The accompanying condensed notes are an integral part of these unaudited financial statements.
LEGACYXCHANGE, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
|
|
For the Three Months Ended
|
|
|
For the Six Months Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
REVENUE, NET
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
15,000
|
|
|
|
15,000
|
|
|
|
30,000
|
|
|
|
30,000
|
|
Professional and consulting fees
|
|
|
-
|
|
|
|
-
|
|
|
|
20,000
|
|
|
|
-
|
|
Other selling, general and administrative
|
|
|
180
|
|
|
|
-
|
|
|
|
501
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL OPERATING EXPENSES
|
|
|
15,180
|
|
|
|
15,000
|
|
|
|
50,501
|
|
|
|
30,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM OPERATIONS
|
|
|
(15,180
|
)
|
|
|
(15,000
|
)
|
|
|
(50,501
|
)
|
|
|
(30,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(17,359
|
)
|
|
|
(15,964
|
)
|
|
|
(33,938
|
)
|
|
|
(31,754
|
)
|
Other income
|
|
|
1,000
|
|
|
|
-
|
|
|
|
1,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL OTHER EXPENSE, NET
|
|
|
(16,359
|
)
|
|
|
(15,964
|
)
|
|
|
(32,938
|
)
|
|
|
(31,754
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS
|
|
$
|
(31,539
|
)
|
|
$
|
(30,964
|
)
|
|
$
|
(83,439
|
)
|
|
$
|
(61,754
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS PER COMMON SHARE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
62,570,659
|
|
|
|
62,570,659
|
|
|
|
62,570,659
|
|
|
|
62,570,659
|
|
The accompanying condensed notes are an integral part of these unaudited financial statements.
LEGACYXCHANGE, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT
For the Three and Six Months Ended September 30, 2020 and 2019
(UNAUDITED)
|
|
Preferred Stock
|
|
|
Common Stock
|
|
|
Additional
|
|
|
|
|
|
Total
|
|
|
|
Number of
|
|
|
|
|
|
Number of
|
|
|
|
|
|
Paid-in
|
|
|
Accumulated
|
|
|
Stockholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Deficit
|
|
Balance at March 31, 2020
|
|
|
-
|
|
|
$
|
-
|
|
|
|
62,570,659
|
|
|
$
|
62,571
|
|
|
$
|
9,182,575
|
|
|
$
|
(10,712,994
|
)
|
|
$
|
(1,467,848
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(51,900
|
)
|
|
|
(51,900
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2020
|
|
|
-
|
|
|
|
-
|
|
|
|
62,570,659
|
|
|
|
62,571
|
|
|
|
9,182,575
|
|
|
|
(10,764,894
|
)
|
|
|
(1,519,748
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(31,539
|
)
|
|
|
(31,539
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at September 30, 2020
|
|
|
-
|
|
|
$
|
-
|
|
|
|
62,570,659
|
|
|
$
|
62,571
|
|
|
$
|
9,182,575
|
|
|
$
|
(10,796,433
|
)
|
|
$
|
(1,551,287
|
)
|
|
|
Preferred Stock
|
|
|
Common Stock
|
|
|
Additional
|
|
|
|
|
|
Total
|
|
|
|
Number of
|
|
|
|
|
|
Number of
|
|
|
|
|
|
Paid-in
|
|
|
Accumulated
|
|
|
Stockholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Deficit
|
|
Balance at March 31, 2019
|
|
|
-
|
|
|
$
|
-
|
|
|
|
62,570,659
|
|
|
$
|
62,571
|
|
|
$
|
9,182,575
|
|
|
$
|
(10,562,984
|
)
|
|
$
|
(1,317,838
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative effect adjustment of derivative liability related to adoption of ASU 2017-11
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,326
|
|
|
|
2,326
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(30,790
|
)
|
|
|
(30,790
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
62,570,659
|
|
|
|
62,571
|
|
|
|
9,182,575
|
|
|
|
(10,591,448
|
)
|
|
|
(1,346,302
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(30,964
|
)
|
|
|
(30,964
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at September 30, 2019
|
|
|
-
|
|
|
$
|
-
|
|
|
|
62,570,659
|
|
|
$
|
62,571
|
|
|
$
|
9,182,575
|
|
|
$
|
(10,622,412
|
)
|
|
$
|
(1,377,266
|
)
|
The accompanying condensed notes are
an integral part of these unaudited financial statements.
