UNITED STATES


SECURITIES
AND EXCHANGE COMMISSION
 Washington, D.C.
20549
  
  FORM
10-QSB
  
 (X)
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES ACT OF
1934:
  For
the Quarterly Period ended March 31, 2008
  ( )
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE EXCHANGE
ACT
  For the
transition period from __________________ to __________________
  Commission
File number 0-14613
  
 LEGACY
HOLDING, INC.
 
  (Exact
name of registrant as specified in its charter)
   Delaware                                         13-2614435
                -------------------------------                     -----------------------
                (State
      or other jurisdiction
      of                     (I.R.S.
      Employer ID No.)
                incorporation or
      organization)
  4160
Technology Drive Suite B
 Fremont,
CA  94538
 (Address
of principal executive offices)
 
 (510)
651-2312
 (Issuer's
telephone number)
  
 Check
whether the Issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X ]  No
[  ]
 
 Indicate
by check mark whether the registrant is a shell company Yes [ ] No [ X ] (As of
June 1, 2008)
 
 As of
June 1, 2008, 18,092,739 shares of the registrants Common Stock were
outstanding.
 
 As of the
end of the period covered by this Report, registrant had 18,092,739 common
shares outstanding.
 
 Transitional
Small Business Disclosure Format (check one): Yes [ ] No [X]
 
 Documents Incorporated by
Reference. Registrant hereby incorporates by reference, its previous
filings under the Securities Exchange Act of 1934.
  
 
 1
 
 TABLE OF CONTENTS
  Part
I  Financial Informaton
 
 Item
1.   Financial Statements
 
 
 Balance
Sheet as of March 31, 2008
(Unaudited).......................................................................................................................................3
 
 Statements
of Operations for the three Months
ended March 31, 2008 and 2007
(Unaudited)........................................................................4
 
 Statements
of Stockholders Equity for the year Ended December 31, 2007 and
the three months ended March 31, 2008 (unaudited)...............5
 
 Statements
of Cash Flows for the three months ended March 31,
2008 and 2007
(Unaudited).......................................................................6
 
 Notes To
Financial Statements (Unaudited)
...............................................................................................................................................7
 
 Item
2.   Management's Discussion and Analysis of Financial Condition
and results of
Operations................................................................10
 
 Item
3.   Controls and
Procedures............................................................................................................................................................13
 
 
 Part
II – Other Information
 
 
 Item
1.   Legal Proceedings
.....................................................................................................................................................................13
 
 Item
2.   Unregistered Sales of Securities and Use of
Proceeds..................................................................................................................13
 
 Item
3.   Defaults Upon Senior
Securities..................................................................................................................................................13
 
 Item
4.   Submission of Matters to a Vote of Security
Holders....................................................................................................................13
 
 Item
5.   Other Information
.......................................................................................................................................................................13
 
 Item
6.   Exhibits and Reports on Form
8-K...............................................................................................................................................13
 
 Signatures................................................................................................................................................................................................15
 
 2
 Table of Contents
  Item
1.  Financial Statements
 
 LEGACY
      HOLDINGS, INC.CONSOLIDATED
      BALANCE SHEET (Unaudited)As
      of
                
                
                As
      of3/31/2008
                
                
                12/31/2007ASSETSCurrent
      assets:Cash
                
                $
                -
                
                
                5,358Deferred
      product cost
                
                
                28,786
                
                
                28,786Inventory
      (Note B)
                
                
                149,202
                
                
                149,202Total
      current assets
                
                
                177,988
                
                
                183,347Property
      and equipment, net (Note C)
                
                
                1,816
                
                
                2,257Total
      assets
                
                $
                179,804
                
                
                185,604LIABILITIES AND
      STOCKHOLDERS' DEFICITCurrent
      liabilities:Bank
      overdraft
                
                $
                2,042
                
                $
                -Accounts
      payable
                
                
                103,978
                
                
                90,309Deferred
      revenue
                
                
                253,695
                
                
                253,695Note
      payable (Note E)
                
                
                120,000
                
                
                120,000Accrued
      wages and taxes
                
                
                197,775
                
                
                158,220Stockholder
      loans payable (Note E)
                
                
                263,859
                
                
                269,583Total  current
      liabilities
                
                
                941,349
                
                
                891,767Stockholders'
      Deficit:Common
      stock, par value $0.01; 100,000,000 authorized; issuedand
      outstanding 18,092,739 at March 31, 2008
                
                
                18,093
                
                
                17,593Treasury
      stock
                
                
                (15,000)
                
                
                (15,000)Additional
      paid in capital
                
                
                3,343,598
                
                
                3,341,598Retained
      deficit
                
                
                (4,108,235)
                
                
                (4,050,354)Total
      stockholders' deficit
                
                
                (761,544)
                
