Wee-Cig International 10Q 2010 Q3 Quarterly report

UNITED STATES ;

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_____________

FORM 10-Q ;

(Mark One)


[ X ]	Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934

	For the quarterly period ended September 30, 2010

[ ]	Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934

	For the transition period from to

Commission File Number:333-138672

Legacy Wine & Spirits International Ltd.

(Exact name of small business issuer as specified in it’s charter)

Nevada

(State or other jurisdiction of incorporation or organization)

91-1963840
(I.R.S. Employer Identification No.)

1802 Goya Street, Jonquiere

Quebec, Canada, G7Z 1C3

(Address of principal executive offices)

514-688-3289

(Issuer’s telephone number)

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.

[X] Yes [ ] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [ ]Yes[ ]No

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 company [X]

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

APPLICABLE ONLY TO CORPORATE ISSUERS

On October 31, 2010 there were 33,714,085 shares outstanding of the issuer’s common stock.

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INDEX	Page
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet as of September 30, 2010 (Unaudited) and December 31, 2009	3
Statements of Operations (Unaudited) For the Three Months and Nine Months Ended September 30, 2010 and 2009, and the Period from February 18, 1999 through September 30, 2010	4
Statements of Cash Flows (Unaudited) For the Nine Months Ended September 30, 2010 and 2009, and the Period from February 18, 1999 through September 30, 2010	5
Notes To Financial Statements (Unaudited)	6
Item 2. Management's Discussion and Analysis or Plan of Operation	15
Item 3. Quantitative and Qualitative Disclosures About Market Risk	20
Item 4T. Controls and Procedures	20
Part II. OTHER INFORMATION
Item 1. Legal Proceedings	21
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	21
Item 3. Defaults Upon Senior Securities	23
Item 4. Submission of Matters to a Vote of Security Holders	23
Item 5. Other Information	23
Item 6. Exhibits	24
SIGNATURES	25

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

LEGACY WINE & SPIRITS INTERNATIONAL LTD.

(A development stage Company)

CONSOLIDATED BALANCE SHEETS


	September 30, 2010 (Unaudited)	December 31, 2009


CURRENT ASSETS
Cash	$ 4,612	$ 6,743
Inventory, at cost Accounts Receivable	21,756 1,096	39,863 -
Prepaid Expenses	6,454	10,871

TOTAL CURRENT ASSETS	33,918	57,477

DEPOSIT ON LEASEHOLD IMPROVEMENTS	85,000	85,000
LEASEHOLD IMPROVEMENTS, net of depreciation of $15,828 (2009 - $8,643)	103,678	110,863
FURNITURE AND FIXTURES, net of depreciation of $32,760 (2009 - $32,537)	768	990
OTHER INTANGIBLE ASSETS,net of amortization of $125,290 (2009 - $74,035)	899,810	951,065

TOTAL ASSETS	$ 1,123,174	$ 1,205,395


LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES
Accounts payable and accrued liabilities	$ 43,990		$ 55,890
Due to Golden Spirit Enterprises Ltd.	72,568		72,691
Due to Organa Gardens International Inc.	131,372		131,372
Due to related parties	54,558		9,149

TOTAL CURRENT LIABILITIES	302,488		269,102

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ EQUITY
Common stock, $.0001 par value, 100,000,000 shares authorized
Issued and outstanding: 33,564,085 (2009 – 22,744,085) common shares	3,357		2,275
Additional paid-in capital	4,814,907		4,485,039
Deferred compensation	(58,750)		(100,000)
Deficit accumulated during the development stage	(3,938,828)		(3,451,021)

TOTAL STOCKHOLDERS’ EQUITY	820,686		936,293

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 1,123,174		$ 1,205,395

The accompanying notes are an integral part of these consolidated financial statements

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LEGACY WINE & SPIRITS INTERNATIONAL LTD.

