UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10Q
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 For the quarterly period ended June 30, 2008
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to ___________
Commission file number : 000-50294
LEGACY TECHNOLOGY HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Colorado 84-1426725
-------- ----------
(State of Incorporation) (IRS Employer ID Number)
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172 Stanwell Street, Colorado Springs, CO 80906
(Address of principal executive offices)
719-579-5882
(Registrant's Telephone number)
Life USA, Inc.
7609 Ralston Road, Arvada, CO 80002
(Former name, former address, and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the past 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to the filing requirements for
the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated file, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] (Do
not check if a smaller reporting company) Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [ X]
Indicate the number of share outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
As of August 15, 2008, there were 10,007,003 shares of the registrant's common
stock issued and outstanding.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) Page
----
Consolidated Balance Sheets - June 30, 2008 and
December 31, 2007 F-1
Consolidated Statements of Operations -
Three and Six months ended June 30, 2008 and 2007 and
From July 23, 2004 (Inception) to June 30, 2008 F-2
Consolidated Statements of Changes in Shareholders' Deficit -
From July 23, 2004 (Inception) to June 30, 2008 F-3
Consolidated Statements of Cash Flows - Six months ended June 30, 2008
and 2007 and
From July 23, 2004 (Inception) to June 30, 2008 F-4
Notes to the Consolidated Financial Statements F-5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 1
Item 3. Quantitative and Qualitative Disclosures About Market Risk - Not Applicable
Item 4. Controls and Procedures 4
Item 4T. Controls and Procedures 4
PART II - OTHER INFORMATION
Item 1. Legal Proceedings -Not Applicable 5
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 5
-Not Applicable
Item 3. Defaults Upon Senior Securities - Not Applicable 5
Item 4. Submission of Matters to a Vote of Security Holders - Not Applicable 5
Item 5. Other Information - Not Applicable 5
Item 6. Exhibits 6
SIGNATURES
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LEGACY TECHNOLOGY HOLDINGS, INC. AND SUBSIDIARY
(Formerly Life USA, Inc.)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
June 30, December 31,
2008 2007
----------------- -----------------
(Unaudited) (Audited)
Assets
Current Assets:
Cash $ 725 $ 2,226
Assets of discontinued operations (Note 3) 2,158 2,158
----------------- -----------------
Total Current Assets 2,883 4,384
----------------- -----------------
Total Assets $ 2,883 $ 4,384
================= =================
Liabilities and Stockholders' Deficit
Current liabilities
Accounts payable $ 392,714 $ 329,219
Notes payable 25,433 25,433
Convertible notes payable 630,000 630,000
Liabilities of discontinued operations (Note 3) 131,835 131,835
----------------- -----------------
Total Current Liabilities 1,179,982 1,116,487
Stockholders' Deficit
Common stock, $0.0001 par value; 100,000,000 shares 101 101
authorized 1,007,003 shares issued and outstanding
at June 30, 2008 and December 31, 2007, respectively
Additional paid-in capital 486,611 486,611
Deficit accumulated during the development stage (1,663,811) (1,598,815)
----------------- -----------------
Total Stockholders' Deficit (1,177,099) (1,112,103)
----------------- -----------------
Total liabilities and stockholders' deficit $ 2,883 $ 4,384
================= =================
See the accompanying notes to these consolidated financial statements.
F-1
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LEGACY TECHNOLOGY HOLDINGS, INC. AND SUBSIDIARY
(Formerly Life USA, Inc.)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
For the Three Months Ended For the Six Months Ended July 23, 2004
June 30, June 30, (Inception) to
2008 2007 2008 2007 June 30, 2008
------------- ------------- --------------------------- ------------------
Revenue:
Sales $ - $ - $ - $ - $ -
------------- ------------- --------------------------- ------------------
Operational expenses:
Goodwill write off - - - - 14,454
General and administrative 6,999 28,759 11,269 33,791 190,620
Impairment loss - - - 116,667
Depreciation and amortization - - - - -
------------- ------------- --------------------------- ------------------
Total operational expenses 6,999 28,759 11,269 33,791 321,741
------------- ------------- --------------------------- ------------------
Loss from operations (6,999) (28,759) (11,269) (33,791) (321,741)
------------- ------------- --------------------------- ------------------
Other income (expense):
Interest expense (26,864) (26,864) (53,727) (53,432) (281,616)
------------- ------------- --------------------------- ------------------
Total other expense (26,864) (26,864) (53,727) (53,432) (281,616)
------------- ------------- --------------------------- ------------------
Discontinued operations, loss from
operations of subsidiary - - - (47,471) (1,060,454)
------------- ------------- --------------------------- ------------------
Net Loss $ (33,863) $ (55,623) $ (64,996) $ (134,694) $ (1,663,811)
============= ============= =========================== ==================
Per share information
Net (loss) per common share
Basic $ * $ * $ * $ (0.01)
Fully diluted * * * (0.01)
------------- ------------- ---------------------------
Weighted average number of common
stock outstanding 1,007,003 1,007,003 1,007,003 1,007,003
------------- ------------- ---------------------------
* Less than $(0.01) per share.