                
                (706,163)Total
      liabilities and stockholders' deficit
                
                $
                179,805
                
                $
                185,604The
      accompanying notes are an integral part of these financial
      statements
  3
 Table of Contents
  LEGACY
      HOLDINGS, INC.CONSOLIDATED
      STATEMENTS OF OPERATIONS (Unaudited)For
      the Three Months Ended March 31, 2008 and 2007For
      the Three Months EndedMarch
      31,2008
                
                
                2007Revenue:Product
      sales
                
                $
                4,906
                
                
                $
                107,655Service
      fees
                
                
                6,032
                
                
                
                7,705R&D
      contract
                
                
                6,000
                
                
                
                15,000Total
      revenue
                
                
                16,938
                
                
                
                130,361Cost
      of goods sold
                
                
                20,735
                
                
                
                147,526Gross
      profit (loss)
                
                
                (3,797
                )
                
                
                (17,165
                )Operating
      expenses:Research
      and development
                
                
                130
                
                
                
                33,049Sales
      and marketing
                
                
                1,565
                
                
                
                607General
      and administration
                
                
                50,925
                
                
                
                46,472Depreciation
                
                
                441
                
                
                
                441Facilities
                
                
                223
                
                
                
                29,358Total
      operating expenses
                
                
                53,284
                
                
                
                109,928Income
      (loss) from operations
                
                
                (57,081
                )
                
                
                (127,093
                )Other
      income (expense)Miscellaneous
      income
                
                
                -
                
                
                
                226Interest
      expense
                
                
                -
                
                
                
                (324
                )Total
      other income (expense)
                
                
                -
                
                
                
                (98
                )Income
      (loss) before income taxes
                
                
                (57,081
                )
                
                
                (127,191
                )Income
      taxes
                
                
                (800
                )
                
                
                (800
                )Net
      income (loss)
                
                $
                (57,881
                )
                
                $
                (127,991
                )Weighted
      average common shares outstandingBasic
      and fully diluted
                
                
                17,842,739
                
                
                
                27,282,846Net
      income (loss) per share common
                
                $
                (0.00
                )
                
                $
                (0.00
                )The
      accompanying notes are an integral part of these financial
      statements
  4
 Table of Contents
  CST
      ENTERTAINMENT, INC.CONSOLIDATED
      STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited)For
      the Years Ended December 31, 2006 and 2007 and the Three Months Ended
      March 31, 2008Additional
                
                
                
                
                
                TotalCommon
      Stock
                
                
                Treasury
                
                
                Paid-In
                
                
                Deficit
                
                
                Stockholders'Shares
                
                
                Amount
                
                
                Stock
                
                
                Capital
                
                
                Accumulated
                
                
                EquityBalances,
      December 31, 2005
                
                
                27,282,846
                
                
                $
                27,283
                
                
                $
                -
                
                
                $
                2,802,916
                
                
                $
                (3,866,745
                )
                
                $
                (1,036,546
                )Net
      loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (285,455
                )
                
                
                (285,455
                )Balances,
      December 31, 2006
                
                
                27,282,846
                
                
                $
                27,283
                
                
                $
                -
                
                
                $
                2,802,916
                
                
                $
                (4,152,200
                )
                
                $
                (1,322,001
                )Recapitalization
      at reverse merger
                
                
                (9,690,107
                )
                
                
                (9,690
                )
                
                
                
                
                
                
                538,681
                
                
                
                
                
                
                
                528,991Treasury
      stock purchases
                
                
                
                
                
                
                
                
                
                
                (15,000
                )
                
                
                
                
                
                
                
                
                
                
                (15,000
                )Net
      loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                101,846
                
                
                
                101,846Balances,
      December 31, 2007
                
                
                17,592,739
                
                
                $
                17,593
                
                
                $
                (15,000
                )
                
                $
                3,341,597
                
                
                $
                (4,050,354
                )
                
                $
                (706,164
                )-Stock
      issued for services
                
                
                500,000
                
                
                
                500
                
                
                
                
                
                
                
                2,000
                
                
                
                
                
                
                
                2,500Net
      loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (57,881
                )
                
                
                (57,881
                )Balances,
      March 31, 2008
                
                
                18,092,739
                
                
                $
                18,093
                
                
                $
                (15,000
                )
                
                $
                3,343,597
                
                
                $
                (4,108,235
                )
                
                $
                (761,545
                )The
      accompanying notes are an integral part of these financial
      statements
  5
 Table of Contents
  CST
      ENTERTAINMENT, INC.CONSOLIDATED
      STATEMENTS OF CASH FLOWS (Unaudited)For
      the Three Months Ended March 31, 2008 and 2007For
      the Three Months EndedMarch
      31,2008
                
                
                2007Cash
      flows from operating activities:Net
      income (loss)
                
                $
                (57,881
                )
                
                $
                (127,991
                )Adjustments
      to reconcile increase in net assets to netcash
      provided by (used in) operating activities:Depreciation
      and amortization
                
