0001079974-19-000282.txt : 20190517 0001079974-19-000282.hdr.sgml : 20190517 20190517100437 ACCESSION NUMBER: 0001079974-19-000282 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 31 CONFORMED PERIOD OF REPORT: 20190331 FILED AS OF DATE: 20190517 DATE AS OF CHANGE: 20190517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LEGACY VENTURES INTERNATIONAL INC. CENTRAL INDEX KEY: 0001616788 STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841] IRS NUMBER: 300826318 STATE OF INCORPORATION: NV FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-55849 FILM NUMBER: 19834458 BUSINESS ADDRESS: STREET 1: 27 BAYCLIFFE RD. CITY: MARKHAM STATE: A6 ZIP: L3R 7T9 BUSINESS PHONE: 647-969-7383 MAIL ADDRESS: STREET 1: 27 BAYCLIFFE RD. CITY: MARKHAM STATE: A6 ZIP: L3R 7T9 10-Q 1 lgvy10q_3312019.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2019

 

[   ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _______ to ______

 

Commission File Number 333-107179 & 000-51210

 

LEGACY VENTURES INTERNATIONAL, INC

(Exact name of registrant as specified in its charter)

 

Nevada   30-0826318

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

27 Baycliffe Rd. Markham, ON, L3R 7T9

(Address of principal executive offices)  (Zip Code)

 

647-969-7383

(Registrant's telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X]    No [  ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes [X]    No [  ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or, an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer", "smaller reporting company", and "emerging growth company", in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer [ ]   Accelerated filer [ ]
Non-accelerated filer [ ]   Smaller reporting company [X]
(Do not check if smaller reporting company)   Emerging growth company [ ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  [ ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes []    No [X]

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of

each class

Trading

Symbol(s)

Name of each exchange

on which registered

 Common stock LGYV   OTC

  

 As of May 16, 2019, there were 315,064 outstanding shares of the registrant's common stock, $0.0001 par value per share.

 

 

 

  
 

 

 

 

 

TABLE OF CONTENTS

 


 

    Page No.

 

PART I – FINANCIAL INFORMATION

   
     
Item 1. Financial Statements   3
     
Item 2. Management's Discussion and Analysis   16
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk   18
     
Item 4. Controls and Procedures   18
     
PART II – OTHER INFORMATION    
     
Item 1. Legal Proceedings   19
     
Item 1A. Risk Factors   19
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds   19
     
Item 3. Defaults Upon Senior Securities   19
     
Item 4. Mine Safety Disclosures   19
     
Item 5. Other Information   19
     
Item 6. Exhibits   20

 

 

 

 

 

 

 2 
 

 

 

 

 

PART I

 

FINANCIAL INFORMATION

 

 

ITEM 1. FINANCIAL STATEMENTS REQUIRED BY FORM 10-Q

 

The Interim Condensed Financial Statements of the Company are prepared as of March 31, 2019.

 

 

 

CONTENTS
 
   
Interim Condensed Balance Sheets 4
   
Interim Condensed Statements of Operations and Comprehensive Income (Loss) 5
   
Interim Condensed Statements of Cash Flows
   
Notes to the Interim Condensed Financial Statements 8

 

 

 

 

 

 

 3 
 


 

LEGACY VENTURES INTERNATIONAL, INC.

INTERIM CONDENSED BALANCE SHEETS (unaudited)

(Expressed in US dollars)

 

 

        March 31,   June 30,
ASSETS   Note   2019   2018
Current assets            
Cash           $ 32,235     $ 30  
Total assets           $ 32,235     $ 30  
LIABILITIES AND STOCKHOLDERS' DEFICIENCY                        
Current liabilities                        
Accounts payable and accrued liabilities           $ 74,171     $ 48,822  
Secured promissory note     5       50,000       -  
Convertible notes     5       20,000       52,425  
Interest payable     5       2,928       17,609  
Advances from third parties     6       22,925       22,925  
Total liabilities             170,024       141,781  
                         
Stockholders' deficiency                        
Preferred Stock, $0.0001 par value; 10,000,000 shares authorized:                        
Preferred Stock - no shares issued and outstanding March 31, 2019 and June 30, 2018     7     $ -     $ -  
Common Stock, $0.0001 par value; 100,000,000 shares authorized:                        
Common Stock - 315,064 shares issued and outstanding March 31, 2019 and June 30, 2018     7       32       32  
Additional paid in capital     5       6,394,771       6,394,771  
Accumulated deficit             (6,532,592 )     (6,536,554 )
Total stockholders' deficit             (137,789 )     (141,751 )
Total liabilities and stockholders' deficiency           $ 32,235     $ 30  
Going concern     2                  

 

 

See accompanying notes to the unaudited interim condensed financial statements

 

 

 4 
 

 

 

LEGACY VENTURES INTERNATIONAL, INC.

INTERIM CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(unaudited)

(Expressed in US dollars)

 

 

       

For the three months ended

March 31,

 

For the nine months ended

March 31,

    Note   2019   2018   2019   2018
Operating expenses                                        
    Professional fees           $ 15,850     $ 5,695     $ 37,100     $ 21,315  
    Other general and administration             833       834       6,014       1,667  
Loss from operations             (16,683 )     (6,529 )     (43,114 )     (22,982 )
Other (expenses) income                                        
    Gain on cancellation of convertible note     5       -       -       545,580       -  
    Interest income  - Promissory note     5       -       4,932       -       11,014  
    Interest expense  - Convertible and Secured notes     5       (712 )     (5,327 )     (30,899 )     (12,224 )
    Accretion expense - Convertible notes     5       -       (6,111 )     (467,575 )     (8,524 )
    Bank charges             -       (15 )     (30 )     (44 )
Total other expenses             (712 )     (6,521 )     47,076       (9,778 )
Income (Loss) before taxes             (17,395 )     (13,050 )     3,962       (32,760 )
    Income tax expense             -       -       -       -  
Net income (loss) and comprehensive income (loss)           $ (17,395 )   $ (13,050 )   $ 3,962     $ (32,760 )
                                         
                                         
Net income (loss) per share - basic         $ (0.06 )   $ (0.04 )   $ 0.01     $ (0.10 )
Net income (loss) per share - diluted     4     $ (0.06 )   $ (0.04 )   $ 0.01     $ (0.10 )
                                         

      Weighted average number of

common shares outstanding -

basic

          315,064       315,064       315,064       315,064  

Weighted average number of

common shares outstanding -

diluted

      4     315,064       315,064       341,731       315,064  

 

  

 

 

See accompanying notes to the unaudited interim condensed financial statements

 

 

 

 5 
 

 

 

 

 

LEGACY VENTURES INTERNATIONAL, INC.

INTERIM CONDENSED STATEMENT OF CASH FLOWS

(unaudited)

(Expressed in US dollars)

 

 

  

For the nine months ended

March 31,

   2019  2018
Cash used in operating activities          
Net income (loss)  $3,962   $(32,760)
Adjustments to reconcile net income (loss) to net cash used by operating activities:          
Gain on cancellation of convertible note   (545,580)   - 
Accretion expense - Convertible notes   467,575    8,524 
Changes in non-cash operating assets and liabilities          
    Interest receivable - Promissory note   -    (11,014)
    Interest payable - Convertible notes   30,899    12,224 
    Accounts payable and accrued liabilities   25,349    57 
Net cash used in operating activities   (17,795)   (22,969)
Cash flow from investing activity          
    Promissory note receivable   -    (500,000)
Net cash used in investing activities   -    (500,000)
Cash flow from financing activities          
    Proceeds from secured promissory note   50,000    - 
    Proceeds from convertible note   -    500,000 
    Proceeds from third party advances   -    22,925 
Net cash provided by financing activities   50,000    522,925 
Decrease in cash   32,205    (44)
Cash, beginning of period   30    89 
Cash, end of period  $32,235   $45 
           
Cash payments for:          
Interest  $-   $- 
Income taxes  $-   $- 

 

 

See accompanying notes to the unaudited interim condensed financial statements

 

 

   
 

 

 

 

LEGACY VENTURES INTERNATIONAL, INC.

NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS

(Expressed in US dollars)

(Unaudited)

 

 

 

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

 

Legacy Ventures International, Inc. (“Legacy” or the “Company”), was incorporated on March 4, 2014 under the laws of the State of Nevada. Since September 15, 2015, the Company operated through a wholly-owned subsidiary RM Fresh Brands Inc. (“RM Fresh”), who services food and beverage retailers and distributors who are looking for innovative, trend-setting products across North America and in international markets. With a focus on sustainable, category changing consumables, RM Fresh acquired the rights to distribute an extensive portfolio of highly desirable brands, including Boxed Water, Cleansify, Uncle Si’s Iced Tea, Chef 5-Minute Meals, Gurkha Cigars, Shimla Foods, Aloe Gloe and Arriba Horchata. Through a network of sub-distribution partners across Canada, RM Fresh provides national product distribution and brokerage services. RM Fresh has an emerging focus on the United States and Middle East through the establishment of sub-distribution partners.