See the accompanying notes to these consolidated financial statements.
F-2
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LEGACY TECHNOLOGY HOLDINGS, INC. AND SUBSIDIARY
(Formerly Life USA, Inc.)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
June 30, 2008
(Unaudited)
Deficit accum-
mulated
Additional During
Common Stock paid-in Development
Number of shares Amount Capital Stage Totals
------------------- -------------- ------------- ---------------- ----------------
Balance - July 23, 2004 (Inception) - $ - $ - $ - $ -
------------------ -------------- ------------- ---------------- ----------------
Balance - December 31, 2004 - - - - -
------------------- -------------- ------------- ---------------- ----------------
Recapitalization 78,654 8 (134,188) - (134,180)
Stock issued for tradename 25,000 3 124,997 - 125,000
Stock issued for services 27,500 3 272 - 275
Warrants granted for services - - 64,107 - 64,107
Stock issued for acquisition 777,500 78 7,697 - 7,775
Stock issued for cash 45,400 5 113,495 - 113,500
Forgiveness of debt - - 20,000 - 20,000
Net loss - - - (628,560) (628,560)
------------------- -------------- ------------- ---------------- ----------------
Balance - December 31, 2005 954,054 95 196,380 (628,560) (432,085)
------------------- -------------- ------------- ---------------- ----------------
Stock issued for services 52,000 5 155,995 156,000
Warrants granted for services - - 134,235 134,235
Net loss - - - (759,626) (759,626)
------------------- -------------- ------------- ---------------- ----------------
Balance - December 31, 2006 1,006,054 101 486,610 (1,388,186) (901,475)
------------------- -------------- ------------- ---------------- ----------------
Net loss - - - (210,629) (210,629)
------------------- -------------- ------------- ---------------- ----------------
Balance - December 31, 2007 1,006,054 101 486,610 (1,598,815) (1,112,104)
------------------- -------------- ------------- ---------------- ----------------
Additional Shares issued for reverse
split 949 - 1 - 1
Net loss - - - (64,996) (64,996)
------------------- -------------- ------------- ---------------- ----------------
Balance as of June 30, 2008 1,007,003 $ 101 $486,611 $ (1,663,811) $ (1,177,099)
=================== ============== ============= ================ ================
See the accompanying notes to these consolidated financial statements.
F-3
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LEGACY TECHNOLOGY HOLDINGS, INC. AND SUBSIDIARY
(Formerly Life USA, INC.)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
July 23, 2004
For the Six Months Ended (Inception) to
June 30, June 30,
2008 2007 2008
--------------- -------------- --------------
Cash Flows from Operating Activities:
Net Loss $ (64,996) $ (134,694) $ (1,663,811)
Adjustments to reconcile net loss to net cash used
in operating activities from
continuing operations:
Loss from discontinued operations - 47,471 1,060,454
Stock Warrants expensed for services - - 198,342
Stock issuance for services - - 156,275
Amortization and depreciation - - -
Goodwill write-off - - 14,454
Changes in operating assets and liabilities:
Impairment loss add back - - 116,667
Decrease (Increase) in Prepaid Expenses - 3,146 18,875
Increase in Accounts Payable 63,495 84,077 206,448
--------------- -------------- --------------
Net Cash Provided (Used) by Operating Activities
from continuing operations (1,501) - 107,704
--------------- -------------- --------------
Cash Flows from Financing Activities:
Proceeds from notes payables - - 647,764
Proceeds from stock issuance - - 7,775
--------------- -------------- --------------
Net Cash Provided (used) by Financing Activities
from continuing operations - - 655,539
--------------- -------------- --------------
Net Cash used in discontinued operations - (11,662) (762,518)
Net (Decrease) Increase in Cash (1,501) - 725
Cash and Cash Equivalents - Beginning of Period 2,226 11,999 -
--------------- -------------- --------------
Cash and Cash Equivalents - End of Period $ 725 $ 337 $ 725
=============== ============== ==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest expense $ - - 2,205
=============== ============== ==============
Cash paid for income taxes $ - - -
=============== ============== ==============
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES:
Stock warrants granted for services $ - - 2,195,438
=============== ============== ==============
Stock issued for services $ - - 156,275
=============== ============== ==============
Acquisition of tradename for 250,000 shares common $ - - 125,000
=============== ============== ==============
Note payable assumed in reverse takeover $ - - 15,080
=============== ============== ==============
See the accompanying notes to these consolidated financial statements.