                
                441
                
                
                
                441Common
      stock issued for services
                
                
                2,500
                
                
                
                -Increase
      (decrease) in:Accounts
      payable
                
                
                13,668
                
                
                
                (16,194
                )Accrued
      wages and taxes
                
                
                39,555
                
                
                
                45,072Net
      cash provided (used in) operating activities
                
                
                (1,717
                )
                
                
                (98,672
                )Cash
      flows from investing activities:Additions
      to property and equipment
                
                
                -
                
                
                
                -Net
      cash provided by (used in) investing activities
                
                
                -
                
                
                
                -Cash
      flows from financing activities:Payment
      on note payable
                
                
                -
                
                
                
                (30,000
                )Proceeds
      (repayment) of stockholder loan
                
                
                (5,683
                )
                
                
                118,653Net
      cash provided by (used in) financing activities
                
                
                (5,683
                )
                
                
                88,653Net
      increase (decrease) in cash
                
                
                (7,400
                )
                
                
                (10,019
                )Cash
      at beginning of year
                
                
                5,358
                
                
                
                20,099Cash
      at end of year
                
                $
                (2,042
                )
                
                $
                10,080Supplementary
      Information:Cash
      paid for interest
                
                $
                -
                
                
                $
                324Cash
      paid for income taxes
                
                $
                -
                
                
                $
                800The
      accompanying notes are an integral part of these financial
      statements
  6
 Table of Contents
  Note A-Organization and
Summary Of Significant Accounting Policies
 
 Basis of
Presentation
 
 The
accompanying reviewed financial statements of Legacy Holdings, Inc. as of March
31, 2008 and for the three months period ended March 31, 2008 have been prepared
in accordance with accounting principles generally accepted in the United States
for interim financial reporting and in accordance with the instructions to Form
10-QSB.  Accordingly, they do not include all information and
footnotes necessary for a complete presentation of financial position, results
of operations, cash flows, and stockholders’ equity in conformity with generally
accepted accounting principles and should be read in conjunction with the
audited consolidated financial statements and notes thereto for the year ended
December 31, 2007.  Except as disclosed herein, there has not been a
material change in the information disclosed in the notes to the financial
statements included in the Company’s annual report on Form 10-KSB for the year
ended December 31, 2007.  In the opinion of management, all
adjustments considered necessary for a fair presentation of the results of
operations and financial position have been included and all such adjustments
are of a normal recurring nature.  Operating results for the three
months ended March 31, 2008 are not necessarily indicative of the results that
can be expected for the year ended December 31, 2008.
 
 Organization
 
 Legacy
Holdings, Inc. (the “Company”) is a Delaware corporation, FKA CST Entertainment,
Inc. Located in Fremont, California.  Legacy Systems, Inc. it’s wholly
owned subsidiary was originally founded in Texas and later, in 1999
reincorporated in the California.  The Company provides wet process
wafer cleaning equipment to the semiconductor and related
industries.  The Company has developed chemical processes that are
designed for device geometry technologies sized at 32mm and
below.  The processes employ "Green Chemistry" to provide an
environmentally safe method for the removal of organic contaminates and
photoresists from any size wafer or substrate.  The Company is an
industry leader in semiconductor wet processing holding multiple patents for
more effective and environmentally safer processes.  The Company is
gaining recognition as an innovative company with very cost effective and
environmentally friendly products.  The Company is poised to be a
major participant in the wet-process equipment market segment, as a supplier to
both end users and wet station manufacturers.
 
 Acquisition
 
 On July
11, 2007, Legacy Systems, Inc. signed a definitive agreement to be merged into
CST Entertainment, Inc, (CST). The CST stockholders acquired all of the issued
and outstanding common stock of Legacy Systems, Inc.  The transaction
is accounted for as a capital transaction and recapitalization by the accounting
acquirer and as a re-organization by the accounting acquiree wherein CST
Entertainment, Inc. is the acquiree and, Legacy Systems, Inc. is the acquirer.
CST Entertainment, Inc. changed its name to Legacy Holdings at the date of
merger July 11, 2007.
 
 Accordingly,
the consolidated financial statements include the following:
  (1) The
balance sheet consists of the net assets of the acquirer at historical cost and
net assets of the acquiree at historical cost.
 
 (2) The
statements of operations include the operations of the acquirer for the periods
presented and the operations of the acquiree from the date of
merger.
 
 Summary of Significant
Accounting Principles
 
 Basis of
Presentation
 
 The
consolidated financial statements included herein were prepared under the
accrual basis of accounting.
 
 Management’s Use of
Estimates
 
 The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
financial statements and the reported amounts of revenues and expenses during
the reporting period.  Actual results could differ from those
estimates.  The financial statements above reflect all of the costs of
doing business.
 
