UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2015September 30, 2016

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

COMMISSION FILE NUMBER: 333-148925

LEGACYXCHANGE, INC.

(Exact name of Registrant as specified in its charter)

301 Yamato Road

Boca Raton, FL 33431

(AddressSecurities registered pursuant to Section 12(b) of principal executive offices)

(800) 630-4190

(Registrant’s telephone number, including area code)the Act:

True 2 Beauty, Inc.

(Former name, former address and former fiscal, if changed since last report)

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 ☒     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 ☒     No ☐

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

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 ☒☐

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. 51,230,056date: 62,570,659 shares of common stock are issued and outstanding as of February 22, 2016.December 15, 2020.

LEGACYXCHANGE, INC.

FORMForm 10-Q

December 31, 2015September 30, 2016

TABLE OF CONTENTS

PART 1I - FINANCIAL INFORMATION

ItemITEM 1. Financial Statements.FINANCIAL STATEMENTS

LEGACYXCHANGE, INC.

(FORMERLY TRUE 2 BEAUTY, INC.)

CONSOLIDATED BALANCE SHEETS

The accompanying condensed notes are an integral part of these unaudited consolidated financial statements.

LEGACYXCHANGE, INC.

(FORMERLY TRUE 2 BEAUTY, INC.)

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

The accompanying condensed notes are an integral part of these unaudited consolidated financial statements.

LEGACYXCHANGE, INC.

(FORMERLY TRUE 2 BEAUTY, INC.)

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS'STOCKHOLDERS’ DEFICIT

For the NineThree and Six Months Ended December 31,September 30, 2016 and 2015

(UNAUDITED)

The accompanying condensed notes are an integral part of these unaudited consolidated financial statements.

LEGACYXCHANGE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

The accompanying condensed notes are an integral part of these unaudited consolidated financial statements.

LEGACYXCHANGE, INC.

(FORMERLY TRUE 2 BEAUTY, INC.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 The accompanying condensed notes are an integral part of these unaudited consolidated financial statements.

LEGACYXCHANGE, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015SEPTEMBER 30, 2016

NOTE 1 –ORGANIZATION AND NATURE OF OPERATIONS

LegacyXChange,LegacyXchange, Inc. (formerly, formerly known as True 2 Beauty, Inc.) (the “Company”) was originally incorporated as Burrow Mining, Inc., a Nevada corporation, on December 11, 2006. In February 2010, the Company shifted its focus to the beauty industry and later amended its Articles of Incorporation and changed its name to True 2 Beauty, Inc. to better reflect its new business focus.

On July 10, 2012, the Company formed a new wholly owned subsidiary True2Bid, Inc. (“True2Bid”), which was incorporated in the state of Nevada. This subsidiary’s name was changed to LegacyXChange,LegacyXchange, Inc. (“LegacyXChange”LegacyXchange”) in December 2014. The Company continued to sell existing inventory of beauty products through May 2013 when the final inventory was sold. LegacyXChange plans to operateLegacyXchange operates an online e-commerce platform focused on delivering users a wide array of sports and entertainment related products that can be won in an action packedaction-packed environment of a live auction.

On July 2, 2015, pursuant to a Certificate of Dissolution filing with the Nevada Secretary of State, the Company dissolved LegacyXChange, Inc.LegacyXchange (formerly True2Bid, Inc.) to allow for the change in name of its parent company, True 2 Beauty, Inc., to LegacyXChange,LegacyXchange, Inc.

The Company plans on launchingis currently inactive due to lack of working capital to fund its website, LegacyXChange.com, for the trading of collectibles and memorabilia across numerous product categories. Following secure chain of custody protocols that guarantee authenticity from origination, and utilizing unique proprietary DNA “Marks” that cannot be counterfeited, the Company’s anticipated inventory of collectibles will be permanently marked with DNA, which can only be verified through DNA analysis. The Company’s goal is to provide the ongoing ability to guarantee authenticity of items with 100% surety. The Company will track ownership for all Original items, and only the Company can verify authenticity. The Company will work with athletes and celebrities as they create high valued new collectibles, items that will differentiate from those already in the marketplace. The site will also allow non-“Marked” third party collectible items to be listed and sold. However, any third party items, which claim to have authentic signatures, will have to provide documentation of authenticity from a Company-approved expert authentication company. The site will offer sellers multiple opportunities to advertise and promote the sale of items.operations.