F-4
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LEGACY TECHNOLOGY HOLDINGS, INC. AND SUBSIDIARY
(Formerly Life USA, Inc.)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
For the Six Months Ended June 30, 2008
NOTE 1. Business, Basis of Presentation and Significant Accounting Policies:
Business:
Legacy Technology Holdings, Inc. (the "Company") was incorporated in Colorado in
January, 1997. The Company was originally named Life USA, Inc. On May 20, 2008,
the Company changed its name to Legacy Technology Holdings, Inc. by filing an
amendment to its Article of Incorporation. The Company was organized to engage
in any activity or business not in conflict with the laws of the State of
Colorado or of the United States of America. As a result of the name change, the
Company's trading symbol on the Over-the-Counter Bulletin Board was changed to
"LTHO".
In September 2005, the Company and Neuro Nutrition, Inc. ("Neuro") signed an
agreement whereby, the Company purchased all of the issued and outstanding
shares of Neuro Nutrition, Inc. for 830,000 shares of its common stock. Neuro
then became a 100% wholly owned subsidiary of the Company. The Company accounted
for the acquisition as a reverse acquisition under the purchase method of
accounting, since the Neuro shareholders obtained control of the consolidated
entity. The historical statements presented are those of Neuro.
Neuro Nutrition was incorporated on July 23, 2004 in the State of Colorado, and
has been in the development stage since. In January 2007, the Company ceased the
operations of Neuro (See Note 3).
On May 20, 2008, in addition to the changing the name of the Company, the
Company instituted a reverse split of its issued and outstanding common stock on
a 1 for 10 basis. After the reverse split, the Company had 1,007,003 shares of
its common stock issued and outstanding. All references to shares in the three
and the six months ended June 30, 2008 and in prior periods have been adjusted
to reflect the post-reverse split amounts.
On August 1, 2008, the Company completed and executed an Agreement and Plan of
Merger with LTH Acquisition Corporation and World Peace Technologies, Inc. with
World Peace Technologies, Inc. being the surviving entity (See Note 7).
In the opinion of the management of the Company, the accompanying unaudited
consolidated financial statements include all normal adjustments considered
necessary to present fairly the financial position and operating results of the
Company for the periods presented. The financial statements and notes are
presented as permitted by Form 10-Q, and do not contain certain information
included in the Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2007. It is management's opinion that when the interim financial
statements are read in conjunction with the December 31, 2007 Annual Report on
Form 10-KSB, the disclosures are adequate to make the information presented not
misleading. Interim results are not necessarily indicative of results for a full
year or any future period.
Basis of Presentation:
The Company has not earned any significant revenues from its limited operations.
Accordingly, the Company's activities have been accounted for as those of a
"Development Stage Enterprise" as set forth is Statement of Financial Accounting
Standard No. 7 ("SFAS No. 7"). Among the disclosures required by SFAS No. 7 are
that the Company's financial statements be identified as those of a development
stage company, and that the statements of operation, stockholders' equity
(deficit) and cash flows disclose activity since the date of the Company's
inception.
F-5
LEGACY TECHNOLOGY HOLDINGS, INC. AND SUBSIDIARY
(Formerly Life USA, Inc.)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
For the Six Months Ended June 30, 2008
Significant Accounting Policies:
Cash and Cash Equivalents
The Company maintains the majority of its cash accounts at a commercial bank.
The total cash balance is insured by the Federal Deposit Insurance Corporation
("FDIC") up to $100,000 per commercial bank. As of June 30, 2008, the Company
had zero amounts in excess of the FDIC insured limits. For purposes of the
statement of cash flows, the Company considers all cash and highly liquid
investments with initial maturities of three months or less to be cash
equivalents.
Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affects 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. Such estimates may be materially different from actual financial
results. Significant estimates include the recoverability of long-lived assets
and the collectability of accounts receivable.
Revenue Recognition
Revenue Recognition is recognized when earned. The Company's revenue recognition
policies are in compliance with Staff Accounting Bulletin (SAB) 104. Sales
revenue is recognized at the date of shipment to customers when a formal
arrangement exists, the price is fixed or determinable, the delivery is
completed, no other significant obligations of the Company exist and
collectability is reasonably assured. Payments received before all of the
relevant criteria for revenue recognition are satisfied are recorded as unearned
revenue.