(A development stage company)

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three months ended September 30,		Nine months ended September 30,		Cumulative from February, 19, 1999 (inception) to June 30 ,
	2010	2009	2010	2009	2010

REVENUES
Wine sales	$ 3,461	$ 5,755	$ 27,372	$ 27,954	$ 74,880

COST OF GOODS SOLD	2,154	2,720	18,606	11,982	46,643

GROSS PROFIT	1,307	3,035	8,766	15,972	28,237

GENERAL AND ADMINISTRATIVE EXPENSES
Wine Promotions	-	-	-	-	3,233
Store supplies	-	908	219	2,514	3,620
Advertising	-	-	-	-	757
Property Tax	-	-	-	-	1,962
Investor relations	18,750	15,000	50,625	47,500	123,125
Consulting	54,745	105,345	271,354	170,810	945,164
Depreciation and amortization	19,318	19,171	57,953	57,511	173,168
Exploration costs	-	-		-	17,214
Management Fees	-	-		-	131,200
Office and General	17,350	17,400	53,172	60,314	469,986
Professional Fees	5,336	18,039	36,116	34,274	366,255
Travel and accommodation	3,473	3,085	17,165	8,047	125,741
Wages and salaries	460	6,699	9,969	20,487	121,878
Website development costs	-	-		-	158,772
Write-down of technology license	-	-		-	912,653
Write-down of URL’s	-	-		-	247,500

TOTAL EXPENSES	119,432	185,647	496,573	401,457	3,802,228

OTHER INCOME (EXPENSES)
Property Option Loss	-	-	-	-	(15,500)
Interest on settlement of due to related parties	-	-	-	-	(149,337)

TOTAL OTHER INCOME (EXPENSES)	-	-	-	-	(164,837)

Loss before Income Taxes	(118,125)	(182,612)	(487,807)	(385,485)	(3,938,828)
Income Tax Provision		-		-	-

NET LOSS	$ (118,125)	$ (182,612)	$ (487,807)	$ (385,485)	$ (3,938,828)

BASIC AND DILUTED INCOME (LOSS) PER SHARE	$ (0.00)	$ (0.01)	$ (0.02)	$ (0.02)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC AND DILUTED	31,904,846	21,295,172	28,144,946	21,069,341

The accompanying notes are an integral part of these consolidated financial statements.

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LEGACY WINE & SPIRITS INTERNATIONAL LTD.

(A development stage company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Nine months ended September 30, 2010	Nine months ended September 30, 2009	Cumulative from February, 19, 1999 (inception) to September 30 , 2010

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (487,807)	$ (385,485)	$ (3,938,828)
Adjustments to reconcile net loss to net cash (used in) operating activities:
- depreciation and amortization	57,953	57,511	173,168
- fees and services paid with shares	115,250	107,830	358,155
- interest on settlement of due to related parties	-	-	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 working capital items	(8,579)	(8,616)	486,076
- inventory	18,107	12,352	(21,756)

NET CASH FLOWS (USED IN) OPERATING ACTIVITIES	(305,076)	(216,408)	(1,465,422)

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of furniture and equipment	-	-	(24,317)
Deposit on Leasehold improvements	-	-	(85,000)
Leasehold improvements	-	-	(119,505)
Website development costs	-	-	(223,872)

NET CASH FLOWS USED IN INVESTING ACTIVITIES	-	-	(452,694)

CASH FLOWS FROM FINANCING ACTIVITIES
Net advances (to) from related parties	302,945	197,072	1,050,928
Proceeds on sale of common stock	-	13,500	871,800

NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES	302,945	210,572	1,922,728

NET (DECREASE) INCREASE IN CASH	(2,131)	(5,836)	4,612

CASH, BEGINNING OF PERIOD	6,743	13,432	-

CASH, END OF PERIOD	$ 4,612	$ 7,596	$ 4,612

The accompanying notes are an integral part of these consolidated financial statements.

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LEGACY WINE & SPIRITS INTERNATIONAL LTD.

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2010

(Unaudited)

NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION

Legacy Wine & Spirits International 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. 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 a 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 $3,938,828 from inception to September 30, 2010 and has a working capital deficiency of $268,570. 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 necessary 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.

The unaudited interim financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Regulation B Article 8 “Financial Statements of Smaller Reporting Companies” as promulgated by the Securities and Exchange Commission ("SEC"). Accordingly, these financial statements do not include all of the disclosures required by generally accepted accounting principles for complete financial statements. These unaudited interim financial statements should be read in conjunction with the audited financial statements for the period ended December 31, 2009 indexed in Form 10-K. In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim period presented.

Operating results for the three and nine month periods ended September 30, 2010 and September 30, 2009 are not necessarily indicative of the results that may be expected for the year ending December 31, 2010.

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 Legacy Wine Trading Co. Ltd. – All significant intercompany transactions and balances have been eliminated in consolidation.