 

On August 31, 2016, in order to fund the ongoing operation and further development of RM, the Company consented to new third party investments into RM in the approximate total amount of $175,000, made in the form of cash and retirement of indebtedness owed by RM. As result of these new investments into RM, the Company’s ownership percentage of the company was reduced to twenty percent (20%). In addition, the Company entered into a new Shareholder Agreement with RM, under which the shares in RM owned by the Company are subject to certain restrictions on transfer until such time as the Company declares a shareholder dividend of the Company’s RM shares following a going public transaction by RM, or in the alternative, for one (1) year after RM completes a going public transaction. Further, the Company disposed of an inter-company liability owed to us by RM in the amount of CDN$166,961.70. The liability was documented under a Demand Promissory Note issued to us by RM. The Company then assigned the note to an investor in RM in exchange for $3,000. Finally, the Company entered into a mutual Release agreement with RM. Under the Release, the Company released and discharged all liabilities owed to us by RM (with the exception of the Demand Promissory Note). RM in turn released the Company of all liabilities owing to RM and released us all ongoing contractual and financial responsibilities to RM, including the Company’s contractual obligation to further fund management fees or other expenses to be incurred by RM.

 

 

 

 

 6 
 

 

 

 

 

LEGACY VENTURES INTERNATIONAL, INC.

NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS

(Expressed in US dollars)

(Unaudited)

 

On June 28, 2017, Randall Letcavage entered into a stock purchase agreement for the acquisition of an aggregate of 286,720 shares of Common Stock of the Company, representing approximately 91% of the issued and outstanding shares of Common Stock of the Company as of such date, from Rehan Saeed, the previous majority shareholder of the Company (the “Purchase Agreement”). The Purchase Agreements were fully executed and delivered, and the transaction consummated as of and at July 7, 2017. Consequently, Mr. Letcavage was able to unilaterally control the election of the Company’s Board of Directors, all matters upon which shareholder approval is required and, ultimately, the direction of the Company.

 

In addition, on June 28, 2017, Rehan Saeed submitted his resignation from all executive officer positions with the Company, including Chief Executive Officer and President, effective on the 10th day following the filing of a Schedule 14f-1 with the U.S. Securities and Exchange Commission. On June 28, 2017, Randall Letcavage was appointed as Chief Executive Officer, Chief Financial Officer, Director, effective immediately. 

 

On June 28, 2017, the Company entered into a non-binding letter of intent to enter into a business combination with Nexalin Technology, Inc., a Nevada corporation (“Nexalin”).

 

On June 6, 2018, the Company reported that Matthew Milonas entered into an agreement for the acquisition of an aggregate of 286,720 shares of Common Stock of the Company, representing approximately 91% of the issued and outstanding shares of Common Stock of the Company (the “Shares”) as of such date, from Randall Letcavage, the majority shareholder of the Company (the “Agreement”). However, Mr. Milonas claims that he did not fully execute and deliver the Agreement and has disclaimed ownership of the subject shares. Mr. Letcavage will not contest Mr. Milonas’ claims and as a result, Mr. Letcavage’s ownership of the shares did not change as disclosed.

 

On August 9, 2018, Mr. Letcavage, as the holder of 91% of the outstanding shares of common stock of the Company, approved the appointment of Peter Sohn as the Chief Executive Officer and Chief Financial Officer and Director of the Company. Effective December 17, 2018, Mr. Sohn accepted the appointments as Chief Executive Officer and Chief Financial Officer and Director of the Company.

 

On December 17, 2018, Mr. Letcavage delivered to Peter Sohn an agreement for the acquisition by Mr. Sohn of the Shares from Mr. Letcavage, which agreement is dated August 9, 2018, but was delivered and deemed effective on December 17, 2018 (the “Agreement”). As a result Mr. Sohn is now able to unilaterally control the election of the Company’s Board of Directors, all matters upon which shareholder approval is required and, ultimately, the direction of the Company.

 

 

 

 

 7 
 

 

 

 

LEGACY VENTURES INTERNATIONAL, INC.

NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS

(Expressed in US dollars)

(Unaudited)

 

 

Share Exchange Agreement and Subscriptions

 

Effective September 11, 2017 (the “Closing Date”), Legacy Ventures International, Inc., (the “Company”) entered into a certain Share Exchange Agreement (the “Share Exchange Agreement”), dated as of September 1, 2017, by and among the Company, Nexalin and shareholders of Nexalin holding a majority of the issued and outstanding shares of Nexalin common stock (the “Nexalin Shareholders”). Pursuant to the Share Exchange Agreement, the Company agreed to exchange the outstanding equity stock of Nexalin held by the Nexalin Shareholders for units (the “Units”) consisting of an aggregate of approximately 25,000,000 newly issued shares of the Common Stock, $0.001 par value, of the Company and warrants (the “Warrants”) to purchase an aggregate of approximately 25,000,000 newly issued shares of the Common Stock, $0.001 par value, of the Company. The warrants are two-year warrants exercisable at the end of one year for exercise prices between $1.50 and $1.75 per share, payable in cash. The warrants must be promptly exercised, and subject to forfeiture if not so exercised, if the Company’s shares achieve a trading price of $3.00 or more for 30 consecutive days. At the Closing Date, the Company approved the issuance of approximately 15,500,000 shares of common stock to the Nexalin shareholders, together with warrants for the purchase of an additional 15,500,000 shares and reserved approximately 9,500,000 additional shares, together with the related warrants, for the issuance to remaining Nexalin shareholders who are expected to execute and deliver the Share Exchange Agreement, including approximately 1,100,000 shares and related warrants issuable immediately to consultants in connection with the transactions contemplated by the Share Exchange Agreement. On September 15, 2017, Legacy Ventures International, Inc., (the “Company”), filed a Current Report on Form 8-K (the “09/15/17 Form 8K”) announcing that effective September 11, 2017 (the “Closing Date”), the Company, on the one hand, and Nexalin Technology, Inc., a Nevada corporation (“Nexalin”), and shareholders of Nexalin holding a majority of the issued and outstanding shares of Nexalin common stock (the “Nexalin Shareholders”), on the other hand, entered into a Share Exchange Agreement (the “Share Exchange Agreement”), dated as of September 1, 2017.  In the Share Exchange Agreement the Company agreed to issue units in exchange for all the outstanding equity stock of Nexalin held by the Nexalin Shareholders. The “Units” were to consist of an aggregate of approximately 25,000,000 newly issued shares of the Company’s Common Stock, $0.001 par value, and warrants (the “Warrants”) to purchase an aggregate of approximately 25,000,000 newly issued shares of the Company’s Common Stock, $0.001 par value.

 

On November 29, 2017, the Company filed an amendment to its 09/15/17 Form 8-K (the “11/29/17 Amended Form 8K”) announcing that the “Closing Date” as defined in the Share Exchange Agreement was September 30, 2017, and, further, that as of the date of the of the 11/29/17 Amended Form 8K, the holders of approximately 90% of the equity securities of Nexalin had exchanged their shares into shares of the Company’s Common Stock.

 

On December 26, 2017, the Company filed a Current Report on Form 8K (the “12/26/17 Form 8K”) announcing that on December 21, 2017, the Company’s sole officer and director, Randy Letcavage, who was at the time Nexalin’s sole officer and director, resigned all officer and director positions with the Company and Nexalin. It was also announced that Mark White was appointed as the Interim Chief Executive Officer and Interim Chief Financial Officer of both the Company and Nexalin. Finally, it was announced that Rick Morad was appointed as the sole director of the Company and Nexalin.

 

On February 1, 2018, the Company filed a Current Report on Form 8K (the “02/01/18 Form 8K”) announcing that Mark White was appointed as a Company director.

 

On February 28, 2018, the Company filed a Current Report on Form 8K (the “02/28/18 Form 8K”) wherein the Company filed (i) the Nexalin audited financial statements for the twelve months ended June 30, 2017 and 2016; (ii) the Nexalin unaudited financial statements for the three months ended September 30, 2017 and 2016; and (iii) the Nexalin unaudited condensed pro forma financial statements for the Company for the twelve months ended June 30, 2017 and as of and for the three months ended September 30, 2017.

 

On March 30, 2018, the Company filed a Current Report on Form 8K (the “03/30/18 Form 8K”) announcing the appointment of Dr. Benjamin V. Hue as a director of the Company.

 

 

 

 

 

 8 
 

 

 

 

LEGACY VENTURES INTERNATIONAL, INC.

NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS

(Expressed in US dollars)

(Unaudited)

 

 

Notwithstanding the disclosure made in the 09/15/17 Form 8K and the11/29/17 Amended Form 8K, the consummation of the acquisition of Nexalin was subject to a number of contractual conditions and legal requirements. These included:

 

  (i) all representations and warranties of the Company contained in the Share Exchange Agreement were to be true in all material respects;

 

  (ii) the Company was to have performed and complied in all material respects with all covenants and agreements required by the Share Purchase Agreement;

 

  (iii) the Company was to obtain all material consents, approvals and authorizations required to be obtained and make all filings required to be made by the Company for the authorization and consummation of the Share Purchase Agreement;

 

  (iv) Nexalin and the Nexalin Shareholders were to be given the opportunity to initiate and complete their legal, accounting and business due diligence of the Company and the results were to be satisfactory to Nexalin and the Nexalin Shareholders in their sole and absolute discretion;

 

  (v) the Units, which included the Company Common Stock and Warrants, were to be delivered to the Nexalin Shareholders within five (5) business days following the Closing of the Share Exchange Agreement. The Company was also required to take any and all action required under the various state securities laws in connection with the issuance of the Units.

 

Once new management and a new Board of Directors were in place, they conducted a review of the Company and the steps taken and to be taken to consummate the acquisition of Nexalin.  After the due diligence review was performed, including legal, accounting and business investigations of the Company, the new management and new Board of Directors became aware of a series of issues that put into question whether there had been or could be completion of the acquisition transaction and that put into issue whether past actions by the Company complied with applicable legal requirements and better business practice. After performing this due diligence  review, the new Board of Directors determined that many of the requirements of and pre-conditions to the Share Exchange Agreement were not completed and condition of the Company was not satisfactory to accomplish the objectives of the Share Exchange Agreement.