Net Loss per Share
Net loss per share is calculated in accordance with the SFAS No. 128, "Earnings
per Share". SFAS No. 128 superseded Accounting Principles Board Opinion No.15
(APB No. 15). Net loss per share for all periods presented has been restated to
reflect the adoption of SFAS No. 128. Basic net loss per share is based upon the
weighted average number of common shares outstanding. Diluted net loss per share
is based on the assumption that all dilutive convertible shares and stock
options were converted or exercised. Dilution is computed by applying the
treasury stock method. Under this method, options and warrants are assumed to be
exercised at the beginning of the period (or at the time of issuance, if later),
and as, if funds obtained thereby were used to purchase common stock at the
average market price during the period.
Fair Value of Financial Instruments
The carrying amount of accounts payable, accrued expenses and convertible
promissory notes are considered to be representative of their respective fair
values because of the short-term nature of these financial instruments.
F-6
LEGACY TECHNOLOGY HOLDINGS, INC. AND SUBSIDIARY
(Formerly Life USA, Inc.)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
For the Six Months Ended June 30, 2008
Other Comprehensive Income
The Company has no material components of other comprehensive income (loss) and
accordingly, net loss is equal to comprehensive loss in all periods.
Recent Accounting Pronouncements:
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements"
("SFAS No. 157"). SFAS No. 157 defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles ("GAAP"), and
expands disclosures about fair value measurements. This statement applies under
other accounting pronouncements that require or permit fair value measurement
where the FASB has previously determined that under those pronouncements fair
value is the appropriate measurement. This statement does not require any new
fair value measurements but may require companies to change current practice.
This statement is effective for those fiscal years beginning after November 15,
2007 and to the interim periods within those fiscal years. We believe that SFAS
No. 157 should not have a material impact on our financial position or results
of operations
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for
Financial Assets and Financial Liabilities (SFAS No. 159). SFAS No. 159 permits
entities to choose to measure, on an item-by-item basis, specified financial
instruments and certain other items at fair value. Unrealized gains and losses
on items for which the fair value option has been elected are required to be
reported in earnings at each reporting date. SFAS No. 159 is effective for
fiscal years beginning after November 15, 2007, the provisions of which are
required to be applied prospectively. We believe that SFAS 159 should not have a
material impact on our financial position or results of operations
In December 2007, the FASB issued SFAS No. 141 (Revised 2007), Business
Combinations, or SFAS No. 141R. SFAS No. 141R will change the accounting for
business combinations. Under SFAS No. 141R, an acquiring entity will be required
to recognize all the assets acquired and liabilities assumed in a transaction at
the acquisition-date fair value with limited exceptions. SFAS No. 141R will
change the accounting treatment and disclosure for certain specific items in a
business combination. SFAS No. 141R applies prospectively to business
combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 15, 2008.
Accordingly, any business combinations we engage in will be recorded and
disclosed following existing GAAP until January 1, 2009. We expect SFAS No. 141R
will have an impact on accounting for business combinations once adopted but the
effect is dependent upon acquisitions at that time. We are still assessing the
impact of this pronouncement.
In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in
Consolidated Financial Statements--An Amendment of ARB No. 51, or SFAS No. 160".
SFAS No. 160 establishes new accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. SFAS No. 160 is effective for fiscal years beginning on or after
December 15, 2008. We believe that SFAS 160 should not have a material impact on
our financial position or results of operations.
F-7
LEGACY TECHNOLOGY HOLDINGS, INC. AND SUBSIDIARY
(Formerly Life USA, Inc.)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
For the Six Months Ended June 30, 2008
In March 2008, the FASB issued SFAS No. 161 Disclosures about Derivative
Instruments and Hedging Activities. SFAS No. 161 requires additional disclosure
related to derivatives instruments and hedging activities. The provisions of
SFAS No. 161 are effective as of January 1, 2008 and the Company is currently
evaluating the impact of adoption.
NOTE 2. Going Concern:
In the Company's Annual Report on Form 10-KSB for the fiscal year ended December
31, 2007, the Report of the Independent Registered Public Accounting Firm
includes an explanatory paragraph that describes substantial doubt about the
Company's ability to continue as a going concern. The Company's interim
financial statements for the three months ended March 31, 2008 have been
prepared on a going concern basis, which contemplates the realization of assets
and the settlement of liabilities and commitments in the normal course of
business. The Company reported a net loss of $64,996 for the six months ended
June 30, 2008 ($33,863 for the three months ended June 30, 2008), and an
accumulated deficit of $1,663,811 as of June 30, 2008. At June 30, 2008, the
Company had a working capital deficit of $1,177,099 and total current
liabilities exceed total current assets by $1,177,099.
