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 September 30, 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)
  Delaware90-0411148
                
                (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
September 30, 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 Information
 
 
 Item
1.   Financial Statements
 
 
 Balance
Sheet as of September 30, 2008
(Unaudited).......................     3
 
 Statements
of Operations for the three and nine
 months
ended September 30, 2008 and 2007
(Unaudited).....................   4
 
 Statements
of Stockholders Equity for the year ended December 31,
 2007 and
the nine months ended September 30, 2008
(unaudited)..........   5
 
 Statements
of Cash Flows for the three and nine months
 Ended
June 30, 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
      of9/30/2008
                12/31/2007ASSETSCurrent
      assets:Cash
                
                $
                16,589
                5,358Deferred
      product cost
                
                
                -
                28,787Inventory
      (Note B)
                
                
                149,202
                149,202Total
      current assets
                
                
                165,791
                183,347Property
      and equipment, net
                
                
                934
                2,257Total
      assets
                
                $
                166,725
                185,604LIABILITIES AND
      STOCKHOLDERS' DEFICITCurrent
      liabilities:Accounts
      payable
                
                
                81,643
                90,309Deferred
      revenue
                
                
                190,500
                253,695Note
      payable (Note E)
                
                
                120,000
                120,000Accrued
      wages and taxes
                
                
                237,330
                158,220Stockholder
      loans payable (Note F)
                
                
                237,609
                269,543Total  current
      liabilities
                
                
                867,082
                891,767Stockholders'
      Deficit:Common
      stock, par value $0.01; 100,000,000 authorized; issuedand
      outstanding 18,092,739 at Sept 30, 2008
                
                
                18,093
                17,593Treasury
      stock
                
                
                (15,000)
                (15,000)Additional
      paid in capital
                
                
                3,343,597
                3,341,598Retained
      deficit
                
                
                (4,086,602)
                (4,050,354)Total
      stockholders' deficit
                
                
                (739,912)
                706,163Total
      liabilities and stockholders' deficit
                
                $
                127,170
                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 and Nine Months Ended Sept 30, 2008 and 2007For
      the Three Months Ended
                
                
                For
      the Nine Months EndedSept
      30,
                
                
                Sept
      30,2008
                
                
                2007
                
                
                2008
                
                
                2007Revenue:Product
      sales
                
                $
                74,474
                
                
                $
                47,108
                
                
                $
                277,492
                
                
                $
                266,561Service
      fees
                
                
                -
                
                
                
                10,435
                
                
                
                11,254
                
                
                
                21,577R&D
      contract
                
                
                14,000
                
                
                
                30,000
                
                
                
                40,000
                
                
                
                25,000Total
      revenue
                
                
                88,474
                
                
                
                87,543
                
                
                
                328,746
                
                
                
                313,138Cost
      of goods sold
                
                
                46,102
                
                
                
                39,380
                
                
                
                140,420
                
                
                
                198,186Gross
      profit (loss)
                
                
                42,372
                
                
                
                48,163
                
                
                
                188,326
                
                
                
                114,952Operating
      expenses:Research
      and development
                
                
                12,756
                
                
                
                15,061
                
                
                
                15,888
                
                
                
                71,550Sales
      and marketing
                
                
                11,278
                
                
                
                1,186
                
                
                
                12,911
                
                
                
                1,004General
      and administration
                
                
                57,283
                
                
                
                42,332
                
                
                
                120,543
                
                
                
                93,396Depreciation
                
                
                441
                
                
                
                441
                
                
                
                1,323
                
                
                
                882Facilities
                
                
                30,800
                
                
                
                3,742
                
                
                
                34,810
                
                
                
                40,205Total
      operating expenses
                
                
                112,557
                
                
                
                62,763
                
                
                
                185,475
                
                
                
                207,037Income
      (loss) from operations
                
                
                (70,185
                )
                
                
                (14,600
                )
                
                
                2,851
                
                
                
                (92,085
                )Other
      income (expense)Miscellaneous
      income
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                14,027Interest
      expense
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (324
                )Total
      other income (expense)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                13,703Income
      (loss) before income taxes
                