 

After careful consideration, the current management and Board of Directors believe that the previously announced share exchange, in fact, had not closed, and because of the many issues identified in its due diligence review, some of which cannot ever be satisfied or adequately remedied, it considers that the Share Exchange Agreement is null and void ab initio.

 

It is the opinion of current management and the current Board of Directors, based on the nullity of the Share Exchange Agreement, that Nexalin never was and is not now a wholly owned subsidiary of the Company.  

 

 

 

 9 
 

 

 

 

 

LEGACY VENTURES INTERNATIONAL, INC.

NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS

(Expressed in US dollars)

(Unaudited)

 

 

NOTE 2 – GOING CONCERN AND BASIS OF PRESENTATION

 

The Company’s unaudited interim condensed financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. During the current period, the Company has incurred frequent losses from operations and as at March 31, 2019, an accumulated deficit. Further, as explained in Note 1, on August 31, 2016, the Company’s ownership percentage of RM Fresh has been reduced to 20%. The Company’s continued existence is dependent upon its ability to continue to execute its operating plan and to obtain additional debt or equity financing. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. There can be no assurance that the necessary debt or equity financing will be available, or will be available on terms acceptable to the Company, in which case the Company may be unable to meet its obligations. Should the Company be unable to realize its assets and discharge its liabilities in the normal course of business, the net realizable value of its assets may be materially less than the amounts recorded in the interim condensed financial statements. The interim condensed financial statements do not include any adjustments relating to the recoverability of recorded asset amounts that might be necessary should the Company be unable to continue in existence.

 

The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's annual report filed with the SEC on Form 10-K for the year ended June 30, 2018.  In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein.  Operating results for the three and nine months ended March 31, 2019, are not necessarily indicative of the results to be expected for the year ending June 30, 2019.  Notes to the interim condensed financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the year ended June 30, 2018, as reported in Form 10-K have been omitted.

 

 

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS

 

SIGNIFICANT ACCOUNTING POLICIES

 

The Company's significant accounting policies have not changed from the year ended June 30, 2018 with the exception of the accounting change discussed below.

 

 RECENTLY ADOPTED ACCOUNTING STANDARDS

 

In November 2015, the FASB issued ASU No. 2015-17, "Balance Sheet Classification of Deferred Taxes," which requires that deferred tax liabilities and assets be classified on the Company’s Balance Sheets as noncurrent based on an analysis of each taxpaying component within a jurisdiction. ASU No. 2015-17 is effective for the fiscal year commencing after December 15, 2017. The adoption of this standard did not have any impact on the balance sheet or results of operations from adopting this standard.

 

In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 740): Recognition and Measurement of Financial Assets and Financial Liabilities. This ASU is effective for annual and interim reporting periods beginning after December 15, 2017. ASU 2016-01 enhances the reporting model for financial instruments to provide users of financial statements with more decision-useful information. The adoption of this standard did not have any impact on the balance sheet or results of operations from adopting this standard.

 

 

 

 

 10 
 

 

 

 

 

LEGACY VENTURES INTERNATIONAL, INC.

NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS

(Expressed in US dollars)

(Unaudited)

 

 

 

NOTE 4 - BASIC AND DILUTED NET INCOME (LOSS) PER SHARE

 

The Company follows ASC Topic 260 to account for the net income (loss) per share.  Net income (loss) per common share ("EPS") calculations are determined by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the year.  Diluted earnings (loss) per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. Net income for the purposes of calculating the diluted EPS was $4,629, for the nine months ended March 31, 2019. Diluted earnings per share and weighted average common shares outstanding – diluted, for the nine months ended March 31, 2019, reflects the conversion of the Unsecured Promissory Notes (see Note 5 for additional details). All dilutive common share equivalents were anti-dilutive for the three months ended March 31,2019 and the three and nine months ended March 31 2018.

 

 

NOTE 5 – SECURED PROMISSORY AND CONVERTIBLE PROMISSORY NOTES

 

Secured Promissory Note

On December 2, 2018, the Company issued a Secured Promissory Note ("Secured Note") to an accredited investor.  The Secured Note has an aggregate principal amount of $50,000, and is payable on December 2, 2019 (the "Maturity Date"), and bears an interest rate of 4% per   annum.  The amount owing under the Secured Note is secured by the assets of the Company. The note may be converted, the terms of which are to be negotiated between the Company and the note holder. Interest expense for the three and nine months ended March 31, 2019, was $493 and $652, respectively.

 

Convertible Promissory Note

On September 11, 2017, the Company issued a Convertible Promissory Note ("Convertible Note") to an accredited investor.  The Convertible Note has an aggregate principal amount of $500,000, and was payable on September 11, 2018 (the "Maturity Date"), and bore an interest rate of 4% per annum, with an interest rate of 18% per annum if the Convertible Note was not repaid by the Maturity Date.  The holder could have converted the Convertible Note at any time up to the Maturity Date into shares of the Company's common stock at a conversion price equal to $1.00 per share.  The Company could have prepaid the Convertible Note prior to the Maturity Date and/or the date of conversion without penalty upon receiving the written consent of the holder.  As the conversion feature was not separable, it had been reflected on the balance sheet. Interest expense for the three months and nine months ended March 31, 2019, was $nil and $29,580, respectively. Interest expense for the three and nine months ended March 31, 2018, was $4,932 and $11,014, respectively.

 

The Convertible Note payable contained a beneficial conversion feature. As a result, the Company recognized a nominal value for the Convertible note, at the September 11, 2017 issuance date, the balance of which was accreted to the face value at the effective interest rate. Accretion expense for the three months ended March 31, 2019 and 2018 was $nil and $1,618, respectively. Accretion expense for the nine months ended March 31, 2019 was $467,575 and $1,708, respectively. The difference between the nominal value ascribed to the Convertible Note on issuance of $499,999 and the face value was recorded in Additional Paid In Capital.

 

 

 11 
 

 

 

Promissory Note Receivable

On September 11, 2017, the Company received a Promissory Note ("Promissory Note") from Nexalin Technology, Inc.  The Promissory Note has an aggregate principal amount of $500,000 and is payable on December 31, 2017 (the "Maturity Date"), and bears an interest rate of 4% per annum.  Interest income for the three months ended March 31, 2019 and 2018, was $nil and $4,932, respectively and $nil and $11,014, respectively for the nine months ended March 31, 2019 and 2018. On April 11, 2018, the Company determined that the promissory note receivable and the accrued interest thereon was impaired.

 

On December 18, 2018, the Company entered into an assignment agreement with the holder of the Convertible Note, whereby, the Promissory Note was assigned the Convertible Note holder in exchange for the waiver and cancellation of the Convertible Note. As a result, the Company recognized a gain of $545,580 for the nine months ended March 31, 2019, which was the carrying value of the Convertible Note and the accrued interest payable thereon at the time the assignment agreement was entered into.

 

Unsecured Promissory Notes

On June 28, 2017 the Company issued $20,000 of unsecured convertible promissory notes (“Notes”). The Notes matured on June, 27, 2018, and bear interest at a rate of 8% per annum. The Notes are convertible into the Common Stock of the Company at a fixed conversion rate of $0.75 per share at any time prior to the maturity date. The Company evaluated the terms and conditions of the Notes under the guidance of ASC 815, Derivatives and Hedging. The conversion feature met the definition of conventional convertible for purposes of applying the conventional convertible exemption. The definition of conventional contemplates a limitation on the number of shares issuable under the arrangement. The instrument was convertible into a fixed number of shares and there were no down round protection features contained in the contracts. The Company was required to consider whether the hybrid contracts embodied a beneficial conversion feature (“BCF”). The calculation of the effective conversion amount resulted in a BCF because the fair value of the conversion was greater than the Company’s stock price on the date of issuance and a BCF was recorded in the amount of $20,000 and accordingly the amount of $20,000 was credited to Additional Paid in Capital. The BCF which represents debt discount is accreted over the life of the loan using the effective interest rate. Accretion expense for the three months ended March 31, 2019 and 2018, was $nil and $4,493, respectively and $nil and $6,816, respectively for the nine months ended March 31, 2018, and 2017, respectively. Interest expense for the three months ended March 31, 2019 and 2018 was $395 and $219, respectively, and $667 and $1,210 for the nine months ended March 31, 2019 and 2018, respectively. As at March 31, 2019, the carrying value of the notes were $20,000 (June 30, 2018 - $20,000).

 

No cash was paid for principal and interest for the above mentioned notes to date.

  

 

 

 12 
 

 

 

 

LEGACY VENTURES INTERNATIONAL, INC.

NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS

(Expressed in US dollars)

(Unaudited)

 

 

NOTE 6 –ADVANCES FROM THIRD PARTY

 

During the nine months ended March 31, 2019 and 2018, the Company was advanced $nil and $22,925, by a third party.   The funds were used to pay certain professional fees including auditors, and accountants. The Company is currently in the process of negotiating with the third party with respect to settlement of the amount advanced.

 

 

NOTE 7 - COMMON AND PREFERRED STOCK TRANSACTIONS

 

COMMON STOCK - AUTHORIZED

 

As at March 31, 2019, the Company was authorized to issue 10,000,000 of preferred stock, with a par value of $0.0001 and 100,000,000 of common stock, with a par value of $0.0001.