LEGACYXCHANGE, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
For the Six Months Ended
|
|
|
|
September 30,
|
|
|
|
2020
|
|
|
2019
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(83,439
|
)
|
|
$
|
(61,754
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Prepaid expenses
|
|
|
(12,345
|
)
|
|
|
-
|
|
Accounts payable
|
|
|
(26,655
|
)
|
|
|
-
|
|
Accrued liabilities
|
|
|
63,937
|
|
|
|
61,754
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
|
(58,502
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Proceeds from loan payable
|
|
|
46,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
46,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash
|
|
|
(12,502
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash - Beginning of period
|
|
|
21,152
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash - End of the period
|
|
$
|
8,650
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
Cash paid for:
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
-
|
|
|
$
|
-
|
|
Income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Cumulative effect adjustment of derivative liability related to adoption of ASU 2017-11
|
|
$
|
-
|
|
|
$
|
2,326
|
|
The accompanying condensed notes are an integral part of these unaudited financial statements.
LEGACYXCHANGE,
INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
NOTE 1 – ORGANIZATION AND NATURE
OF OPERATIONS
LegacyXchange, Inc., formerly known as
True 2 Beauty, Inc. (the “Company”) was originally incorporated as Burrow Mining, Inc., a Nevada corporation, on December
11, 2006. In February 2010, the Company amended its Articles of Incorporation and changed its name to True 2 Beauty, Inc.
On July 10, 2012, the Company formed a
new wholly owned subsidiary True2Bid, Inc. (“True2Bid”) which was incorporated in the state of Nevada. This subsidiary’s
name was changed to LegacyXchange, Inc. (“LegacyXchange”) in December 2014. The Company continued to sell existing
inventory of beauty products through May 2013 when the final inventory was sold. LegacyXchange operates an online e-commerce platform
focused on delivering users a wide array of sports and entertainment related products that can be won in an action-packed environment
of a live auction.
On July 2, 2015, pursuant to a Certificate
of Dissolution filing with the Nevada Secretary of State, the Company dissolved LegacyXchange (formerly True2Bid, Inc.) to allow
for the change in name of its parent company, True 2 Beauty, Inc., to LegacyXchange, Inc.
The Company is currently inactive due to
lack of working capital to fund its operations.
NOTE 2 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Basis of Presentation
Management acknowledges its responsibility
for the preparation of the accompanying unaudited financial statements which reflect all adjustments, consisting of normal recurring
adjustments, considered necessary in its opinion for a fair statement of its financial position and the results of its operations
for the periods presented. The accompanying unaudited financial statements of the Company have been prepared in accordance with
accounting principles generally accepted in the United States of America (the “U.S. GAAP”) for interim financial information
and with the instructions Article 8-03 of Regulation S-X. Operating results for interim periods are not necessarily indicative
of results that may be expected for the fiscal year as a whole. Certain information and note disclosure normally included in financial
statements prepared in accordance with U.S. GAAP has been omitted from these statements pursuant to such accounting principles
and, accordingly, they do not include all the information and notes necessary for comprehensive financial statements. These unaudited
financial statements should be read in conjunction with the summary of significant accounting policies and notes to the financial
statements for the year ended March 31, 2020 of the Company which were included in the Company’s annual report on Form 10-K
as filed with the Securities and Exchange Commission on January 28, 2021.
Going Concern
The unaudited financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course
of business. As reflected in our accompanying unaudited financial statements, the Company had net loss and net cash used in operating
activities of $83,439 and $58,502, respectively, for the six months ended September 30, 2020. The Company had accumulated deficit,
stockholders’ deficit and working capital deficit of $10,796,433, $1,551,287 and $1,460,287, respectively, on September 30,
2020. The Company had no revenues for the six months ended September 30, 2020. The Company’s loans payable in aggregate amount
of $143,924 and $480,740 of convertible notes are currently in default. Management believes that these matters raise substantial
doubt about the Company’s ability to continue as a going concern for twelve months from the issuance date of this report.
