United States Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-K
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2008
OR
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 0-14278
LEGACY WINE & SPIRITS INTERNATIONAL LTD.
(FORMERLY LEGACY MINING LTD.)
NEVADA | 91-1963840 |
(STATE OF INCORPORATION) | (I.R.S. ID) |
719 30TH AVENUE, POINTE CALUMET, QUEBEC, CANADA J0N 1G1
(514) 688-3289
Securities registered pursuant to Section 12(b) of the Act:
COMMON STOCK OTC:BB
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $.0001
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
Yes ¨ Nox
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 preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.x
Indicate by check mark whether the registrant is a large accelerated filer, 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 companyx
(Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ Nox
As of December 31, 2008, there were 20,596,085 shares of the issuer's $0.0001 par value common stock issued and outstanding.
1
Legacy Wine & Spirits International Ltd.
FORM 10-K
For The Fiscal Year Ended December 31, 2008
INDEX
PART I
3
ITEM 1. BUSINESS
3
ITEM 1A. RISK FACTORS
7
ITEM 1B. UNRESOLVED STAFF COMMENTS
7
ITEM 2. PROPERTIES
8
ITEM 3. LEGAL PROCEEDINGS
8
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
8
PART II
9
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF
EQUITY SECURITIES
9
ITEM 6. SELECTED FINANCIAL DATA
10
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
10
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
11
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
12
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
27
ITEM 9A. CONTROLS AND PROCEDURES EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
28
ITEM 9B. OTHER INFORMATION
28
PART III
28
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
29
ITEM 11. EXECUTIVE COMPENSATION
29
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
29
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
30
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
30
PART IV
31
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
31
SIGNATURES
32
Note About Forward-Looking Statements
Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statem ents are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. A detailed discussion of these and other risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in the section entitled “Risk Factors” (refer to Part I, Item 1A). We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
2
PART I
ITEM 1. BUSINESS
GENERAL
The following should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements.
Legacy Wine & Spirits International Ltd. (formerly Legacy Mining Ltd.) (“Legacy” or the “Company”) was incorporated on February 19, 1999 in the State of Nevada as Power Direct Tech.com. On February 23, 1999, the Company changed its name to PD Tech.com and on June 8, 1999 the Company changed its name to Cardstakes.com to reflect management’s decision to shift the Company’s focus to internet-based business development. On January 13, 2004, the Company changed its name to Legacy Mining Ltd. to reflect management’s decision to shift the Company’s focus to mineral exploration and development. We also declared a one-for-two reverse stock split of all of the outstanding common stock, without any change in par value of the shares of common stock. Shareholder approval was obtained to affect the reverse stock split which became effective on January 30, 2004. The new CUSIP number for the Company is 5246EP 10 3.
On December 12, 2006, Legacy filed a Form SB-2 Registration Statement with the United States Security Commission. Following a number of amendments, the SB-2/A was declared effective on August 3, 2007. The trading symbol is “LEYM”.
On April 4, 2008, the Company held a Special Meeting whereby the Board of Directors, by unanimous consent, adopted, effective May 2, 2008, the following amendments to its Articles of Incorporation:
Name Change. A majority of the shareholders entitled to vote on such matters approved a change of name from Legacy Wine & Spirits International Ltd. to “Legacy Wine & Spirits International Ltd”. On April 8, 2008, a Certificate of Amendment to its Articles of Incorporation was filed with the State of Nevada changing the name to Legacy Wine & Spirits International Ltd.
Change of Symbol and CUSIP Number. The Company also took the necessary steps to change its symbol and CUSIP Number. Therefore, the CUSIP Number has changed from 5246EP 10 3 to 52470N 10 1. Following the review of the NASD and FINRA, the Company was given a new effective date for trading. Effective at the opening of business on May 27, 2008, the symbol changed from LEYM to “LWSP”.
Our Wine & Spirits Operation
On May 28, 2008 Legacy Wine & Spirits International Ltd. reported that it had signed an agreement with Legacy Wine and Spirits Merchants Ltd (“Legacy Merchants”) a Hong Kong based Company, for the rights to a fifteen (15) year general license to import, bottle, blend, manufacture and distribute wine and spirits in China. Legacy Merchants received 1,000,000 shares of the Company’s Rule 144 stock valued at $960,000 for the rights to the aforementioned license through its agreement with Beijing Nine Dragons Winery Development Co. Ltd (“Nine Dragons”) a China based company. Through Legacy Merchants and its agreement with Crown Star Holdings Ltd, an alcoholic beverage sourcing company with offices in Canada and Hong Kong, the Company has access to a wide selection of fine wine and spirits. The Company’s initial plans were to open at least two (2) wine and spirits retail stores to be located in Beijing, China by September, 200 8 for the distribution of its imported products. Through a number of delays after the completion of the Beijing 2008 Olympics, the plan has changed. Legacy renovated one (1) 1,900 sq.ft. store in Tianjin, China completed in November, 2008. This store will be named “Legacy Wine and Spirits” and will initially stock imported red and white wines as well as a selection of spirits from choice regions throughout the world. This initial store will be a flagship model for a franchising plan designed to further broaden the Company’s distribution facilities and gain further market awareness and penetration of the Legacy brand. Once the Legacy retail stores have been established, the Company will exercise its First Right of Refusal to start-up its manufacturing facility in Beijing through Legacy Merchants agreement with Nine Dragons.
3
On June 24, 2008 Legacy Wine & Spirits International Ltd. reported that it had signed a Distribution Agreement with a Canadian based supplier of Italian wines. This Agreement provided for the supply of select bottled wines at the mid-range price-point from six (6) different wine regions in Italy. The Company was at this time in talks with distributors and wineries in both Spain and California with regards to a Distribution Agreement for wine supply from those parts. During the year ended December 31, 2008, the Company decided to terminate its distribution agreement with 2174684 and it was refunded its $45,000 advance.
Thereafter, the Company secured a relationship with Bronco Wine Company of California and purchased its initial inventory of nine varietals of wine on September 26, 2008 for the purchase price of $37,800. Subsequent to September 30, 2008, 1050 cases of wine were shipped to China and displayed for the opening of the first wine store in December 2008.
The Company has also incurred $10,000 in costs for sourcing of product and brands with wine & spirits manufacturers in China. As at December 31, 2008, the inventory totaled $56,082.
Bronco Wine Company is the single largest private grape grower in the world with ownership of 17,000 hectares of wine grapes and five Californian wineries. Legacy is importing 750 ml bottled wines in several varietals of Bronco Winery’s Hacienda Cellars Brand from Sonoma County, California.
The Hacienda brand from Bronco Winery will include Merlot, Cabernet Sauvignon, Chardonnay, Sauvignon Blanc, Riesling, Gewurztraminer, Viognier, White Zinfandel and Brut Sparkling Wine. All wine varietals are aimed at the mid-price point and will be distributed and retailed in China via wholesale retailers and Legacy’s own outlet showroom which caters to the retail buyer as well, located in TEDA, Tianjin, a second tier city of over 10 million people just outside of Beijing
The Company has amended its business plan in three phases:
Phase One:
Legacy will open one (1) corporately owned wine and spirits retail stores in Tianjin, China (opened December, 2008). This retail store will be stocked with select, moderately priced imported wines and spirits and will serve as the design and sales model for all franchise boutiques opened thereafter. This phase sees Legacy establishing its brand name and retail stores through Point of Purchase marketing and taste appreciation gatherings. Legacy will also secure purchase orders from wholesale distributors for its ‘Bottled Exclusively for Legacy’ wine and spirits line. This phase moves the Company towards the establishment of the Legacy brand.
Phase Two:
Through its agreement with Beijing Nine Dragons Winery Development Co. Ltd., Legacy will start importing select wine and spirits to be bottled in-house and distributed by the Company to Legacy’s retail outlets. This phase will allow Legacy to increase its profit margin via lower shipping costs and taxes as well as wholesale price reductions. Legacy now begins the strategic franchising of its retail stores. This phase will begin in the third quarter of 2009.
Phase Three:
Legacy will begin the importing of select wine juice for the purpose of blending and manufacturing its own brand label wines and spirits. This phase sees Legacy advance its market penetration, solidify its brand recognition and thus realize a further increase in its profit margin. . This phase will begin in the fourth quarter of 2009.
4
Our Mineral Properties
1.Ester Creek and Second Chance Mineral Properties
On October 11, 2005, the Company entered into an agreement with Golden Spirit Gaming Ltd. ("Golden Spirit"), a public company with directors in common, whereby the Company acquired a ninety-percent (90%) ownership interest in the Ester Creek and Second Chance claims (collectively, the “Claims”) located approximately eight miles northeast of Fairbanks, Alaska for the issuance of 750,000 restricted shares of the Company’s common stock valued at $7,500. Under the terms of the agreement, Ester Creek Gold Company, a private Nevada corporation, retained a 10% non-assessable interest in the Ester Creek claims and Lee Holland, a resident of Alaska, retained a 10% non-assessable interest in the Second Chance claim. The Claims are located in and around Ester Creek over an area of approximately 2,320 acres (4 square miles).
