ITEM 1. FINANCIAL STATEMENTS
LEGACY TECHNOLOGY HOLDINGS, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
2013 2012
----------------- -----------------
Assets
Current Assets
Cash $ 152 $ 70
----------------- -----------------
Total Assets, all current $ 152 $ 70
================= =================
Liabilities and Stockholders' Deficit
Current liabilities
Accounts payable $ 302,007 $ 325,229
Accrued expenses 859,559 802,269
Advances payable 48,956 68,956
Notes payable 31,632 31,632
Convertible notes payable 699,000 630,000
----------------- -----------------
Total Current Liabilities 1,941,154 1,858,086
----------------- -----------------
Stockholders' Deficit
Common stock, $0.0001 par value; 100,000,000 shares 373 373
authorized; 3,731,772 shares issued and outstanding
at June 30, 2013 and December 31, 2012, respectively
Additional paid-in capital (1,094,027) (1,163,027)
Deficit accumulated during the development stage (847,348) (695,362)
----------------- -----------------
Total Stockholders' Deficit (1,941,002) (1,858,016)
----------------- -----------------
Total Liabilities and Stockholders' Deficit $ 152 $ 70
================= =================
See the accompanying notes to these consolidated financial statements.
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LEGACY TECHNOLOGY HOLDINGS, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended For the Six Months Ended May 8, 2008
March 31, June 30, (Inception) to
2013 2012 2013 2012 March 31, 2013
--------------------------- --------------------------- ------------------
Revenue:
Sales $ - $ - $ - $ - $ -
--------------------------- --------------------------- ------------------
Operational expenses:
General and administrative 19,762 18,927 25,695 35,584 288,632
--------------------------- --------------------------- ------------------
Total operational expenses 19,762 18,927 25,695 35,584 288,632
--------------------------- --------------------------- ------------------
Loss from operations (19,762) (18,927) (25,695) (35,584) (288,632)
--------------------------- --------------------------- ------------------
Other income (expense):
Gain on debt relief - - - - 68,005
Finance cost of convertible notes - - (69,000) - (69,000)
Interest expense (29,423) (28,047) (57,291) (55,824) (557,721)
--------------------------- --------------------------- ------------------
Total other expense (29,423) (28,047) (126,291) (55,824) (558,716)
--------------------------- --------------------------- ------------------
Net Loss $ (49,185) $ (46,974) $ (151,986) $ (91,408) $ (847,348)
=========================== =========================== ==================
Per share information
Net (loss) per common share
Basic $ (0.01) $ (0.01) $ (0.04) $ (0.02)
Fully diluted (0.01) (0.01) (0.04) (0.02)
--------------------------- ---------------------------
Weighted average number of common
stock outstanding 3,731,772 3,731,772 3,731,772 3,731,772
--------------------------- ---------------------------
See the accompanying notes to these consolidated financial statements.
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LEGACY TECHNOLOGY HOLDINGS, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
(Unaudited)
Additional
Common Stock paid-in
Number of shares Amount Capital
------------------- -------------- ----------------- -
Balances at December 31, 2006* - $ - $ -
Net income (loss) for the year - - -
------------------- -------------- -----------------
Balances at December 31, 2007* - - -
Issuance of Founders common stock - cash 4,800,000 480 5,120
Issuance of Founders common stock - services 4,200,000 420 3,780
Stock issued for Net Liabilities - reverse merger 1,007,003 101 (1,197,555)
Capital contribution - related party - - 25,000
Net income (loss) for the year - - -
------------------- -------------- -----------------
Balance as of December 31, 2008* 10,007,003 1,001 (1,163,655)
------------------- -------------- -----------------
Cancellation of shares (6,275,231) (628) 628
Net income (loss) for the year - - -
------------------- -------------- -----------------
Balance as of December 31, 2009 3,731,772 373 (1,163,027)
------------------- -------------- -----------------
Net income (loss) for the year - - -
------------------- -------------- -----------------
Balance as of December 31, 2010 3,731,772 373 (1,163,027)
------------------- -------------- -----------------
Net income (loss) for the year - - -
------------------- -------------- -----------------
Balance as of December 31, 2011 3,731,772 373 (1,163,027)
------------------- -------------- -----------------
Net income (loss) for the year - - -
------------------- -------------- -----------------
Balance as of December 31, 2012 3,731,772 373 (1,163,027)
------------------ -------------- -----------------
Convertible Promissory Note Discount - - 69,000
Net income (loss) for the period - - -
------------------- -------------- -----------------
Balance as of March 31, 2013 3,731,772 $ 373 $(1,094,027)
=================== ============== =================
* As restated for reverse merger on July 18, 2008
See the accompanying notes to these consolidated financial statements.
