The Interim Condensed Financial Statements
of the Company are prepared as of September 30, 2019.
NOTES TO THE UNAUDITED INTERIM CONDENSED
FINANCIAL STATEMENTS
(Expressed in US dollars)
(Unaudited)
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Legacy Ventures International, Inc. (“Legacy”
or the “Company”), was incorporated on March 4, 2014 under the laws of the State of Nevada The Company currently has
no ongoing operations except for the incurring of general and administrative expenditures. Previously, since September 15, 2015,
the Company operated through a wholly-owned subsidiary RM Fresh Brands Inc. (“RM Fresh”). On August 31, 2016, in order
to fund the ongoing operation and further development of RM, the Company consented to new third party investments into RM in the
approximate total amount of $175,000, made in the form of cash and retirement of indebtedness owed by RM. As result of these new
investments into RM, the Company’s ownership percentage of the RM Fresh was reduced to twenty percent (20%). The Company
entered into a mutual Release agreement with RM. Under the Release, the Company released and discharged all liabilities owed to
the Company by RM (with the exception of the Demand Promissory Note). RM in turn released the Company of all liabilities owing
to RM and released the Company all ongoing contractual and financial responsibilities to RM, including the Company’s contractual
obligation to further fund management fees or other expenses to be incurred by RM. The carrying value of the investment in RM Fresh
was previously written down to $nil.
On June 28, 2017, Randall Letcavage entered
into a stock purchase agreement for the acquisition of an aggregate of 286,720 shares of Common Stock of the Company, representing
approximately 91% of the issued and outstanding shares of Common Stock of the Company as of such date, from Rehan Saeed, the previous
majority shareholder of the Company (the “Purchase Agreement”). The Purchase Agreements were fully executed and delivered,
and the transaction consummated as of and at July 7, 2017. Consequently, Mr. Letcavage was able to unilaterally control the election
of our Board of Directors, all matters upon which shareholder approval is required and, ultimately, the direction of the Company.
In addition, on June 28, 2017, Rehan Saeed
submitted his resignation from all executive officer positions with the Company, including Chief Executive Officer and President,
effective on the 10th day following the filing of a Schedule 14f-1 with the U.S. Securities and Exchange Commission. On June 28,
2017, Randall Letcavage was appointed as Chief Executive Officer, Chief Financial Officer, Director, effective immediately.
On June 28, 2017, the Company entered into
a non-binding letter of intent to enter into a business combination with Nexalin Technology, Inc., a Nevada corporation (“Nexalin”).
On June 6, 2018, the Company reported that
Matthew Milonas entered into an agreement for the acquisition of an aggregate of 286,720 shares of Common Stock of the Company,
representing approximately 91% of the issued and outstanding shares of Common Stock of the Company (the “Shares”) as
of such date, from Randall Letcavage, the majority shareholder of the Company (the “Agreement”). However, Mr. Milonas
claims that he did not fully execute and deliver the Agreement and has disclaimed ownership of the subject shares. Mr. Letcavage
will not contest Mr. Milonas’ claims and as a result, Mr. Letcavage’s ownership of the shares did not change as disclosed.
On August 9, 2018, Mr. Letcavage, as the holder
of 91% of the outstanding shares of common stock of the Company, approved the appointment of Peter Sohn as the Chief Executive
Officer and Chief Financial Officer and Director of the Company. Effective December 17, 2018, and Mr. Sohn accepted the appointments
as Chief Executive Officer and Chief Financial Officer and Director of the Company.
On December 17,
2018, Mr. Letcavage delivered to Peter Sohn an agreement for the acquisition by Mr. Sohn of the Shares from Mr. Letcavage, which
agreement is dated August 9, 2018, but was delivered and deemed effective on December 17, 2018 (the “Agreement”). As
a result, Mr. Sohn is now able to unilaterally control the election of our Board of Directors, all matters upon which shareholder
approval is required and, ultimately, the direction of the Company
LEGACY VENTURES INTERNATIONAL, INC.