The Company will be responsible to keep the Claims in good standing henceforth and to protect the rights of the carried interest holders. The Company will be required to perform annual assessment work to keep the Claims in good standing. The Company has an independent engineering report prepared on the property, which contains recommendations for a work commitment of $25,495 for geological sampling and assaying to be conducted in the
spring of 2008. Due to the new business direction of the Company, it will not proceed with any further work and these claims and management has abandoned the claims.
2. Other Proposed Acquisition
On January 14, 2008 the Company signed a letter of intent with Mercury Enterprise Co. Ltd. ("Mercury") regarding Mercury's 80% property interest. In the letter of intent, the Company agreed to enter into a participation agreement with Mercury on or before March 14, 2008, subject to its due diligence. As of March 17, 2008 the Company has not entered into a participation agreement with Mercury, and therefore the letter of intent has terminated and the Company no longer has any right to acquire an interest in the Property. The Company will not be proceeding with any acquisition of an interest in the Property and has written off associated costs of $15,500 during the first quarter of 2008.
.
ITEM 1A. RISK FACTORS
Not applicable to smaller reporting companies
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
5
ITEM 2. PROPERTIES
As of the dates specified in the following table, Wine & Spirits International Ltd. Held the following property in the following amounts:
Property
December 31, 2008
December 31, 2007
--------------------------------------------------------------------------------------------------------------------
Cash and equivalents
US $ 13,432
US $ 6,014
Legacy Wine & Spirits International Ltd. defines cash equivalents as all highly liquid investments with a maturity of 3 months or less when purchased. Legacy Wine & Spirits International Ltd. does not presently own any interests in real estate. Legacy Wine & Spirits International Ltd. does presently own computer equipment valued at $1,416 (2007 – $2,,022)
Facilities.
As of August 1, 2002, Legacy Wine & Spirits International Ltd. has leased 1250 sq. ft of office space from Holm Investments Ltd. at $1,000 per month for a period of 3 years and has been renewed for an additional 3 years at $1,100 per month. The current tenancy agreement expired August 1, 2008 and was renewed for 3 additional years at $1,100 per month. Effective September 1, 2008, the Company has also leased an additional 900 sq. ft office from 1063244 Alberta Ltd. for $1,100.00 per month on a month to month basis. As of October 15, 2008, the Company has leased it wine store in Tianjin for a period of 10 years (renewable for an additional 5 yrs.), at $1,225 per month.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On April 4, 2008, the Company held a Special Meeting whereby the Board of Directors, by unanimous consent, adopted, effective May 2, 2008, the following amendments to its Articles of Incorporation:
Name Change. A majority of the shareholders entitled to vote on such matters approved a change of name from Legacy Mining Ltd. to “Legacy Wine & Spirits International Ltd”. On April 8, 2008, a Certificate of Amendment to its Articles of Incorporation was filed with the State of Nevada changing the name to Legacy Wine & Spirits International Ltd.
Change of Symbol and CUSIP Number. The Company also took the necessary steps to change its symbol and CUSIP Number. Therefore, the CUSIP Number has changed from 5246EP 10 3 to 52470N 10 1. Following the review of the NASD and FINRA, the Company was given a new effective date for trading. Effective at the opening of business on May 27, 2008, the symbol changed from LEYM to “LWSP”.
6
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES
As at December 31, 2008 there were approximately 2,000 holders of the outstanding shares of the Legacy Wine & Spirits International Ltd.'s $0.001 par value common stock. Legacy Wine & Spirits International Ltd. participates in the OTC Bulletin Board Electronic Quotation System maintained by the National Association of Securities Dealers, Inc., under the most recent trading symbol "LEYM". Legacy Wine & Spirits International Ltd. began trading October 30, 2007. According to quotes provided by stockhouse.com, the Legacy Wine & Spirits International Ltd.'s common stock has closed at:
Quarter
High
Low
2007 Fourth Quarter
$0.75
$0.15
2008 First Quarter
$1.00
$0.64
2008 Second Quarter
$1.05
$0.83
2008 Third Quarter
$0.80
$0.51
2008 Fourth Quarter
$0.93
$0.60
Such quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.
The public may read and copy any materials filed with the SEC at the SEC's Public Reference Room at 450 Fifth Street NW, Washington, D.C. 20549. The public may also obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC 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 is http://www.sec.gov.
Common Stock. Legacy Wine & Spirits International Ltd. is authorized to issue 100,000,000 shares of common stock, $.0001 par value, each share of common stock having equal rights and preferences, including voting privileges. The shares of $.0001 par value common stock of Legacy Wine & Spirits International Ltd.. constitute equity interests in Legacy Wine & Spirits International Ltd. entitling each shareholder to a pro rata share of cash distributions made to shareholders, including dividend payments. As of December 31, 2008, 20,596,085 shares of the Legacy Wine & Spirits International Ltd.'s common stock were issued and outstanding.
The holders of Legacy Wine & Spirits International Ltd.'s common stock are entitled to one vote for each share of record on all matters to be voted on by shareholders. There is no cumulative voting with respect to the election of directors of Legacy Wine & Spirits International Ltd. or any other matter, with the result that the holders of more than 50% of the shares voted for the election of those directors can elect all of the Directors.
The holders of Legacy Wine & Spirits International Ltd.'s common stock have no conversion, preemptive or other subscription rights, and there are no redemption provisions applicable to Legacy Wine & Spirits International Ltd.'s common stock. All of the outstanding shares of Legacy Wine & Spirits International Ltd.'s common stock are duly authorized, validly issued, fully paid and non-assessable.
Dividends. The holders of the Legacy Wine & Spirits International Ltd.'s common stock are entitled to receive dividends when, as and if declared by Legacy Wine & Spirits International Ltd.'s Board of Directors from funds legally available therefore; provided, however, that cash dividends are at the sole discretion of Legacy Wine & Spirits International Ltd.'s Board of Directors. In the event of liquidation, dissolution or winding up of Legacy Wine & Spirits International Ltd., the shareholders of common stock are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities of Legacy Wine & Spirits International Ltd. and after provision has been made for each class of stock, if any, having preference in relation to Legacy Wine & Spirits International Ltd.'s common stock.
Legacy Wine & Spirits International Ltd. has never declared or paid any dividends on its common stock. Legacy Wine & Spirits International Ltd. does not intend to declare or pay any dividends in the foreseeable future.
7
Sales of Securities
2008 Transactions
On February 27, 2008 the Company issued 25,000 restricted common shares with a fair value of $16,250 to a newly appointed director for his current services.
On May 27, 2008, the Company issued 294,083 shares of Legacy Wine & Spirits International Ltd. common stock in satisfaction of $147,041 owed to nine (9) related parties. The issuance price of the common stock was $0.50 per share as agreed between the debtors and Legacy Wine & Spirits International Ltd. The fair market value of those shares on the date of issue was $0.95 per share, resulting in interest on the settlement of debt in the amount of $132,337.
On June 12, 2008, the Company completed the closing of the first phase in connection with a Private Placement (the “Private Placement“) of its securities to certain accredited investors for aggregate gross proceeds of $460,000. The investors purchased an aggregate of 920,000 shares of the Company at a price of $0.50 per share and these shares
were issued subject to restrictions under Rule 144. The Company is now proceeding with the second phase in connection with a Private Placement, which will raise an additional $540,000 through the issuance of 720,000 shares of the Registrant at a price of $0.75 per share for grand total proceeds of $1,000,000.
On June 13, 2008, the Company issued 1,000,000 restricted common shares valued at $960,000 to acquire a 15 year general license to import, bottle, blend, manufacture & distribute wine and spirits throughout China.
On August 19, 2008, the Company issued 85,000 shares of Legacy Wine & Spirits International Ltd. common stock in satisfaction of $42,500 owed to three (3) related parties. The issuance price of the common stock was $0.50 per share as agreed between the debtors and Legacy Wine & Spirits International Ltd. The fair market value of those shares on the date of issue was $0.70 per share, resulting in interest on the settlement of debt in the amount of $17,000.
On September 16, 2008, the Company issued 5,000 restricted common shares valued at $2,550 to a new director for directors’ fees.
On October 7, 2008, the Company issued 6,000 restricted common shares for cash in the amount of $3,000 for a previous share subscription with respect to the second phase of a private placement as described above.
On October 22, 2008, the Company received proceeds of $97,500 for the issue of 162,500 shares under the Company’s 2008 Employee Stock Option Incentive Plan.