Management cannot provide assurance that
we will ultimately achieve profitable operations or become cash flow positive or raise additional debt and/or equity capital. Management
believes that our capital resources are not currently adequate to continue operating and maintaining its business strategy for
a period of twelve months from the issuance date of this report. The Company will seek to raise capital through additional debt
and/or equity financings to fund its operations in the future.
Although the Company has historically raised
capital from sales of equity and from the issuance of promissory notes, there is no assurance that it will be able to continue
to do so. If the Company is unable to raise additional capital or secure additional lending in the near future, management expects
that the Company will need to curtail or cease operations. These unaudited financial statements do not include any adjustments
related to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern.
LEGACYXCHANGE,
INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
Use of Estimates
The preparation of the unaudited financial
statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited financial statements
and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Fair Value of Financial Instruments
and Fair Value Measurements
FASB ASC 820 - Fair Value Measurements
and Disclosures, defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. FASB ASC 820 requires disclosures about the fair value
of all financial instruments, whether or not recognized, for financial statement purposes. Disclosures about the fair value of
financial instruments are based on pertinent information available to the Company on September 30, 2020. Accordingly, the estimates
presented in these financial statements are not necessarily indicative of the amounts that could be realized on disposition of
the financial instruments. FASB ASC 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation
techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable
inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical
assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).
The three levels of the fair value hierarchy
are as follows:
|
Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.
|
|
|
|
Level 2—Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.
|
|
|
|
Level 3—Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.
|
The carrying amounts reported in the unaudited
balance sheets for cash, due from and to related parties, prepaid expenses, accounts payable and accrued liabilities approximate
their fair market value based on the short-term maturity of these instruments.
In August 2018, the FASB issued ASU 2018-13—Fair
Value Measurement (Topic 820): Disclosure Framework Changes to the Disclosure Requirements for Fair Value Measurement, to modify
the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, based on the concepts in the Concepts
Statement, including the consideration of costs and benefits. The amendments in this Update are effective for all entities for
fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company adopted ASU 2018-13
during the period ended June 30, 2020 and its adoption did not have a material impact on the Company’s financial statements.
Cash
The Company maintains its cash in bank
and financial institution deposits that at times may exceed federally insured limits. There were no balances in excess of FDIC
insured levels as of September 30, 2020 and March 31, 2020. The Company has not experienced any losses in such accounts through
September 30, 2020.
Revenue Recognition
In May 2014, FASB issued an update Accounting
Standards Update, ASU 2014-09, establishing ASC 606 - Revenue from Contracts with Customers. ASU 2014-09, as amended by subsequent
ASUs on the topic, establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts
with customers and supersedes most of the existing revenue recognition guidance. This standard, which is effective for interim
and annual reporting periods in fiscal years that begin after December 15, 2017, requires an entity to recognize revenue to depict
the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects
to be entitled in exchange for those goods or services and also requires certain additional disclosures. The Company adopted ASU
2014-09 during the three months ended June 30, 2018. The adoption of ASU 2014-09 did not have any material impact on the Company’s
financial statements. The Company did not have revenues from operations for the three and six months ended September 30, 2020.
Stock-Based Compensation
Stock-based compensation is accounted
for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the financial statements
of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee
or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires
measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value
of the award.
LEGACYXCHANGE,
INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
In June 2014, the FASB issued Accounting
Standards Update No. 2014-12, Compensation — Stock Compensation (Topic 718), Accounting for Share-Based Payments When the
Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (a consensus of the FASB
Emerging Issues Task Force) (ASU 2014-12). The guidance applies to all reporting entities that grant their employees share-based
payments in which the terms of the award provide that a performance target that affects vesting could be achieved after the requisite
service period. The amendments require that a performance target that affects vesting and that could be achieved after the requisite
service period is treated as a performance condition. For all entities, the amendments in this Update are effective for annual
periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The effective
date is the same for both public business entities and all other entities. The Company early adopted ASU 2014-12 during the three
months ended June 30, 2016. The adoption of ASU 2014-12 did not have any material impact on the Company’s financial statements.