 Concentrations of credit
risk
 
 Financial
instruments which potentially subject the Company to concentrations of credit
risk consist principally of cash and cash equivalents.  The Company
deposits its cash and cash equivalents with a U.S. commercial financial
institution. These amounts may, at times, exceed federally insured
limits.  Management believes that these institutions are financially
sound and, accordingly, minimal credit risk exits.
 
 Cash and Cash
Equivalents
 
 The
Company considers all highly liquid debt instruments purchased with original
maturity of three months or less to be cash equivalents.
 
 Accounts Receivable and
Allowance for Doubtful Accounts
 
 The
Company evaluates the collectability of its accounts receivable based on a
combination of factors.  When the Company believes a collection issue
exists with respect to a specific receivable, the Company records an allowance
to reduce that receivable to the amount that it believes to be
collectible.  At March 31, 2008 the Company did not have receivables
outstanding.
  7
 Table of Contents
  Note A-Organization and
Summary Of Significant Accounting Policies
 
 Comprehensive Income
(Loss)
 
 The
Company adopted Financial Accounting Standards Board Statement of Financial
Accounting Standards (SFAS) No. 130, “Reporting Comprehensive
Income,” which establishes standards for the reporting and display of
comprehensive income and its components in the consolidated financial
statements.
 
 Impairment of Long-Lived
Assets
 
 The
Company evaluated the recoverability of its property and equipment, and other
assets in accordance with Statements of Financial Accounting Standards (SFAS)
No. 121, “Accounting for the
Impairment of Long-Lived Assets to be Disposed of,” which requires
recognition of impairment of long-lived assets in the event the net book value
of such assets exceeds the estimated future undiscounted cash flows attributable
to such assets or the business to which such intangible assets
relate.
 
 Stock-Based
Compensation
 
 Employee
stock-based compensation is accounted for in accordance with Accounting
Principles Board Opinion No. 25, “Accounting for Stock Issued to
Employees” (“APB 25”) and the FASB interpretations
thereof.  Pursuant to those accounting pronouncements, compensation is
recorded for share options granted to employees at the date of grant based on
the difference between the exercise price of the options and the market value of
the underlying shares at that date.  Due to the terms of the grants,
the fair value of the compensation in accordance with SFAS No. 123R, "Accounting for Stock-Based
Compensation" approximates the values computed in accordance with APB No.
25. Stock-based compensation to non-employees is accounted for in accordance
with SFAS No. 123R.  Under both accounting pronouncements, as part of
the necessary computations, management is required to estimate the fair value of
the underlying shares.  Fair value has generally been determined by
management, as the price at which the Company's shares were issued at the most
recent private placement of the Company's Common Stock.  Since the
Company trades on the Pink Sheets fair value is determined according to stock
market price.  The timing of the grant and measurement of
stock-based awards will not have a material effect on the Company's consolidated
results of operations and financial position.  Since no stock-based
awards exist.
 
 Property and
Equipment
 
 Property
and equipment are stated at cost.  Depreciation is provided on the
double-declining method over the estimated useful lives of the assets ranging
from five to seven years.  When assets are retired or disposed of, the
cost and accumulated depreciation are removed from the accounts, and any
resulting gains or losses are included in income.  Maintenance and
repairs are charged to expense in the period incurred.
  Income
Taxes
 
 The
Company accounts for income taxes under an asset and liability
approach.  Deferred income taxes reflect the net tax effects of
temporary differences between the carrying amount of the assets and liabilities
for financial reporting purposes and the tax basis used for income tax purposes,
and operating loss and tax credit carry-forwards measured by applying currently
enacted tax laws.  Valuation allowances are provided when necessary to
reduce net deferred tax assets to an amount that is considered more likely than
not to be realized.
 
 Fair Value of Financial
Instruments
 
 The
carrying amounts of the Company’s financial instruments, including cash,
deferred product cost, inventory, accounts payable, deferred revenue, notes
payable, accrued wages due officer and stockholder loans payable approximate
their fair value due to their short maturities or market interest rates, if
applicable, of such instruments.
 
 Revenue
Recognition
 
 Net sales
include contracts for providing research and development, product sales, and
related service income.  The Company recognized revenue when all of
the following criteria are met: persuasive evidence of an arrangement exists,
delivery has occurred, the price is fixed or determinable, and collectability is
reasonably assured.  This is generally upon receipt of the customers
acceptance form indicating the product has been completed to their satisfaction
except for the research and development and service revenue which is recognized
when the services have been performed.  The Company defers prepayment
on contracts until the above criteria have been met.  The
corresponding cost associated with those contracts is also deferred until the
revenue is ultimately recognized.
 
 Research and Development
Costs
 
 Research
and development costs are charged to operations as incurred.
 