 

There were no common stock transactions which resulted in the issuance of shares in the common stock of the Company for the three and nine month ended March 31, 2019 and 2018.

 

 

 

 

 13 
 

 

 

 

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

 

Forward-Looking Statements

 

This report contains forward-looking statements that involve risks and uncertainties.  We use words such as anticipate, believe, plan, expect, future, intend and similar expressions to identify such forward-looking statements. You should not place too much reliance on these forward-looking statements.  The Company’s actual results are likely to differ materially from those anticipated in these forward-looking statements for many reasons.

 

Plan of Operation

 

Legacy Ventures International, Inc. (“Legacy” or the “Company”), was incorporated on March 4, 2014 under the laws of the State of Nevada. Since September 15, 2015, the Company operated through a wholly-owned subsidiary RM Fresh Brands Inc. (“RM Fresh”), who services food and beverage retailers and distributors who are looking for innovative, trend-setting products across North America and in international markets. With a focus on sustainable, category changing consumables, RM Fresh acquired the rights to distribute an extensive portfolio of highly desirable brands, including Boxed Water, Cleansify, Uncle Si’s Iced Tea, Chef 5-Minute Meals, Gurkha Cigars, Shimla Foods, Aloe Gloe and Arriba Horchata. Through a network of sub-distribution partners across Canada, RM Fresh provides national product distribution and brokerage services. RM Fresh has an emerging focus on the United States and Middle East through the establishment of sub-distribution partners.

 

On August 31, 2016, in order to fund the ongoing operation and further development of RM, the Company consented to new third party investments into RM in the approximate total amount of $175,000, made in the form of cash and retirement of indebtedness owed by RM. As result of these new investments into RM, the Company’s ownership percentage of the company was reduced to twenty percent (20%). In addition, the Company entered into a new Shareholder Agreement with RM, under which the shares in RM owned by the Company are subject to certain restrictions on transfer until such time as we declare a shareholder dividend of the Company’s RM shares following a going public transaction by RM, or in the alternative, for one (1) year after RM completes a going public transaction. Further, the Company disposed of an inter-company liability owed to us by RM in the amount of CDN$166,961.70. The liability was documented under a Demand Promissory Note issued to us by RM. The Company then assigned the note to an investor in RM in exchange for $3,000. Finally, the Company entered into a mutual Release agreement with RM. Under the Release, the Company released and discharged all liabilities owed to us by RM (with the exception of the Demand Promissory Note). RM in turn released us of all liabilities owing to RM and released us all ongoing contractual and financial responsibilities to RM, including the Company’s contractual obligation to further fund management fees or other expenses to be incurred by RM.

 

On June 28, 2017, Randall Letcavage entered into a stock purchase agreement for the acquisition of an aggregate of 286,720 shares of Common Stock of the Company, representing approximately 91% of the issued and outstanding shares of Common Stock of the Company as of such date, from Rehan Saeed, the previous majority shareholder of the Company (the “Purchase Agreement”). The Purchase Agreements were fully executed and delivered, and the transaction consummated as of and at July 7, 2017. Consequently, Mr. Letcavage was able to unilaterally control the election of the Company’s Board of Directors, all matters upon which shareholder approval is required and, ultimately, the direction of the Company.

 

In addition, on June 28, 2017, Rehan Saeed submitted his resignation from all executive officer positions with the Company, including Chief Executive Officer and President, effective on the 10th day following the filing of a Schedule 14f-1 with the U.S. Securities and Exchange Commission. On June 28, 2017, Randall Letcavage was appointed as Chief Executive Officer, Chief Financial Officer, Director, effective immediately.

 

 

 

 

 14 
 

 

 

On June 28, 2017, the Company entered into a non-binding letter of intent to enter into a business combination with Nexalin Technology, Inc., a Nevada corporation (“Nexalin”).

 

On June 6, 2018, the Company reported that Matthew Milonas entered into an agreement for the acquisition of an aggregate of 286,720 shares of Common Stock of the Company, representing approximately 91% of the issued and outstanding shares of Common Stock of the Company (the “Shares”) as of such date, from Randall Letcavage, the majority shareholder of the Company (the “Agreement”). However, Mr. Milonas claims that he did not fully execute and deliver the Agreement and has disclaimed ownership of the subject shares. Mr. Letcavage will not contest Mr. Milonas’ claims and as a result, Mr. Letcavage’s ownership of the shares did not change as disclosed.

 

On August 9, 2018, Mr. Letcavage, as the holder of 91% of the outstanding shares of common stock of the Company, approved the appointment of Peter Sohn as the Chief Executive Officer and Chief Financial Officer and Director of the Company. Effective December 17, 2018, Mr. Sohn accepted the appointments as Chief Executive Officer and Chief Financial Officer and Director of the Company.

 

Also on December 17, 2018, Mr. Letcavage delivered to Peter Sohn an agreement for the acquisition by Mr. Sohn of the Shares from Mr. Letcavage, which agreement is dated August 9, 2018, but was delivered and deemed effective on December 17, 2018 (the “Agreement”). As a result Mr. Sohn is now able to unilaterally control the election of the Company’s Board of Directors, all matters upon which shareholder approval is required and, ultimately, the direction of the Company.

 

Share Exchange Agreement and Subscriptions

 

Effective September 11, 2017 (the “Closing Date”), Legacy Ventures International, Inc., (the “Company”) entered into a certain Share Exchange Agreement (the “Share Exchange Agreement”), dated as of September 1, 2017, by and among the Company, Nexalin and shareholders of Nexalin holding a majority of the issued and outstanding shares of Nexalin common stock (the “Nexalin Shareholders”). Pursuant to the Share Exchange Agreement, the Company agreed to exchange the outstanding equity stock of Nexalin held by the Nexalin Shareholders for units (the “Units”) consisting of an aggregate of approximately 25,000,000 newly issued shares of the Common Stock, $0.001 par value, of the Company and warrants (the “Warrants”) to purchase an aggregate of approximately 25,000,000 newly issued shares of the Common Stock, $0.001 par value, of the Company. The warrants are two-year warrants exercisable at the end of one year for exercise prices between $1.50 and $1.75 per share, payable in cash. The warrants must be promptly exercised, and subject to forfeiture if not so exercised, if the Company’s shares achieve a trading price of $3.00 or more for 30 consecutive days. At the Closing Date, the Company approved the issuance of approximately 15,500,000 shares of common stock to the Nexalin shareholders, together with warrants for the purchase of an additional 15,500,000 shares and reserved approximately 9,500,000 additional shares, together with the related warrants, for the issuance to remaining Nexalin shareholders who are expected to execute and deliver the Share Exchange Agreement, including approximately 1,100,000 shares and related warrants issuable immediately to consultants in connection with the transactions contemplated by the Share Exchange Agreement. On September 15, 2017, Legacy Ventures International, Inc., (the “Company”), filed a Current Report on Form 8-K (the “09/15/17 Form 8K”) announcing that effective September 11, 2017 (the “Closing Date”), the Company, on the one hand, and Nexalin Technology, Inc., a Nevada corporation (“Nexalin”), and shareholders of Nexalin holding a majority of the issued and outstanding shares of Nexalin common stock (the “Nexalin Shareholders”), on the other hand, entered into a Share Exchange Agreement (the “Share Exchange Agreement”), dated as of September 1, 2017.  In the Share Exchange Agreement the Company agreed to issue units in exchange for all the outstanding equity stock of Nexalin held by the Nexalin Shareholders. The “Units” were to consist of an aggregate of approximately 25,000,000 newly issued shares of the Company’s Common Stock, $0.001 par value, and warrants (the “Warrants”) to purchase an aggregate of approximately 25,000,000 newly issued shares of the Company’s Common Stock, $0.001 par value.

 

On November 29, 2017, the Company filed an amendment to its 09/15/17 Form 8-K (the “11/29/17 Amended Form 8K”) announcing that the “Closing Date” as defined in the Share Exchange Agreement was September 30, 2017, and, further, that as of the date of the of the 11/29/17 Amended Form 8K, the holders of approximately 90% of the equity securities of Nexalin had exchanged their shares into shares of the Company’s Common Stock.

 

On December 26, 2017, the Company filed a Current Report on Form 8K (the “12/26/17 Form 8K”) announcing that on December 21, 2017, the Company’s sole officer and director, Randy Letcavage, who was at the time Nexalin’s sole officer and director, resigned all officer and director positions with the Company and Nexalin. It was also announced that Mark White was appointed as the Interim Chief Executive Officer and Interim Chief Financial Officer of both the Company and Nexalin. Finally, it was announced that Rick Morad was appointed as the sole director of the Company and Nexalin.

 

 

 

 

 15 
 

 

 

On February 1, 2018, the Company filed a Current Report on Form 8K (the “02/01/18 Form 8K”) announcing that Mark White was appointed as a Company director.

 

On February 28, 2018, the Company filed a Current Report on Form 8K (the “02/28/18 Form 8K”) wherein the Company filed (i) the Nexalin audited financial statements for the twelve months ended June 30, 2017 and 2016; (ii) the Nexalin unaudited financial statements for the three months ended September 30, 2017 and 2016; and (iii) the Nexalin unaudited condensed pro forma financial statements for the Company for the twelve months ended June 30, 2017 and as of and for the three months ended September 30, 2017.

 

On March 30, 2018, the Company filed a Current Report on Form 8K (the “03/30/18 Form 8K”) announcing the appointment of Dr. Benjamin V. Hue as a director of the Company.