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LEGACY TECHNOLOGY HOLDINGS, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
(Unaudited)
Deficit accum
During
Development
Stage Totals
--------------- ----------------
Balances at December 31, 2006* $ - $ -
Net income (loss) for the year - -
---------------- ----------------
Balances at December 31, 2007* - -
Issuance of Founders common stock - cash - 5,600
Issuance of Founders common stock - services - 4,200
Stock issued for Net Liabilities - reverse merger - (1,197,454)
Capital contribution - related party - 25,000
Net income (loss) for the year (98,782) (98,782)
---------------- ----------------
Balance as of December 31, 2008* (98,782) (1,261,436)
---------------- ----------------
Cancellation of shares - -
Net income (loss) for the year (155,673) (155,673)
---------------- ----------------
Balance as of December 31, 2009 (254,455) (1,417,109)
---------------- ----------------
Net income (loss) for the year (125,970) (125,970)
---------------- ----------------
Balance as of December 31, 2010 (380,425) (1,543,079)
---------------- ----------------
Net income (loss) for the year (137,719) (137,719)
---------------- ----------------
Balance as of December 31, 2011 (518,144) (1,680,798)
---------------- ----------------
Net income (loss) for the year (177,218) (177,218)
---------------- ----------------
Balance as of December 31, 2012 (695,362) (1,858,016)
---------------- ----------------
Convertible Promissory Note Discount - 69,000
Net income (loss) for the period (151,986) (151,986)
---------------- ----------------
Balance as of March 31, 2013 $ (847,348) $ (1,941,002)
================ ================
* As restated for reverse merger on July 18, 2008
See the accompanying notes to these consolidated financial statements.
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LEGACY TECHNOLOGY HOLDINGS, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
May 8, 2008
For the Six Months Ended (Inception) to
June 30, March 31,
2013 2012 2013
--------------- --------------- ---------------
Cash Flows from Operating Activities:
Net Loss $ (151,986) $ (91,408) $ (847,348)
Adjustment to net loss for non-cash items:
Finance cost of convertible promissory notes 69,000 69,000
Adjustments to reconcile net loss to net cash
used in operating activities from continuing operations:
Gain on debt relief - - (68,005)
Compensatory Stock issuance - - 4,200
Changes in operating assets and liabilities:
Increase in Accounts Payable and Accrued Liabilities 34,068 86,378 689,250
--------------- --------------- ---------------
Net Cash Provided (Used) by Operating Activities (48,918) (5,030) (152,903)
--------------- --------------- ---------------
Cash Flows from Investing Activities:
Net Cash Provided by Investing Activities - - -
--------------- --------------- ---------------
Cash Flows from Financing Activities:
Capital contribution for related parties - - 25,000
Sale of common stock - - 5,600
Funds from convertible promissory notes 44,000 44,000
Proceeds from advance payables 5,000 5,100 73,956
--------------- --------------- ---------------
Net Cash Provided (used) by Financing Activities 49,000 5,100 148,556
--------------- --------------- ---------------
Net Increase in Cash 82 70 (4,347)
Cash and Cash Equivalents - Beginning of Period 70 - 4,499
--------------- --------------- ---------------
Cash and Cash Equivalents - End of Period $ 152 $ - $ 152
=============== =============== ===============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest expense $ - - -
=============== =============== ===============
Cash paid for income taxes $ - - -
=============== =============== ===============
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES:
Common shares issued in reverse merger $ - $ - $ (1,197,454)
=============== =============== ===============
See the accompanying notes to these consolidated financial statements.