                
                (70,185
                )
                
                
                (14,600
                )
                
                
                2,851
                
                
                
                (78,382
                )Income
      taxes
                
                
                800
                
                
                
                
                
                
                
                (800
                )
                
                
                (800
                )Net
      income (loss)
                
                $
                (70,985
                )
                
                $
                (14,600
                )
                
                $
                2,051
                
                
                $
                (79,182
                )Weighted
      average common shares outstandingBasic
      and fully diluted
                
                
                18,092,739
                
                
                
                18,092,739
                
                
                
                18,092,739
                
                
                
                27,282,846Net
      income (loss) per share common
                
                $
                (0.00
                )
                
                $
                (0.00
                )
                
                $
                0.00
                
                
                $
                (0.00
                )The
      accompanying notes are an integral part of these financial
      statements
  4
 Table
of Contents
  LEGACY
      HOLDING, INC.CONSOLIDATED
      STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited)For
      the Years Ended December 31, 2006 and 2007 and the Nine Months Ended Sept
      30, 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
      Gain
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                2,051
                
                
                
                2,051Balances,
      Sept 30, 2008
                
                
                18,092,739
                
                
                $
                18,093
                
                
                $
                (15,000
                )
                
                $
                3,343,597
                
                
                $
                (4,048,303
                )
                
                $
                (701,613
                )The
      accompanying notes are an integral part of these financial
      statements
  5
 Table
of Contents
  LEGACY
      HOLDING, INC.CONSOLIDATED
      STATEMENTS OF CASH FLOWS (Unaudited)For
      the Three and Nine Months Ended Sept 30, 2008 and 2007For
      the Three Months Ended
                
                
                For
      the Nine Months EndedSept
      30,
                
                
                Sept
      30,2008
                
                
                2007
                
                
                2008
                
                
                2007Cash
      flows from operating activities:Net
      income (loss)
                
                $
                (70,185
                )
                
                $
                (14,600
                )
                
                $
                (35,448
                )
                
                $
                (79,182
                )Adjustments
      to reconcile increase in net assets to netcash
      provided by (used in) operating activities:Depreciation
      and amortization
                
                
                441
                
                
                
                441
                
                
                
                1,323
                
                
                
                1,323Common
      stock issued for services
                
                
                
                
                
                
                
                
                
                
                2,500Decrease
      (increase) in:Deferred
      product sales cost
                
                
                -
                
                
                
                (787
                )
                
                
                -
                
                
                
                10,000InventoryIncrease
      (decrease) in:Accounts
      payable
                
                
                (30,121
                )
                
                
                (1,215
                )
                
                
                (8,668
                )
                
                
                (34,198
                )Deferred
      revenue
                
                
                -
                
                
                
                -
                
                
                
                (63,195
                )
                
                
                (55,136
                )Accrued
      wages and taxes
                
                
                -
                
                
                
                39,134
                
                
                
                79,110
                
                
                
                79,238Net
      cash provided (used in) operating activities
                
                
                (99,865
                )
                
                
                22,973
                
                
                
                (24,378
                )
                
                
                (78,396
                )Cash
      flows from investing activities:Additions
      to property and equipment
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Net
      cash provided by (used in) investing activities
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Cash
      flows from financing activities:Return
      of paid in capital
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                7,274Return
      of treasury stock
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (15,000
                )Payment
      on note payable
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (30,000
                )Proceeds
      (repayment) of stockholder loan
                
                
                (16,447
                )
                
                
                (21,992
                )
                
                
                (31,933
                )
                
                
                101,544Net
      cash provided by (used in) financing activities
                
                
                (16,447
                )
                
                
                (21,992
                )
                
                
                (31,933
                )
                
                
                63,818Net
      increase (decrease) in cash
                
                
                (77,557
                )
                
                
                981
                
                
                
                11,231
                
                
                
                (13,597
                )Cash
      at beginning of year
                
                
                94,146
                
                
                
                5,521
                
                
                
                5,358
                
                
                