Pursuant to ASC 505-50 - Equity-Based Payments
to Non-Employees, all share-based payments to non-employees, including grants of stock options, were recognized in the financial
statements as compensation expense over the service period of the consulting arrangement or until performance conditions are expected
to be met. Using a Black Scholes valuation model, the Company periodically reassessed the fair value of non-employee options until
service conditions are met, which generally aligns with the vesting period of the options, and the Company adjusts the expense
recognized in the financial statements accordingly. In June 2018, the FASB issued ASU No. 2018-07, Improvements to Nonemployee
Share-Based Payment Accounting, which simplifies several aspects of the accounting for nonemployee share-based payment transactions
by expanding the scope of the stock-based compensation guidance in ASC 718 to include share-based payment transactions for acquiring
goods and services from non-employees. ASU No. 2018-07 is effective for annual periods beginning after December 15, 2018, including
interim periods within those annual periods. The Company early adopted ASU No. 2018-07 during the three months ended March 31,
2018. The adoption ASU No. 2018-07 did not have a material impact on the Company’s financial statements.
Income Taxes
The Company accounts for income tax using
the liability method prescribed by ASC 740 - Income Taxes. Under this method, deferred tax assets and liabilities are determined
based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will
be in effect in the year in which the differences are expected to reverse. The Company records a valuation allowance to offset
net deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of
the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or
loss in the period that includes the enactment date.
The Company follows the accounting guidance
for uncertainty in income taxes using the provisions of ASC 740 “Income Taxes”. Using that guidance, tax positions
initially need to be recognized in the financial statements when it is more likely than not the position will be sustained upon
examination by the tax authorities. As of September 30, 2020 and March 31, 2020, the Company had no uncertain tax positions that
qualify for either recognition or disclosure in the financial statements. The Company recognizes interest and penalties related
to uncertain income tax positions in other expense. However, no such interest and penalties were recorded as of September 30, 2020.
Basic and Diluted Loss Per Share
Pursuant to ASC 260-10-45, basic loss per
common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding for the periods
presented. Diluted loss per share is computed by dividing net loss by the weighted average number of shares of common stock, common
stock equivalents and potentially dilutive securities outstanding during the period. Potentially dilutive common shares consist
of common stock issuable for stock options and warrants (using the treasury stock method), convertible notes and common stock issuable.
These common stock equivalents may be dilutive in the future. The following potentially dilutive equity securities outstanding
as of September 30, 2020 and 2019 were not included in the computation of dilutive loss per common share because the effect would
have been anti-dilutive:
|
|
September 30,
|
|
|
|
2020
|
|
|
2019
|
|
Stock warrants
|
|
|
800,000
|
|
|
|
4,225,000
|
|
Convertible notes
|
|
|
75,575,108
|
|
|
|
70,687,584
|
|
Total
|
|
|
76,375,108
|
|
|
|
70,353,121
|
|
LEGACYXCHANGE,
INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
Related Parties
Parties are considered to be related to
the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under
common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate
families of principal owners of the Company and its management and other parties with which the Company may deal with if one party
controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting
parties might be prevented from fully pursuing its own separate interests.
Recent Accounting Pronouncements
Management does not believe that any other
recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the Company’s
financial statements.