NOTE 2 –BASIS OF PRESENTATION, GOING CONCERN AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICITESPOLICIES

PrinciplesBasis of consolidationPresentation and Principals of Consolidation

The Company’s unaudited consolidated financial statements forup to the three and nine months ended December 31, 2014period ending June 30, 2015 include the financial statement of the Company and its wholly-owned subsidiary, True2Bid, Inc. With the dissolution of this subsidiary in July 2, 2015, the unaudited financial statements for the three and ninesix months ended December 31, 2015 areSeptember 30, 2016 were no longer consolidated. All intercompany accounts and transactions have been eliminated in consolidation for the 2014 amounts.

Basis of presentationconsolidation.

Management acknowledges its responsibility for the preparation of the accompanying unaudited consolidated financial statements which reflect all adjustments, consisting of normal recurring adjustments, considered necessary in its opinion for a fair statement of its consolidated financial position and the consolidated results of its operations for the periods presented. The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (the “U.S. GAAP”) for interim financial information and with the instructions Article 8-03 of Regulation S-X. Operating results for interim periods are not necessarily indicative of results that may be expected for the fiscal year as a whole. Certain information and note disclosure normally included in financial statements prepared in accordance with U.S. GAAP has been omitted from these financial statements pursuant to such accounting principles and, accordingly, they do not include all the information and notes necessary for comprehensive financial statements. These unaudited consolidated financial statements should be read in conjunction with the summary of significant accounting policies and notes to the consolidated financial statements for the yearsyear ended March 31, 2015 and 20142016 of the Company which were included in the Company’s annual report on Form 10-K.10-K as filed with the Securities and Exchange Commission on December 4, 2020.

Going concernConcern

TheseThe unaudited consolidated financial statements have been prepared assuming that the Company will continue ason a going concern basis, which contemplates among other things, the realization of assets and the satisfactionsettlement of liabilities and commitments in the normal course of business.

As reflected in theour accompanying unaudited consolidated financial statements, the Company had a loss from operations of $457,440 and $425,765 for the nine months ended December 31, 2015 and 2014, respectively,net income and net cash used in operationsoperating activities of $240,610$349,386 and $332,409$15,364, respectively, for the ninesix months ended December 31, 2015 and 2014, respectively, and anSeptember 30, 2016. The net income was primarily attributed to the gain from the change in far value of derivative liabilities. The Company had accumulated deficit, a stockholders’ deficit and a working capital deficit of $9,473,270, $642,002$10,196,651, $951,505 and $481,674,$951,505, respectively, at December 31, 2015, did not generate any revenueSeptember 30, 2016. The Company had no revenues for the ninesix months ended December 31, 2015September 30, 2016, and had a gross loss for the nine months ended December 31, 2014. Thesewe defaulted on our loans. Management believes that these matters raise substantial doubt about the Company’s ability to continue as a going concern.concern for twelve months from the issuance date of this report.

Management cannot provide assurance that we will ultimately achieve profitable operations or become cash flow positive, or raise additional debt and/or equity capital. Management believes that our capital resources are not currently adequate to continue operating and maintaining its business strategy for a period of twelve months from the issuance date of this report. The ability ofCompany will seek to raise capital through additional debt and/or equity financings to fund its operations in the future.

LEGACYXCHANGE, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2016

Although the Company has historically raised capital from sales of equity and from the issuance of promissory notes, there is no assurance that it will be able to continue as a going concernto do so. If the Company is dependent on the Company’s abilityunable to raise additional capital implement its business plan, and generate significant revenues. Theor secure additional lending in the near future, management expects that the Company will need to curtail or cease operations. These unaudited consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary ifshould the Company isbe unable to continue as a going concern. The Company plans on raising capital through the sale of equity or debt instruments to implement its business plan. There is no assurance these plans will be realized.

LEGACYXCHANGE, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015Use of Estimates

NOTE 2 –BASIS OF PRESENTATION, GOING CONCERN AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICITES (continued)

Use of estimates

The preparation of the unaudited consolidated financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Significant estimates during the three and ninesix months ended December 31, 2015 and 2014September 30, 2016 include assumptions used in the valuation of deferred tax assets, valuation of derivative liabilities and the valuation of stock-based compensation and fees.liabilities.