                20,099Cash
      at end of year
                
                $
                16,589
                
                
                $
                6,502
                
                
                $
                16,589
                
                
                $
                6,502Supplementary
      Information:Cash
      paid for interest
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                324Cash
      paid for income taxes
                
                $
                800
                
                
                $
                -
                
                
                $
                800
                
                
                $
                800The
      accompanying notes are an integral part of these financial
      statements
  6
 Table
of Contents
  LEGACY
HOLDINGS, INC. AND SUBSIDIARY
 Notes to
Consolidated Financial Statements
 For the
Three and Six Months Ended June 30, 2008 and 2007
  Note A-Organization and
Summary Of Significant Accounting Policies
 
 Basis of
Presentation
 
 The
accompanying reviewed financial statements of Legacy Holdings, Inc. as of
September 30, 2008 and for the three and nine month periods ended September 30,
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 and nine months ended September 30, 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:
 
 Note A-Organization and
Summary Of Significant Accounting Policies
 
 Acquisition
(Continued)
 
 (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 September 30, 2008 the Company did not have
receivables outstanding.
 7
 Table
of Contents
  LEGACY
HOLDINGS, INC. AND SUBSIDIARY
 Notes to
Consolidated Financial Statements
 For the
Three and Six Months Ended June 30, 2008 and 2007
 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.
  Note A-Organization and
Summary Of Significant Accounting Policies
 
 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
 LEGACY
HOLDINGS, INC. AND SUBSIDIARY
 Notes to
Consolidated Financial Statements
 For the
Three and Six Months Ended June 30, 2008 and 2007
  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 Sept 30, 2008.
 
 NOTE C – PROPERTY AND
EQUIPMENT
 
 Property
and equipment consists of the following at Sept 30, 2008:
 Sept
      30, 2008Furniture
      & Fixtures
              
              
              20,025Machinery
      & Equipment
              
              
              259,034Less
      Accumulated Depreciation
              
              
              (278,124
              )$
              934
  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.
 
 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 September 30, 2008.
 
 NOTE F – LOANS FROM
SHAREHOLDERS
 
 The
Company has received loans and advances from the President.  At
September 30, 2008 the balance outstanding on these loans was
$237,609.  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 Sept 30, 2008, the Company had 18,092,739 shares issued and
outstanding.
  NOTE H – INCOME
TAXES
 
 Income
tax provision for the quarter ended Sept 30, 2008 and 2007 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 is not involved or a party to any
lawsuit.
  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.  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, but there is no certainty that the Company will
be able to sell sufficient shares, or sell shares on commercially reasonable
terms sufficient to fund such a plan.
 
 On
September 6, 2008 the Company entered into a letter of intent to acquire 100% of
the stock of Modutek Corporation, a California corporation for
$3,171,250.  Terms of the agreement include a cash payment of
$1,976,250 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.  However, the Company does not currently have
the funds to make such an acquisition,  and is dependent upon its plan
for new common stock financing to raise the necessary capital to complete the
acquisition, the success of which is uncertain.
 
 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
and Nine Months Ended September 30, 2008 and 2007
 
 Revenue
 
 Our
revenues were $88,474 and $87,543 for the three months ended September 30, 2008
and 2007, respectively, representing an increase of $931, or 1%, in
2008.  The increase in revenues in 2008 was due to customer acceptance
of the wetstations and Legacy’s process technologies, thereby generating
additional sales.
 
 Our
revenues were $328,746 and $313,138 for the nine months ended September 30, 2008
and 2007, respectively, representing a decrease of $15,608, or 5%, in
2008.  The increase in revenues in 2008 was due to repeat customer
orders.
 
 Costs
and Operating Expenses for the Three Months Ended September 30,
2008
 
 Our total
costs and operating expenses were $112,557 and $62,763 for the three months
ended September 30, 2008 and 2007, respectively, representing an increase of
$49,794, or 79%, in 2008.  The higher costs and operating expenses in
2008 were principally due to the higher costs of assembly by outside
fabricators.
 