NOTES TO THE UNAUDITED INTERIM CONDENSED
FINANCIAL STATEMENTS
(Expressed in US dollars)
(Unaudited)
Share Exchange Agreement and Subscriptions
Effective September 11, 2017 (the “Closing
Date”), the Company entered into that certain Share Exchange Agreement (the “Share Exchange Agreement”), dated
as of September 1, 2017, by and among the Company, Nexalin and shareholders of Nexalin holding a majority of the issued and outstanding
shares of Nexalin common stock (the “Nexalin Shareholders”). Pursuant to the Share Exchange Agreement, the Company
agreed to exchange the outstanding equity stock of Nexalin held by the Nexalin Shareholders for units (the “Units”)
consisting of an aggregate of approximately 25,000,000 newly issued shares of the Common Stock, $0.001 par value, of the Company
and warrants (the “Warrants”) to purchase an aggregate of approximately 25,000,000 newly issued shares of the Common
Stock, $0.001 par value, of the Company. The warrants are two-year warrants exercisable at the end of one year for exercise prices
between $1.50 and $1.75 per share, payable in cash. The warrants must be promptly exercised, and subject to forfeiture if not so
exercised, if the Company’s shares achieve a trading price of $3.00 or more for 30 consecutive days. At the Closing Date,
the Company approved the issuance of approximately 15,500,000 shares of common stock to the Nexalin shareholders, together with
warrants for the purchase of an additional 15,500,000 shares and reserved approximately 9,500,000 additional shares, together with
the related warrants, for the issuance to remaining Nexalin shareholders who are expected to execute and deliver the Share Exchange
Agreement, including approximately 1,100,000 shares and related warrants issuable immediately to consultants in connection with
the transactions contemplated by the Share Exchange Agreement. On September 15, 2017, Legacy Ventures International, Inc., (the
“Company”), filed a Current Report on Form 8-K (the “09/15/17 Form 8K”) announcing that effective September
11, 2017 (the “Closing Date”), the Company, on the one hand, and Nexalin Technology, Inc., a Nevada corporation (“Nexalin”),
and shareholders of Nexalin holding a majority of the issued and outstanding shares of Nexalin common stock (the “Nexalin
Shareholders”), on the other hand, entered into a Share Exchange Agreement (the “Share Exchange Agreement”),
dated as of September 1, 2017. In the Share Exchange Agreement the Company agreed to issue units in exchange for all the
outstanding equity stock of Nexalin held by the Nexalin Shareholders. The “Units” were to consist of an aggregate of
approximately 25,000,000 newly issued shares of the Company’s Common Stock, $0.001 par value, and warrants (the “Warrants”)
to purchase an aggregate of approximately 25,000,000 newly issued shares of the Company’s Common Stock, $0.001 par value.
On November 29, 2017, the Company filed an
amendment to its 09/15/17 Form 8-K (the “11/29/17 Amended Form 8K”) announcing that the “Closing Date”
as defined in the Share Exchange Agreement was September 30, 2017, and, further, that as of the date of the of the 11/29/17 Amended
Form 8K, the holders of approximately 90% of the equity securities of Nexalin had exchanged their shares into shares of the Company’s
Common Stock.
On December 26, 2017, the Company filed a Current
Report on Form 8K (the “12/26/17 Form 8K”) announcing that on December 21, 2017, the Company’s sole officer and
director, Randy Letcavage, who was at the time Nexalin’s sole officer and director, resigned all officer and director positions
with the Company and Nexalin. It was also announced that Mark White was appointed as the Interim Chief Executive Officer and Interim
Chief Financial Officer of both the Company and Nexalin. Finally, it was announced that Rick Morad was appointed as the sole director
of the Company and Nexalin.
On February 1, 2018, the Company filed a Current Report on Form
8K (the “02/01/18 Form 8K”) announcing that Mark White was appointed as a Company director.
LEGACY VENTURES INTERNATIONAL, INC.