The future success of the Company is likely dependent on its ability to attain
additional capital, or to find an acquisition to add value to its present
shareholders and ultimately, upon its ability to attain future profitable
operations. There can be no assurance that the Company will be successful in
obtaining such financing, or that it will attain positive cash flow from
operations. Management believes that actions presently being taken to revise the
Company's operating and financial requirements provide the opportunity for the
Company to continue as a going concern.
NOTE 3. Discontinued Operations:
In January 2007, management of the Company ceased the operations of its
wholly-owned subsidiary, Neuro. As part of the cessation of Neuro, the Company
liquidated the inventory held by Neuro.
At June 30, 2008, Neuro's remaining asset is cash of $2,158, and its liabilities
consist of accounts payable of $125,636 and a note payable of $6,199 (excluding
intercompany payables of approximately $750,106).
Neuro's revenues for the six months ended June 30, 2008 and 2007 reported in
discontinued operations were $0 and $12,716, respectively ($0 for the three
months ended June 30, 2008 and 2007). Neuro recorded a net loss for the six
months ended June 30, 2008 and 2007 of $0 and $47,471, respectively ($0 for the
three months ended June 30, 208 and 2007).
F-8
LEGACY TECHNOLOGY HOLDINGS, INC. AND SUBSIDIARY
(Formerly Life USA, Inc.)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
For the Six Months Ended June 30, 2008
NOTE 4. Notes Payable:
The Company's outstanding notes payable on June 30, 2008 consisted of:
$ 15,080 Note Payable issued to an investor. Due upon demand.
Interest rate is 8%
10,353 Note payable, issued to vendor. Due upon demand
--------
$ 25,443 Total notes payable outstanding on June 30, 2008.
========
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NOTE 5. Convertible Notes Payable:
Convertible notes payable as of June 30, 2008, consisted of the following:
$ 50,000 Note payable 1, convertible into 151,515 shares,
due September 30, 2006, incurring interest at 25%,
attached to the note are 151,515 warrants exercisable
at $0.625 per share. The note is secured by a
subordinated pledge of inventory and accounts receivable.
$ 25,000 Note payable 2, convertible into 50,000 shares,
due September 7, 2006, incurring interest at 10%. Note
holder has verbally agreed to extend the note.
$ 50,000 Note payable 3, convertible into 151,515 shares, due
September 30, 2006, incurring interest at 25%.
The note is secured by a subordinated pledge of
Inventory and accounts receivable.
$ 75,000 Note payable 4, convertible into 227,273 shares,
due September 30, 2006, incurring interest at 25%,
attached to the note are 227,273 warrants exercisable at
$0.625 per share. The note is secured by a subordinated
pledge of inventory and accounts receivable.
$ 20,000 Note payable 5, convertible into 40,000 shares, due
February 28, 2007, incurring interest at 15%,
attached to the note are 40,000 warrants
exercisable at $0.65 per share.
$ 50,000 Note payable 6, convertible into 100,000 shares, due
February 28, 2007, incurring interest at 15%, attached
to the note are 100,000 warrants exercisable at $0.65
per share.
|
F-9
LEGACY TECHOLOGY HOLDINGS, INC. AND SUBSIDIARY
(Formerly Life USA, Inc.)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
For the Six Months Ended June 30, 2008
$ 75,000 Note payable 7, convertible into 150,000 shares,
due May 27, 2006, incurring interest at 10%, attached
to the note are 150,000 warrants exercisable at $0.625
per share.
$ 50,000 Note payable 8, convertible into 100,000 shares, due
November 11, 2006, incurring interest at 10%, attached
to the note are 200,000 warrants exercisable at
$0.625 per share.
$ 50,000 Note payable 9, convertible into 100,000 shares, due
November 11, 2006, incurring interest at 10%, attached
to the note are 200,000 warrants exercisable at
$0.625 per share.
$ 5,000 Note payable 10, convertible into 10,000 shares, due
November 11, 2006, incurring interest at 10%, attached
to the note are 20,000 warrants exercisable at $0.625
per share.
$ 50,000 Note payable 11, convertible into 100,000 shares, due
December 7, 2006, incurring interest at 10%, attached
to the note are 200,000 warrants exercisable at $0.625
per share.
$ 25,000 Note payable 12, convertible into 50,000 shares, due
February 20, 2007, incurring interest at 10%, attached
to the note are 100,000 warrants exercisable at $0.75
per share.
$ 5,000 Note payable 13, convertible into 10,000 shares, due
February 28, 2007, incurring interest at 10%, attached
to the note are 20,000 warrants exercisable at $0.75
per share.
$ 50,000 Note payable 14, convertible into 125,000 shares, due
September 12, 2006, incurring interest at 25%, attached
to the note are 250,000 warrants exercisable at $0.75
per share. This note is secured by inventory and
accounts receivable.