2007 Transactions
On August 31, 2007, the Company’s initial public offering of 1,000,000 common shares at a price of $0.05 per share was completed. The offering was fully subscribed for proceeds to the Company of $50,000 and the shares were issued to the placees on September 4, 2007.
2008 Stock Options
During the year ended ended December 31, 2008, the Company granted a total of 162,500, 5 year common stock options at an exercise price of $0.60 per share. The Company recognized stock-based compensation of $4,875 in accordance with SFAS 123R which represented the fair value of stock options granted to consultants in exchange for services rendered to the Company.
(a)
The Company’s stock option activity is as follows:
Number of options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | |
Balance, December 31, 2007 | - | ||
Granted during 2008 | 162,500 | 0.60 | 5 years |
Exercised during 2008 | (162,500) | ||
Balance, December 31, 2008 | - |
(b)
As of December 31, 2008, there were 617,500 stock options available for grant under the Company’s 2008 Stock Incentive and Option Plan.
8
2007 Stock Options
None.
ITEM 6. SELECTED FINANCIAL DATA
Fiscal Year Ended December 30 | 2008 | 2007 | |||
Revenue | $ 2,055 | $ Nil | |||
Operating Loss | (505,183) | (100,657) | |||
Net Loss | (668,369) | (100,657) | |||
Basic net loss per share | 0.03 | 01 | |||
Cash dividends declared per share | - | - | |||
Cash, cash equivalents, and short-term investments | 13,432 | 6,014 | |||
Total assets | 1,315,614 | 9,952 | |||
Long-term obligations | - | - | |||
Stockholders’ equity (deficit) | 495,655 | 1,922,877 |
9
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This following information specifies certain forward-looking statements of management of the company. Forward-looking statements are statements that estimate the happening of future events are not based on historical fact. Forward-looking statements may be identified by the use of forward-looking terminology, such as "may", "shall", "will", "could", "expect", "estimate", "anticipate", "predict", "probable", "possible", "should", "continue", or similar terms, variations of those terms or the negative of those terms. The forward-looking statements specified in the following information have been compiled by our management on the basis of assumptions made by management and considered by management to be reasonable. Our future operating results, however, are impossible to predict and no representation, guaranty, or warranty is to be i nferred from those forward-looking statements.
The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. No assurance can be given that any of the assumptions relating to the forward-looking statements specified in the following information are accurate, and we assume no obligation to update any such forward-looking statements.
Liquidity and Capital Resources.
For the year ended December 31, 2008, we had total assets of $1,315,614, compared to total assets in 2007 of $9,952. This includes a cash balance of $13,432, compared to $6,014 in 2007. We also have inventory of $56,082 and prepaid expenses of $11,493.. We have $128,726 invested in leasehold improvements, $85,000 on deposit for future leasehold improvements, intangible assets of $1,019,405 and $1,416 in furniture and fixtures..
At December 31, 2008, we had current liabilities of $203,888, which was represented by accounts payable and accrued liabilities of $35,923 and $167,965 due to related parties. At December 31, 2007 we had current liabilities of $132,640. The increase in liabilities was due to an increase in funds due to related parties. At December 31, 2008, we had a working capital deficiency of $112,880 (2007 - $(124,710).
We do not believe that our current cash resources will be able to maintain our current operations for an extended period of time. We will be required to raise additional funds or arrange for additional financing over the next 12 months to adhere to our development schedule. No assurance can be given, however, that we will have access to additional cash in the future, or that funds will be available on acceptable terms to satisfy our working capital requirements. If we are not able to arrange for additional funding or if our officers, directors and shareholders stop advancing funds to us, we may be forced to make other arrangements for financing such as loans or entering into strategic alliances. We have not identified any alternative sources of financing.
Results of Operations
We have no revenues from operations to date. During the year ended December 31, 2008 the loss from operations is $668,639 (2007 - $100,657). This increase in loss was due to an increase in office expenses, legal & consulting expenses and travel costs.
From inception to December 31, 2008 our Company has incurred cumulative net losses of $2,882,758, resulting primarily from the write-down of certain internet related activities we were previously involved in. These included a write-down of a proprietary internet technology license in the amount of $912,653, a write-down of URL’s acquired in the amount of $247,500, and a write-down of website development costs in the amount of $158,772; management and consulting fees of $429,862; travel and accommodation of $94,567; office and general expenses of $331,855 professional fees of $257,027; depreciation expense of $38,527 and exploration costs of $17,214.
10
The cash and equivalents constitute our present internal sources of liquidity.
Because we are not generating any significant revenues, our only external source of liquidity is the sale of our capital stock and any advances from officers, directors or shareholders.
Our Plan of Operation for the Next Twelve Months
We do anticipate that we will need to raise additional capital within the next 12 months in order to continue as a going concern. To the extent that additional capital is raised through the sale of equity or equity- related securities, the issuance of such securities could result in dilution of our stockholders. There can be no assurance that additional funding will be available on favorable terms, if at all. If adequate funds are not available within the next 12 months, we may be required to curtail our operations significantly or to obtain funds through entering into arrangements with collaborative partners or others that may require us to relinquish rights to certain of our assets that we would not otherwise relinquish.
Legacy Wine & Spirits International Ltd. does anticipate some expenditures within the next 12 months for its expanding wine operations in China.
Legacy Wine & Spirits International Ltd. does not anticipate any further significant exploration costs within the next 12 months, nor does Legacy Wine & Spirits International Ltd. anticipate that it will lease or purchase any significant equipment within the next 12 months.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
None
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Legacy Wine & Spirits International Ltd.
Quebec, Canada
We have audited the accompanying balance sheets of Legacy Wine & Spirits International Ltd. (formerly Legacy Mining Ltd.) (a development stage company) as of December 31, 2008 and 2007, and the related statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended and for the cumulative period from February 19, 1999 (inception) to December 31, 2008. 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 audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An au dit 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 audits provides a reasonable basis for our opinion.
11
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Legacy wine & Spirits International Ltd. as of December 31, 2008 and 2007, and the results of its activities and cash flows for the years then ended and for the cumulative period from February 19, 1999 (inception) to December 31, 2008 in conformity with accounting principles generally accepted in the United States.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company’s current liabilities exceed current assets, has incurred significant losses since inception, all of which raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regards to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ L.L. Bradford & Company, LLC
April 15, 2009
Las Vegas, Nevada
LEGACY WINE & SPIRITS INTERNATIONAL LTD.
(formerly Legacy Mining Ltd.)
(A development stage Company)
CONSOLIDATED BALANCE SHEETS
December 31, 2008 | December 31, 2007 | ||
ASSETS | |||
CURRENT ASSETS | |||
Cash | $ 13,432 | $ 6,014 | |
Taxes Recoverable | - | 1,260 | |
Inventory, at cost | 66,082 | - | |
Due from Golden Spirit Enterprises Ltd. | - | 656 | |
Prepaid Expenses | 11,494 | - | |
TOTAL CURRENT ASSETS | 91,008 | 7,930 | |
DEPOSIT ON LEASEHOLD IMPROVEMENTS | 85,000 | - | |
LEASEHOLD IMPROVEMENTS, net of depreciation of $719 (2007 - $Nil) | 118,786 | - | |
FURNITURE AND FIXTURES, net of depreciation of $32,112 (2007 - $31,505) | 1,415 | 2,022 | |
OTHER INTANGIBLE ASSETS,net of amortization of $5,695 (2007 - $Nil) | 1,019,405 | - | |
TOTAL ASSETS | $ 1,315,614 | $ 9,952 | |
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | |||
CURRENT LIABILITIES | |||
Accounts payable and accrued liabilities | $ 35,923 | $ 26,467 | |
Due to Golden Spirit Enterprises Ltd. | 31,331 | - | |
Due to Organa Gardens International Inc. | 116,631 | - | |
Due to related parties | 20,003 | 106,173 | |
TOTAL CURRENT LIABILITIES | 203,888 | 132,640 | |
COMMITMENTS AND CONTINGENCIES | |||
STOCKHOLDERS’ EQUITY (DEFICIT) | |||
Common stock, $.0001 par value, 100,000,000 shares authorized | |||
Issued and outstanding: 20,596,085 (2007 – 18,098,502) common shares | 2,060 | 1,809 | |
Additional paid-in capital | 3,972,424 | 2,089,622 | |
Common Stock to be issued | 20,000 | - | |
Deficit accumulated during the development stage | (2,882,758) | (2,214,119) | |
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT) | 1,111,726 | (122,688) | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | $ 1,315,614 | $ 9,952 |
The accompanying notes are an integral part of these financial statements.
12
.
LEGACY WINE & SPIRITS INTERNATIONAL LTD.