NOTE 3 – ACCRUED LIABILITIES
At September 30, 2020 and March 31, 2020,
accrued liabilities consisted of the following:
|
|
September 30,
2020
|
|
|
March 31,
2020
|
|
|
|
(Unaudited)
|
|
|
|
|
|
Accrued interest
|
|
$
|
346,147
|
|
|
$
|
312,210
|
|
Accrued professional fees
|
|
|
2,634
|
|
|
|
2,634
|
|
Accrued payroll taxes
|
|
|
28,691
|
|
|
|
28,691
|
|
Accrued executive and director compensation
|
|
|
362,173
|
|
|
|
332,173
|
|
Total
|
|
$
|
739,645
|
|
|
$
|
675,708
|
|
NOTE 4 – LOANS PAYABLE
|
|
September 30,
2020
|
|
|
March 31,
2020
|
|
|
|
(Unaudited)
|
|
|
|
|
|
Current loans payable
|
|
$
|
143,924
|
|
|
$
|
143,924
|
|
Long-term loans payable
|
|
|
91,000
|
|
|
|
45,000
|
|
Total principal amount
|
|
$
|
234,924
|
|
|
$
|
188,924
|
|
Between July 2015 through March 2016, the
Company entered into individual loan agreements with various investors in the aggregate principal amount of $132,769. These loans
bear an interest rate of 10% and were due and payable on the first anniversary of the date of issuance of the loans.
Between April 2016 through May 2016, the
Company entered into individual loan agreements with various investors in the aggregate principal amount of $11,155. These loans
bear an interest rate of 10% and were due and payable on the first anniversary of the date of issuance of the loans.
In November 2019 through June 2020, the
Company entered into loan agreements with an investor in the aggregate principal amount of $91,000. These loan bear an interest
rate of 6% and were due and payable on the second anniversary of the date of issuance of the loans.
As of September 30, 2020, these loans had
outstanding principal and accrued interest of $234,924 and $71,136, respectively and $143,924 of these loans were in default. As
of March 31, 2020, these loans had outstanding principal and accrued interest of $188,924 and $61,637, respectively, and $143,924
of these loans were in default.
LEGACYXCHANGE,
INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
During the three and six months ended September
30, 2020, the Company recorded interest expense of $5,073 and $9,500, respectively, on these loans. During the three and six months
ended September 30, 2019, the Company recorded interest expense of $3,678 and $7,316, respectively, on these loans.
NOTE 5 – CONVERTIBLE NOTES
PAYABLE
At September 30, 2020 and March 31, 2020,
convertible notes consisted of the following:
|
|
September 30,
2020
|
|
|
March 31,
2020
|
|
|
|
(Unaudited)
|
|
|
|
|
|
Principal amount
|
|
$
|
480,740
|
|
|
$
|
480,740
|
|
Convertible notes payable
|
|
$
|
480,740
|
|
|
$
|
480,740
|
|
Fiscal 2015 Financing
In October and November 2014, the Company
entered into a subscription agreement with various purchasers (the “Fiscal 2015 Agreements”) for the sale of the Company’s
convertible notes. Pursuant to the Fiscal 2015 Agreements, the Company issued to these purchasers, convertible promissory notes
(the “Fiscal 2015 Convertible Notes”) for an aggregate principal amount of $400,000 with the Company receiving proceeds
equal to the principal amount. The Fiscal 2015 Convertible Notes bear an interest rate of 10% per year and were due and payable
on the third anniversary of the date of issuance through October and November 2017. The purchasers are entitled, at their option,
at any time after the issuance of the Fiscal 2015 Convertible Notes, to convert all or any lesser portion of the outstanding principal
amount and accrued and unpaid interest into the Company’s common stock at a conversion price of $0.02 During the fiscal year
2016, the conversion price was ratcheted down to $0.01. During the fiscal year 2016, the purchasers converted $130,510 and $10,792
of outstanding principal and accrued interest, respectively, into 7,065,084 shares of the Company’s common stock. As of March
31, 2020, the Fiscal 2015 Convertible Notes were in default and had outstanding principal and accrued interest of $269,490 and
$149,565, respectively. As of September 30, 2020, the Fiscal 2015 Convertible Notes were in default and had outstanding principal
and accrued interest of $269,490 and $163,264, respectively.