 

Notwithstanding the disclosure made in the 09/15/17 Form 8K and the11/29/17 Amended Form 8K, the consummation of the acquisition of Nexalin was subject to a number of contractual conditions and legal requirements. These included:

 

  (i) all representations and warranties of the Company contained in the Share Exchange Agreement were to be true in all material respects;

 

  (ii) the Company was to have performed and complied in all material respects with all covenants and agreements required by the Share Purchase Agreement;

 

  (iii) the Company was to obtain all material consents, approvals and authorizations required to be obtained and make all filings required to be made by the Company for the authorization and consummation of the Share Purchase Agreement;

 

  (iv) Nexalin and the Nexalin Shareholders were to be given the opportunity to initiate and complete their legal, accounting and business due diligence of the Company and the results were to be satisfactory to Nexalin and the Nexalin Shareholders in their sole and absolute discretion;

 

  (v) the Units, which included the Company Common Stock and Warrants, were to be delivered to the Nexalin Shareholders within five (5) business days following the Closing of the Share Exchange Agreement. The Company was also required to take any and all action required under the various state securities laws in connection with the issuance of the Units.

 

Once new management and a new Board of Directors were in place, they conducted a review of the Company and the steps taken and to be taken to consummate the acquisition of Nexalin.  After the due diligence review was performed, including legal, accounting and business investigations of the Company, the new management and new Board of Directors became aware of a series of issues that put into question whether there had been or could be completion of the acquisition transaction and that put into issue whether past actions by the Company complied with applicable legal requirements and better business practice. After performing this due diligence  review, the new Board of Directors determined that many of the requirements of and pre-conditions to the Share Exchange Agreement were not completed and condition of the Company was not satisfactory to accomplish the objectives of the Share Exchange Agreement.

After careful consideration, the current management and Board of Directors believe that the previously announced share exchange, in fact, had not closed, and because of the many issues identified in its due diligence review, some of which cannot ever be satisfied or adequately remedied, it considers that the Share Exchange Agreement is null and void ab initio.

It is the opinion of current management and the current Board of Directors, based on the nullity of the Share Exchange Agreement, that Nexalin never was and is not now a wholly owned subsidiary of the Company.

 

 

 

 16 
 

 

 

 

 

Liquidity and Capital Resources

 

As of March 31, 2019, the Company's primary source of liquidity consisted of $32,235 in cash held by a third party.  The Company financed its operations through a combination of short -term advances and issuance of a secured promissory note.

 

The Company has sustained net losses which have resulted in a total stockholders' deficit at March 31, 2019, and is currently experiencing a shortfall in operating capital which raises substantial doubt about the Company's ability to continue as a going concern.  The Company anticipates a net loss for the year ending June 30, 2019 and with the expected cash requirements for the coming months, without additional cash inflows from an increase in revenues combined with continued cost-cutting or a receipt of cash from capital investment, there is substantial doubt as to the Company's ability to continue operations.

 

On December 2, 2018, the Company issued a Secured Promissory Note ("Secured Note") to an accredited investor.  The Secured Note has an aggregate principal amount of $50,000, and is payable on December 2, 2019 (the "Maturity Date"), and bears an interest rate of 4% per annum.  The amount owing under the Secured Note is secured by the assets of the Company. The note may be converted, the terms of which are to be negotiated between the Company and the note holder.

 

We may seek to secure additional debt or equity capital to finance substantial business development initiatives.  There is presently no agreement in place with any source of financing for the Company and there can be no assurance that the Company will be able to raise any additional funds, or that such funds will be available on acceptable terms.  Funds raised through future equity financing will likely be substantially dilutive to current shareholders.  Lack of additional funds will materially affect the Company and its business, and may cause the Company to cease operations.  Consequently, shareholders could incur a loss of their entire investment in the Company.

 

Net Cash Used in Operating Activities

 

During the nine months ended March 31, 2019, and 2018, cash used in operations was $17,795 and $22,969, respectively. Cash used in operating activities was primarily the result of professional fees, general and administrative expenses offset by an increase in accounts payable and accrued liabilities. 

 

Net Cash Used in Investing Activities

 

There was no cash used in investing activities for the nine months ended March 31, 2019. Net cash used in investing activities was $500,000 through the investment in a promissory note, for the nine months ended March 31, 2018.

 

Net Cash Provided by Financing Activities

 

Net cash provided by financing activities for was $50,000 for the nine months ended March 31, 2018, as a result of the issuance of a secured promissory note. Net cash provided by financing activities for the nine months ended March 31, 2018, was $522,925, the result of the issuance of a Convertible note and third party advances. 

 

Results of Operations

 

Operating expenses.  Operating expenses for the three months ended March 31, 2019, was $16,683 compared with $6,529 for the three months ended March 31, 2018. Operating expenses for the nine months ended March 31, 2019, was $43,114 compared with $22,982 for the nine months ended March 31, 2018. Operating expenses consisted of accrued expenses for the Company’s auditors as well as other consulting and professional fees. Operating expenses were higher for the three and nine month periods ended March 31, 2018 compared with the prior year periods as a result of additional consultants being used.

 

Other Income (Expenses). Other income (expenses) for the three months ended March 31, 2019, was an expense of $712 compared with an expense of $6,521 for the three months ended March 31, 2018. The current period was lower due to lower interest expense as a result of the cancellation of the Convertible Note and lower accretion expense. Other income (expenses) for the nine months ended March 31, 2019, was income of $47,076 compared with an expense of $9,778 for the nine months ended March 31, 2018. The current period was higher due to the gain recognized on the cancellation of the convertible note, offset to some extent by higher interest expense and accretion expense.

 

Net Income (Loss). Net loss for the three months ended March 31, 2019 was $17,395 compared to a net loss of $13,050 for the three months ended March 31, 2018. For the nine months ended March 31, 2019, the Company recognized net income of $3,962 compared with a net loss of $32,760 for the nine months ended March 31, 2018.

 

 

 

 

 17 
 

 

 

 

 

Off-Balance Sheet Arrangements

 

We do not have any off balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.

 

Personnel

 

The Company has no full-time employees, but utilizes other project-based contract personnel to carry out the Company’s business.  We utilize contract personnel on a continuous basis, primarily in connection with the filing of reports with the Securities and Exchange Commission which require a high level of specialization for one or more of the service components offered.

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

Not Required.

 

 

Item 4. Controls and Procedures.

 

The Securities and Exchange Commission defines the term "disclosure controls and procedures" to mean a Company's controls and other procedures of an issuer that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.  The Company maintains such a system of controls and procedures in an effort to ensure that all information which it is required to disclose in the reports it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified under the SEC's rules and forms and that information required to be disclosed is accumulated and communicated to principal executive and principal financial officers to allow timely decisions regarding disclosure.

 

As of the end of the period covered by this Quarterly Report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s chief executive officer and chief financial officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rules 13a-15(b) and 15d-15(b). Based upon this evaluation, the Company’s chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures as of the end of the period covered by this Quarterly Report were ineffective due to a lack of segregation of duties,  due to limited administrative and financial personnel and related resources and as the Company only has one director.

 

Changes in Internal Control over Financial Reporting

 

There have been no significant changes in the Company’s internal controls over financial reporting that occurred during the period ended March 31, 2019, that have materially or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

 

 

 

 

 

 18 
 

 

 

 

 

 

PART II – OTHER INFORMATION

 

 

Item 1. Legal Proceedings

 

We are not currently subject to any legal proceedings, and to the best of our knowledge, no such proceeding is threatened, the results of which would have a material impact on the Company’s properties, results of operations, or financial condition. Nor, to the best of our knowledge, are any of the Company’s officers or directors involved in any legal proceedings in which we are an adverse party.

 

 

Item 1A. Risk Factors

 

Since we are a smaller reporting company, we are not required to provide the information required by this Item.

 

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

 

On September 11, 2017, the Company issued a Convertible Promissory Note ("Convertible Note") to an accredited investor.  The Convertible Note has an aggregate principal amount of $500,000, and is payable on September 11, 2018 (the "Maturity Date"), and bears an interest rate of 4% per annum.  The holder may convert the Convertible Note at any time up to the Maturity Date into shares of the Company's common stock at a conversion price equal to $1.00 per share.  The Company may prepay the Convertible Note prior to the Maturity Date and/or the date of conversion without penalty upon receiving the written consent of the holder. 

 

On December 18, 2018, the Company entered into an assignment agreement with the holder of the Convertible Note, whereby, the a Promissory Note receivable was assigned the Convertible Note holder in exchange for the waiver and cancellation of the Convertible Note.

 

On December 2, 2018, the Company issued a Secured Promissory Note ("Secured Note") to an accredited investor.  The Secured Note has an aggregate principal amount of $50,000, and is payable on December 2, 2019 (the "Maturity Date"), and bears an interest rate of 4% per annum.  The amount owing under the Secured Note is secured by the assets of the Company. The note may be converted, the terms of which are to be negotiated between the Company and the note holder.

 

 

Item 3. Defaults Upon Senior Securities

 

None.

 

 

Item 4. Mine Safety Disclosures.

 

Not Applicable.

 

 

Item 5. Other Information.

 

None.

 

 

 

 19 
 

 

 

 

Item 6. Exhibits.

 

The following exhibits are filed with or incorporated by reference in this report:

 

Item No. Description
   
31.1* Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Peter Sohn..
   
32.1* Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Peter Sohn..
   
101* XBRL Report

 

*  filed herewith

 

 

 

 

 

 

 20 
 

 

 


 

SIGNATURES

 

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

 

 

 

LEGACY VENTURES INTERNATIONAL, INC.