(formerly Legacy Mining Ltd.)
(A devlopment stage company)
CONSOLIDATED STATEMENTS OF OPERATIONS
Year ended December 31, 2008 | Year ended December 31, 2007 | Cumulative results of operations from February, 19 ,1999 (inception) to December 31,2008 | ||
REVENUES | ||||
Wine sales | $ 2,055 | $ - | $ 2,055 | |
COST OF GOOD SOLD | 674 | - | 674 | |
GROSS PROFIT | 1,381 | - | 1,381 | |
GENERAL AND ADMINISTRATIVE EXPENSES | ||||
Wine promotions | 2,735 | - | 2,735 | |
Store supplies | 1,537 | - | 1,537 | |
Advertising | 248 | - | 248 | |
Property Tax | 1,962 | - | 1,962 | |
Investor Relations | 10,000 | - | 10,000 | |
Consulting | 298,148 | 16,000 | 429,862 | |
Depreciation and Amortization | 7,021 | 867 | 38,527 | |
Exploration costs | - | - | 17,214 | |
Management fees | - | - | 131,200 | |
Office and general | 59,531 | 25,580 | 331,855 | |
Professional fees | 70,609 | 50,519 | 257,027 | |
Travel and accommodation | 28,494 | 6,691 | 94,567 | |
Wages and salaries | 24,898 | 1,000 | 83,643 | |
Website development costs | - | - | 158,772 | |
Write-down of technology license | - | - | 912,653 | |
Write-down of URL’s | - | - | 247,500 | |
TOTAL EXPENSES | 505,183 | 100,657 | 2,719,302 | |
OTHER INCOME (EXPENSES) | ||||
Property Option Loss | (15,500) | - | (15,500) | |
Interest on settlement of due to related parties | (149,337) | - | (149,337) | |
TOTAL OTHER INCOME (EXPENSES) | (164,837) | - | (164,837) | |
Loss before Income Taxes | (668,639) | (100,657) | (2,882,758) | |
Income Tax Provision | - | - | - | |
NET LOSS | $ (668,639) | $ (100,657) | $ (2,882,758) | |
BASIC AND DILUTED INCOME LOSS PER SHARE | $ (0.03) | $ (0.01) | ||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC AND DILUTED | 19,420,297 | 17,421,790 |
The accompanying notes are an integral part of these financial statements.
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LEGACY WINE & SPIRITS INTERNATIONAL LTD.
(formerly Legacy Mining Ltd.)
(A development stage company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)
PERIOD FROM FEBRUARY 19, 1999 (INCEPTION) TO DECEMBER 31, 2008
Number of shares | Amount | Additional paid-in capital | Common stock to be issued | Deficit accumulated during the exploration stage | Total | |
Balance, February 19, 1999 | - | $ - | $ - | $ - | $ - | $ - |
March 30, 1999 – Shares issued for cash @ $0.20 | 1,050,000 | 105 | 209,895 | - | - | 210,000 |
June 15, 1999 to September 15, 1999 - Shares issued for licensing agreement @ $0.20 | 4,563,446 | 456 | 912,198 | - | - | 912,654 |
July 7, 1999 – Shares issued for services @ $0.20 | 250,000 | 25 | 49,975 | - | - | 50,000 |
Net loss for the period from inception to December 31, 1999 | - | - | - | - | (988,882) | (988,882) |
Balance, December 31, 1999 | 5,863,446 | 586 | 1,172,068 | - | (988,882) | 183,772 |
Net loss | - | - | - | - | (614,401) | (614,401) |
Balance, December 31, 2000 | 5,863,446 | 586 | 1,172,068 | - | (1,603,283) | (430,269) |
Net loss | - | - | - | - | (207,381) | (207,381) |
Balance, December 31, 2001 | 5,863,446 | 586 | 1,172,068 | - | (1,810,664) | (638,010) |
Net loss | - | - | - | - | (62,334) | (62,334) |
Balance, December 31, 2002 | 5,863,446 | 586 | 1,172,068 | - | (1,872,998) | (700,344) |
December 31, 2003 - Common shares to be issued | 229,988 | - | 229,988 | |||
Net loss | - | - | - | - | (64,461) | (64,461) |
Balance, December 31, 2003 | 5,863,446 | 586 | 1,172,068 | 229,988 | (1,937,459) | (534,817) |
February 18, 2004 – Shares issued for debt settlement @ $0.02 | 5,300,000 | 530 | 105,470 | (106,000) | - | - |
February 18, 2004 – Shares issued for debt settlement @ $0.02 | 1,229,880 | 123 | 122,865 | (122,988) | - | - |
February 27, 2004 – Shares issued for property @ $0.02 | 100,000 | 10 | 1,990 | (1,000) | - | 1,000 |
Share reconciliation after reverse split | (4) | - | - | - | - | - |
Net loss | (52,637) | (52,637) | ||||
Balance, December 31, 2004 | 12,493,322 | 1,249 | 1,402,393 | - | (1,990,096) | (586,454) |
The accompanying notes are an integral part of these financial statements.
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LEGACY WINE & SPIRITS INTERNATIONAL LTD.
(formerly Legacy Mining Ltd.)
(A development stage company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
PERIOD FROM FEBRUARY 19, 1999 (INCEPTION) TO DECEMBER 31, 2008
Number of shares | Amount |
Additional paid-in capital | Deferred Compen-sation | Deficit accumulated during the exploration stage | Total | |
Balance forward, January 1, 2005 | 12,493,322 | 1,249 | 1,402,393 | $ - | (1,990,096) | (586,454) |
December 17,2005 – Shares issued for property @$0.02 | 750,000 | 75 | 7,425 | - | - | 7,500 |
Donated capital | - | - | 437,530 | - | - | 437,530 |
Net loss | - | - | - | - | (45,681) | (45,681) |
Balance, December 31, 2005 | 13,243,322 | 1,324 | 1,847,348 | - | (2,035,777) | (187,105) |
September 5, 2006 – Shares issued for debt @ $0.02 | 3,855,180 | 385 | 192,374 | 192,759 | ||
Net loss | - | - | - | - | (77,685) | (77,685) |
Balance, December 31, 2006 | 17,098,502 | 1,709 | 2,039,722 | - | (2,113,462) | (72,031) |
September 4, 2007 – Shares issued for initial public offering @ $0.05 | 1,000,000 | 100 | 49,900 | - | - | 50,000 |
Net loss | - | - | - | - | (100,657) | (100,657) |
Balance, December 31, 2007 | 18,098,502 | $ 1,809 | $ 2,089,622 | - | $ (2,214,119) | (122,688)$ |
February 27, 2008 – Shares issued for services @ $0.65 | 25,000 | 3 | 16,247 | - | - | 16,250 |
May 27, 2008 – Shares issued for debt @ $0.50 | 294,083 | 29 | 147,012 | - | - | 147,041 |
- Interest portion of debt settlement | 132,337 | - | - | 132,337 | ||
June 12, 2008 – Shares issued for cash @ $0.50 | 920,000 | 92 | 459,908 | - | - | 460,000 |
June 13, 2008 – Shares issued for license @ $0.96 | 1,000,000 | 100 | 959,900 | - | - | 960,000 |
August 19, 2008 – Shares issued for debt @ $0.50 | 85,000 | 9 | 42,491 | - | - | 42,500 |
- Interest portion of debt settled | - | - | 17,000 | 17,000 | ||
September 16, 2008 – Shares issued for services @ $0.51 | 5,000 | 1 | 2,549 | - | - | 2,550 |
October 7, 2008 – Shares issued for cash @ $0.50 | 6,000 | 1 | 2,999 | - | - | 3,000 |
October 22, 2008 – Shares issued for options @ $0.60 | 162,500 | 16 | 97,484 | - | - | 97,500 |
| ||||||
Stock based compensation | - | - | 4,875 | - | - | 4,875 |
Shares to be issued for services @ $0.60 | - | - | - | (20,000) | - | (20,000) |
Net loss | - | - | - | (668,639) | (668,639) | |
Balance, December 31, 2008 | 20,596,085 | $ 2,060 | $3,972,424 | $ 20,000 | $(2,882,758) | 1,111,726 |
The accompanying notes are an integral part of these financial statements
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LEGACY WINE & SPIRITS INTERNATIONAL Ltd.
(formerly Legacy Mining Ltd.)