Fiscal 2016 Financing
In May and June 2015, the Company entered
into a subscription agreement with various purchasers (the “Fiscal 2016 Agreements I”) for the sale of the Company’s
convertible notes and warrants. Pursuant to the Fiscal 2016 Agreements I, the Company issued to the purchasers for an aggregate
subscription amount of $115,000: (i) convertible promissory notes in the aggregate principal amount of $115,000 (the “Fiscal
2016 Notes I”) and (ii) five-year warrants to purchase an aggregate of 2,300,000 (twenty warrants for each dollar of the
principal amount) shares Company’s common stock at an exercise price of $0.07 (the “Fiscal 2016 Warrants I”).
The Company received proceeds equal to the principal amount. The Fiscal 2016 Notes I bear an interest rate of 10% per year and
were due and payable on the third anniversary of the date of issuance through May and June 2018. The purchasers are entitled, at
their option, at any time after the issuance of the Fiscal 2016 Notes I, to convert all or any lesser portion of the outstanding
principal amount and accrued and unpaid interest into the Company’s common stock at a conversion price of $0.05. The conversion
price of the Fiscal 2016 Notes I shall be subject to adjustment for issuances of common stock at a purchase price of less than
the then-effective conversion price. During the fiscal year 2016, the conversion price was ratcheted down to $0.01. As of March
31, 2020, the Fiscal 2016 Notes I were in default and had outstanding principal and accrued interest of $115,000 and $56,744, respectively.
As of September 30, 2020, the Fiscal 2016 Notes I were in default and had outstanding principal and accrued interest of $115,000
and $62,590, respectively.
During August through October 2015, the Company entered into
a subscription agreement with various purchasers (the “Fiscal 2016 Agreements II”) for the sale of the Company’s
convertible notes and warrants. Pursuant to the Fiscal 2016 Agreements II, the Company issued to the purchasers for an aggregate
subscription amount of $96,250: (i) convertible promissory notes in the aggregate principal amount of $96,250 (the “Fiscal
2016 Notes II”) and (ii) five-year warrants to purchase an aggregate of 1,925,000 (twenty warrants for each dollar of the
principal amount) shares Company’s common stock at an exercise price of $0.07 (the “Fiscal 2016 Warrants II”).
The Company received proceeds equal to the principal amount. The Fiscal 2016 Notes II bear an interest rate of 10% per year and
were due and payable on the third anniversary of the date of issuance through August through September 2018. The purchasers are
entitled, at their option, at any time after the issuance of the Fiscal 2016 Notes II, to convert all or any lesser portion of
the outstanding principal amount and accrued and unpaid interest into the Company’s common stock at a conversion price of
$0.05. The conversion price of the Fiscal 2016 Notes II shall be subject to adjustment for issuances of common stock at a purchase
price of less than the then-effective conversion price. During the fiscal year 2016, the conversion price was ratcheted down to
$0.01. As of March 31, 2020, the Fiscal 2016 Notes II were in default and had outstanding principal and accrued interest of $96,250
and $44,264, respectively. As of September 30, 2020, the Fiscal 2016 Notes II were in default and had outstanding principal and
accrued interest of $96,250 and $49,157, respectively.
LEGACYXCHANGE,
INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
During the three and six months ended September
30, 2020, the Company recorded interest expense of $12,286 and $24,438 on these convertible notes. During the three and six months
ended September 30, 2019, the Company recorded interest expense of $12,286 and $24,438 on these convertible notes.
Derivative Liabilities Pursuant to
Notes and Warrants
In connection with the issuance of the
Notes and Warrants, the Company determined that the terms of the Notes and Warrants contain terms that included a down-round provision
under which the conversion price and exercise price could be affected by future equity offerings undertaken by the Company or contain
terms that are not fixed monetary amounts at inception and included various other terms such as default provisions that caused
derivative treatment. Accordingly, under the provisions of ASC 815-40 –Derivatives and Hedging – Contracts in an
Entity’s Own Stock, the embedded conversion option contained in the convertible instruments and the Warrants were accounted
for as derivative liabilities at the date of issuance and shall be adjusted to fair value through earnings at each reporting date.