 Research and Development Expenses.Our Research and Development expenses for the three months ended
September 30, 2008 and 2007, were $12,756 and $15,061 respectively, representing
a decrease of $2,305 or 15%.  The decrease in our research and
development expenses resulted from the manpower focus on moving the company from
the Pink Sheets to the OTC Bulletin Board.
 
 General and Administrative
Expenses. General and administrative expenses were $57,283 and $42,332
for the three months ended September 30, 2008 and 2007, respectively,
representing an increase of $14,951, or 35%, in 2008.  The increase in
our general and administrative expenses in 2008, as compared to 2007, is
primarily related to the increased expenses associated with accounting and legal
fees associated with moving the company from the Pink Sheets to the OTC:Bulletin
Board.
 
 Stock-Based
Compensation.  We did not incur any stock-based compensation
expenses during the three months ended September 30, 2008 or 2007.
 
 Costs
and Operating Expenses for the Nine Months Ended September 30, 2008
 
 Our total
costs and operating expenses were $185,475 and $207,037 for our nine months
ended September 30, 2008 and 2007, respectively, representing a decrease of
$21,562, or 10%, in 2008.  The lower costs and operating expenses in
2008 was principally due to management focusing on the completing the SEC
reporting requirements to move the company from the Pink Sheets to the OTC
Bulletin Board.
 
 Research and Development
Expenses.Our Research and Development expenses for our nine
months ended September 30, 2008 and 2007, were $15,888 and $71,550, representing
a decrease of $55,662 or 78%.  The decrease in our research and
development expenses resulted from our transition from an R&D company to a
manufacturing company.
 
 General and Administrative Expenses.General and administrative expenses were $120,543 and $93,396 for our
nine months ended September 30, 2008 and 2007, respectively, representing an
increase of $27,147, or 29%, in 2008.  The increase in our general and
administrative expenses in 2008, as compared to 2007, is primarily related to
the increased expenses associated with manufacturing wetstations.
 
 Stock-Based
Compensation.We incurred $2,500 and $0 of stock-based
compensation expense during the nine months ended September 30, 2008 and 2007,
respectively.
 
 Other
Income
 
 Although
the net changes and percent changes with respect to our revenues and our costs
and operating expenses for our nine months ended September 30, 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
September 30, 2008, our principal sources of liquidity consisted of $16,589 of
cash, as compared to $6,502 of cash at September 30, 2007.  In
addition, we had a stockholders’ deficit of $739,912 at September 30, 2008,
compared to a deficit of $786,510 at September 30, 2007, a reduction in the
deficit of $46,598.
 
 Our
operations provided net cash of $11,231 during our first nine months ending
September 30, 2008, as compared to a decrease in net cash of $13,597 during our
nine months ending September 30, 2007.  The $11,231 increase in the
net cash provided by our operating activities during 2008 primarily resulted
from the payment from the shipping of another wet station.
 
 Financing
activities used $31,933 in net cash during our nine months ending September 30,
2008, compared to providing $101,544 in net cash during our nine months ending
September 30, 2007, or a difference of $133,477.
 
 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.
 
 We will
continue to seek additional capital and lines of credit to increase our work
force, expand our inventory and put ourselves in a position to make one or more
acquisitions.  At our nine months ending September 30, 2008, we had total
current liabilities of $867,082, consisting primarily of $237,609 in related
party loans, a $120,000 note payable, $190,500 in deferred revenues and $318,973
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 will 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 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 September 30,
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
 
 Item
6                      Exhibits
  13
 Table
of Contents
  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
 31.1                                                          Certification of Principal Financial Officer
Pursuant to Rule 13a-14
 31.2                                                          
Certification of Principal Executive Officer Pursuant to
Rule 13a-14
 32.1
                Certification of Chief Executive Officer Pursuant to 18
      U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
      Sarbanes-Oxley Act of 200232.2
                Certification
      of Chief FinancialOfficer Pursuant to 18 U.S.C Section 1350, as
      Adopted Pursuant to 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
 Table
of Contents
 
 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:
November 1, 2008
  LEGACY
HOLDING, INC.
 
 By: 
      /s/ Robert
      Matthews
                Robert
      Matthews
                President,
      CEO and Treasurer