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LEGACY WINE & SPIRITS INTERNATIONAL LTD.

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2010

(Unaudited)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (con’t.)

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.

Furniture and Fixtures

Furniture and Fixtures are carried at acquisition cost less accumulated depreciation. Depreciation is provided over the estimated useful lives of the assets on a straight line 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”) Accounting Standards Codification (“ASC”) 350 , “Intangibles-Goodwill and Other” 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 ASC 350. 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, 2010, 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 estimated useful life of the assets using the straight-line method for financial statement purposes. The Company 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 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.

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.

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LEGACY WINE & SPIRITS INTERNATIONAL LTD.

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2010

(Unaudited)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (con’t.)

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 period. 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).

Income Taxes

The Company accounts forincometaxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. A valuation allowance is established against deferred tax assets that do not meet the criteria for recognition. In the event the Company were to determine that it would be able to realize deferred income tax assets in the future in excess of their net recorded amount, the would make an adjustment to the valuation allowance which would reduce the provision for income taxes.

The Company follows the accounting guidance which provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized initially and in subsequent periods. Also included is guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

Stock-Based Compensation

The Company accounts for all compensation related to stock, options or warrants using a fair value based method whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. The Company uses the Black-Scholes pricing model to calculate the fair value of options and warrants issued to both employees and non-employees. Stock issued for compensation is valued using the market price of the stock on the date of the related agreement.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (con’t.)

Recent Accounting Pronouncements

In September 2009, the FASB issued ASU No. 2009-12 – Fair Value Measurements and Disclosures (Topic 820) – Investments in Certain Entities That Calculate Net Asset Value per Share (or its equivalent). This ASU permits use of a practical expedient, with appropriate disclosures, when measuring the fair value of an alternative investment that does not have a readily determinable fair value. ASU No. 2009-12 is effective for interim and annual periods ending after December 15, 2009, with early application permitted. Since the Company does not currently have any such investments, it does not anticipate any impact on its financial statements upon adoption.

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LEGACY WINE & SPIRITS INTERNATIONAL LTD.

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2010

(Unaudited)

NOTE 2- BASIS OF PRESENTATION (continued)

In August 2009, the FASB issued ASU No. 2009-05 – Fair Value Measurements and Disclosures (Topic 820) – Measuring Liabilities at Fair Value. This ASU clarifies the fair market value measurement of liabilities. In circumstances where a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using one or more of the following techniques: a technique that uses quoted price of the identical or a similar liability or liabilities when traded as an asset or assets, or another valuation technique that is consistent with the principles of Topic 820 such as an income or market approach. ASU No. 2009-05 was effective upon issuance and it did not result in any significant financial impact on the Company upon adoption.

In January 2010, the FASB issued ASU No. 2010-06 regarding fair value measurements and disclosures and improvement in the disclosure about fair value measurements. This ASU requires additional disclosures regarding significant transfers in and out of Levels 1 and 2 of fair value measurements, including a description of the reasons for the transfers. Further, this ASU requires additional disclosures for the activity in Level 3 fair value measurements, requiring presentation of information about purchases, sales, issuances, and settlements in the reconciliation for fair value measurements. This ASU is effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. We are currently evaluating the impact of this ASU; however, we do not expect the adoption of this ASU to have a material impact on our consolidated financial statements.

In February 2010, the FASB issued ASU No. 2010-09 regarding subsequent events and amendments to certain recognition and disclosure requirements. Under this ASU, a public company that is a SEC filer, as defined, is not required to disclose the date through which subsequent events have been evaluated. This ASU is effective upon the issuance of this ASU. The adoption of this ASU did not have a material impact on our consolidated financial statements.

In April 2010, the FASB issued ASU No. 2010-18 regarding improving comparability by eliminating diversity in practice about the treatment of modifications of loans accounted for within pools under Subtopic 310-30 – Receivable – Loans and Debt Securities Acquired with Deteriorated Credit Quality (“Subtopic 310-30”). Furthermore, the amendments clarify guidance about maintaining the integrity of a pool as the unit of accounting for acquired loans with credit deterioration. Loans accounted for individually under Subtopic 310-30 continue to be subject to the troubled debt restructuring accounting provisions within Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors. The amendments in this Update are effective for modifications of loans accounted for within pools under Subtopic 310-30 occurring in the first interim or annual period ending on or after July 15, 2010. The amendments are to be applied prospectively . Early adoption is permitted. We are currently evaluating the impact of this ASU; however, we do not expect the adoption of this ASU to have a material impact on our consolidated financial statements.