 Recently Issued Accounting
Pronouncements
 
 In
February 2007, the FASB issued Statement of Financial Accounting Standard No.
159, “The Fair Value Option
for Financial Assets and Financial Liabilities” (“SFAS No. 159”). This
statement permits entities to choose to measure many financial instruments and
certain other items at fair value. Companies should report unrealized gains and
losses on items for which the fair value option has been elected in earnings at
each subsequent reporting date. This statement is effective as of the beginning
of an entity’s first fiscal year that begins after November 15, 2007. The
Company is currently assessing the potential impact, if any, for the adoption of
SFAS No.159 on its consolidated financial statements.
 
 8
 Table of Contents
 
 Note A-Organization and
Summary Of Significant Accounting Policies
 
 Recently Issued Accounting
Pronouncements (Continued)
 
 In
December 2007, the FASB issued two new statements: (a.) SFAS No. 141(revised
2007), Business
Combinations, and (b.) No. 160, Noncontrolling Interests in
Consolidated Financial Statements. These statements are effective for
fiscal years beginning after December 15, 2008 and the application of these
standards will improve, simplify and converge internationally the accounting for
business combinations and the reporting of noncontrolling interests in
consolidated financial statements. The Company is in the process of evaluating
the impact, if any, on SFAS 141 (R) and SFAS 160 and does not anticipate that
the adoption of these standards will have any impact on its consolidated
financial statements.
 
 (a.)  SFAS
No. 141 (R) requires an acquiring entity in a business combination to: (i)
recognize all (and only) the assets acquired and the liabilities assumed in the
transaction, (ii) establish an acquisition-date fair value as the measurement
objective for all assets acquired and the liabilities assumed, and (iii)
disclose to investors and other users all of the information they will need to
evaluate and understand the nature of, and the financial effect of, the business
combination, and, (iv) recognize and measure the goodwill acquired in the
business combination or a gain from a bargain purchase.
 
 (b.) SFAS
No. 160 will improve the relevance, comparability and transparency of financial
information provided to investors by requiring all entities to: (i) report
noncontrolling (minority) interests in subsidiaries in the same manner, as
equity but separate from the parent’s equity, in consolidated financial
statements.
 
 NOTE B –
INVENTORIES
 
 Inventories
are stated at the lower of cost or market, with costs determined on a first-in,
first-out (FIFO) basis.  Inventory consisted of parts and completed
units and was $149,202 at March 31, 2008.
 
 NOTE C – PROPERTY AND
EQUIPMENT
 
 Property
and equipment consists of the following at March 31, 2008:
 Mar
      31, 08Furniture
      & Fixtures
              
              
              20,025Machinery
      & Equipment
              
              
              259,034Less
      Accumulated Depreciation
              
              
              (277,242
              )$
              1,816
  NOTE D – OPERATING LEASES
AND COMMITMENTS
 
 The
Company leases its operating and office facilities under an agreement that
expires annually on September 1stof each
year and is renewable at the option of the lessor.  With each annual
renewal the monthly rent may be adjusted at the option of the lessor by the
increase, if any, of the September year to year change in the Consumer Price
Index.  No rent was paid for the quarter ended March 31,
2008.
 
 NOTE E – NOTES
PAYABLE
 
 In prior
years the Company entered into a $150,000 debt agreement that incurred interest
at a rate of 7.5% through May 19, 2006 and 12.5% thereafter until paid in
full.  During 2007 the Company negotiated with the lender to forgive
the interest on the note.  In 2007 the Company made a principal
payment of $30,000 and owed $120,000 at March 31, 2008.
 
 NOTE F – LOANS FROM
SHAREHOLDERS
 
 The
Company has received loans and advances from the President and other
shareholders at various times.  At March 31, 2008 the balance
outstanding on these loans was $263,859.  These loans carry no stated
interest rate but the imputed effects of interest are not material to the
financial statements taken as a whole.
 
 NOTE G – STOCKHOLDERS’
EQUITY
 
 The
Company is authorized to issue 100,000,000 shares of $0.001 par value common
stock. At March 31, 2008, the Company had 18,092,739 shares issued and
outstanding.  In February, 2008, 500,000 common shares were issued in
exchange for legal services valued at $2,500.
  NOTE H – INCOME
TAXES
 
 Income
tax provision for the quarter ended March 31, 2008 was comprised of $800 of
state current taxes, only.
 
 NOTE I -
LITIGATION
 
 The
Company is subject to certain routine legal proceedings, as well as demands,
claims and threatened litigation, that arise in the normal course of its
business.  The Company believes that the ultimate amount of liability,
if any, for any pending claims of any type, will not materially affect its
consolidated financial position, results of operations or
liquidity.
  NOTE – J GOING
CONCERN
 
 Between
2001 and 2006, the Company experienced significant operating losses, negative
cash flows and had a stockholder deficit due to market conditions and R&D
expenses.  As of March 31, 2008, the Company had a repeat order
backlog totaling approximately $845,000.  With the increase in orders,
management implemented a plan of action to move the Company towards
profitability.  The plan of action included, beginning in 2006 and
continuing in the first half of 2007, the restructuring and retirement of a
majority of its debt.  Management has also repurchased all preferred
shares of stock of its wholly owned subsidiary and converted the majority of
shareholder loans to common stock.  The Company plans to sell shares
of its common stock to generate funds to meet new and increased demand for its
products and services.  Management believes that its plan of action
will be sufficient to achieve this goal.
 