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5
LEGACY TECHNOLOGY HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Enterprises)
Notes to the Consolidated Financial Statements
For the Six Months Ended June 30, 2013
(Unaudited)
NOTE 1. Business, Basis of Presentation and Significant Accounting Policies:
Business:
Legacy Technology Holdings, Inc. (the "Company" and/or "Legacy") 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".
Neuro Nutrition, the Company's wholly owned subsidiary, was incorporated on July
23, 2004 in the State of Colorado, and has no operational activities.
World Peace, the Company's wholly owned subsidiary was incorporated in the State
of Colorado on May 8, 2008 and has had no operational activities during the
three months ended March 31, 2013 nor during the year ended December 31, 2012.
Reorganization and Share Exchange:
On April 4, 2013, the Company entered into a Plan and Agreement of
Reorganization and Share Exchange Agreement ("the Agreement") with Genomic
Integrated Wellness Systems, Inc. ("GIWS") and GIWS's sole shareholder, Charles
Youngren.
The Agreement provides for the Company to issue 22,527,088 shares of its
restricted common stock to be exchanged for 100% of the issued and outstanding
equity of GIWS, making the Company the sole shareholder of GIWS. As a result of
the issuance, the sole shareholder of GIWS, Charles Youngren, will hold 80% of
the issued and outstanding common stock of the Company, post-acquisition.
Closing of the acquisition is contingent upon the delivery of audited financial
statements by GIWS. At the time of this filing, the transaction has not been
closed.
Basis of Presentation:
Development Stage Enterprise
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" Among the disclosures required by 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.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
Legacy and its wholly-owned subsidiaries, Neuro Nutrition, Inc. and Legacy
Technology Holdings (formerly World Peace Technologies, Inc.) All significant
inter-company balances and transactions have been eliminated in consolidation.
6
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 $250,000 per commercial bank. As of June 30, 2013 and December
31, 2012, 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. 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
Basic net loss per common share is calculated by dividing the net loss
applicable to common shares by the weighted average number of common and common
equivalent shares outstanding during the period. For the three months ended
March 31, 2013 and 2012, there were no potential common equivalent shares used
in the calculation of weighted average common shares outstanding as the effect
would be anti-dilutive because of the net loss.
Stock-Based Compensation
The Company adopted the provisions of and accounts for stock-based compensation
using an estimate of value in accordance with the fair value method. Under the
fair value recognition provisions of this statement, stock-based compensation
cost is measured at the grant date based on the fair value of the award and is
recognized as expense on a straight-line basis over the requisite service
period, which generally is the vesting period. The Company elected the
modified-prospective method, under which prior periods are not revised for
comparative purposes. The valuation method applies to new grants and to grants
that were outstanding as of the effective date and are subsequently modified.
Fair Value of Financial Instruments
The carrying amount of accounts payable, accrued expenses, convertible
promissory notes are considered to be representative of their respective fair
values because of the short-term nature of these financial instruments.
7
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.
Income Taxes
Provision for income taxes represents actual or estimated amounts payable on tax
return filings each year. Deferred tax assets and liabilities are recorded for
the estimated future tax effects of temporary differences between the tax basis
of assets and liabilities and amounts reported in the accompanying balance
sheets, and for operating loss and tax credit carry forwards. The change in
deferred tax assets and liabilities for the period measures the deferred tax
provision or benefit for the period. Effects of changes in enacted tax laws on
deferred tax assets and liabilities are reflected as adjustment to the tax
provision or benefit in the period of enactment.
Recent Accounting Pronouncements
There were various other accounting standards and interpretations issued during
the six months ended June 30, 2013, none of which are expected to have a
material impact on the Company's financial position, operations or cash flows.
NOTE 2. Going Concern:
The Company's financial statements for the six months ended June 30, 2013 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 $151,986 for the six months ended
June 30, 2013, and an accumulated deficit of $847,348 as of June 30, 2013. At
June 30, 2013, the Company had a working capital deficit of $1,941,002.
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. Notes Payable:
The Company's outstanding non-convertible notes payable on June 30,
2013 and December 31, 2012, 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
6,199 Other notes payable
--------
$ 31,632 Total notes payable outstanding on March 31, 2013
======== and December 31, 2012.