NOTE 3 – DEPOSITS ON LEASEHOLD IMPROVEMENTS

The Company opened its first wine and spirits retail store located in Tianjin, China in December, 2008 for the distribution of its imported products. As at September 30, 2010 the Company has advanced $85,000 towards the leasehold improvements of future store(s) planned for 2011.

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LEGACY WINE & SPIRITS INTERNATIONAL LTD.

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2010

(Unaudited)

NOTE 4 – 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	September 30	December 31,
	2010	2009
15 year general license to acquire & distribute wine & spirits in China	$ 960,000	$ 960,000
Website development , branding and labeling costs incurred	65,100	65,100
Less: accumulated amortization	(125,290)	(74,035)
	$ 899,810	$ 951,065

NOTE 5 – DEFERRED COMPENSATION

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. During the nine months ended September 30, 2010, a total of $45,000 has been expensed ( 2009 - $45,000).

On November 1, 2008, the Company entered into an agreement with Compte de Sierge Accomodative Corp. Ltd., (“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. 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. During the nine months ended September 30, 2010, a total of $45,000 has been expensed (2009 - $45,000).

On May 15, 2010, the Company entered into an agreement with Palisades Financial Ltd. (“Palisades”), a private company controlled by a significant shareholder, with a two-year term, whereby Palisades provides investor relations services to the Company (valued at $30,000) in exchange for 750,000 restricted shares of the Company’s common stock. During the nine months ended September, a total of $5,625 has been expensed ( 2009 - $Nil).

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LEGACY WINE & SPIRITS INTERNATIONAL LTD.-

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2010

(Unaudited)

NOTE 5 – DEFERRED COMPENSATION (con’t)

On May 15, 2010, the Company entered into an agreement with a consultant, for a two year term, whereby the consultant provides consulting services to the Company (valued at $30,000) in exchange for 750,000 shares of the Company’s common stock. During the nine months ended September 30, 2010, a total of $5,625 has been expensed ( 2009 - $Nil).

The Company amortizes the costs of these services over the respective terms of the contracts. During the nine months ended September 30, 2010, the Company recorded amortization of deferred compensation totaling $101,250 and as at September 30, 2010 the unamortized portion of the deferred compensation totaled $58,750.

NOTE 6 – STOCKHOLDERS’ EQUITY

The Company’s capitalization is 100,000,000 common shares with a par value of $0.0001 per share.

2010 Transactions

On January 20, 2010 the Company issued 200,000 restricted common shares with a fair value of $14,000 to a consultant for his current services.

During the nine months ended September 30, 2010 the Company issued 9,120,000 shares under the Company’s 2010 & 2009 Employee Stock Option Incentive Plans with a value of $256,950 for satisfaction of debt to related parties.

On May 26, 2010, the Company issued 1,500,000 restricted common shares with a fair value of $60,000 pursuant to deferred compensation agreements.

2009 Transactions

On January 22, 2009 the Company issued 400,000 restricted common shares with a fair value of $240,000 pursuant to deferred compensation agreements (See note 6).

On April 20, 2009 the Company issued 13,000 restricted common shares with a fair value of $7,930 in exchange for services.

On June 8, 2009 the Company issued 30,000 restricted common shares at $0.45 for total cash proceeds of $13,500.

During the nine months ended September 30, 2009, the Company issued 360,000 shares under the Company’s 2009 Employee Stock Option Incentive Plan with a value of $123,200 for satisfaction of debt to related parties.

2010 Stock Options

During the nine months ended September 30, 2010 the Company issued 5,570,000 shares under the Company’s 2010 & 2009 Employee Stock Option Incentive Plans at various prices between $0.03 to $0.07 with a total value of $256,950 for satisfaction of debt to related parties. Accordingly, no further stock based compensation was recorded.

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LEGACY WINE & SPIRITS INTERNATIONAL LTD.