 On March
12, 2008 the Company entered into a letter of intent to acquire 100% of the
stock of Modutek Corporation, a California corporation for
$4,186,050.  Terms of the agreement include a cash payment of
$1,916,096 at closing and a promissory note for the remainder of the acquisition
cost.  This transaction is a primary part of the Company’s plan of
action to re-structure and is dependent upon new common stock financing to raise
the necessary capital to complete the acquisition.
  9
 Table of Contents
  Item
2. Management's Discussions and Analysis of Financial Condition and Results of
Operations
 
 Note
Regarding Forward Looking Statements
 
 Except
for statements of historical fact, certain information contained herein
constitutes ‘forward looking statements’ within the meaning of Section 27A of
the Securities Act and Section 21E of the Securities Exchange Act. Forward
looking statements address our current plans, intentions, beliefs and
expectations and are statements of our expected future economic performance.
Statements containing terms like ‘believes’, ‘does not believe’, ‘plans’,
‘expects’, ‘intends’, ‘estimates’, ‘anticipates’, and other phrases of similar
meaning or the negative or other variations of these words or other comparable
words or phrases are considered to imply uncertainty and are forward looking
statements.
 
 Such
forward looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results or achievements of the Company
to be materially different from any future results or achievements of the
Company expressed or implied by such forward looking statements.  Such
factors include, but are not limited to, our ability to obtain capital to
finance and expand our operations, changes in economic conditions, government
regulations, contract requirements and abilities, behavior of existing and new
competitor companies and other risks and uncertainties discussed in this report
on Form 10QSB, and in other documents the Company files from time to time with
the SEC.  You are cautioned not to place undue reliance on the
forward-looking statements, which speak only as of the date of this Form
10-QSB.
 
 We cannot
guarantee our future results, level of activity, performance or
achievements.  Neither we nor any other person assumes responsibility
for the accuracy and completeness of these forward looking
statements.  We are under no duty to update any of the forward looking
statements after the date of this report.
 
 Legacy
Holdings, Inc. (the “Company”, or “Legacy”) provides wafer cleaning, etching and
photoresist stripping equipment and process technology to the semiconductor
industry, and related industries such as Solar Cells, Flat Panel Display’s, and
Light Emitting Diodes.  We have developed and patented a new, and what
we believe is a breakthrough process that employs cost advantaged “Green”
chemistry, to produce an environmentally safe process for photoresist removal
over metal exposed surfaces and organic cleaning of any size
substrate.
 
 In 1998,
we began filing patent applications for new chemical processes, that utilizes
Ozone and other environmentally friendly chemical processes for cleaning and
photoresist stripping of silicon wafers of all sizes.  These patented
and patent pending technologies can be adopted to support wafer cleaning in a
variety of different models. For our innovative
process development of Green Chemistry, we received the U.S. EPA Green Chemistry
Award issued by the White House in 1997.  Legacy is the only
semiconductor equipment company to receive this prestigious award.
 
 In 2002,
we completed the transition from a chemical module supplier to a full wet
station supplier, with the sale of our first wet station.  We were
still in the development phase of its dryer technology (DryZoneTM) which was
needed to break away from the other wet station manufacturers.  In
2006, we introduced our first fully automated dry in/dry out wet
station.  In 2007, we received customer acceptance sign-off of three
wet stations from three different customers and we received orders for two
expanded wet stations.
 
 We
provide a technology we believe creates a significant operational and financial
advantage for companies which produce semiconductors. Our technology supports
equipment that provides wafers for digital memory in computers (DRAM) and/or the
newly emerging NAND technology.  NAND flash is used in digital
photography and for memory in notebook computers.
 
 We
produce automated wet process equipment for the semiconductor, flat panel, solar
cell, and MEMS industries.  The equipment utilizes both patented
process and hardware technologies developed by Legacy.  The heart of
the process technology is a state-of-the-art ozone cleaning and drying
system.  The Ozone technology base eliminates or reduces hazardous
chemistries and hazardous process conditions while increasing process
performance and wafer throughput.
 
 Our
equipment manufacturing is all subcontracted out to other vendors
currently.  There are many companies that can manufacture to our
specifications on a sub contract basis, and no one sub contractor is critical to
our business.
 