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8
NOTE 4. Convertible Notes Payable:
Convertible notes payable as of December 31, 2011 and 2010 consisted of the
following:
$ 50,000 Note payable 1, convertible into 151,515 shares with
conversion feature expiring in May 2008,
due September 30, 2006, incurring interest at 25%,
attached to the note are 151,515 warrants exercisable
at $0.625 per share, which expired in 2008. The note
is secured by a subordinated pledge of inventory and
accounts receivable.
$ 25,000 Note payable 2, convertible into 50,000 shares of Neuro
Nutrition, Inc. with conversion feature expiring at
end 2007, due September 7, 2006, incurring interest
at 10%.
$ 50,000 Note payable 1, convertible into 151,515 shares with
conversion feature expiring in May 2008,
due September 30, 2006, incurring interest at 25%,
attached to the note are 151,515 warrants exercisable
at $0.625 per share, which expired in 2008. The note
is secured by a subordinated pledge of inventory and
accounts receivable.
$ 75,000 Note payable 4, convertible into 227,273 shares with
conversion feature expiring in May 2008,
due September 30, 2006, incurring interest at 25%,
attached to the note are 227,273 warrants exercisable
at $0.625 per share, which expired in 2008. The note
is secured by a subordinated pledge of inventory and
accounts receivable.
$ 20,000 Note payable 5, convertible into 40,000 shares of Neuro
Nutrition, Inc. anytime at Holder's option, due
February 28, 2007, incurring interest at 20%,attached
to the note are 40,000 warrants for Neuro
Nutrition, Inc. common stock exercisable at
$0.65 per share.
$ 50,000 Note payable 6, convertible into 100,000 shares of
Neuro Nutrition, Inc. anytime at Holder's option, due
February 28, 2007, incurring interest at 20%, attached
to the note are 100,000 warrants for Neuro Nutrition,
Inc. common stock exercisable at $0.65 per share.
$ 75,000 Note payable 7, convertible into 150,000 shares of
Neuro Nutrition, Inc. with conversion feature
expiring in May 2008, due May 27, 2006, incurring
interest at 10%, attached to the note are 150,000
warrants for Neuro Nutrition, Inc. exercisable at $0.625
per share, which expired in 2008.
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9
$ 50,000 Note payable 8, convertible into 100,000 shares with
conversion feature expiring in November 2008, due
November 11, 2006, incurring interest at 10%, attached to
the note are 200,000 warrants exercisable at $0.625 per
share, which expired in 2008.
$ 50,000 Note payable 8, convertible into 100,000 shares with
conversion feature expiring in November 2008, due
November 11, 2006, incurring interest at 10%, attached to
the note are 200,000 warrants exercisable at $0.625 per
share, which expired in 2008.
$ 5,000 Note payable 10, convertible into 10,000 shares with
conversion feature expiring in November 2008, due
November 11, 2006, incurring interest at 10%, attached to
the note are 20,000 warrants exercisable at $0.625 per
share, which expired in 2008.
$ 50,000 Note payable 11, convertible into 100,000 shares anytime
at Holder's option, due December 7, 2006, incurring
interest at 10%, attached to the note are 200,000
warrants exercisable at $0.625 per share, which
expired in 2008.
$ 25,000 Note payable 12, convertible into 50,000 shares anytime
at Holder's option, due February 20, 2007, incurring
interest at 10%, attached to the note are 100,000
warrants exercisable at $0.75 per share, which
expired in 2008.
$ 5,000 Note payable 13, convertible into 10,000 shares anytime
at Holder's option, due February 28, 2007, incurring
interest at 10%, attached to the note are 20,000
warrants exercisable at $0.75 per share, which
expired in 2008.
$ 50,000 Note payable 14, convertible into 125,000 shares
anytime at Holder's option, due September 12, 2006,
incurring interest at 25%, attached to the note are
250,000 warrants exercisable at $0.75 per share,
which expired in 2008. This note is secured by
inventory and accounts receivable.