 

Date: May 16, 2019

 

By: /s/ Peter Sohn                              

Name: Peter Sohn

Title: Chief Financial Officer and Principal Executive Officer

 

 

  

 

 21 
 

 

EX-31.1 2 ex31_1.htm CERTIFICATION

 

Exhibit 31.1

 

 

CERTIFICATION

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Peter Sohn of LEGACY VENTURES INTERNATIONAL, INC. (the "Company"), certify that:

 

1. I have reviewed this 10-Q of the Company;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

 

4.  As the Company's Principal Executive Officer and Principal Financial and Accounting Officer I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

 

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c. Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d. Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter (the Company's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and

 

5.  As the Company's Principal Executive Officer and Principal Financial and Accounting Officer I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent functions):

 

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and

 

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.

 

Date:   May 16, 2019

 

/s/ Peter Sohn

Peter Sohn

Principal Executive Officer

and Principal Financial and Accounting Officer

 

 

EX-32.1 3 ex32_1.htm CERTIFICATION

Exhibit 32.1

 

 

CERTIFICATION

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Peter Sohn, Principal Executive Officer and Principal Financial and Accounting Officer of LEGACY VENTURES INTERNATIONAL, INC. (the "Company") certify that:

 

1.  I have reviewed the quarterly report on Form 10-Q of the Company;

 

2.  Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; and

 

3.  Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the period presented in this quarterly report.

 

Date:  May 16, 2019

 

/s/ Peter Sohn

Peter Sohn

Principal Executive Officer

and Principal Financial and Accounting Officer

 

 

 

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ORGANIZATION AND DESCRIPTION OF BUSINESS
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Organization, Consolidation and Presentation of Financial Statements [Abstract]  
ORGANIZATION AND DESCRIPTION OF BUSINESS

 

 

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

 

Legacy Ventures International, Inc. (“Legacy” or the “Company”), was incorporated on March 4, 2014 under the laws of the State of Nevada. Since September 15, 2015, the Company operated through a wholly-owned subsidiary RM Fresh Brands Inc. (“RM Fresh”), who services food and beverage retailers and distributors who are looking for innovative, trend-setting products across North America and in international markets. With a focus on sustainable, category changing consumables, RM Fresh acquired the rights to distribute an extensive portfolio of highly desirable brands, including Boxed Water, Cleansify, Uncle Si’s Iced Tea, Chef 5-Minute Meals, Gurkha Cigars, Shimla Foods, Aloe Gloe and Arriba Horchata. Through a network of sub-distribution partners across Canada, RM Fresh provides national product distribution and brokerage services. RM Fresh has an emerging focus on the United States and Middle East through the establishment of sub-distribution partners.

 

On August 31, 2016, in order to fund the ongoing operation and further development of RM, the Company consented to new third party investments into RM in the approximate total amount of $175,000, made in the form of cash and retirement of indebtedness owed by RM. As result of these new investments into RM, the Company’s ownership percentage of the company was reduced to twenty percent (20%). In addition, the Company entered into a new Shareholder Agreement with RM, under which the shares in RM owned by the Company are subject to certain restrictions on transfer until such time as we declare a shareholder dividend of the Company’s RM shares following a going public transaction by RM, or in the alternative, for one (1) year after RM completes a going public transaction. Further, the Company disposed of an inter-company liability owed to us by RM in the amount of CDN$166,961.70. The liability was documented under a Demand Promissory Note issued to us by RM. The Company then assigned the note to an investor in RM in exchange for $3,000. Finally, the Company entered into a mutual Release agreement with RM. Under the Release, the Company released and discharged all liabilities owed to us by RM (with the exception of the Demand Promissory Note). RM in turn released the Company of all liabilities owing to RM and released us all ongoing contractual and financial responsibilities to RM, including the Company’s contractual obligation to further fund management fees or other expenses to be incurred by RM.

 

On June 28, 2017, Randall Letcavage entered into a stock purchase agreement for the acquisition of an aggregate of 286,720 shares of Common Stock of the Company, representing approximately 91% of the issued and outstanding shares of Common Stock of the Company as of such date, from Rehan Saeed, the previous majority shareholder of the Company (the “Purchase Agreement”). The Purchase Agreements were fully executed and delivered, and the transaction consummated as of and at July 7, 2017. Consequently, Mr. Letcavage was able to unilaterally control the election of the Company’s Board of Directors, all matters upon which shareholder approval is required and, ultimately, the direction of the Company.

 

In addition, on June 28, 2017, Rehan Saeed submitted his resignation from all executive officer positions with the Company, including Chief Executive Officer and President, effective on the 10th day following the filing of a Schedule 14f-1 with the U.S. Securities and Exchange Commission. On June 28, 2017, Randall Letcavage was appointed as Chief Executive Officer, Chief Financial Officer, Director, effective immediately. 

 

On June 28, 2017, the Company entered into a non-binding letter of intent to enter into a business combination with Nexalin Technology, Inc., a Nevada corporation (“Nexalin”).

 

On June 6, 2018, the Company reported that Matthew Milonas entered into an agreement for the acquisition of an aggregate of 286,720 shares of Common Stock of the Company, representing approximately 91% of the issued and outstanding shares of Common Stock of the Company (the “Shares”) as of such date, from Randall Letcavage, the majority shareholder of the Company (the “Agreement”). However, Mr. Milonas claims that he did not fully execute and deliver the Agreement and has disclaimed ownership of the subject shares. Mr. Letcavage will not contest Mr. Milonas’ claims and as a result, Mr. Letcavage’s ownership of the shares did not change as disclosed.

 

On August 9, 2018, Mr. Letcavage, as the holder of 91% of the outstanding shares of common stock of the Company, approved the appointment of Peter Sohn as the Chief Executive Officer and Chief Financial Officer and Director of the Company. Effective December 17, 2018, Mr. Sohn accepted the appointments as Chief Executive Officer and Chief Financial Officer and Director of the Company.

 

On December 17, 2018, Mr. Letcavage delivered to Peter Sohn an agreement for the acquisition by Mr. Sohn of the Shares from Mr. Letcavage, which agreement is dated August 9, 2018, but was delivered and deemed effective on December 17, 2018 (the “Agreement”). As a result Mr. Sohn is now able to unilaterally control the election of the Company’s Board of Directors, all matters upon which shareholder approval is required and, ultimately, the direction of the Company.

 

Share Exchange Agreement and Subscriptions

 

Effective September 11, 2017 (the “Closing Date”), Legacy Ventures International, Inc., (the “Company”) entered into a certain Share Exchange Agreement (the “Share Exchange Agreement”), dated as of September 1, 2017, by and among the Company, Nexalin and shareholders of Nexalin holding a majority of the issued and outstanding shares of Nexalin common stock (the “Nexalin Shareholders”). Pursuant to the Share Exchange Agreement, the Company agreed to exchange the outstanding equity stock of Nexalin held by the Nexalin Shareholders for units (the “Units”) consisting of an aggregate of approximately 25,000,000 newly issued shares of the Common Stock, $0.001 par value, of the Company and warrants (the “Warrants”) to purchase an aggregate of approximately 25,000,000 newly issued shares of the Common Stock, $0.001 par value, of the Company. The warrants are two-year warrants exercisable at the end of one year for exercise prices between $1.50 and $1.75 per share, payable in cash. The warrants must be promptly exercised, and subject to forfeiture if not so exercised, if the Company’s shares achieve a trading price of $3.00 or more for 30 consecutive days. At the Closing Date, the Company approved the issuance of approximately 15,500,000 shares of common stock to the Nexalin shareholders, together with warrants for the purchase of an additional 15,500,000 shares and reserved approximately 9,500,000 additional shares, together with the related warrants, for the issuance to remaining Nexalin shareholders who are expected to execute and deliver the Share Exchange Agreement, including approximately 1,100,000 shares and related warrants issuable immediately to consultants in connection with the transactions contemplated by the Share Exchange Agreement. On September 15, 2017, Legacy Ventures International, Inc., (the “Company”), filed a Current Report on Form 8-K (the “09/15/17 Form 8K”) announcing that effective September 11, 2017 (the “Closing Date”), the Company, on the one hand, and Nexalin Technology, Inc., a Nevada corporation (“Nexalin”), and shareholders of Nexalin holding a majority of the issued and outstanding shares of Nexalin common stock (the “Nexalin Shareholders”), on the other hand, entered into a Share Exchange Agreement (the “Share Exchange Agreement”), dated as of September 1, 2017.  In the Share Exchange Agreement the Company agreed to issue units in exchange for all the outstanding equity stock of Nexalin held by the Nexalin Shareholders. The “Units” were to consist of an aggregate of approximately 25,000,000 newly issued shares of the Company’s Common Stock, $0.001 par value, and warrants (the “Warrants”) to purchase an aggregate of approximately 25,000,000 newly issued shares of the Company’s Common Stock, $0.001 par value.

 

On November 29, 2017, the Company filed an amendment to its 09/15/17 Form 8-K (the “11/29/17 Amended Form 8K”) announcing that the “Closing Date” as defined in the Share Exchange Agreement was September 30, 2017, and, further, that as of the date of the of the 11/29/17 Amended Form 8K, the holders of approximately 90% of the equity securities of Nexalin had exchanged their shares into shares of the Company’s Common Stock.