Fair Value of Financial Instruments and Fair Value Measurements

FASB ASC 820 - Fair Value Measurements and Disclosures, defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FASB ASC 820 requires disclosures about the fair value of all financial instruments, whether or not recognized, for financial statement purposes. Disclosures about the fair value of financial instruments are based on pertinent information available to the Company on September 30, 2016. Accordingly, the estimates presented in these consolidated financial statements are not necessarily indicative of the amounts that could be realized on disposition of the financial instruments. FASB ASC 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and fair value measurementsthe lowest priority to unobservable inputs (Level 3 measurement).

The Company adoptedthree levels of the guidance of Accounting Standards Codification (“ASC”) 820 for fair value measurements which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair valueare as follows:

The carrying amounts reported in the unaudited consolidated balance sheets for cash, inventories,due from and to related parties, prepaid expenses, accounts payable and accrued liabilities accrued officer salary and director fees, and loan payable, approximate their fair market value based on the short-term maturity of these instruments.

CertainAssets or liabilities measured at fair value on a recurring basis included conversion options in convertible notes and warrants with their exercise price containing a down-round provision (see Note 6) and were as follows at September 30, 2016 and March 31, 2016:

A roll forward of the level 3 valuation financial instruments suchis as certain accrued liabilities, embody obligations that require (or permit at the Company’s discretion) settlement by issuance of a variable number of the Company’s common shares that have a value equal to a fixed monetary amount. The number of shares required to be issued to settle that unconditional obligation is variable, because that number of common shares will be determined by the fair value of the Company’s common shares on the date of settlement or over a stated period of time, such as the average over the last 30 days before settlement, or the beginning of the quarter. Pursuant to ASC 480-10-25-14(a), the financial instruments are classified as a liability at the fixed monetary amount with a charge to expense to increase the obligation to the fixed monetary amount. Upon issuance of the shares to settle the obligation, equity is increased by the amount of the liability and no gain or loss is recognized for the difference between the settlement date or average market price and the ending market price.follows:

The following table reflects changes for the nine months ended December 31, 2015 for all financial assets and liabilities categorized as Level 3: 

LEGACYXCHANGE, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015SEPTEMBER 30, 2016

NOTE 2 –BASIS OF PRESENTATION, GOING CONCERN AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICITES (continued)

Fair value of financial instruments and fair value measurements (continued)

ASC 825-10 “Financial Instruments”“Financial Instruments”,allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding financial instruments.

Cash and Cash Equivalents

Cash and cash equivalents

Cash and cash equivalents consistFor purposes of the statements of cash and short-termflows, the Company considers all highly liquid investments purchasedinstruments with original maturitiesa maturity of three months or less.less at the purchase date and money market accounts to be cash equivalents. At September 30, 2016 and March 31, 2016, the Company did not have any cash equivalents.

The Company maintains its cash in bank and financial institution deposits that at times may exceed federally insured limits. There were no cash equivalents at December 31, 2015balances in excess of FDIC insured levels as of September 30, 2016 and March 31, 2015.2016. The Company has not experienced any losses in such accounts through September 30, 2016.

Inventories and cost of revenueInventory

Inventories are stated at the lower of cost or market value. Cost is determined using the cost to acquire inventory and is valued using the first-in, first-out method. AnyDuring the six months ended September 30, 2016, the Company determined that the inventory adjustments are based upon management’s review of inventories on hand compared to estimated future usage$570 was impaired and sales. Inventorieswas written off. As of finished goods totaled $570 and $0 at December 31, 2015September 30, 2016 and March 31, 2015, respectively. 2016, the Company’s inventory was not significant as the Company was inactive during the six months ended September 30, 2016.

Revenue recognitionDerivative Liabilities

The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the purchase price is fixed or determinable and collectability is reasonably assured. The Company’s specific revenue recognition policies are as follows:

Stock-based compensationThe Company has certain financial instruments that are embedded derivatives associated with capital raises and certain warrants. The Company evaluates all its financial instruments to determine if those contracts or any potential embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with ASC 815-10 – Derivative and Hedging – Contract in Entity’s Own Equity. This accounting treatment requires that the carrying amount of any derivatives be recorded at fair value at issuance and marked-to-market at each balance sheet date. In the event that the fair value is recorded as a liability, as is the case with the Company, the change in the fair value during the period is recorded as either other income or expense. Upon conversion, exercise or repayment, the respective derivative liability is marked to fair value at the conversion, repayment or exercise date and then the related fair value amount is reclassified to other income or expense as part of gain or loss on debt extinguishment.