$ 50,000 Note payable 15, convertible into 125,000 shares anytime
at Holder's option, due September 12, 2006,
incurring interest at 25%, attached to the
note are 250,000 warrants exercisable at
$0.75 per share, which expired in 2008. 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.
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As of June 30, 2013, all of the convertible notes described above are in
default.
In March 2013, the Company issued an unsecured convertible promissory note in
exchange for cash of $44,000. In addition, the Company issued an unsecured
convertible promissory note in exchange for already outstanding advances of
$25,000. The convertible promissory notes have a term of 1 year, an interest
rate of 8% per annum and provides for the conversion of the note into shares of
the Company's common stock at $0.07 per share. The Company has recognized a
finance cost of $69,000 in connection with the convertible promissory notes.
10
NOTE 5. Stock Options and Warrants:
At June 30, 2013, the Company had stock option and warrant activity as described
below.
Non-employee stock options
The Company accounts for non-employee stock options under ASC 718, whereby
option costs are recorded based on the fair value of the consideration received
or the fair value of the equity instruments issued, whichever is more reliably
measurable. Unless otherwise provided for, the Company covers option exercises
by issuing new shares.
The Company's subsidiary Neuro Nutrition, Inc. at the beginning of 2010 had
140,000 common stock purchase warrants outstanding. The warrants are to be
effectively granted for exercise upon conversion by the warrant holder of an
accompanying note payable into common stock, which said note the holder can
convert anytime at his option. The warrant holder has two years after effective
grant date to exercise the warrants, at a price of $.625 per share. No Neuro
Nutrition, Inc. warrants were exercised or expired during the three months
ended, leaving a balance of 140,000 warrants at June 30, 2013.
Employee stock options
The Company accounts for employee stock options under ASC 718. Unless otherwise
provided for, the Company covers option exercises by issuing new shares. There
were no employee stock options issued or outstanding at June 30, 2013.
NOTE 6. Taxes:
The Company is subject to foreign and domestic income taxes. The Company has had
no income, and therefore has paid no income tax.
Deferred income taxes arise from temporary timing differences in the recognition
of income and expenses for financial reporting and tax purposes. The Company's
deferred tax assets consist entirely of the benefit from net operating loss
(NOL) carry-forwards. The NOL carry forwards expire in various years through
2030. The Company's deferred tax assets are offset by a valuation allowance due
to the uncertainty of the realization of the NOL carry-forwards. NOL
carry-forwards may be further limited by a change in company ownership and other
provisions of the tax laws.
The Company's deferred tax assets, valuation allowance, and change in valuation
allowance are as follows:
Estimated NOL
Carry-forward Valuation Net Tax
Period Ending benefit Allowance Benefit
June 30, 2013 $173,416 $(173,416) -
December 31, 2012 $139,072 $(139,072) -
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11
NOTE 7 - Legal Proceedings:
In May 2008 a complaint was filed in the District Court for the County of
Boulder, Colorado by product suppliers of the Company (the "Plaintiffs") seeking
collection of trade accounts due in the approximate amount of $127,000 plus
collection costs. Research of the account by Plaintiff's counsel effectively
reduced this amount to approximately $64,000, which is included in the Company's
balance sheet liabilities. The case is ongoing at the present time.
NOTE 8 - Subsequent Events:
The Company has evaluated it activities subsequent to June 30, 2013 and through
the issuance of the financial statements and found no other reportable
subsequent events.
12
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, 2012, 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
We had we had no revenues during the three months ended March 31, 2013. We have
minimal capital, minimal cash, and only our intangible assets consisting of our
business plan, relationships and contacts. We are illiquid and need cash
infusions from investors or shareholders to provide capital, or loans from any
sources.
The Company has focused its efforts, since July of 2009, has focused its efforts
on the completion of its past due audits and the filing of its financial reports
with the Securities and Exchange Commission (SEC). As we have come closer to the
completion of such efforts, the Company has begun to focus its efforts on the
development of operations through an acquisition.
On April 4, 2013, the Company entered into a Plan and Agreement of
Reorganization and Share Exchange Agreement ("the Agreement") with Genomic
Integrated Wellness Systems, Inc. ("GIWS") and GIWS's sole shareholder, Charles
Youngren.