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2010

(Unaudited)

NOTE 6 – STOCKHOLDERS’ EQUITY (con’t)

The Company’s stock option activity is as follows:


	Number of options	Weighted Average Exercise Price	Weighted Average Remaining Contractual Life

Balance, December 31, 2008	-	-	-
Granted during the period	1720,000	0.25	-
Exercised during the period	( 1,720,000)	0.25	-

Balance, December 31, 2009	-	$ -	-

Granted during the period	9,120,000	0.07	-
Exercised during the period	( 9,120,000)	0.07	-


Balance, September 30, 2010	-	$ -	-

As of June 30, 2010 there were 587,500 stock options available for grant under the Company’s 2008 Stock Incentive and Option Plan.

As of June 30, 2010 there were 3,965,000 stock options available for grant under the Company’s 2009 Stock Incentive and Option Plan

On February 9, 2010, the Company filed Registration Statements on Form S-8 to register 9,000,000 to be issued pursuant to the Company’s 2010 Stock Incentive and Option Plan. As of March 31, 2010 there were 3,775,000 stock options available for grant under the Company’s 2010 Stock Incentive and Option Plan

2009 Stock Options

During the nine month period ended September 30, 2009, the Company granted a total of 390,000, 5 year common stock options at various prices between $0.14 - $0.45 per share, of which 360,000 were exercised immediately in satisfaction of debts. The Company recognized stock-based compensation of $9,900 , which represented the fair value of the remaining 30,000 stock options granted to consultants in exchange for services rendered to the Company.

During the year 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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LEGACY WINE & SPIRITS INTERNATIONAL LTD.

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2010

(Unaudited)

NOTE 6 – STOCKHOLDERS’ EQUITY (con’t)

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
Exercised during 2009	(162,500)	0.60


Balance, December 31, 2008	-	-	-
Granted during the period	390,000	0.45
Exercised during the period	390,000	-

Balance, September 30, 2009	-	$ 0.45	4.91 years

As of September 30, 2009, there were 587,500 stock options available for grant under the Company’s 2008 Stock Incentive and Option Plan.

On June 5, 2009, the Company filed Registration Statements on Form S-8 to register 6,000,000 to be issued pursuant to the Company’s 2009 Stock Incentive and Option Plan. As of September 30, 2009, there were 5,610,000 stock options available for grant under the Company’s 2009 Stock Incentive and Option Plan

NOTE 7 – RELATED PARTY TRANSACTIONS

During the nine months ended September 30, 2010, the Company incurred expenses for consulting fees of $120,000 (2009 - $70,000) to a significant shareholder and Companies controlled by a significant shareholder and $3,142 (2009 - $5,800) for directors fees.

During the nine months ended September 30, 2010, the Company incurred expenses for services of $101,250 (2009 - $90,000) to significant shareholders pursuant to service contracts (See Note 5).

During the nine months ended September 30, 2010, the Company incurred expenses for rent of $19,295 (2009 - $20,295) to a Companies controlled by a significant shareholder.

The following amounts are due to related parties:


	September 30, 2010	December 31, 2009

Organa Gardens International Inc.	$ 132,372	$ 131,372
Golden Spirit Enterprises Ltd.	72,568	72,691
Significant shareholders	54,558	9,149

	$ 259,498	$ 213,212

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.

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LEGACY WINE & SPIRITS INTERNATIONAL LTD.

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2010

(Unaudited)

NOTE 8 – 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 June 30, 2010, the Company has combined net operating losses carried forward totalling approximately $3,938,000 for tax purposes which expire through 2030. 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.

NOTE 9- SUPPLEMENTARY CASH FLOW INFORMATION AND NON-CASH INVESTING AND FINANCING ACTIVITIES


	Nine months ended Sept. 30,		For the period from February 19, 1999 (inception) to
	2010	2009	Sept. 30 , 2010

Cash paid during the period for:
Interest	$ -	$ -	$ -

Income taxes	$ -	$ -	$ -

Shares issued for other intangible assets	$ -	$ -	$ 960,000

Shares issued for debt settlement to related parties	$ 256,950	-	$ 868,239

Shares issued for deferred compensation	$ 60,000	$ 300,000	$ 360,000

The Company issued 9,120,000 common shares with a value of $256,950 for satisfaction of debt to related parties

during the nine months ended September 30, 2010.

On May 26, 2010, the Company issued 1,500,000 restricted common shares with a fair value of $60,000 pursuant to deferred compensation agreements.

NOTE 10 – COMMITMENTS AND CONTINGENCIES

As of August 1, 2002, the Company leased 1250 sq. ft of office space from Holm Investments Ltd. at $1,000 per month for a period of 3 years which was renewed in 2005 for an additional 3 years at $1,100 per month and again in 2008 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 per month on a month to month basis.