In July 2017, FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features. These amendments simplify the accounting for certain financial instruments with down-round features. The amendments require companies to disregard the down-round feature when assessing whether the instrument is indexed to its own stock, for purposes of determining liability or equity classification. The adoption of this guidance is not expected to have a material impact on the Company’s financial statements.

Revenue Recognition

In May 2014, FASB issued an update Accounting Standards Update, ASU 2014-09, establishing ASC 606 - Revenue from Contracts with Customers. ASU 2014-09, as amended by subsequent ASUs on the topic, establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most of the existing revenue recognition guidance. This standard, which is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2017, requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and also requires certain additional disclosures. adoption of this guidance is not expected to have a material impact on the process for, timing of, and presentation and disclosure of revenue recognition from customers. The Company did not have revenues from operations for the three and six months ended September 30, 2016.

LEGACYXCHANGE, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2016

Stock-Based Compensation

Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.

In June 2014, the FASB issued Accounting Standards Update No. 2014-12, Compensation — Stock Compensation (Topic 718), Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (a consensus of the FASB Emerging Issues Task Force) (ASU 2014-12). The guidance applies to all reporting entities that grant their employees share-based payments in which the terms of the award provide that a performance target that affects vesting could be achieved after the requisite service period. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period is treated as a performance condition. For all entities, the amendments in this Update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The effective date is the same for both public business entities and all other entities. The Company early adopted ASU 2014-12 during the period ending June 30, 2016. The adoption of ASU 2014-12 did not have any material impact on the Company’s financial statements.

Pursuant to ASC 505-50 for- Equity-Based Payments to Non-Employees, all share-based payments to consultants and other third parties,non-employees, including grants of stock options, were recognized in the financial statements as compensation expense is determined at the “measurement date.” The expense is recognized over the service period of the award. Untilconsulting arrangement or until performance conditions are expected to be met. Using a Binomial valuation model, the measurement date is reached, the total amount of compensation expense remains uncertain. The Company initially records compensation expense based onperiodically reassessed the fair value of non-employee options until service conditions are met, which generally aligns with the award atvesting period of the reporting date.options, and the Company adjusts the expense recognized in the financial statements accordingly. In June 2018, the FASB issued ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, which simplifies several aspects of the accounting for nonemployee share-based payment transactions by expanding the scope of the stock-based compensation guidance in ASC 718 to include share-based payment transactions for acquiring goods and services from non-employees. ASU No. 2018-07 is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods. Early adoption is permitted, but entities may not adopt prior to adopting the new revenue recognition guidance in ASC 606. The adoption of this guidance is not expected to have a material impact on the Company’s financial statements.

LEGACYXCHANGE, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015Income Taxes

NOTE 2 –BASIS OF PRESENTATION, GOING CONCERN AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICITES (continued)

Income taxes

DeferredThe Company accounts for income tax assets and liabilities arise from temporary differences associated with differences betweenusing the financial statements and tax basis of assets and liabilities, as measuredliability method prescribed by the enacted tax rates, which are expected to be in effect when these differences reverse. DeferredASC 740 - Income Taxes. Under this method, deferred tax assets and liabilities are classified as current or non-current, depending upondetermined based on the classificationdifference between the financial reporting and tax bases of the asset or liabilities to which they relate. Deferred tax assets and liabilities not related to an asset or liability are classified as current or non-current depending onusing enacted tax rates that will be in effect in the periodsyear in which the temporary differences are expected to reverse. Valuation allowances are established when necessaryThe Company records a valuation allowance to reduceoffset net deferred tax assets toif based on the amount expected toweight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date.

The Company follows the accounting guidance for uncertainty in income taxes using the provisions of FASB ASC 740-10 “Uncertainty in 740 “Income Taxes” (ASC 740-10)Taxes”. Certain recognition thresholds mustUsing that guidance, tax positions initially need to be met before a tax position is recognized in the financial statements. An entity may only recognize or continue to recognizestatements when it is more likely than not the position will be sustained upon examination by the tax positions that meet a “more-likely-than-not” threshold.authorities. As of December 31, 2015September 30, 2016 and March 31, 2015,2016, the Company does not believe it has anyhad no uncertain tax positions that would requirequalify for either recognition or disclosure in the accompanying unaudited consolidated financial statements. The Company recognizes and accrues for tax related interest and penalties when assessed. Asrelated to uncertain income tax positions in other expense. However, no such interest and penalties were recorded as of December 31 and March 31, 2015, the Company has not been assessed any interest or penalties.September 30, 2016.