(A development stage company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended December 31, 2008 | Year ended December 31, 2007 |
Cumulative results of operations from February 19, 1999 (inception) to December 31, 2008 | |
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net loss | $ (668,639) | $ (100,657) | $ (2,882,758) |
Adjustments to reconcile net loss to net cash (used in) operating activities: | |||
-depreciation and amortization | 7,021 | 867 | 38,527 |
- fees and services paid with shares and options | 43,675 | - | 93,675 |
- interest on settlement of due to related parties | 149,337 | - | 149,337 |
- non-cash exploration costs | - | - | 9,500 |
- write down of technology license | - | - | 912,654 |
- write off of website development costs | - | - | 158,772 |
- write down of URLs | - | - | 247,500 |
- net changes in other working capital items | (778) | (3,933) | 474,065 |
- inventory | (66,082) | (66,082) | |
NET CASH FLOWS (USED IN) OPERATING ACTIVITIES | (535,466) | (103,723) | (864,810) |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Acquisition of furniture and equipment | - | - | (24,317) |
Deposit on Leasehold improvements | (85,000) | (85,000) | |
Leasehold improvements | (119,505) | (119,505) | |
Website development costs | (65,100) | - | (223,872) |
NET CASH FLOWS USED IN INVESTING ACTIVITIES | (269,605) | - | (452,694) |
| |||
CASH FLOWS FROM FINANCING ACTIVITIES |
| ||
Net advances (to) from related parties | 251,989 | 52,251 | 510,436 |
Proceeds on sale of common stock | 560,500 | 50,000 | 820,500 |
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES | 812,489 | 102,251 | 1,330,936 |
NET (DECREASE) INCREASE IN CASH | 7,418 | (1,472) | 13,432 |
CASH, BEGINNING OF YEAR | 6,014 | 7,486 | - |
CASH, END OF YEAR | $ 13,432 | $ 6,014 | $ 13,432 |
The accompanying notes are an integral part of these financial statements.
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LEGACY WINE & SPIRITS INTERNATIONAL LTD.
(formerly Legacy Mining Ltd.)
(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2008 and 2007 |
NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Legacy Wine & Spirits International Ltd. (formerly Legacy Mining Ltd.) (“Legacy” or the “Company”) was incorporated on February 19, 1999 in the State of Nevada as Power Direct Tech.com. On February 23, 1999, the Company changed its name to PD Tech.com and on June 8, 1999 the Company changed its name to Cardstakes.com to reflect management’s decision to shift the Company’s focus to internet-based business development. On January 13, 2004, the Company changed its name to Legacy Wine & Spirits International Ltd. to reflect management’s decision to shift the Company’s focus to mineral exploration and development. In 2007, the Company filed a Registration Statement Form SB-2/A to become a fully reporting Company on the OTC: BB and on October 30, 2007, began trading under the symbol “LEYM”. In 2008, due to uncertainties in the financing of mineral exploration and development, management decided to shift the Company focus to the wine & spirits industry. On May 2, 2008, the Company changed its name to Legacy Wine & Spirits International Ltd. and on May 27, 2008, the Company began trading under the symbol “LWSP”.
Going concern
These financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company is an development stage company and its general business is the operation of a wine store in Tianjin, China.. The Company will depend almost exclusively on outside capital through the issuance of common shares to finance ongoing operating losses and to fund the wine operations The Company has incurred losses of $2,882,758 from inception to December 31, 2008 and has a working capital deficiency of $112,880. The ability of the Company to continue as a going concern is dependent on raising additional capital and ultimately on generating future profitable operations. There can be no assurance that the Company will be able to raise the n ecessary funds when needed to finance its ongoing costs.
The Company's future capital requirements will depend on many factors, including cash flow from operations, costs to complete property development, if warranted, and competition and global market conditions. The Company's anticipated recurring operating losses and growing working capital needs will require that it obtain additional capital to operate its business.
Given the Company's limited operating history, lack of revenues, and its operating losses, there can be no assurance that it will be able to achieve or maintain profitability. Accordingly, these factors raise substantial doubt about the Company’s ability to continue as a going concern.
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NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The financial statements include the accounts of the Company and its subsidiary, a 100% interest in Tianjin Wine Trading Co. Ltd. – All significant intercompany transactions and balances have been eliminated in consolidation.
Basis of presentation
The accompanying financial statements are presented in United States dollars and are prepared in accordance with accounting principles generally accepted in the United States.
Use of Estimates and Assumptions
Preparation of the Company’s financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
Equipment
Equipment is carried at acquisition cost less accumulated depreciation. Depreciation is provided over the estimated useful lives of the assets on a straightline basis – generally from 3-5 years.
Leasehold Improvements
Leasehold Improvements is carried at acquisition cost less accumulated depreciation. Depreciation is provided over the shorter of the lease term, which generally includes reasonably assured option periods, or the estimated useful lives of the assets on straight line basis per annum.
Intangible Assets
Financial Accounting Standards Board (“FASB”) Statement No. 142, Goodwill and Other Intangible Assets ("FAS 142") requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually in accordance with the provisions of FAS 142. This standard also requires that intangible assets with definite useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment. As of September 30, 2008, the Company believes there is no impairment of its intangible assets. The Company's intangible assets consist of the acquisition of the license to import and distribute wine & liquor products and various brands and labels. The Company determined that the intangibles have an estimated useful life of 15 years and will be reviewed annually for impairment. Amortization will be recorded over the estima ted useful life of the assets using the straight-line method for financial statement purposes. The Company will commenced amortization when the economic benefits of the assets begin to be consumed in December, 2008.
Other intangibles are carried at acquisition cost less accumulated amortization. Amortization is provided over the estimated useful lives of the assets on straight line basis per annum.
Concentration of Credit Risk
Cash in bank accounts is at risk to the extent that it exceeds U.S. Federal Deposit Insurance Corporation and Canadian Deposit Insurance Corporation insured amounts. To minimize risk, the Company places its cash with high credit quality institutions. All cash is deposited in one prominent Canadian financial institution.
Fair Value of Financial Instruments
The following disclosure of the estimated fair value of financial instruments is made in accordance with the requirements of SFAS No. 107. Disclosures about Fair Value of Financial Instruments. The estimated fair value amounts have been determined by the Company, using available market information and appropriate valuation methodologies. The fair value of financial instruments classified as current assets or liabilities, including cash, notes receivable, accounts payable, and amounts due to related parties approximate their carrying value due to the short-term maturity of the instruments.
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NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Foreign Currency Translation
The financial position and results of operations of the Tianjin Wine Trading Co. Ltd. operations are measured using the parent’s currency as the functional currency. Non monetary assets and liabilities of these operations are translated at the exchange rate in effect at the transaction date. Monetary assets and liabilities of these operations are translated at the exchange rate in effect at the balance sheet date. Income statement accounts, with the exception of amortized assets or liabilities, are translated at the average exchange rate during the year. Translation adjustments arising from the use of differing exchange rates from period to period are included in exchange gain or loss in the income statement. Gains and losses that result from foreign currency transactions are included in the calculation of net income (loss).
Inventory
Inventory is recorded at the lower of cost or net realizable value
Revenue Recognition
Sales are recognized upon purchase by customers at our retail store. All sales at our retail store are final, allowing for no sales returns.
Income Taxes
The Company follows the liability method of accounting for income taxes as set forth in SFAS No. 109 “Accounting for Income Taxes”. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax balances. Deferred tax assets and liabilities are measured using enacted or substantially enacted tax rates expected to apply to the taxable income in the years in which those differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment or substantive enactment. A valuation allowance is provided for deferred tax assets if it is more likely than not that the Company will not realize the future benefit, or if the future deducti bility is uncertain. On January 1, 2007, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48 (“FIN No. 48”),Accounting forUncertainty in Income Taxes—an interpretation of FASB Statement No. 109 (“SFAS No. 109”). This interpretation introduces a new approach that changes how enterprises recognize and measure tax benefits associated with tax positions and how enterprises disclose uncertainties related to income tax positions in their financial statements.
Stock-Based Compensation
On January 1, 2006, the Company adopted the fair value recognition provisions of Financial Accounting Standards Board (“FASB”) Statement No. 123(R),Share-Based Payment,(“SFAS 123R”). Prior to January 1, 2006, the Company accounted for share-based payments under the recognition and measurement provisions of APB Opinion No. 25,Accounting for Stock Issued to Employees(“APB 25”), and related Interpretations, as permitted by FASB Statement No. 123,Accounting for Stock-Based Compensation(“SFAS 123”). In accordance with APB 25, no compensation cost was required to be recognized for options granted to employees that had an exercise price equal to the market value of the underlying common stock on the date of grant.
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NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (con’t.)
The Company adopted SFAS 123R using the modified-prospective-transition method. Under this method, compensation cost recognized for the year ended December 31, 2008 includes: a) compensation cost for all share-based payments granted prior to, but not yet vested as of December 31, 2006, based on the grant-date fair value estimated in accordance with the original provisions of SFAS 123, and b) compensation cost for all share-based payments granted subsequent to December 31, 2005, based on the grant-date fair value estimated in accordance with the provisions of SFAS 123R. In addition, deferred stock compensation related to non-vested options is required to be eliminated against additional paid-in capital upon adoption of SFAS 123R. The results for the prior periods have not been restated.
The Company’s results of operations for the year ended December 31, 2008 were no different than if the Company had not adopted SFAS 123R because all stock options granted during the year ended December 31, 2008 were granted to consultants with the related fair value accounting consistent under SFAS 123 and SFAS 123R, and (iii) the Company did not modify any previously existing stock options. As a result, no pro forma disclosure of the impact of adopting SFAS 123R has been provided for the year ended December 31, 2008.
The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with SFAS No. 123 and the conclusions reached by the Emerging Issues Task Force (“EITF”) in Issue No. 96-18. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by EITF 96-18.
Comparative figures
Certain comparative figures have been reclassified in order to conform to the current year's financial statement presentation
Recent Accounting Pronouncements
In February 2007, FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities Including an Amendment of FASB Statement No. 115.” The fair value option permits entities to choose to measure eligible financial instruments at fair value at specified election dates. The entity will report unrealized gains and losses on the items on which it has elected the fair value option in earnings. SFAS 159 is effective beginning in fiscal year 2008. The Company is currently evaluating the effect of adopting SFAS 159, but does not expect it to have a material impact on its results of operations or financial condition.
In December 2007, the SEC issued Staff Accounting Bulletin (“SAB”) 110 Share-Based Payment. SAB 110 amends and replaces Question 6 of Section D.2 of Topic 14, “Share-Based Payment,” of the Staff Accounting Bulletin series. Question 6 of Section D.2 of Topic 14 expresses the views of the staff regarding the use of the “simplified” method in developing an estimate of the expected term of “plain vanilla” share options and allows usage of the “simplified” method for share option grants prior to December 31, 2007. SAB 110 allows public companies which do not have historically sufficient experience to provide a reasonable estimate to continue use of the “simplified” method for estimating the expected term of “plain vanilla” share option grants after December 31, 2007. SAB 110 is effective January 1, 2008. The Company currently uses the “simplified” method to estimate the expected term for share optio n grants as it does not have enough historical experience to provide a reasonable estimate. The Company will continue to use the “simplified” method until it has enough historical experience to provide a reasonable estimate of expected term in accordance with SAB 110. The Company does not expect SAB 110 will have a material impact on its balance sheets, statements of operations and cash flows.
In December 2007, the Financial Accounting Standards Board (“FASB”) issued Statement No. 141R, Business Combinations, and Statement No. 160, Non-controlling Interests in Consolidated Financial Statements, an amendment of ARB No. 51. Statement No. 141R modifies the accounting and disclosure requirements for business combinations and broadens the scope of the previous standard to apply to all transactions in which one entity obtains control over another business. Statement No. 160 establishes new accounting and reporting standards for non-controlling interests in subsidiaries. The Company will be required, if applicable, to apply the provisions of the new standards in the first quarter of 2009. Early adoption is not permitted for these new standards.
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NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (con’t.)
In March 2008, the Financial Accounting Standards Board, or FASB, issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133. This standard requires companies to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. This Statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company has not yet
adopted the provisions of SFAS No. 161, but does not expect it to have a material impact on its consolidated financial position, results of operations or cash flows.
In May 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles”. SFAS No. 162 sets forth the level of authority to a given accounting pronouncement or document by category. Where there might be conflicting guidance between two categories, the more authoritative category will prevail. SFAS No. 162 will become effective 60 days after the SEC approves the PCAOB’s amendments to AU Section 411 of the AICPA Professional Standards. SFAS No. 162 has no effect on the Company’s financial position, statements of operations, or cash flows at this time.
In May 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 163, “Accounting for Financial Guarantee Insurance Contracts-and interpretation of FASB Statement No. 60”. SFAS No. 163 clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement of premium revenue and claims liabilities. This statement also requires expanded disclosures about financial guarantee insurance contracts. SFAS No. 163 is effective for fiscal years beginning on or after December 15, 2008, and interim periods within those years. SFAS No. 163 has no effect on the Company’s financial position, statements of operations, or cash flows at this time.
NOTE 3 – INTERESTS IN MINERAL PROPERTIES
Ester Creek and Second Chance Mineral Properties
On October 11, 2005, the Company entered into an agreement with Golden Spirit Gaming Ltd. ("Golden Spirit"), a public company with directors in common, whereby the Company acquired a ninety-percent (90%) ownership interest in the Ester Creek and Second Chance claims (collectively, the “Claims”) located approximately eight miles northeast of Fairbanks, Alaska for the issuance of 750,000 restricted shares of the Company’s common stock valued at $7,500. Under the terms of the agreement, Ester Creek Gold Company, a private Nevada corporation, retained a 10% non-assessable interest in the Ester Creek claims and Lee Holland, a resident of Alaska, retained a 10% non-assessable interest in the Second Chance claim. The Claims are located in and around Ester Creek over an area of approximately 2,320 acres (4 square miles).
The Company will be responsible to keep the Claims in good standing henceforth and to protect the rights of the carried interest holders. The Company will be required to perform annual assessment work to keep the Claims in good standing. The Company has an independent engineering report prepared on the property, which contains recommendations for a work commitment of $25,495 for geological sampling and assaying to be conducted in the
spring of 2008. Due to the new business direction of the Company, it will not proceed with any further work and these claims and management has abandoned the claims.
Other
On January 14, 2008 the Company signed a letter of intent with Mercury Enterprise Co. Ltd. ("Mercury") regarding Mercury's 80% property interest. In the letter of intent, the Company agreed to enter into a participation agreement with Mercury on or before March 14, 2008, subject to its due diligence. As of March 17, 2008 the Company has not entered into a participation agreement with Mercury, and therefore the letter of intent has terminated and the Company no longer has any right to acquire an interest in the Property. The Company will not be proceeding with any acquisition of an interest in the Property and has written off associated costs of $15,500 in the first quarter.
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NOTE 4 – DEPOSITS ON LEASEHOLD IMPROVEMENTS
The Company will opened its first wine and spirits retail store located in Tianjin, China in December, 2008 for the distribution of its imported products. As at December 31, 2008, the Company has advanced $85,000 towards the leasehold improvements of a second store planned for the latter half of 2009.
NOTE 5 – INTANGIBLE ASSETS
On May 5, 2008, the Company signed an agreement with Legacy Wine and Spirits Merchants Ltd (“Legacy Merchants”) a Hong Kong based Company, for the rights to a fifteen (15) year general license to import, bottle, blend, manufacture and distribute wine and spirits in China. The agreement did not take effect until the Company completed its name change, which was completed on May 27, 2008. Legacy Merchants was issued 1,000,000 restricted shares of the Company’s Rule 144 stock valued at $960,000 for the rights to the aforementioned license through its agreement with Beijing Nine Dragons Winery Co. Ltd (“Nine Dragons”) a China based company. Through Legacy Merchants and its agreement with Crown StarHoldings Ltd, an alcoholic beverage sourcing company with offices in Canada and Hong Kong, the Company has access to a wide selection of fine wine and spirits.
The Company opened one wine and spirits retail stores to be located in Tianjin, China in December, 2008 These approximate 1,900 sq. ft. store is named “Legacy Wine and Spirits” and will initially stock imported red and white wines as well as a selection of spirits from Bronco winery in California, USA.. This initial store will be a flagship model for a franchising plan designed to further broaden the Company’s distribution facilities and gain further market awareness and penetration of the Legacy brand. Once the Legacy retail stores have been established, the Company will exercise its First Right of Refusal to start-up its manufacturing facility in Beijing through Legacy Merchants agreement with Nine Dragons.
Intangible assets include the following:
Description | December 3, | December 31, |
2008 | 2007 | |
15 year general license to acquire & distribute wine & spirits in China | $ 960,000 | $ - |
Website development , branding and labeling costs incurred | 65,100 | - |
Less: accumulated amortization | (5,695) | |
$ 1,019,405 | $ - |
NOTE 6 – COMMON STOCK TO BE ISSUED
On November 1, 2008, the Company entered into an agreement with Charlton Investments Limited. (“Charlton”), a private company controlled by a significant shareholder, with a two-year term, whereby Charlton will provide investment-banking services to the Company (valued at $120,000) in exchange for 200,000 restricted shares of the Company’s common stock (issued subsequent to December 31, 2008).
On November 1, 2008, the Company entered into an agreement with Compte de Sierge Accomodative Corp. Ld.., (“Compte”) a private company owned by a significant shareholder of the Company, for a two year term, whereby Compte will provide investor relations services to the Company (valued at $120,000) in exchange for 200,000 restricted shares of the Company’s common stock (issued subsequent to December 31, 2008). Compte will provide such services as researching, editing and generating a company profile, relaying the Company’s business perspectives and distribution of corporate updates, including press releases.
As of December 31, 2008, the Company had not issued the common stock related to these agreements. Additionally, the Company recorded $20,000 in common stock to be issued for services performed under the contracts.
22
NOTE 7 – STOCKHOLDERS’ EQUITY
The Company’s capitalization is 100,000,000 common shares with a par value of $0.0001 per share.
2008 Transactions
On February 27, 2008 the Company issued 25,000 restricted common shares with a fair value of $16,250 to a newly appointed director for his current services.
On May 27, 2008, the Company issued 294,083 shares of Legacy Wine & Spirits International Ltd. common stock in satisfaction of $147,041 owed to nine (9) related parties. The issuance price of thecommon stock was $0.50 per share as agreed between the debtors and Legacy Wine & Spirits International Ltd. The fair
market value of those shares on the date of issue was $0.95 per share, resulting in interest on the settlement of debt in the
amount of $132,337.
On June 12, 2008, the Company completed the closing of the first phase in connection with a Private Placement (the “Private Placement“) of its securities to certain accredited investors for aggregate gross proceeds of $460,000. The investors purchased an aggregate of 920,000 shares of the Company at a price of $0.50 per share and these shares
Were issued subject to restrictions under Rule 144. The Company is now proceeding with the second phase in connection with a Private Placement, which will raise an additional $540,000 through the issuance of 720,000 shares of the Registrant at a price of $0.75 per share for grand total proceeds of $1,000,000.
On June 13, 2008, the Company issued 1,000,000 restricted common shares valued at $960,000 to acquire a 15 year general license to import, bottle, blend, manufacture & distribute wine and spirits throughout China.
On August 19, 2008, the Company issued 85,000 shares of Legacy Wine & Spirits International Ltd. common stock in satisfaction of $42,500 owed to three (3) related parties. The issuance price of the
common stock was $0.50 per share as agreed between the debtors and Legacy Wine & Spirits International Ltd. The fair market value of those shares on the date of issue was $0.70 per share, resulting in interest on the settlement of debt in the amount of $17,000.
On September 16, 2008, the Company issued 5,000 restricted common shares valued at $2,550 to a new director for directors’ fees.
On October 7, 2008, the Company issued 6,000 restricted common shares for cash in the amount of $3,000 for a previous share subscription with respect to the second phase of a private placement as described above.
On October 22, 2008, the Company received proceeds of $97,500 for the issue of 162,500 shares under the Company’s 2008 Employee Stock Option Incentive Plan.
2007 Transactions
On August 31, 2007, the Company’s initial public offering of 1,000,000 common shares at a price of $0.05 per share was completed. The offering was fully subscribed for proceeds to the Company of $50,000 and the shares were issued to the placees on September 4, 2007.
2008 Stock Options
During the year ended ended December 31, 2008, the Company granted a total of 162,500, 5 year common stock options at an exercise price of $0.60 per share. The Company recognized stock-based compensation of $4,875 in accordance with SFAS 123R which represented the fair value of stock options granted to consultants in exchange for services rendered to the Company.
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NOTE 7 – STOCKHOLDERS’ EQUITY (con’t.)
(c)
The Company’s stock option activity is as follows:
Number of options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | |
Balance, December 31, 2007 | - | ||
Granted during 2008 | 162,500 | 0.60 | 5 years |
Exercised during 2008 | (162,500) | ||
Balance, December 31, 2008 | - |
(d)
As of December 31, 2008, there were 617,500 stock options available for grant under the Company’s 2008 Stock Incentive and Option Plan.
2007 Stock Options
None.
NOTE 8 – RELATED PARTY TRANSACTIONS
During year ended December 31, 2008, the Company incurred expenses for consulting fees of $20,000 (2007 - $12,000) to a Company controlled by a significant shareholder.
During year ended December 31, 2008, the Company incurred expenses for services of $20,000 (2007 - $Nil) to two company\ies controlled by a significant shareholders pursuant to service contracts. (See Note 6).
During year ended December 31, 2008, the Company incurred expenses for rent of $12,000 (2007 - $12,000) to a Company controlled by a significant shareholder.
At December 31, 2008 and 2007, the following amounts are due to related parties:
December 31, 2008 | December 31, 2007 | |||
Organa Gardens International Ltd. | $ | 116,131 | $ | 35,533 |
Golden Spirit Enterprises Ltd. | 31,331 | - | ||
Significant shareholders | 20,003 | 70,640 | ||
$ | 167,465 | $ | 106,173 |
All related party transactions are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties. All amounts owed to the above related parties are unsecured, non-interest bearing and have no specific terms of repayment.
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NOTE 9 - INCOME TAXES
Potential benefits of United States Federal income tax losses are not recognized in the accounts until realization is more likely than not. As of December 31, 2008, the Company has combined net operating losses carried forward totaling approximately $2,882,000 for tax purposes which expire through 2028. Availability of loss usage is subject to change of ownership limitations under Internal Revenue Code 382 for 2002 and prior year’s losses. Pursuant to SFAS No. 109, the Company is required to compute tax asset benefits for net operating losses carried forward. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry forwards.
A reconciliation of income tax computed at the federal and state statutory tax rates is as follows:
Year ended December 31, 2008 | Year ended December 31, 2007 | |
Federal income tax provision at statutory rate | (35.00)% | (35.00)% |
State income tax provision at statutory rate, net of federal income tax effect | (0.00) | (0.00) |
Total income tax provision rate | (35.00)% | (35.00)% |
The actual income tax provisions differ from the expected amounts calculated by applying the federal income tax statutory rate to the Company’s loss before income taxes. The components of these differences are as follows:
Year ended December 31, 2008 | Year ended December 31, 2007 | ||
Loss before income taxes | $ (668,639) | $ (100,657) | |
Corporate tax rate | 35.00% | 35.00% | |
Expected tax expense (recovery) | (234,024) | (35,230) | |
Non-deductable stock based compensation | 4,875 | - | |
Unrecognized loss carry forward and other | 229,149 | 35,230 | |
Income tax provision | $ - | $ - |
The Company’s tax-effected deferred income tax assets and liabilities are estimated as follows:
2008 | 2007 | |||
Non-capital loss carry forwards | $ | - | $ | - |
Valuation allowance | - | - | ||
Net deferred tax asset | $ | - | $ | - |
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NOTE 10- SUPPLEMENTARY CASH FLOW INFORMATION AND NON-CASH INVESTING AND FINANCING ACTIVITIES
Year ended December 31, | For the period from February 19, 1999 (inception) to | ||
2008 | 2007 | December 31 ,2008 | |
Cash paid during the period for: | |||
Interest | $ - | $ - | $ - |
Income taxes | $ - | $ - | $ - |
Shares issued for other intangible assets | $ 960,000 | $ 960,000 | |
Shares issued for debt settlement | $ 189,541 | $ - | $ 611,289 |
During the year ending December 31, 2008 the Company issued:
The Company issued 30,000 restricted common shares valued at $ 19,250 to two Directors.
The Company issued 379,083 restricted common shares valued at $ 338,840 to settle debt.
The Company issued 1,000,000 restricted common shares valued at $ 960,000 to acquire a liquor distribution license.
The Company also received proceeds on the exercise of 162,500 stock options totaling $97,500.
The Company issued 926,000 common shares at a price of $0.50 for proceeds of $463,000 pursuant to a private placement.
During the year ending December 31, 2007 the Company issued:
1,000,000 common shares were issued at a price of $0.05 for proceeds of $50,000 pursuant to an initial public offering.
NOTE 11 – COMMITMENTS AND CONTINGENCIES
As of August 1, 2002, Legacy Wine & Spirits International Ltd. has leased 1250 sq. ft of office space from Holm Investments Ltd. at $1,000 per month for a period of 3 years and has been renewed for an additional 3 years at $1,100 per month. The current tenancy agreement expired August 1, 2008 and was renewed for 3 additional years at $1,100 per month. Effective September 1, 2008, the Company has also leased an additional 900 sq. ft office from 1063244 Alberta Ltd. for a $1,100.00 per month on a month to month basis. As of October 15, 2008, the Company has leased it wine store in Tianjin for a period of 10years (renewable for an additional 5 years), at $1,225 per month. See table below for Tianjin lease schedule.
Tianjin Store | 2009 | 2010 | 2011 | 2012 | 2013 | TOTAL |
Lease rental | $14,700 | $14,700 | $14,700 | $14,700 | $14,700 | $73,500 |
NOTE 12 – SUBSEQUENT EVENTS
The Company issued 400,000 restricted common shares valued at $240,000 pursuant to two service contracts. (See note 6).