As of October 15, 2008, the Company leased its wine store in Tianjin for a period of 10 years (renewable for an additional 5 years), at $1,225 per month. See table below for Tianjin lease schedule.


Tianjin Store	2010	2011	2012	2013	2014	TOTAL
Lease rental	$14,700	$14,700	$14,700	$14,700	$14,700	$73,500

LEGACY WINE & SPIRITS INTERNATIONAL LTD.

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2010

(Unaudited)

NOTE 11 – SUBSEQUENT EVENTS TO NOVEMBER 11, 2010

In October, 2010, 150,000 incentive stock options were granted and immediately exercised at $0.02 per share to satisfy a consultant debt in the amount of $3,000.

On October 13, 2010, the Company was removed from the bulletin board to the pinksheets for failure to comply with Rule 15c2-11 whereby the frequency of market maker quotations did not meet the requirements of the Rule. The Company is taking the necessary steps to be in compliance with Rule 15c2-11 and be able to return to the OTC Bulletin Board for quotations in due course.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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 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”.

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, 20 08 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.

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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 (12,600 bottles) 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 September 30, 2010, the inventory totaled $21,756 (December 2009- $39,863).

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 a three phase of business operation:

Phase One:

Legacy opened the initial corporately owned wine and spirits retail store in Tianjin, China in December, 2008. This retail store is stocked with select, moderately priced imported wines 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:

Legacy has $85,000 reserved for leasehold improvements required to be made to future store locations. Additionally, the Company is in negotiations with three (3) existing wine and spirit stores in China. These stores are located in and around the Company's flagship store in TEDA (Tianjin Economic Development Area).

-16-

The location of these stores were strategically chosen for logistic reasons since this will enable the current Legacy staff to move between each store implementing the protocol and standards that Legacy Stores will be known for in China. A Legacy Wine and Spirits store should signify a reliable place for locals or foreigners to purchase their alcohol of choice whether it be for gift giving or personal consumption. With limited capital investment necessary and the Company's stock as a negotiable tool, Legacy's management feels that it will be advantageous to integrate these existing operating entities into a chain of Legacy retail outlets thus solidifying the Company's corporate branding. This move will greatly expedite the Company's ability to distribute its inventory and increase its brand awareness in China. The proposed acquisition will enable Legacy to have the economy of scale working in th eir favor in terms of sales multiples and purchasing capabilities with wine and spirit suppliers and vendors.

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. This phase is now expected to begin in the second quarter of 2011.

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 is now expected to begin in the fourth quarter of 2011.

The Company attended the Shanghai-Fujian Seafood Association (SFSA) dinner where Legacy's wines were the only wines featured at the seafood/wine pairing dinner on December 11, 2009. The SFSA provides up to 40% of the seafood consumed in Shanghai. The event provided an excellent opportunity to broaden the base of acceptance for Legacy's wine selections and resulted in immediate orders for 400 cases of Legacy wines as well as the consumption of 30 cases of wine at the event.

Approximately 40 percent of imported wine enters China through Shanghai, so it is natural that the city has become the base for the majority of the leading distributors. Shanghai's specialty retail wine shops are a growing phenomenon in Shanghai and are unique alternatives to traditional state-owned tobacco and liquor shops and other retail outlets. These shops have found a niche in the retail market due to their unique marketing strategies, educational events, and store locations. From wine tasting parties and definitive flavor labels to wine and food matching seminars, these small specialty shops offer a growing and personalized introduction to imported wine.

Legacy is expecting to join this market with its first wine outlet in Shanghai in 2010. The local partners currently buy wine from Legacy.

According to statistics, Xiamen, the capital city of Fujian Province, reports annual consumption volumes of wine exceeding 10,000 liters, of which 45% are premium wines. Sales volumes have been increasing by 15% each year making Xiamen one of the key wine markets in China. In addition to strong local demand for wine, Xiamen also plays an important role as a wine distribution centre to neighboring areas such as Quanzhou, Fuzhou and Zhejiang in Jiangxi province.

Legacy also intends to set up a joint venture in 2011 to aggressively enter the Xiamen market. Similar to Shanghai the local partners currently buy wine from Legacy.

As of September 30, 2010, the Company is in the process of producing the first of its own brand of select wines under private label from choice vintners around the world.