Shipping costsCosts

Shipping costs are included in other selling, general and administrative expense and totaled $0 and $27were not significant for the three and six months ended December 31, 2015September 30, 2016 and 2014, respectively. Shipping costs totaled $2 and $142 for the nine months ended December 31, 2015 and 2014, respectively.2015.

Advertising

Advertising is expensed as incurred and is included in other selling, general and administrative expense. The Company did not incur any advertising expense for the three and ninesix months ended December 31, 2015September 30, 2016 and 2014.2015.

LEGACYXCHANGE, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2016

Research and development

Expenditures for research and product development costs are expensed as incurred. The Company did not incur any research and development expense during the three and nine months ended December 31, 2015 and 2014.

Basic and diluted earnings per shareDiluted Income (Loss) Per Share

Pursuant to ASC 260-10-45, basic earningsincome (loss) per common share is computed by dividing net income (loss) allocable to common shareholders by the weighted average number of shares of common stock outstanding for the periods presented. Diluted income (loss) per share is computed by dividing net income (loss)loss by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during eachthe period. Diluted income (loss) per share reflects the potential dilution that could occur if securities were exercised or converted into common stock or other contracts to issue common stock resulting in the issuance of common stock that would then share in the Company’s income (loss) subject to anti-dilution limitations. For the three and nine months ended December 31, 2015, potentiallyPotentially dilutive common shares consist of common stock issuable for stock options and warrants (using the treasury stock method), convertible notes and common shares issuable uponstock issuable. These common stock equivalents may be dilutive in the conversion of convertible debt (using the if-converted method). For the three and nine months ended December 31, 2014, allfuture. The following potentially dilutive equity securities are excluded fromoutstanding as of September 30, 2016 and 2015 were not included in the computation of diluted weighted average number of shares ofdilutive loss per common stock outstanding as theyshare because the effect would have had an anti-dilutive impact.been anti-dilutive:

Common stock issued for services

On April 27,

Common stock issued 100,000 restricted shares of common stock to an attorneya former related party for services rendered. The shares were valued at the fair market value of $0.06 per share based on the closing bid price on the grant date. The Company recorded stock-based legal fees of $6,000 for the nine months ended December 31, 2015.

On May 1, 2015, the Company issued 180,000 restricted shares of common stock to an attorney for services to be rendered. The shares were valued at the fair market value of $0.0549 per share based on the closing bid price on the grant date. The Company recorded stock-based legal fees of $6,589 for the nine months ended December 31, 2015 and had a remaining prepaid expense of $3,293 at December 31, 2015, which will be amortized over the remaining service period.

On May 1, 2015, the Company issued 175,000 vested shares of common stock to an attorney for services to be rendered. The shares were valued at the fair market value of $0.0549 per share on the grant date which is the measurement date based on the closing bid price on the grant date. The Company recorded stock-based legal fees of $6,400 for the nine months ended December 31, 2015 and had a remaining prepaid expense of $3,208 at December 31, 2015, which will be amortized over the remaining service period.

On June 1, 2015, the Company issued 726,989 restricted shares of common stock to a company controlled by the Company’s Chief Financial Officer for compensation and to settle accrued liabilities of $26,667 pursuant to the related service agreement (See Note 7). The shares were valued at $26,667 based on 60% of the closing bid price of the Company’s common stock on the last trading day of the previous quarter as defined in the service agreement. No gain or loss was recognized on this settlement.

On June 1, 2015, the Company issued 250,000 vested shares of common stock to a consultant for marketing services to be rendered. The shares were valued at the fair market value of $0.054 per share on the grant date which is the measurement date based on the closing bid price on the grant date. The Company recorded stock-based marketing service fees of $7,875 for the nine months ended December 31, 2015 and had a remaining prepaid expense of $5,625 at December 31, 2015, which will be amortized over the remaining service period.

On July 1, 2015, the Company issued 100,000 vested shares of common stock to a consultant for web design services to be rendered. The shares were valued at the fair market value of $0.06 per share on the grant date which is the measurement date based on the closing bid price on the grant date. The Company recorded stock-based consulting fees of $3,000 for the nine months ended December 31, 2015 and had a remaining prepaid expense of $3,000 at December 31, 2015, which will be amortized over the remaining service period.