The Agreement provides for the Company to issue 22,527,088 shares of its
restricted common stock to be exchanged for 100% of the issued and outstanding
equity of GIWS, making the Company the sole shareholder of GIWS. As a result of
the issuance, the sole shareholder of GIWS, Charles Youngren, will hold 80% of
the issued and outstanding common stock of the Company, post-acquisition.
Closing of the acquisition is contingent upon the delivery of audited financial
statements by GIWS. At the time of this filing, the acquisition has not closed.
In addition, at closing, the existing officers of the Company will resign and
new officers will be appointed by GIWS's sole shareholder. Mr. Youngren will be
appointed the Chief Operating Officer and a director of the Company. In
addition, as, the sole shareholder of GIWS, Mr. Youngren will have the ability
to appoint two new directors to the Company's Board of Directors.
13
GIWS was incorporated on November 15, 2012 in the state of Colorado, but has
operations in Hawaii. GIWS was formed in order to develop and commercialize a
web-based genomic preventative medicine solution using sophisticated and
proprietary algorithms to analyze data, on individual patient lifestyle factors
such as biometrics, diet, pharmaceuticals, endocrine and blood tests, and
genetic markers. The aggregation of this Patient data in a Data Warehouse will
facilitate analysis via a variety of Machine Learning Algorithms. Discovery of
Genetic Marker patterns, endocrine and blood analysis detected trends, and
associations with individual Patient factors can facilitate customized
Individual Patient Preventative Medicine solutions by health professionals to
mitigate the expression of undesirable Genetic characteristics and to enhance
the expression of desirable Genetic characteristics.
We will need substantial additional capital to support our proposed business
acquisition. We have no revenues. We have no committed source for any funds as
of date here. No representation is made that any funds will be available when
needed. In the event funds cannot be raised when needed, we may not be able to
carry out our business plan, may never achieve sales or royalty income, and
could fail in business as a result of these uncertainties.
RESULTS OF OPERATIONS
For the Three Months Ended June 30, 2013 Compared to the Three Months Ended June
30, 2013
During the three months ended June 30, 2013 and 2012, we did not recognize any
revenues from our operations. We do not expect to recognize revenues in the near
future, as we work to complete our proposed acquisition with GIWS, discussed
above.
During the three months ended June 30, 2013, we incurred general and
administrative expenses of $19,762 compared to $18,927 during the six months
ended June 30, 2012. The increase of $835 was a result of decrease of $13,396 in
professional fees, specifically a $12,303 decrease in legal expenses as the
Company has neared the completion of the work to bring its filings current
offset by a $14,000 increase in consulting fees in connection with the GIWS
acquisition.
During the three months ended June 30, 2013, we incurred a net loss of $49,185,
compared to $46,974 during the three months ended June 30, 2012. The increase of
$2,211 is a result of the $835 increase in general and administrative expenses,
combined with a $1,376 increase in interest expenses resulting from the $69,000
increase in convertible promissory notes during the quarter ended June 30, 2013.
For the Six Months Ended June 30, 2013 Compared to the Six Months Ended June 30,
2013
During the six months ended June 30, 2013 and 2012, we did not recognize any
revenues from our operations. We do not expect to recognize revenues in the near
future, as we work to complete our proposed acquisition with GIWS, discussed
above.
During the six months ended June 30, 2013, we incurred general and
administrative expenses of $25,695 compared to $35,584 during the six months
ended June 30, 2012. The decrease of $9,889 was a result of decrease of $24,131
in professional fees, specifically a $27,800 decrease in legal expenses offset
by a $7,750 increase is auditing fees combined with a $14,000 increase in
consulting fees in connection with the GIWS acquisition.
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During the six months ended June 30, 2013, we incurred a net loss of $151,986,
compared to $91,408 during the six months ended June 30, 2012. The increase of
$60,578 is a result of the $9,889 decrease in general and administrative
expenses, offset by a $70,467 increase in other income (expense) resulting from
the $69,000 finance cost recognized in connection with $69,000 in convertible
promissory notes issued by the Company during the three months ended March 31,
2013 and an increase of $1,467 in interest expense resulting from the increase
in convertible promissory notes.