-17-

The first selection will be from the region of Chile in South America, to be known as the Andes Primera Collection by Legacy. The Andes Primera Brand will consist of red wine varietals only such as Cabernet Sauvignon, Merlot, Malbec, Camanere and Cabernet-Merlot. Currently, imported bottled Chilean wines in China are competitive in price due to a special trade agreement between the two countries.

As at September 30, 2010, intangible assets include the following:


Description	September 30	December 31,
	2010	2009
15 year general license to acquire & distribute wine & spirits in China	$ 960,000	$ 960,000
Website development , branding and labeling costs incurred	65,100	65,100
Less: accumulated amortization	(125,290)	(74,035)
	$ 899,810	$ 951,065

We review our definite lived intangible related to the license in accordance with FASB ASC 350 “Intangibles – Goodwill and Other” and FASB ASC 360-10-35 “Subsequent Measurement” which states “An impairment shall be recognized only if the carrying amount of a long-live asset is not recoverable and exceeds its fair value”. The carrying amount of the license is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset.

Over the 15 year period of the license, the Company has estimated that the undiscounted cash flows generated exceed the carrying amount. During the year ended December 31, 2009 it was determined that this is still realistic. Since the Company determined that the carrying amount was still recoverable, it was determined that an impairment did not exist.

In addition, we recognize that our policy should further clarify the distinction between indefinite and definite lived assets. As such we disclose the following:

Codification (“ASC”) 350, “Intangibles—Goodwill and Other”. Under ASC 350, intangible assets, other than goodwill, are identified and segregated between amortizable and non-amortizable assets. Amortizable intangibles are amortized over their estimated, contractual, or regulated useful lives which is 15 years. Goodwill and other non-amortizable assets are reviewed, at least annually, for impairment in the carrying value of the intangible asset. In addition, this review also includes the net carrying value of amortizable intangible assets. If impairment is deemed to have occurred, a loss for such impairment is recorded as part of current operations. We test our goodwill for impairment annually during our fourth fiscal quarter and in interim periods if certain events occur indicating that the carrying value of goodwill may be impaired. We review the value of our intangible assets in accordance with the applicable accounting literat ure for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate.

We have performed an evaluation of the carrying value of our intangible assets as of September 30, 2010, and determined that impairment changes are not necessary.

-18-

Liquidity and Capital Resources.

At September 30, 2010, we had total assets of $1,123,174, including current assets in cash of $4,612, inventory, at cost, $21,756, accounts receivable of $1,096 and prepaid expenses of $6,454. We have a deposit on leasehold improvements of $85,000, actual leasehold improvements, net of depreciation of $15,828 in the amount of $103,678, equipment, net of depreciation of $32,760, in the amount of $768 and other intangible assets of , net of amortization of $125,290 in the amount of $899,810. As of December 31, 2009, we had total current assets of $57,477. The decrease in assets is due to depreciation and amortization of our assets, sale of inventory and expensing the expired portion of prepaid expenses.

At September 30, 2010, we had current liabilities of $302,488, which was represented by accounts payable and accrued liabilities of $43,990, a related party payable to Golden Spirit Enterprises Ltd. in the amount of $72,568, a related party payable to Organa Gardens International Inc. in the amount of $131,172 and $54,558 due to other related parties. As of December 31, 2009 we had total current liabilities of $269,102. The increase in liabilities was a result of an increase in amounts owing to related parties. At September 30, 2010, we had a working capital deficiency of $268,570. (December 31, 2009 - $211,625).

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. The Company is currently attempting to raise capital through sophisticated private investors.

Results of Operations

We have begun to realize some revenues from our retail wine store in China operations. Revenues for the three month period ended September 30, 2010 were $3,461 (2009 - $5,755) Loss from operations for the three month period ended September 30, 2010 was $118,125 (2009 - $182,612). This decrease in loss was due to an decrease in consulting expenses for the three months ended September 30, 2010. Revenues for the nine month period ended September 30, 2010 were $27,372 (2009 - $27,954) Loss from operations for the nine month period ended September 30, 2010 was $487,807 (2009 - $385,485). This increase in loss was due to an increase in consulting expenses for the nine months ended September 30, 2010.

From inception to September 30, 2010 our Company has incurred cumulative net losses of $3,938,828, 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 $945,164; travel and accommodation of $125,741; office and general expenses of $469,986, professional fees of $366,255; depreciation and amortization expense of $173,168, exploration costs of $17,214, a property option loss of $15,500 and interest on settlement of debt of $149,337.