On August 5, 2015, the Company issued 181,818 restricted shares of common stock to a company controlled by the Company’s Chief Financial Officer for compensation and to settle accrued liabilities of $10,000 pursuant to the related service agreement (See Note 7). The shares were valued at $10,000 based on 60% of the closing bid price of the Company’s common stock on the last trading day of the previous quarter as defined in the service agreement. No gain or loss was recognized on this settlement.

On August 5, 2015, the Company issued 125,000 vested shares of common stock to two accounting consultants for services rendered and 800,000 vested shares of common stock to two IT professionals for services rendered. The shares were valued at the fair market value of $0.04 per share on the grant date which is the measurement date based on the closing bid price on the grant date. The Company recorded stock-based accounting fees of $5,000 and stock-based consulting fees of $32,000, respectively, for the nine months ended December 31, 2015.

On October 26, 2015, the Company issued 250,000 restricted shares of common stock to a consultant for services rendered and to be rendered. The shares were valued at the fair market value of $0.0389 per share based on the closing bid price on the grant date. The Company recorded stock-based consulting fees of $6,807 for the nine months ended December 31, 2015 and had a remaining prepaid expense of $2,918 at December 31, 2015, which will be amortized over the remaining service period.

LEGACYXCHANGE, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015SEPTEMBER 30, 2016

note 9 –STOCKHOLDERS’ DEFICIT(continued)

Common stock issued for services (continued)payment of loan fees

On December 15, 2015, the Company issued 2,500,000 and 1,500,000 restricted shares of common stock to its officer and director, respectively, for services rendered. The shares were valued at the fair market value of $0.01 per share based on the closing bid price on the grant date. The Company recorded stock-based compensation of $40,000 for the nine months ended December 31, 2015.

On December 15, 2015, the Company issued 250,000 restricted shares of common stock to an attorney for services to be rendered. The shares were valued at the fair market value of $0.01 per share based on the closing bid price on the grant date. The Company recorded prepaid expenses of $2,500 which will be amortized over the service period.

Common stock issued for notesdebt conversion and accrued interest

On July 9, 2015, $27,510 principal amount of the Company’s Fiscal 2015 Convertible Notes and $10,792 accrued interest were converted at $0.02 per share into 1,915,084 shares of the Company’s common stock.

On July 22, 2015, $36,000 principal amount of the Company’s Fiscal 2015 Convertible Notes was converted at $0.02 per share into 1,800,000 shares of the Company’s common stock.

On July 27, 2015, $25,000 principal amount of the Company’s Fiscal 2015 Convertible Notes was converted at $0.02 per share into 1,250,000 shares of the Company’s common stock.Warrants

Common stockWarrants issued for loan fees

On July 7, 2015, the Company issued 75,000 vested shares of common stock as additional consideration for a bridge loan. The shares were valued at the fair market value of $0.048 per share on the grant date which is the measurement date based on the closing bid price on the grant date. The Company recorded interest expense of $3,600 for the nine months ended December 31, 2015.

Reclassification of derivative liabilities upon notes conversionpursuant to equity subscription agreements

During the nine months ended December 31,fiscal years 2013 to 2015, the Company reclassified $188,327 derivative liabilities to additional paid-in capital upon the conversion of Fiscal 2015 Convertible Notes with principal amount of $88,510.

Warrants

The Company issued warrantsin connection with the sale of common stock, during the nine months ended December 31, 2015. TheseCompany issued an aggregate of 1,048,315 five-year warrants haveto purchase common shares for an exercise price of $0.035$0.40 per common share to investors pursuant to unit subscription agreements. These warrants were accounted for as equity. As of September 30, 2016 and expire in 5 years from issuance dates. Warrant activities for the nine months ended DecemberMarch 31, 20152016, 1,048,315 warrants were as follows:

There was no intrinsic value for the warrants at December 31, 2015.

LEGACYXCHANGE, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015

note 9 –STOCKHOLDERS’ DEFICIT(continued)issued and outstanding.

Warrants (continued)issued in connection with the Fiscal 2016 Financing

The following table summarizesDuring fiscal years 2016, pursuant to the sharesconvertible note agreements under the fiscal 2016 financing discussed in Note 6, the Company issued five-year warrants to purchase an aggregate of 4,225,000 (twenty warrants for each dollar of the Company’s common stock issuable upon exercise of warrants outstanding at December 31, 2015: