initially constitute a quorum. Section 9. VOTING. Only persons in whose names shares entitled to vote stand on the stock records of the corporation on the day of any meeting of Shareholders, unless some other day be fixed by the Board of Directors for the determination of Shareholders of record, and then on such other day, shall be entitled to vote at such meeting. Provided the candidate's name has been placed in nomination prior to the voting and one or more Shareholders has given notice at the meeting prior to the voting of the Shareholder's intent to cumulate the Shareholder's votes, every Shareholder entitled to vote at any election for Directors of any corporation for profit may cumulate their votes and give one candidate a number of votes equal to the number of Directors to be elected multiplied by the number of votes to which his or her shares are entitled to, or distribute his or her votes on the same principle among as many candidates as he or she thinks fit. 10. 11 The 13 VOTING - continued candidates receiving the highest number of votes up to the number of Directors to be elected are elected. The Board of Directors may fix a time in the future not exceeding thirty (30) days preceding the date of any meeting of Shareholders or the date fixed for the payment of any dividend or distribution, or for the allotment of rights, or when any change or conversion or exchange of shares shall go into effect, as a record date for the determination of the Shareholders entitled to notice of and to vote at any such meeting, or entitled to receive any such dividend or distribution, or any allotment of rights or to exercise the rights in respect to any such change, conversion or exchange of shares. In such case only Shareholders of record on the date so fixed shall be entitled to notice of and to vote at such meeting, to receive such dividends, distribution or allotment of rights, or to exercise such rights, as the case may be notwithstanding any transfer of any share on the books of the corporation after any record date fixed as aforesaid. The Board of Directors may close the books of the corporation against transfers of shares during the whole or any part of such period. Section 10. PROXIES. Every Shareholder entitled to vote, or to execute consents, may do so, either in person or by written proxy, executed in accordance with the provisions of applicable law filed with the Secretary of the corporation. Section 11. ORGANIZATION. The President, or in the absence of the President, any Vice President, shall call the meeting of the Shareholders to order, and shall act as Chairman of the meeting. In the absence of the President and all of the Vice Presidents, Shareholders shall appoint a Chairman for such meeting. The Secretary of the corporation shall act as Secretary of all meetings of the Shareholders, but in the absence of the Secretary at any meeting of the Shareholders, the presiding Officer may appoint any person to act as Secretary of the meeting. Section 12. INSPECTORS OF ELECTION. In advance of any meeting of Shareholders, the Board of Directors may, if they so elect, appoint inspectors of election to act at such meeting or any adjournment thereof. If inspectors of election be not so appointed, or if any persons so appointed fail to appear or refuse to act, the chairman of any such meeting may, and on the request of any Shareholder or his or her proxy shall, make such appointment at the meeting in which case the number of inspectors shall be either one (1) or three (3) as determined by a majority of the Shareholders represented at the meeting. ARTICLE V CERTIFICATES AND TRANSFER OF SHARES Section 1. CERTIFICATES FOR SHARES. Certificates for shares shall be of such form and device as the Board of Directors 11. 12 may designate and shall state the name of the record holder of the shares represented thereby; its number; date of issuance; the number of shares for which it is issued; a statement of the rights, privileges preferences and restriction, if any; a statement as to the redemption or conversion, if any; a statement of liens or restrictions upon transfer or voting, if any; if the shares be assessable or, if assessments are collectible by personal action, a plain statement of such facts. All certificates shall be signed in the name of the corporation by the Chairman of the Board or Vice Chairman of the Board or the President or Vice President and by the Chief Financial Officer or an 14 CERTIFICATES FOR SHARES - continued Assistant Treasurer or the Secretary or any Assistant Secretary, certifying the number of shares and the class or series of shares owned by the Shareholder. Any or all of the signatures on the certificate may be facsimile. In case any Officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed on a certificate shall have ceased to be that Officer, transfer agent, or registrar before that certificate is issued, it may be issued by the corporation with the same effect as if that person were an Officer, transfer agent, or registrar at the date of issuance. Section 2. TRANSFER ON THE BOOKS. Upon surrender to the Secretary or transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Section 3. LOST OR DESTROYED CERTIFICATES. Any person claiming a certificate of stock to be lost or destroyed shall make an affidavit or affirmation of that fact and shall, if the Directors so require, give the corporation a bond of indemnity, in form and with one or more sureties satisfactory to the Board, in at least double the value of the stock represented by said certificate, whereupon a new certificate may be issued in the same tender and for the same number of shares as the one alleged to be lost or destroyed. Section 4. TRANSFER AGENTS AND REGISTRARS. The Board of Directors may appoint one or more transfer agents or transfer clerks, and one or more registrars which shall be an incorporated bank or trust company, either domestic or foreign, who shall be appointed at such times and places as the requirements of the corporation may necessitate and the Board of Directors may designate. Section 5. CLOSING STOCK TRANSFER BOOKS - RECORD DATE. In order that the corporation may determine the Shareholders entitled to notice of any meeting or to vote or entitled to receive payment of any dividend or other distribution or allotment of any rights or 12. 13 entitled to exercise any rights in respect to any other lawful action, the Board may fix, in advance, a record date, which shall not be more than sixty (60) days nor less than ten (10) days prior to the date of such meeting nor more than sixty (60) days prior to any other action. If no record date is fixed; the record date for determining Shareholders entitled to notice of or to vote at a meeting of Shareholders shall be at the close of business on the business day next preceding the day on which notice is given or if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held. The record date for determining Shareholders entitled to give consent to corporate action in writing without a meeting, when no prior action by the Board is necessary, shall be the day on which the first written consent is given. The record date for determining Shareholders for any other purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto, or the sixtieth (60th) day prior to the date of such other action, whichever is later. 15 ARTICLE VI RECORDS - REPORTS - INSPECTION Section 1. RECORDS. The corporation shall maintain, in accordance with generally accepted accounting principles, adequate and correct accounts, books and records of its business and properties. All of such books, records and accounts shall be kept at its principal executive office as fixed by the Board of Directors from time to time. Section 2. INSPECTION OF BOOKS AND RECORDS. All books and records shall be open to inspection of the Directors and Shareholders from time to time and in the manner provided under applicable law. Section 3. CERTIFICATION AND INSPECTION OF BY-LAWS. The original or a copy of these By-Laws, as amended or otherwise altered to date, certified by the Secretary, shall be kept at the corporation's principal executive office and shall be open to inspection by the Shareholders at all reasonable times during office hours. Section 4. CHECK, DRAFTS, ETC. All checks, drafts, or other orders for payment of money, notes or other evidences of indebtedness, issued in the name of or payable to the corporation, shall be signed or endorsed by such person or persons and in such manner as shall be determined from time to time by the Board of Directors. 13. 14 Section 5. CONTRACT, ETC.-HOW EXECUTED. The Board of Directors, except as in the By-Laws otherwise provided, may authorize any Officer or Officers, agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the corporation. Such authority may be general or confined to specific instances. Unless so authorized by the Board of Directors, no Officer, agent or employee shall have any power or authority to bind the corporation by any contract or agreement, or to pledge its credit, or to render it liable for any purpose or to any amount except as may be provided under applicable law. ARTICLE VII ANNUAL REPORTS Section 1. REPORT TO SHAREHOLDERS, DUE DATE. The Board of Directors shall cause an annual report to be sent to the Shareholders not later than one hundred twenty (120) days after the close of the fiscal or calendar year adopted by the corporation. This report shall be sent at least fifteen (15) days before the annual meeting of Shareholders to be held during the next fiscal year and in the manner specified in Section 4 of the Article IV of these By-Laws for giving notice to Shareholders of the corporation. The annual report shall contain a balance sheet as of the end of the fiscal year and an income statement and statement of changes in financial position for the fiscal year, accompanied by any report of independent accountants or, if there is no such report, the certificate of an authorized officer of the corporation that the statements were prepared without audit from the books and records of the corporation. ARTICLE VIII AMENDMENTS TO BY-LAWS Section 1. AMENDMENT BY SHAREHOLDERS. New By-Laws may be adopted or these By-Laws may be amended or repealed by the vote or written consent of holders of a majority of the outstanding shares entitled to vote; provided, however, that if the Articles of Incorporation of the corporation set forth the number of authorized Directors of the corporation, the authorized number of Directors may be changed only by an amendment of the Article of Incorporation. 16 Section 2. POWERS OF DIRECTORS. Subject to the right of the Shareholders to adopt, amend or repeal By-Laws, as provided in Section I of this Article Vill, and the limitations, if any, under law, the Board of Directors may adopt, amend or repeal any of these By-Laws other than a By-Law or amendment thereof changing the authorized number of Directors. Section 3. RECORD OF AMENDMENTS. Whenever an amendment or new By-Law is adopted, it shall be copied in the book of By-Laws 14. 15 with the original By-Laws, in the appropriate place. If any By-Law is repealed, the fact of repeal with the date of the meeting at which the repeal was enacted or written assent was filed shall be stated in said book. ARTICLE IX CORPORATE SEAL Section 1. SEAL. The corporate sea] shall be circular in form, and shall have inscribed thereon the name of the corporation, the date and State of incorporation. ARTICLE X MISCELLANEOUS Section 1. REPRESENTATION OF SHARES IN OTHER CORPORATIONS. Shares of other corporations standing in the name of this corporation may be voted or represented and all incidents thereto may be exercised on behalf of the corporation by the Chairman of the Board, the President or any Vice President and the Secretary or an Assistant Secretary. Section 2. SUBSIDIARY CORPORATIONS. Shares of this corporation owned by a subsidiary shall not be entitled to vote on any matter. A subsidiary for these purposes is defined as a corporation, the shares of which possessing more than 25% of the total combined voting power of all classes of shares entitled to vote, are owned directly or indirectly through one (1) or more subsidiaries. Section 3. INDEMNITY. Subject to applicable law, the corporation may indemnify any Director, Officer, agent or employee as to those liabilities and on those terms and conditions as appropriate. In any event, the corporation shall have the right to purchase and maintain insurance on behalf of any such persons whether or not the corporation would have the power to indemnify such person against the liability insured against. Section 4. ACCOUNTING YEAR. The accounting year of the corporation shall be fixed by resolution of the Board of Directors. 17 Approve and Adopted this 1st day of May, 1999. /s/ John Yamada -------------------------- John Yamada, SECRETARY CERTIFICATE OF SECRETARY I hereby certify that I am the Secretary of ALCHEMY ENTERPRISES, LTD., and that the foregoing By-Laws, consisting of 10 pages, constitute the code of By-Laws of ALCHEMY ENTERPRISES, LTD., as duly adopted at a regular meeting of the Board of Directors of the corporation held May 1st, 1999. /s/ John Yamada -------------------------- John Yamada, SECRETARY 18 -----END PRIVACY-ENHANCED MESSAGE-----