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.

-19-

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.

Off-Balance Sheet Arrangements

Our company has not entered into any off balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As of September 30, 2010, we had cash in the amount of $4,612. We have generated small revenues in the amount of $74,880 since inception and have incurred a net loss of $3,938,828 from our inception on February 19, 1999 to September 30, 2010. Our current operating funds are insufficient to expand the operation of our business venture as well as providing funds for anticipated operating overheads, professional fees and regulatory filing fees. Legacy Wine & Spirits International Ltd. does expect significant costs to complete the leasehold improvements and supply wine & liquor inventory to future liquor store locations for its business venture. It will have to obtain funds through entering into arrangements with collaborative partners or others to accomplish these expenditures. It currently is attempting to raise capital through sophisticated private investors. There is no assurance that we will be able to raise sufficient funding from the sale of our common stock to fund our anticipated business plan.

Item 4T Controls and Procedures.

An evaluation was conducted by our Chief Executive Officer (CEO) and Chief Financial Officer (CFO) of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2010. Based on that evaluation, the CEO and CFO concluded that our controls and procedures were effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

There was no change in our internal control over financial reporting that occurred during the fiscal quarter ended September 30, 2010 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

This quarterly report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of our registered public accounting firm due to a transition period established by rules of the Securities and Exchange Commission for newly public companies.

-20-

PART II - OTHER INFORMATION

ITEM 1. Legal Proceedings

ITEM 1A. Risk Factors

Not applicable

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

The Company’s capitalization is 100,000,000 common shares with a par value of $0.0001 per share.

2010 Transactions

On January 20, 2010 the Company issued 200,000 restricted common shares with a fair value of $14,000 to a consultant for his current services.

On May 26, 2010, the Company issued 1,500,000 restricted common shares with a fair value of $60,000 pursuant to deferred compensation agreements.

2009 Transactions

On January 22, 2009 the Company issued 400,000 restricted common shares with a fair value of $240,000 pursuant to deferred compensation agreements (See note 6).

On April 20, 2009 the Company issued 13,000 restricted common shares with a fair value of $7,930 in exchange for services.

On June 8, 2009 the Company issued 30,000 restricted common shares at $0.45 for total cash proceeds of $13,500.

2010 Stock Options

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The Company’s stock option activity is as follows:


	Number of options	Weighted Average Exercise Price	Weighted Average Remaining Contractual Life

Balance, December 31, 2008	-	-	-
Granted during the period	1720,000	0.25	-
Exercised during the period	( 1,720,000)	0.25	-

Balance, December 31, 2009	-	$ -	-

Granted during the period	9,120,000	0.07	-
Exercised during the period	( 9,120,000)	0.07	-


Balance, September 30, 2010	-	$ -	-

As of June 30, 2010 there were 587,500 stock options available for grant under the Company’s 2008 Stock Incentive and Option Plan.

As of June 30, 2010 there were 3,965,000 stock options available for grant under the Company’s 2009 Stock Incentive and Option Plan.

2009 Stock Options

-22-

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
Exercised during 2009	(162,500)	0.60


Balance, December 31, 2008	-	-	-
Granted during the period	390,000	0.45
Exercised during the period	390,000	-

Balance, September 30, 2009	-	$ 0.45	4.91 years

As of September 30, 2009, there were 587,500 stock options available for grant under the Company’s 2008 Stock Incentive and Option Plan.

ITEM 3. Defaults Upon Senior Securities

None.

ITEM 4. Submission of Matters to Vote of Security Holders

None

ITEM 5. Other Information

The Company has unresolved staff comments with the United States Securities & Exchange Commission

regarding the methods and key assumptions used to determine the fair value of our existing general license agreement and other intangible assets. The ongoing comments are in the process of being resolved and the next response is due in mid November.

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ITEM 6. EXHIBITS

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 32.2 - Section 302 Certification of Periodic Report of the Chief Financial Officer.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	LEGACY WINE & SPIRITS INTERNATIONAL LTD.


Date: November 18, 2010	By: /s/ J. Cruz
	Jaclyn Cruz
	President and a Director

Date: November 18, 2010	By: /s/ C. Scheive
	Christopher Scheive
	Director, Secretary & Treasurer

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Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	8th grade Avg

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