NOTES TO THE UNAUDITED INTERIM CONDENSED
FINANCIAL STATEMENTS
(Expressed in US dollars)
(Unaudited)
NOTE 2 – GOING CONCERN AND BASIS OF PRESENTATION
The Company’s interim condensed financial
statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities
in the normal course of business. During the current year, the Company has incurred recurring losses from operations and as at
September 30, 2019 has a working capital deficiency of $181,282, and an accumulated deficit of $6,576,085. The Company’s
continued existence is dependent upon its ability to continue to execute its operating plan and to obtain additional debt or equity
financing. These conditions raise substantial doubt about our ability to continue as a going concern. There can be no assurance
that the necessary debt or equity financing will be available, or will be available on terms acceptable to the Company, in which
case the Company may be unable to meet its obligations. Should the Company be unable to realize its assets and discharge its liabilities
in the normal course of business, the net realizable value of its assets may be materially less than the amounts recorded in the
financial statements. The financial statements do not include any adjustments relating to the recoverability of recorded asset
amounts that might be necessary should the Company be unable to continue in existence.
The unaudited interim financial statements
of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and
the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and
notes thereto contained in the Company's annual report filed with the SEC on Form 10-K for the year ended June 30, 2019.
In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of
financial position and the results of operations for the interim periods presented have been reflected herein. Operating
results for the three months ended September 30, 2019 are not necessarily indicative of the results to be expected for the year
ending June 30, 2020. Notes to the interim condensed financial statements which would substantially duplicate the disclosures
contained in the audited financial statements for the year ended June 30, 2019, as reported in Form 10-K, have been omitted.
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING
PRONOUNCEMENTS
SIGNIFICANT ACCOUNTING POLICIES
The Company's significant accounting policies
have not changed from the year ended June 30, 2019 with the exception of the accounting change discussed below.
NOTE 4 - BASIC AND DILUTED NET LOSS PER
SHARE
The Company follows ASC Topic 260 to account
for the loss per share. Basic earnings (loss) per common share ("EPS") calculations are determined by dividing
net income (loss) by the weighted average number of shares of common stock outstanding during the year. Diluted earnings
(loss) per common share calculations are determined by dividing net income (loss) by the weighted average number of common shares
and dilutive common share equivalents (if dilutive) outstanding. All dilutive common share equivalents were anti-dilutive for the
three months ended September 30, 2019 and 2018.
LEGACY VENTURES INTERNATIONAL, INC.
NOTES TO THE UNAUDITED INTERIM CONDENSED
FINANCIAL STATEMENTS
(Expressed in US dollars)
(Unaudited)
NOTE 5 – PROMISSORY AND CONVERTIBLE NOTES
On
September 11, 2017, the Company issued a Convertible Promissory Note ("Convertible Note") to an accredited investor.
The Convertible Note has an aggregate principal amount of $500,000, and was payable on September 11, 2018 (the "Maturity
Date"), and bears an interest rate of 4% per annum, with an interest rate of 18% per annum if the Convertible Note was not
repaid by the Maturity Date. The holder may convert the Convertible Note at any time up to the Maturity Date into shares
of the Company's common stock, par value $0.001 per share, at a conversion price equal to $1.00 per share. The Company could
prepay the Convertible Note prior to the Maturity Date and/or the date of conversion without penalty upon receiving the written
consent of the holder.
The Convertible Note payable contained a beneficial
conversion feature. As a result, the Company recognized a nominal value for the Convertible note, at the September 11, 2017 issuance
date, the balance of which was accreted to the face value at the effective interest rate. Accretion expense for the three months
ended September 30, 2019 and September 30, 2018 was $nil and $467,575. The difference between the nominal value ascribe to the
Convertible Note on issuance and the face value was recorded in the Additional Paid In Capital.
As a result of the series of events noted above,
on April 11, 2018, the Company wrote-off the value of the Convertible Note as well as the accrued interest receivable thereon.
The Convertible Note was assigned to an accredited arm’s length third party, in exchange for the waiver of the promissory
note payable pursuant to the terms of the Assignment Agreement.