 

On December 26, 2017, the Company filed a Current Report on Form 8K (the “12/26/17 Form 8K”) announcing that on December 21, 2017, the Company’s sole officer and director, Randy Letcavage, who was at the time Nexalin’s sole officer and director, resigned all officer and director positions with the Company and Nexalin. It was also announced that Mark White was appointed as the Interim Chief Executive Officer and Interim Chief Financial Officer of both the Company and Nexalin. Finally, it was announced that Rick Morad was appointed as the sole director of the Company and Nexalin.

 

On February 1, 2018, the Company filed a Current Report on Form 8K (the “02/01/18 Form 8K”) announcing that Mark White was appointed as a Company director.

 

On February 28, 2018, the Company filed a Current Report on Form 8K (the “02/28/18 Form 8K”) wherein the Company filed (i) the Nexalin audited financial statements for the twelve months ended June 30, 2017 and 2016; (ii) the Nexalin unaudited financial statements for the three months ended September 30, 2017 and 2016; and (iii) the Nexalin unaudited condensed pro forma financial statements for the Company for the twelve months ended June 30, 2017 and as of and for the three months ended September 30, 2017.

 

On March 30, 2018, the Company filed a Current Report on Form 8K (the “03/30/18 Form 8K”) announcing the appointment of Dr. Benjamin V. Hue as a director of the Company.

 

Notwithstanding the disclosure made in the 09/15/17 Form 8K and the11/29/17 Amended Form 8K, the consummation of the acquisition of Nexalin was subject to a number of contractual conditions and legal requirements. These included:

 

  (i) all representations and warranties of the Company contained in the Share Exchange Agreement were to be true in all material respects;

 

  (ii) the Company was to have performed and complied in all material respects with all covenants and agreements required by the Share Purchase Agreement;

 

  (iii) the Company was to obtain all material consents, approvals and authorizations required to be obtained and make all filings required to be made by the Company for the authorization and consummation of the Share Purchase Agreement;

 

  (iv) Nexalin and the Nexalin Shareholders were to be given the opportunity to initiate and complete their legal, accounting and business due diligence of the Company and the results were to be satisfactory to Nexalin and the Nexalin Shareholders in their sole and absolute discretion;

 

  (v) the Units, which included the Company Common Stock and Warrants, were to be delivered to the Nexalin Shareholders within five (5) business days following the Closing of the Share Exchange Agreement. The Company was also required to take any and all action required under the various state securities laws in connection with the issuance of the Units.

 

Once new management and a new Board of Directors were in place, they conducted a review of the Company and the steps taken and to be taken to consummate the acquisition of Nexalin.  After the due diligence review was performed, including legal, accounting and business investigations of the Company, the new management and new Board of Directors became aware of a series of issues that put into question whether there had been or could be completion of the acquisition transaction and that put into issue whether past actions by the Company complied with applicable legal requirements and better business practice. After performing this due diligence  review, the new Board of Directors determined that many of the requirements of and pre-conditions to the Share Exchange Agreement were not completed and condition of the Company was not satisfactory to accomplish the objectives of the Share Exchange Agreement.

 

After careful consideration, the current management and Board of Directors believe that the previously announced share exchange, in fact, had not closed, and because of the many issues identified in its due diligence review, some of which cannot ever be satisfied or adequately remedied, it considers that the Share Exchange Agreement is null and void ab initio.

 

It is the opinion of current management and the current Board of Directors, based on the nullity of the Share Exchange Agreement, that Nexalin never was and is not now a wholly owned subsidiary of the Company.  

 

 

XML 16 R7.htm IDEA: XBRL DOCUMENT v3.19.1
GOING CONCERN AND BASIS OF PRESENTATION
9 Months Ended
Mar. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
GOING CONCERN AND BASIS OF PRESENTATION

 

NOTE 2 – GOING CONCERN AND BASIS OF PRESENTATION

 

The Company’s unaudited interim condensed financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. During the current period, the Company has incurred frequent losses from operations and as at March 31, 2019, an accumulated deficit. Further, as explained in Note 1, on August 31, 2016, the Company’s ownership percentage of RM Fresh has been reduced to 20%. The Company’s continued existence is dependent upon its ability to continue to execute its operating plan and to obtain additional debt or equity financing. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. There can be no assurance that the necessary debt or equity financing will be available, or will be available on terms acceptable to the Company, in which case the Company may be unable to meet its obligations. Should the Company be unable to realize its assets and discharge its liabilities in the normal course of business, the net realizable value of its assets may be materially less than the amounts recorded in the interim condensed financial statements. The interim condensed financial statements do not include any adjustments relating to the recoverability of recorded asset amounts that might be necessary should the Company be unable to continue in existence.

 

The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's annual report filed with the SEC on Form 10-K for the year ended June 30, 2018.  In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein.  Operating results for the three and nine months ended March 31, 2019, are not necessarily indicative of the results to be expected for the year ending June 30, 2019.  Notes to the interim condensed financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the year ended June 30, 2018, as reported in Form 10-K have been omitted.

 

 

XML 17 R8.htm IDEA: XBRL DOCUMENT v3.19.1
SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS
9 Months Ended
Mar. 31, 2019
Accounting Policies [Abstract]  
SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS

 

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS

 

SIGNIFICANT ACCOUNTING POLICIES

 

These unaudited condensed interim financial statements have been prepared on the same basis as the annual audited financial statements and should be read in conjunction with those annual audited financial statements filed on Form 10-K for the year ended June 30, 2018. In the opinion of management, these unaudited interim condensed financial statements reflect adjustments, necessary to present fairly the Company's financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period.

 

The Company's significant accounting policies have not changed from the year ended June 30, 2018 with the exception of the accounting change discussed below.

 

 RECENTLY ADOPTED ACCOUNTING STANDARDS

 

In November 2015, the FASB issued ASU No. 2015-17, "Balance Sheet Classification of Deferred Taxes," which requires that deferred tax liabilities and assets be classified on the Company’s Balance Sheets as noncurrent based on an analysis of each taxpaying component within a jurisdiction. ASU No. 2015-17 is effective for the fiscal year commencing after December 15, 2017. The Company did not have any impact on the balance sheet or results of operations from adopting this standard.

 

In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 740): Recognition and Measurement of Financial Assets and Financial Liabilities. This ASU is effective for annual and interim reporting periods beginning after December 15, 2017. ASU 2016-01 enhances the reporting model for financial instruments to provide users of financial statements with more decision-useful information. The Company did not have any impact on the balance sheet or results of operations from adopting this standard

 

 

XML 18 R9.htm IDEA: XBRL DOCUMENT v3.19.1
BASIC AND DILUTED NET LOSS PER SHARE
9 Months Ended
Mar. 31, 2019
Earnings Per Share [Abstract]  
BASIC AND DILUTED NET LOSS PER SHARE

 

NOTE 4 - BASIC AND DILUTED NET INCOME (LOSS) PER SHARE

 

The Company follows ASC Topic 260 to account for the net income (loss) per share.  Net income (loss) per common share ("EPS") calculations are determined by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the year.  Diluted earnings (loss) per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. Net income for the purposes of calculating the diluted EPS was $4,629, for the nine months ended March 31, 2019. Diluted earnings per share and weighted average common shares outstanding – diluted, for the nine months ended March 31, 2019, reflects the conversion of the Unsecured Promissory Notes (see Note 5 for additional details). All dilutive common share equivalents were anti-dilutive for the three months ended March 31,2019 and the three and nine months ended March 31 2018.

 

XML 19 R10.htm IDEA: XBRL DOCUMENT v3.19.1
SECURED PROMISSORY AND CONVERTIBLE PROMISSORY NOTES
9 Months Ended
Mar. 31, 2019
Debt Disclosure [Abstract]  
SECURED PROMISSORY AND CONVERTIBLE PROMISSORY NOTES

 

NOTE 5 – SECURED PROMISSORY AND CONVERTIBLE PROMISSORY NOTES

 

Secured Promissory Note

On December 2, 2018, the Company issued a Secured Promissory Note ("Secured Note") to an accredited investor.  The Secured Note has an aggregate principal amount of $50,000, and is payable on December 2, 2019 (the "Maturity Date"), and bears an interest rate of 4% per annum.  The amount owing under the Secured Note is secured by the assets of the Company. The note may be converted, the terms of which are to be negotiated between the Company and the note holder. Interest expense for the three and nine months ended March 31, 2019, was $493 and $652, respectively.

 

Convertible Promissory Note

On September 11, 2017, the Company issued a Convertible Promissory Note ("Convertible Note") to an accredited investor.  The Convertible Note has an aggregate principal amount of $500,000, and was payable on September 11, 2018 (the "Maturity Date"), and bore an interest rate of 4% per annum, with an interest rate of 18% per annum if the Convertible Note was not repaid by the Maturity Date.  The holder could have converted the Convertible Note at any time up to the Maturity Date into shares of the Company's common stock at a conversion price equal to $1.00 per share.  The Company could have prepaid the Convertible Note prior to the Maturity Date and/or the date of conversion without penalty upon receiving the written consent of the holder.  As the conversion feature was not separable, it had been reflected on the balance sheet. Interest expense for the three months and nine months ended March 31, 2019, was $nil and $29,580, respectively. Interest expense for the three and nine months ended March 31, 2018, was $4,932 and $11,014, respectively.

 

The Convertible Note payable contained a beneficial conversion feature. As a result, the Company recognized a nominal value for the Convertible note, at the September 11, 2017 issuance date, the balance of which was accreted to the face value at the effective interest rate. Accretion expense for the three months ended March 31, 2019 and 2018 was $nil and $1,618, respectively. Accretion expense for the nine months ended March 31, 2019 was $467,575 and $1,708, respectively. The difference between the nominal value ascribed to the Convertible Note on issuance of $499,999 and the face value was recorded in Additional Paid In Capital.