$ 50,000 Note payable 15, convertible into 125,000 shares, due
September 12, 2006, incurring interest at 25%, attached
to the note are 250,000 warrants exercisable at $0.75
per share. This note is secured by inventory and
accounts receivable.
--------
$630,000 Total Convertible notes payable. All these notes, with
======== the exception of notes 1, 3, 4, 14 and 15 are unsecured.
|
As of June 30, 2008, all of the convertible notes described above are in
default.
F-10
LEGACY TECHNOLOGY HOLDINGS, INC. AND SUBSIDIARY
(Formerly Life USA, Inc.)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
For the Six Months Ended June 30, 2008
NOTE 6. Capital Stock Transactions
Common Stock:
During the six months ended June 30, 2008 and 2007, the Company did not issue
any shares of its common stock.
On May 20, 2008, the Company instituted a reverse split of its issued and
outstanding common stock on a 1 for 10 basis. After the reverse split, the
Company had 1,007,003 shares of its common stock issued and outstanding. All
references to shares in the three and the six months ended June 30, 2008 and in
prior periods have been adjusted to reflect the post-reverse split amounts.
Warrants:
During the six months ended June 30, 2008, warrants exercisable for 620,000
shares of common stock expired.
NOTE 7. Subsequent Event:
On June 17, 2008, the Company entered into an Agreement and Plan of Merger by
and between the Company, LTH Acquisition Corporation ("LTH Acquisition"), a
wholly-owned subsidiary of the Company, and World Peace Technologies, Inc.
("World Peace"). As part of the merger, World Peace Technologies, Inc., a
Colorado corporation, will be merged with LTH Acquisition and World Peace will
be the surviving entity of the merger. The Agreement was slightly modified on
July 28, 2008, to correct minor technical issues and on August 1, 2008, the
Agreement and Plan of Merger was executed and completed.
The Agreement was slightly modified on July 28, 2008, to correct minor technical
issues and the Agreement and Plan of Merger has been executed and completed.
World Peace Technologies, Inc. ("World Peace") was incorporated on May 8, 2008,
in the state of Colorado. World Peace is a technology development business that
specializes in the development of technologies and products with possible
applications to the military.
As part of the amended Agreement and Plan of Merger, the Company has authorized
the issuance of 9,000,000 shares of its restricted common stock to the
shareholders of World Peace, in exchange for all of the issued and outstanding
shares of World Peace (9,000,000 shares). World Peace will be operated as a
wholly owned subsidiary.
As a result of the merger, the Company will have approximately 10,007,003 shares
of common stock issued and outstanding.
F-11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with our unaudited
financial statements and notes thereto included herein. In connection with, and
because we desire to take advantage of, the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, we caution readers regarding
certain forward looking statements in the following discussion and elsewhere in
this report and in any other statement made by, or on our behalf, whether or not
in future filings with the Securities and Exchange Commission. Forward-looking
statements are statements not based on historical information and which relate
to future operations, strategies, financial results or other developments.
Forward looking statements are necessarily based upon estimates and assumptions
that are inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond our control and many
of which, with respect to future business decisions, are subject to change.
These uncertainties and contingencies can affect actual results and could cause
actual results to differ materially from those expressed in any forward looking
statements made by, or on our behalf. We disclaim any obligation to update
forward-looking statements.
The independent registered public accounting firm's report on the Company's
financial statements as of December 31, 2007, and for each of the years in the
two-year period then ended, includes a "going concern" explanatory paragraph,
that describes substantial doubt about the Company's ability to continue as a
going concern.
PLAN OF OPERATIONS
Legacy Technology Holdings, Inc. ("the Company" or "we") previously operated as
a nutraceutical marketing and distribution company with a strategic focus of
acquiring intellectual property and processes. The Company intended to market
and distributes nutritional products and services in a way that appeals to its
target market. In January 2007, the Company ceased the operations of its wholly
owned subsidiary, Neuro Nutrition, Inc. ("Neuro"). The Company has been unable
to continue Nuero's operations due to financial constraints.
On May 20, 2008, the Company changed its name to Legacy Technology Holdings,
Inc. by filing an amendment to its Article of Incorporation. As a result of the
name change, the Company's trading symbol on the Over-the-Counter Bulletin Board
was changed to "LTHO".
On May 20, 2008, in the Company instituted a reverse split of its issued and
outstanding common stock on a 1 for 10 basis. After the reverse split, the
Company had 1,007,003 shares of its common stock issued and outstanding. All
references to shares in the three and the six months ended June 30, 2008 and in
prior periods have been adjusted to reflect the post-reverse split amounts.