On September 11, 2017, the Company received
a Promissory Note ("Promissory Note") from Nexalin Technology, Inc. The Promissory Note has an aggregate principal
amount of $500,000 and is payable on December 31, 2017 (the "Maturity Date") and bears an interest rate of 4% per annum.
On December 18, 2018, the Company entered into
an assignment agreement (“Assignment Agreement”) with the holder of the Convertible Note, whereby, the Promissory Note
was assigned to the Convertible Note holder in exchange for the waiver and cancellation of the Convertible Note. As a result, the
Company recognized a gain of $545,580 for the year ended June 30, 2019, which was the carrying value of the Convertible Note and
the accrued interest payable thereon at the time the assignment agreement was entered into
UNSECURED CONVERTIBLE PROMISSORY NOTES
On December 2, 2018, the Company issued a Secured
Promissory Note ("Secured Notes") to an accredited investor. The Secured Note has an aggregate principal amount
of $50,000, and is payable on December 2, 2019 (the "Maturity Date"), and bears an interest rate of 4% per annum.
The amount owing under the Secured Note is secured by the assets of the Company. The note may be converted, the terms of which
are to be negotiated between the Company and the note holder.
On September
6, 2019, the Company issued a Secured Promissory Note ("Secured Notes") to an accredited investor. The Secured
Note has an aggregate principal amount of $50,000, and is payable on September 6, 2020 (the "Maturity Date"), and bears
an interest rate of 4% per annum. The
amount owing under the Secured Note is secured by the assets of the Company. The note may be converted, the terms of which are
to be negotiated between the Company and the note holder. The Company has received $27,576 as at period end.
On June 28, 2017 the Company issued $20,000
of unsecured convertible promissory notes (“Notes”). The Notes matured on June, 27, 2018, and bear interest at a rate
of 8% per annum. The Notes are convertible into the Common Stock of the Company at a fixed conversion rate of $0.75 per share at
any time prior to the maturity date. The Company evaluated the terms and conditions of the Notes under the guidance of ASC 815,
Derivatives and Hedging. The conversion feature met the definition of conventional convertible for purposes of applying the conventional
convertible exemption. The definition of conventional contemplates a limitation on the number of shares issuable under the arrangement.
The instrument was convertible into a fixed number of shares and there were no down round protection features contained in the
contracts. The Company was required to consider whether the hybrid contracts embodied a beneficial conversion feature (“BCF”).
The calculation of the effective conversion amount resulted in a BCF because the fair value of the conversion was greater than
the Company’s stock price on the date of issuance and a BCF was recorded in the amount of $20,000 and accordingly the amount
of $20,000 was credited to Additional Paid in Capital. The BCF which represents debt discount is accreted over the life of the
loan using the effective interest rate. Accretion expense for the three months ended September 30, 2019 and 2018 was $nil, respectively.
Interest expense for the three months ended September 30, 2019 and 2018, was $229 and $226, respectively. As at September 30, 2019,
the carrying value of the notes were $20,000 (June 30, 2018 - $20,000).
No amounts of principal and interest for the
above mentioned notes have been paid to date.
LEGACY VENTURES INTERNATIONAL, INC.
NOTES TO THE UNAUDITED INTERIM CONDENSED
FINANCIAL STATEMENTS
(Expressed in US dollars)
(Unaudited)
NOTE 6 – RELATED PARTY ADVANCES AND BALANCES, AND ADVANCES
FROM THIRD PARTIES
During the three months ended September 30,
2019 and 2018, the Company was advanced $nil, respectively, by a third party. The funds were used to pay certain professional fees
including auditors, and accountants. The Company is currently in the process of negotiating with the third party with respect to
settlement of the amount advanced.
NOTE 7 - COMMON AND PREFERRED STOCK TRANSACTIONS
COMMON STOCK - AUTHORIZED
As at September 30, 2019, the Company was authorized
to issue 10,000,000 of preferred stock, with a par value of $0.0001 and 100,000,000 of common stock, with a par value of $0.0001.
There were no common stock transactions in
the periods ended September 30, 2019 and year ended June 30, 2019.