 

Promissory Note Receivable

On September 11, 2017, the Company received a Promissory Note ("Promissory Note") from Nexalin Technology, Inc.  The Promissory Note has an aggregate principal amount of $500,000 and is payable on December 31, 2017 (the "Maturity Date"), and bears an interest rate of 4% per annum.  Interest income for the three months ended March 31, 2019 and 2018, was $nil and $4,932, respectively and $nil and $11,014, respectively for the nine months ended March 31, 2019 and 2018. On April 11, 2018, the Company determined that the promissory note receivable and the accrued interest thereon was impaired.

 

On December 18, 2018, the Company entered into an assignment agreement with the holder of the Convertible Note, whereby, the Promissory Note was assigned the Convertible Note holder in exchange for the waiver and cancellation of the Convertible Note. As a result, the Company recognized a gain of $545,580 for the nine months ended March 31, 2019, which was the carrying value of the Convertible Note and the accrued interest payable thereon at the time the assignment agreement was entered into.

 

Unsecured Promissory Notes

On June 28, 2017 the Company issued $20,000 of unsecured convertible promissory notes (“Notes”). The Notes matured on June, 27, 2018, and bear interest at a rate of 8% per annum. The Notes are convertible into the Common Stock of the Company at a fixed conversion rate of $0.75 per share at any time prior to the maturity date. The Company evaluated the terms and conditions of the Notes under the guidance of ASC 815, Derivatives and Hedging. The conversion feature met the definition of conventional convertible for purposes of applying the conventional convertible exemption. The definition of conventional contemplates a limitation on the number of shares issuable under the arrangement. The instrument was convertible into a fixed number of shares and there were no down round protection features contained in the contracts. The Company was required to consider whether the hybrid contracts embodied a beneficial conversion feature (“BCF”). The calculation of the effective conversion amount resulted in a BCF because the fair value of the conversion was greater than the Company’s stock price on the date of issuance and a BCF was recorded in the amount of $20,000 and accordingly the amount of $20,000 was credited to Additional Paid in Capital. The BCF which represents debt discount is accreted over the life of the loan using the effective interest rate. Accretion expense for the three months ended March 31, 2019 and 2018, was $nil and $4,493, respectively and $nil and $6,816, respectively for the nine months ended March 31, 2018, and 2017, respectively. Interest expense for the three months ended March 31, 2019 and 2018 was $395 and $219, respectively, and $667 and $1,210 for the nine months ended March 31, 2019 and 2018, respectively. As at March 31, 2019, the carrying value of the notes were $20,000 (June 30, 2018 - $20,000).

 

No cash was paid for principal and interest for the above mentioned notes to date.

 

XML 20 R11.htm IDEA: XBRL DOCUMENT v3.19.1
ADVANCES FROM THIRD PARTY
9 Months Ended
Mar. 31, 2019
Related Party Transactions [Abstract]  
ADVANCES FROM THIRD PARTY

 

NOTE 6 –ADVANCES FROM THIRD PARTY

 

During the nine months ended March 31, 2019 and 2018, the Company was advanced $nil and $22,925, by a third party. The funds were used to pay certain professional fees including auditors, and accountants. The Company is currently in the process of negotiating with the third party with respect to settlement of the amount advanced.

 

XML 21 R12.htm IDEA: XBRL DOCUMENT v3.19.1
COMMON AND PREFERRED STOCK TRANSACTIONS
9 Months Ended
Mar. 31, 2019
Equity [Abstract]  
COMMON AND PREFERRED STOCK TRANSACTIONS

 

NOTE 7 - COMMON AND PREFERRED STOCK TRANSACTIONS

 

COMMON STOCK - AUTHORIZED

 

As at March 31, 2019, the Company was authorized to issue 10,000,000 of preferred stock, with a par value of $0.0001 and 100,000,000 of common stock, with a par value of $0.0001.

 

There were no common stock transactions which resulted in the issuance of shares in the common stock of the Company for the three and nine month ended March 31, 2019 and 2018.

 

XML 22 R13.htm IDEA: XBRL DOCUMENT v3.19.1
SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS (Policies)
9 Months Ended
Mar. 31, 2019
Accounting Policies [Abstract]  
CHANGE IN ACCOUNTING POLICY

CHANGE IN ACCOUNTING POLICY

 

The FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260) Distinguishing Liabilities From Equity (Topic 480) Derivatives and Hedging (Topic 815): Accounting for Certain Financial Instruments With Down Round Features II Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests With a Scope Exception, allows a financial instrument with a down-round feature to no longer automatically be classified as a liability solely based on the existence of the down-round provision. The update also means the instrument would not have to be accounted for as a derivative and be subject to an updated fair value measurement each reporting period.

        

On consideration of the above factors, the Company elected to early adopt ASU 2017-11 on July 1, 2017. The ASU is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other organizations, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020.

 

The early adoption allows the Company to reduce the cost and complexity of updating the fair value measurement each reporting period and eliminate the unnecessary volatility in reported earnings created by the revaluation when the Company’s shares’ value changes.

 

The Company presented the change in accounting policy through the retrospective application of the new accounting principle to all prior periods, as described in ASU No. 250-10-45-5, Accounting Changes and Error Corrections. There was no impact on the opening balances as a result of adopting this policy.

Recently Issued Accounting Standards

Recently issued accounting pronouncements

 

In November 2015, the FASB issued ASU No. 2015-17, "Balance Sheet Classification of Deferred Taxes," which requires that deferred tax liabilities and assets be classified on our Balance Sheets as noncurrent based on an analysis of each taxpaying component within a jurisdiction. ASU No. 2015-17 is effective for the fiscal year commencing after December 15, 2017. The Company does not anticipate that the adoption of ASU No. 2015-17 will have a material effect on the balance sheet or the results of operations.

 

In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 740): Recognition and Measurement of Financial Assets and Financial Liabilities. This ASU is effective for annual and interim reporting periods beginning after December 15, 2017. ASU 2016-01 enhances the reporting model for financial instruments to provide users of financial statements with more decision-useful information. The Company is currently assessing the impact of ASU 2016-01.

XML 23 R14.htm IDEA: XBRL DOCUMENT v3.19.1
ORGANIZATION AND DESCRIPTION OF BUSINESS (Details Narrative)
1 Months Ended
Jun. 06, 2018
shares
Sep. 11, 2017
Days
$ / shares
shares
Aug. 31, 2016
Jun. 28, 2017
shares
Mar. 31, 2019
$ / shares
shares
Jun. 30, 2018
$ / shares
shares
Going public transaction, term     1 year      
Common stock, par value | $ / shares         $ 0.0001 $ 0.0001
Warrant term   2 years        
Common stock, shares issued         315,064 315,064
Purchase of additional warrants, shares   15,500,000        
Purchase of additional reserved warrants, shares   9,500,000        
Trading price, per share | $ / shares   $ 3.00        
Warrants issue, shares   1,100,000        
Trading price number of consecutive days | Days   30        
Warrant [Member] | Minimum [Member]            
Exercise price of warrant | $ / shares   $ 1.50        
Warrant [Member] | Maximum [Member]            
Exercise price of warrant | $ / shares   $ 1.75        
Share Exchange Agreement [Member]            
Common stock shares newly issued   25,000,000        
Common stock, par value | $ / shares   $ 0.001        
Share Exchange Agreement [Member] | Warrant [Member]            
Common stock shares newly issued   25,000,000        
Common stock, par value | $ / shares   $ 0.001        
Randall Letcavage [Member] | Stock purchase agreement [Member]            
Stock issued for acquisition       286,720    
Percentage of issued and outstanding shares acquired       91.00%    
Matthew Milonas [Member]            
Stock issued for acquisition 286,720          
Percentage of issued and outstanding shares acquired 91.00%          
Nexalin Shareholder [Member]            
Common stock, shares issued   15,500,000        
XML 24 R15.htm IDEA: XBRL DOCUMENT v3.19.1
PROMISSORY AND COVERTIBLE NOTES (Details Narrative) - USD ($)
3 Months Ended 9 Months Ended
Sep. 11, 2017
Mar. 31, 2018
Mar. 31, 2019
Beneficial conversion feature   $ 86 $ 90
Convertible Note [Member] | Nexalin Technology, Inc [Member]      
Aggregate principal amount $ 500,000    
Maturity date Dec. 31, 2017    
Interest rate 4.00%    
Convertible Note [Member] | Accredited investor [Member]      
Aggregate principal amount $ 500,000    
Maturity date Sep. 11, 2018    
Interest rate 4.00%    
XML 25 R16.htm IDEA: XBRL DOCUMENT v3.19.1
ADVANCES FROM THIRD PARTY (Details Narrative) - USD ($)
9 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Related Party Transactions [Abstract]    
ADVANCES FROM THIRD PARTY $ 22,925
XML 26 R17.htm IDEA: XBRL DOCUMENT v3.19.1
COMMON AND PREFERRED STOCK TRANSACTIONS (Details Narrative) - $ / shares
Mar. 31, 2019
Jun. 30, 2018
Equity [Abstract]    
Preferred stock, par value $ 0.0001 $ 0.0001
Preferred stock, shares authorized 10,000,000 10,000,000
Common stock, par value $ 0.0001 $ 0.0001
Common stock, shares authorized 100,000,000 100,000,000
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