LIQUIDITY
We have nominal cash of $152 and no other liquid assets at June 30, 2013, and we
will be reliant upon shareholder loans or private placements of equity to fund
any kind of operations. We have secured no sources of loans or private
placements at this time.
During the six months ended June 30, 2013, we used funds of $48,918 in our
operational activities. During the six months ended June 30, 2013, we recognized
a net loss of $151,986, which was adjusted for the $69,000 finance cost incurred
in connection with the Company's issuance of $69,000 in convertible promissory
notes during the six months ended June 30, 2013.
During the six months ended June 30, 2012, we did not use cash of $5,030 in our
operational activities. During the six months ended June 30, 2012, we recognized
a net loss of $91,408 and did not have any non-cash adjustments to net losses.
During the six months ended June 30, 2013 and 2012, we did not use or receive
any funds from investment activities.
During the six months ended June 30, 2013, we received funds of $49,000 from our
financing activities. During the six months ended June 30, 2012, we received
funds of $5,100 from our financing activities.
In March 2013, the Company issued an unsecured convertible promissory note in
exchange for cash of $44,000. In addition, the Company issued an unsecured
convertible promissory note in exchange for already outstanding advances of
$25,000. The convertible promissory notes have a term of 1 year, an interest
rate of 8% per annum and provides for the conversion of the note into shares of
the Company's common stock at $0.07 per share. The Company has recognized a
finance cost of $69,000 in connection with the convertible promissory notes.
Short Term.
On a short-term basis, Legacy has not generated any revenue or revenues
sufficient to cover operations. For short term needs the Company will be
dependent on receipt, if any, of offering proceeds.
Capital Resources
The Company has only common stock as its capital resource.
Legacy has no material commitments for capital expenditures within the next
year, however if operations are commenced, substantial capital will be needed to
pay for participation, investigation, exploration, acquisition and working
capital.
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Need for Additional Financing
Legacy does not have capital sufficient to meet its cash needs. The Company will
have to seek loans or equity placements to cover such cash needs. Once a
business acquisition is completed, the Company's needs for additional financing
is likely to increase substantially.
No commitments to provide additional funds have been made by the Company's
management or other stockholders. Accordingly, there can be no assurance that
any additional funds will be available to Legacy to allow it to cover the
Company's expenses as they may be incurred.
ITEM 4. CONTROLS AND PROCEDURES
The Company maintains a system of disclosure controls and procedures that are
designed for the purposes of ensuring that information required to be disclosed
in the Company's SEC reports is recorded, processed, summarized, and reported
within the time periods specified in the SEC rules and forms, and that such
information is accumulated and communicated to the Company's management,
including the Chief Executive Officer as appropriate to allow timely decisions
regarding required disclosure.
Management, after evaluating the effectiveness of the Company's disclosure
controls and procedures as defined in Exchange Act Rules 13a-14(c) as of June
30, 2013 (the "Evaluation Date") concluded that as of the Evaluation Date, the
Company's disclosure controls and procedures were effective to ensure that
material information relating to the Company would be made known to them by
individuals within those entities, particularly during the period in which this
annual report was being prepared and that information required to be disclosed
in the Company's SEC reports is recorded, processed, summarized, and reported
within the time periods specified in the SEC's rules and forms.
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING.
Legacy's 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. The Company's
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. The Company's internal control over financial
reporting includes those policies and procedures that:
(1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of
the Company's assets;
(2) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that the Company's
receipts and expenditures are being made only in accordance with
authorizations of Legacy's management and directors; and
(3) provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use or disposition of the Company's assets
that could have a material effect on Legacy's financial statements.
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Management's assessment of the effectiveness of the registrant's internal
control over financial reporting is as of June 30, 2013. The Company believes
that internal control over financial reporting is ineffective, due to a lack of
accounting staff. The Company does not have the financial ability to hire
additional accounting staff, at this time.
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 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 the Company's internal control over financial reporting
that occurred during the fiscal quarter ended June 30, 2012, that has materially
affected, or is reasonably likely to materially affect, its internal control
over financial reporting.