 We have
developed a unique photoresist ozone based wet stripping process that is
aggressive enough to remove advanced photoresist polymers in less than 10
seconds from 300 mm sized wafers without affecting 32 nm dielectric films or
etching sensitive copper/metal stack interconnects.  Provided the
necessary capital can be obtained, we are now positioned to provide this process
technology and management proposes to build wet chemical delivery modules in the
future to supply the ozone based chemistry for integration into manufacturer’s
Wet Process Platforms.  This same process line is proposed to generate
a consumable chemistry which can be supplied to end-users. The chemical supply
used in this process is an on-going requirement for photoresist
removal.
 
 Provided
the necessary capital can be obtained, management plans to offer in house wafer
processing services for customer Pre-diffusion cleaning and resist stripping
operations.In
this scenario, we would receive the wafers, process them in our application lab,
package the wafers and return them to the client.
 
 10
 Table of Contents
 
 Results
of Operations
 
 Three
Months Ended March 31, 2008 and 2007
 
 Revenue
 
 Our
revenues were $16,938 and $130,361 for our quarters ended March 31, 2008 and
2007, respectively, representing a decrease of $113,423, or 87%, in
2008.  The decrease in revenues in 2008 was due to management focusing
on the restructuring of the company which included the following; completing the
reverse merger with CST Entertainment inc., working on the audit for 2007 and
working with investors to raise moneys.  This shifted the limited
manpower away from customer sales and manufacturing  to address the
corporate infrastructure requirements.
 
 Costs
and Operating Expenses
 
 Our total
costs and operating expenses were $53,284 and $109,928 for our quarters ended
March 31, 2008 and 2007, respectively, representing a decrease of $56,644, or
52%, in 2008.  The lower costs and operating expenses in 2008 was
principally due to the shift away from manufacturing to address the corporate
infrastructure after the reverse merger.
  Research and Development
Expenses. Our Research and Development expenses for our quarters ended
March 31, 2008 and 2007, were $130 and $33,049 respectively, representing a
decrease of $32,919 or 99%.  The decrease in our research and
development expenses resulted from our transition from an R&D company to a
manufacturing company and to address the corporate infrastructure after the
reverse merger.
 
 General and Administrative
Expenses. General and administrative expenses were $50,925 and $46,472
for our quarters ended March 31, 2008 and 2007, respectively, representing an
increase of $4,453, or 10%, in 2008.  The increase in our general and
administrative expenses is primarily related to the increased expenses
associated with manufacturing wetstations.
 
 Although
the net changes and percent changes with respect to our revenues and our costs
and operating expenses for our quarters ended March 31, 2008 and 2007 are
summarized above, these trends should not be viewed as a definitive indication
of our future results.
  Liquidity
and Capital Resources
 
 At
March 31, 2008, our principal sources of liquidity consisted of $0 of cash,
as compared to $10,080 of cash at March 31, 2007.   In addition,
we had a stockholders’ deficit of $761,545 at March 31, 2008, compared to a
deficit of $812,993 at March 31, 2007, a reduction in the deficit in
stockholders’ equity of $51,448.
 
 Our
operations used net cash of $1,717 during our first quarter ending March 31,
2008, as compared to $98,672 during our first quarter ending March 31,
2007.  The $96,955 decrease in the net cash used by our operating
activities during 2008 primarily the shift away from manufacturing to address
the corporate infrastructure after the reverse merger
 
 Financing
activities used $5,683 in net cash during our first quarter ending March 31,
2008, compared to providing $88,653 in net cash during our first quarter ending
March 31, 2007, or a difference of $94,336.
 
 We have
no significant contractual obligations or commercial commitments not reflected
on our balance sheet as of this date.
  11
 Table of Contents
  Plan
of Operations
 
 During
the next 12 months, we will continue to focus on acquisition of a synergistic
manufacturing company, and introduction of our process technology to Tier 1
customers such as Intel, Texas Instruments, and Samsung, while we seek
additional capital and lines of credit to increase our work force and expand our
inventory.  At our first quarter ended March 31, 2008, we had a working
capital deficit of $763,360 and total current liabilities of $941,349,
consisting primarily of $263,859 in related party loans and $253,695 in deferred
revenues and $303,795 in accrued wages and taxes and accounts
payable.  Without increased capital we will be unable to substantially
reduce our working capital deficit or reduce our current
liabilities.  Our financing efforts may be impaired by our limited
revenues as well as the limited liquidity for our common stock.
 