On June 17, 2008, the Company entered into an Agreement and Plan of Merger by
and between the Company, LTH Acquisition Corporation ("LTH Acquisition"), a
wholly-owned subsidiary of the Company, and World Peace Technologies, Inc.
("World Peace"). As part of the merger, World Peace Technologies, Inc., a
Colorado corporation, will be merged with LTH Acquisition and World Peace will
be the surviving entity of the merger. The Agreement was slightly modified on
July 28, 2008, to correct minor technical issues and on August 1, 2008, the
Agreement and Plan of Merger was executed and completed.
World Peace was incorporated on May 8, 2008, in the state of Colorado. World
Peace is a technology development business that specializes in the development
of technologies and products with possible applications to the military.
1
As part of the amended Agreement and Plan of Merger, the Company has authorized
the issuance of 9,000,000 shares of its restricted common stock to the
shareholders of World Peace, in exchange for all of the issued and outstanding
shares of World Peace (9,000,000 shares). World Peace will be operated as a
wholly owned subsidiary.
The Company intends to file a notice of election to be regulated as a business
development company under the Investment Act of 1940 (1940 Act) with the
Securities and Exchange Commission (SEC).
The Company intends to focus its business development activities on those small
business entities specializing in the development of technologies and products
with possible applications in the military industry and commercial applications.
The Company has identified four initial technologies to focus its business
development activities. The four technologies are as follows:
- Low Energy Cooling - the use of an evaporative and
dehumidification technology to deliver cooler air temperatures
replacing existing residential, commercial or field tents. The
technology uses 90% less energy than current air conditioners either
direct or indirect systems, without increasing humidity in the
structure;
- Air 2 Water - the use of technology, which is not dependent upon
Freon, to harvest water from the air to produce atmospheric water;
- Plasteel - optimizes the use of a cold chemical process to produce
plastic, the resultant plastic product is as strong as, if not
stronger then steel; and
- Targeted Weather - the use of algorithms to determine the
development and location of severe weather combined with the use of
technology to prevent the severe weather from forming.
The Company is in the process of developing full business plans for each of the
above listed technologies. The Company will have four subsidiaries as a result
of the transaction, and intends to operate those subsidiaries to carry out each
individual business plan. However, World Peace, as an approved vendor to the
United States Department of Defense (US DOD), may act as a marketing agent and
bidder for US DOD RFPs for the other subsidiaries, if they develop military
products.
The Company at this time is focusing its efforts on securing financing to pay
outstanding debts and supporting future business activities and the development
of its business plan. The Company does not have sufficient revenue and income to
operate in a break-even mode. The Company will need to fund the deficits in
operating capital through debt or private placements of its common stock, which
is its sole source of liquidity.
RESULTS OF OPERATIONS
For the Three Months Ended June 30, 2008 Compared to the Three Months Ended June
30, 2007
During the three months ended June 30, 2008 and 2007, we did not recognize any
revenues from our business activities.
During the three months ended June 30, 2008, we incurred operational expenses of
$6,999 compared to $28,759 during the three months ended June 30, 2007. The
decrease of $21,760 is a result of the minimization of our operations over the
prior period.
2
During the three months ended June 30, 2008 and 2007, we recognized interest
expense of $26,864 in connection with our convertible notes.
During the three months ended June 30, 2008, we recognized a net loss of $33,863
compared to a net loss of $55,623 during the three months ended June 30, 2007.
The decrease of $21,760 is a result of the $21,760 decrease in operational
expenses discussed above.
For the Six Months Ended June 30, 2008 Compared to the Six Months Ended June 30,
2007
During the six months ended June 30, 2008 and 2007, we did not recognize any
revenues from our business activities.
During the six months ended June 30, 2008, we incurred operational expenses of
$11,269 compared to $33,791 during the six months ended June 30, 2007. The
decrease of $22,522 is a result of the reduction of our operations over the
prior period.
During the six months ended June 30, 2008 and 2007, we recognized interest
expense of $53,727 and $53,432, respectively, in connection with our convertible
notes.
During the six months ended June 30, 2008, we recognized a net loss of $64,996
compared to a net loss of $134,694 during the six months ended June 30, 2007.
The decrease of $69,698 is a result of the $47,471 decrease in losses from
discontinued operations combined with the decrease of $22,522 in operational
expenses discussed above.
LIQUIDITY AND FINANCIAL CONDITION
Net cash used in operating activities during the six months ended June 30, 2008
was $1,501, compared to net cash used in operating activities during the six
months ended June 30, 2007 of $0. During the six months ended June 30, 2008, net
losses of $64,996 were not adjusted for any non-cash items. During the six
months ended June 30, 2007, net losses of $134,694 were adjusted by $47,471 loss
from discontinued operations.
During the six months ended June 30, 2008 and 2007, we did not use or receive
funds from investing activities. During the six months ended June 30, 2008 and
2007, we did not use or receive any funds from financing activities.
At June 30, 2008, we had total current assets of $2,883, consisting of cash on
hand of $725, and $2,158 in assets of discontinued operations. At June 30, 2008,
we had total current liabilities of $1,179,982, consisting of accounts payable
of $392,714, notes payable of $25,433, convertible notes payable of $630,000 and
$131,835 in liabilities of discontinued operations. At June 30, 2008, there is a
working capital deficit of $1,177,099.
During the years ended December 31, 2006 and 2005, the Company issued
convertible promissory notes for $630,000. The convertible promissory notes had
due dates starting in May 2006 through February 2007. The Company is currently
in default on the payment of the convertible promissory notes.
3
NEED FOR ADDITIONAL FINANCING
The Company does not have capital sufficient to meet the Company's cash needs,
including the costs of compliance with the continuing reporting requirements of
the Securities Exchange Act of 1934. The Company will have to seek loans or
equity placements to cover such cash needs. Lack of its existing capital may be
a sufficient impediment to prevent it from accomplishing the goal of expanding
its operations. There is no assurance, however, that without funds it will
ultimately allow the Company to carry out its business.
No commitments to provide additional funds have been made by management or other
stockholders. Accordingly, there can be no assurance that any additional funds
will be available to the Company to allow it to cover its expenses as they may
be incurred.
Irrespective of whether the Company's cash assets prove to be inadequate to meet
the Company's operational needs, the Company might seek to compensate providers
of services by issuances of stock in lieu of cash.
ITEM 3. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not Applicable
ITEM 4. CONTROLS AND PROCEDURES
Disclosures Controls and Procedures
We have adopted and maintain disclosure controls and procedures (as such term is
defined in Rules 13a 15(e) and 15d-15(e) under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) that are designed to ensure that
information required to be disclosed in our reports under the Exchange Act, is
recorded, processed, summarized and reported within the time periods required
under the SEC's rules and forms and that the information is gathered and
communicated to our management, including our Chief Executive Officer (Principal
Executive Officer) and Chief Financial Officer (Principal Financial Officer), as
appropriate, to allow for timely decisions regarding required disclosure.
As required by SEC Rule 15d-15(b), our Chief Executive Officer carried out an
evaluation under the supervision and with the participation of our management,
of the effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Exchange Act Rule 15d-14 as of the end of the period
covered by this report. Based on the foregoing evaluation, our Chief Executive
Officer has concluded that our disclosure controls and procedures are effective
in timely alerting them to material information required to be included in our
periodic SEC filings and to ensure that information required to be disclosed in
our periodic SEC filings is accumulated and communicated to our management,
including our Chief Executive Officer, to allow timely decisions regarding
required disclosure as a result of the deficiency in our internal control over
financial reporting discussed below.
4
ITEM 4T. CONTROLS AND PROCEDURES
Management's Quarterly Report on Internal Control over Financial Reporting.
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting for the company in accordance with as defined
in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our management
conducted an evaluation of the effectiveness of our internal control over
financial reporting based on the framework in Internal Control - Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Our internal control over financial reporting is designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. Our internal control over financial
reporting includes those policies and procedures that:
(i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of our
assets;
(ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that our receipts
and expenditures are being made only in accordance with authorizations
of our management and directors; and
(iii)provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use or disposition of our assets that
could have a material effect on our financial statements.
Management's assessment of the effectiveness of the small business issuer's
internal control over financial reporting is as of the quarter ended June 30,
2008. We believe that internal control over financial reporting is effective. We
have not identified any, current material weaknesses considering the nature and
extent of our current operations and any risks or errors in financial reporting
under current operations.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
This quarterly report does not include an attestation report of the Company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the Company's
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit the Company to provide only management's
report in this annual report.
There was no change in our internal control over financial reporting that
occurred during the fiscal quarter ended June 30, 2008, that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.
5
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
NONE
ITEM 2. CHANGES IN SECURITIES
NONE.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
NONE.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE.
ITEM 5. OTHER INFORMATION
NONE.
ITEM 6. EXHIBITS
Exhibits. The following is a complete list of exhibits filed as part of this
Form 10-Q. Exhibit numbers correspond to the numbers in the Exhibit Table of
Item 601 of Regulation S-K.
Exhibit 31.1 Certification of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act
Exhibit 32.1 Certification of Principal Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act
6
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities and Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
LEGACY TECHNOLOGY, INC.
(Registrant)
Dated: August 19, 2008 By: /s/ David P. Kutchinski
-----------------------
David P. Kutchinski, President, Chief
Executive Officer & Principal Accounting
Officer
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