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no disagreements with Legacy Wine & Spirits International Ltd.'s auditors since formation of the company that require disclosure pursuant to Item 304 of Regulation S-B.
ITEM 9A. CONTROLS AND PROCEDURES EVALUATION OF
DISCLOSURE CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We maintain a system of internal and disclosure controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act, is recorded, processed, summarized and reported on a timely basis, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Our management, under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) or 15d-15(e)) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Annual Report. Based on such evaluation, our Chief Executive Officer and our Chief Financial Officer they have concluded that, as of the evaluation date, our disclosure controls and procedures are effective in alerting them on a timely basis to material information relating to us required to be included in our reports filed or submitted under the Exchange Act.
Internal Controls Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting based on criteria established in the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2008. Further, this evaluation did not identify any significant changes to our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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 risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this Annual Report.
Changes In Internal Controls
No changes in the Company's internal controls over financial reporting occurred during the period ended December 31, 2008 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
Code of Ethics
We intend to adopt a code of ethics in 2008 that applies to our principle executive officer, principal financial officer, principle accounting officer or controller, other persons performing similar functions. We intend to post the text of our code of ethics on our website in connection with our "Investor Relations" materials. In addition, we intend to promptly disclose (1) the nature of any amendment to our code of ethics that applies to our principle executive officer principal financial officer, principle accounting officer or controller, other persons performing similar functions (2) the nature of any wavier, including an implicit wavier, from a provision of our code of ethics that is granted to one of these specific officers, the name of such person who is granted the waiver and the date of the waiver on our web site in the future.
We do not currently have a code of ethics as this is a new regulatory requirement and we are examining the various form and contents of other companies written code of ethics, discussing the merits and meaning of a code of ethics to determine the best form for our Company.
27
ITEM 9B. OTHER INFORMATION
Not applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
1. Officers and Directors of the Company.
DATE OF APPOINTMENT
NAME
AGE POSITION
TO BOARD OF DIRECTORS
--------------------------------------------------------------------------------------------------------------------------------------
Christopher Scheive 46
President & Director & CEO
November 18, 2008
Jaclyn Cruz
28
Secretary, Treasurer
August 18, 2008
& Director & CFO
The chart above specifies Legacy Wine & Spirits International Ltd. current officers and directors.
All directors of the Company hold office until the next annual meeting or until their successors have been elected and qualified. All officers serve at the discretion of the Board of Directors.
On January 24, 2008, the Registrant accepted the resignation of Carlton Parfitt as Secretary, Treasurer, Director and Chief Financial Officer of the Company. On November 18, 2008, the Registrant accepted the resignation of Robert Klein as Secretary, Treasurer, Director and Chief Financial Officer of the Company. On November 18, 2008, the Registrant accepted the resignation of Marc Scheive as Secretary, Treasurer, Director and Chief Financial Officer of the Company. None of these resignations was not motivated by a disagreement with the Company on any matter relating to the Company’s operations, policies or practices.
Christopher Scheive is a business entrepreneur based in Quebec.
Jaclyn Cruz is a notary public based in Quebec.
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Section 16(a) Beneficial Ownership Reporting Compliance. We believe that our officers, directors, and principal shareholders have not filed all reports required to be filed on, respectively, a Form 3 (Initial Statement of Beneficial Ownership of Securities), a Form 4 (Statement of Changes of Beneficial Ownership of Securities), or a Form 5 (Annual Statement of Beneficial Ownership of Securities).
ITEM 11. EXECUTIVE COMPENSATION
Name of Individual or Capacities in which
Aggregate Remuneration
Identity of Group Remuneration was received
For 2008
For 2007
------------------------------ -----------------------------------------
--------------------------------------
Christopher Scheive
Director, President
$ 1,000
$ -
Jaclyn Cruz
Director , Sec.,Treas. $ 3,550
$ -
Compensation of Directors. Currently, Mr.Scheive and Ms. Cruz, Directors of Legacy Wine & Spirits International Ltd. and are paid on an occasional basis.
Stock Based Compensation
Stock Based Compensation. During the year ended December 31, 2008, $4,875 (2007-$Nil) in stock based compensation was recorded in our financial statements. Stock based compensation is an estimate of the intrinsic value placed in respect to stock options granted to officers, directors, employees and an estimate of the fair value of stock options granted to consultants using the Black-Scholes option pricing model We do expect further stock based compensation in 2009.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth information as of December 31, 2008, with respect to the ownership of the Legacy Wine & Spirits International Ltd.'s common stock by each person known by Legacy Wine & Spirits International Ltd. to be the beneficial owner of more than five percent (5%) of Legacy Wine & Spirits International Ltd.'s common stock, by each director and officer and by all officers and directors as a group.
Name of Beneficial Holder | Address of Beneficial Holder | Amount of Shares Beneficially Owned | % of Outstanding Common Stock |
Cede & Co. | The Depository Trust Co PO Box 222 Bowling Green St’n. New York, NY 10272 | 11,122,854 (1) | 54.00 % |
Christopher Scheive President/Director/CEO | 400 Blvd. Thomas Unit 400 Lachute, Quebec, J8H 1V7 | - | 0.00 |
Jaclyn Cruz Sec,Treas/.Director/CFO | P.O. Box 63 Farmingville, New York 11738 | 5,000 | 0.0002 % |
All directors and Officers as a group | 5,000 | 0.0002 % |
(1) The beneficial owners of these shares are not known to Legacy Wine & Spirits International Ltd.
Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities.
Changes in Control. Our management is not aware of any arrangements which may result in "changes in control" as that term is defined by the provisions of Item 403(c) of Regulation S-B.
29
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE
During year ended December 31, 2008, the Company incurred expenses for consulting fees of $20,000 (2007 - $12,000) to a Company controlled by a significant shareholder.
During year ended December 31, 2008, the Company incurred expenses for services of $20,000 (2007 - $Nil) to two company\ies controlled by a significant shareholders pursuant to service contracts.
During year ended December 31, 2008, the Company incurred expenses for rent of $12,000 (2007 - $12,000) to a Company controlled by a significant shareholder.
At December 31, 2008 and 2007, the following amounts are due to related parties:
December 31, 2008 | December 31, 2007 | |||
Organa Gardens International Ltd. | $ | 116,131 | $ | 35,533 |
Golden Spirit Enterprises Ltd. | 31,331 | - | ||
Significant shareholders | 20,003 | 70,640 | ||
$ | 167,465 | $ | 106,173 |
All related party transactions are in the normal course of business and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties. All amounts owed to the above related parties are unsecured, non-interest bearing and have no specific terms of repayment.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
1. Audit Fees: Aggregate fees billed for each of the last two (2) fiscal years for professional services rendered by the principal accountant for the audit of the annual financial statements and review of financial statements included on Form 10-QSB:
2008: $30,000
2007: $34,500
2. Audit-Related Fees: Aggregate fees billed in each of the last two (2) fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of the financial statements and are not reported previously. These services include the review of certain registration statements.
2008: $800
2007: $1,400
3. Tax Fees: Aggregate fees billed in each of the last two (2) fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning.
2008: $0
2007: $0
4. All Other Fees: Aggregate fees billed in each of the last two (2) fiscal years for products and services provided by the principal accountant, other than the services previously reported.
2008: $0
2007: $0
5. Audit Committee Pre-Approval Procedures. The Board of Directors has not, to date, appointed an Audit Committee.
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PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Exhibit 31.1 - Section 906 Certification of Periodic Report of the Chief
Executive Officer.
Exhibit 31.2 - Section 906 Certification of Periodic Report of the Chief
Financial Officer.
Exhibit 32.1 - Section 302 Certification of Periodic Report of the Chief
Executive Officer.
Exhibit 32.1 - Section 302 Certification of Periodic Report of the Chief
Financial Officer.
b) Form 8-K
8-K filed November 19, 2008 items 1.01 and 3.02: with respect to the change of directors
8-K filed August 22, 2008 items 1.01 and 3.02: with respect to the change of directors
8-K filed June 10, 2008 with respect to new acquisitions and non-shell status
8-K filed January 29, 2008 items 1.01 and 3.02: with respect to new agreements
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this amended report to be signed on its behalf by the undersigned,
thereunto duly authorized, on April 15, 2009
Legacy Wine & Spirits International Ltd.
a Delaware corporation
By:
/s/ Christopher Scheive
------------------------
Christopher Scheive
Its:
Director and President
In accordance with the Exchange Act, this amended report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
/s/: Christopher Scheive
------------------------------------
Date: April 15, 2009
Christopher Scheive
President and a Director
By: /s/ Jaclyn Cruz
-------------------------------------
Date: April 15, 2009
Jaclyn Cruz, Director, Secretary & Treasurer
By: /s/ Jaclyn Cruz
32