 We cannot
assure that additional capital funding would be available through private or
public equity financing or bank financing.  Furthermore, outside events
such as the trends in the silicon chip manufacturing business, the condition of
the stock market, interest rate levels and the availability of credit, and
general trends in the economy, could affect our ability to obtain
financing.  We have no financing arrangements with any person to
obtain additional funding on any terms and cannot assure that we will be able to
do so.
  Critical
Accounting Policies
 
 We have
identified the policies outlined below as critical to our business
operations and an understanding of our results of operations.  The
list is not intended to be a comprehensive list of all of our accounting
policies.  In many cases, the accounting treatment of a
particular transaction is specifically dictated by accounting principles
generally accepted in the United States, with no need for management's
judgment in their application.  The impact and any associated
risks related to these policies on our business operations is discussed
throughout Management's Discussion and Analysis or Plan of Operations where
such policies affect our reported and expected financial results.  For
a detailed discussion on the application of these and other accounting
policies, see the Notes to our Consolidated Financial
Statements.  Note that our preparation of the financial
statements requires us to make estimates and assumptions that affect the
reported amount of assets and liabilities, disclosure of contingent assets
and liabilities at the date of our financial statements, and the reported
amounts of revenue and expenses during the reporting
period.  There can be no assurance that actual results will not
differ from those estimates.
 
 Revenue
Recognition
 
 All
revenues are derived from the sale of our products and
services.  Revenue and related taxes and operating expenses are
recorded in the month the product or service is delivered to the
purchaser.  Accounts receivable are stated at the amount management expects
to collect.  Management provides for probable uncollectible amounts through
a charge to earnings and a credit to an allowance based on its assessment of the
collectibility of the receivable.  At our quarters ended March 31,
2008 and 2007, no allowance for doubtful accounts was deemed
necessary.
 
 Income
Taxes
 
 Provisions
for income taxes are based on taxes payable or refundable and deferred
taxes.   Deferred taxes are provided on differences between the tax
bases of assets and liabilities and their reported amounts in the financial
statements and tax operating loss carryforwards.   Deferred tax assets
and liabilities are included in the financial statements at currently enacted
income tax rates applicable to the period in which the deferred tax assets and
liabilities are expected to be realized or settled.  As changes in tax
laws or rates are enacted, deferred tax assets and liabilities are adjusted
through the provision for income taxes.
 
 Accounting
for Reorganization
 
 In view
of Legacy Systems, Inc.’s reorganization with Legacy Holdings, Inc, a shell
corporation, via a stock for stock exchange, the Company’s financial statements
have been treated as a reorganization for presentation purposes.
 
 12
 Table of Contents
 
 ITEM
3.  CONTROLS AND PROCEDURES
 
 (a) Evaluation of
disclosure controls and procedures
 
 As
required by Rule 13a-15(b) under the Exchange Act, we conducted an evaluation,
under the supervision and participation of our management, including the
Company’s President and Chief Financial Officer (who is the principal accounting
officer).  No weaknesses were noted and both the President and Chief
Financial Officer concluded that the disclosure controls and procedures were
effective as of the most recent fiscal quarter covered by this Form
10-QSB.
 
 (b)
        Changes in internal
controls
  In
accordance with Item 308 (c) of Regulation S-B, there were no changes in the
Company’s internal control reporting in connection with the Company’s evaluation
of its internal controls that occurred during the most recent fiscal quarter
covered by this Form 10-QSB.
  PART
II.   OTHER INFORMATION
 
 Item
1          Legal
Proceedings.  None
 
 Item
2          Unregistered Sales of Equity
Securities and use of proceeds.None
 
 Item
3          Defaults Upon Senior
Securities.  None
 
 Item
4          Submission of Matters to a Vote of
Security Holders.None
 
 Item
5          Other
Information.None
  13
 Table of Contents
  Item
6   Exhibits
 
 Exhibit
Number                                       Title of
Document
 
 (1)
3.01                                                      
Articles of Incorporation of Legacy Holdings, Inc.
 (1)
3.02                                                      
Articles of Incorporation of Legacy Systems, Inc.
 (1)
3.03                                                      
Bylaws of Legacy Holdings, Inc.
 (1)
3.04                                                      
Bylaws of Legacy Systems, Inc.
 (1)
4.01                                                      
Specimen stock certificate
 (1)
10.01                                                    
Employment Contract with CEO Robert Matthews
 31.01                                                         
Certification of PrincipalFinancial Officer Pursuant to
Rule 13a-14
 Certification of Principal Executive Officer Pursuant to
Rule 13a-14
 32.01                                                         
Certification Chief FinancialOfficer Pursuant to 18 U.S.C.
Section 1350, as Adopted
 Pursuantto Section 906 of the Sarbanes-Oxley Act of 2002
 Certification of Chief Executive Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuantto Section 906 of the Sarbanes-Oxley Act of 2002
  (1)
Incorporated by reference to the Company’s report on Form 10-KSB for the year
ended December 31, 2007.
 
 14
 
 SIGNATURES
  In
accordance with the requirements of the Exchange Act, the Registrant caused this
Report to be signed on its behalf by the undersigned thereto duly
authorized.
  Date:
August 6, 2008
  LEGACY
HOLDING, INC.
 
 By:  /s/ Robert Matthews
                Robert
      Matthews
                President,
      CEO and Treasurer