The fair value of the embedded conversion option derivatives and warrant derivatives were determined using the Binomial valuation
model. At the end of each period, on the date that debt was converted into common shares, and on the date of a cashless exercise
of warrants, the Company revalued the embedded conversion option and warrants derivative liabilities.
In July 2017, FASB issued ASU No. 2017-11,
Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part
I) Accounting for Certain Financial Instruments with Down Round Features. These amendments simplify the accounting for certain
financial instruments with down-round features. The amendments require companies to disregard the down-round feature when assessing
whether the instrument is indexed to its own stock, for purposes of determining liability or equity classification. The guidance
was adopted as of April 1, 2019 and the Company elected to record the effect of this adoption retrospectively to outstanding financial
instruments with a down round feature by means of a cumulative-effect adjustment during the period which the amendment is effective.
The Company adopted ASU No. 2017-11 in the period ended June 30, 2019, and the adoption resulted in a cumulative-effect adjustment
of $2,326 on its financial statements and as of June 30, 2019, there was no derivative liability recorded.
NOTE 6 – STOCKHOLDERS’
DEFICIT
Authorized shares
The Company is authorized to issue 200,000,000
consisting of 190,000,000 shares of common stock at $0.001 per share par value, and 10,000,000 shares of preferred stock at $0.001
per share par value.
Preferred Stock
As of September 30, 2020 and March 31,
2020, the Company did not have any preferred stock issued and outstanding.
Common Stock
As of September 30, 2020 and March 31,
2020, the Company had 62,570,659 shares of common stock issued and outstanding.
Warrants
Warrants issued pursuant to equity subscription
agreements:
During fiscal years 2013 to 2015, in connection
with the sale of common stock, the Company issued an aggregate of 1,048,315 five-year warrants to purchase common shares for an
exercise price of $0.40 per common share to investors pursuant to unit subscription agreements. These warrants were accounted for
as equity. During the year ended March 31, 2020, 314,706 of the remaining issued and outstanding warrants expired. As of March
31, 2020, there were no warrants issued and outstanding.
Warrants issued in connection with the
Fiscal 2016 Financing:
During fiscal years 2016, pursuant to the
convertible note agreements under the fiscal 2016 financing discussed in Note 5, the Company issued five-year warrants to purchase
an aggregate of 4,225,000 (twenty warrants for each dollar of the principal amount) shares of the Company’s common stock
at an exercise price of $0.07. The exercise price of these warrants shall be subject to adjustment for issuances of common stock
at a purchase price of less than the then-effective conversion price and were accounted for as derivative liabilities. During the
fiscal year 2016, the conversion price was ratcheted down to $0.01. As of March 31, 2020, 4,225,000 warrants were issued and outstanding.
During the six months ended September 30, 2020, 3,425,000 of the outstanding warrants expired. As of September 30, 2020, 800,000
warrants were issued and outstanding.
LEGACYXCHANGE,
INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
Warrant activity for the six months ended
September 30, 2020 are summarized as follows:
|
|
|
Number of
Warrants
|
|
|
Weighted
Average
Exercise Price
|
|
|
Weighted
Average
Remaining
Contractual
Term (Years)
|
|
|
Aggregate
Intrinsic Value
|
|
Balance Outstanding at March 31, 2020
|
|
|
|
4,225,000
|
|
|
$
|
0.01
|
|
|
|
0.3
|
|
|
$
|
—
|
|
Expired
|
|
|
|
(3,425,000
|
)
|
|
$
|
0.01
|
|
|
|
—
|
|
|
$
|
—
|
|
Balance Outstanding at September 30, 2020
|
|
|
|
800,000
|
|
|
$
|
0.01
|
|
|
|
0.1
|
|
|
$
|
—
|
|
Exercisable at September 30, 2020
|
|
|
|
800,000
|
|
|
$
|
0.01
|
|
|
|
0.1
|
|
|
$
|
—
|
|
NOTE 7 – SUBSEQUENT EVENTS
In February 2021, the Company entered into
loan agreement with an investor in the aggregate principal amount of $55,000. The loans bear interest rate of 6% and were due and
payable two-years from the date of issuance.