In December 2007, the Financial Accounting Standards Board (“FASB”) issued Statement No. 141R, Business Combinations, and Statement No. 160, Non-controlling Interests in Consolidated Financial Statements, an amendment of ARB No. 51. Statement No. 141R modifies the accounting and disclosure requirements for business combinations and broadens the scope of the previous standard to apply to all transactions in which one entity obtains control over another business. Statement No. 160 establishes new accounting and reporting standards for non-controlling interests in subsidiaries. The Company will be required, if applicable, to apply the provisions of the new standards in the first quarter of 2009. Early adoption is not permitted for these new standards. The adoption of this standard during the period did not have a material impact on the Company’s financial position, results of operations or cash flows.

In March 2008, the Financial Accounting Standards Board, or FASB, issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133.  This standard requires companies to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. This Statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The adoption of this standard during the period did not have a material impact on the Company’s financial position, results of operations or cash flows.

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LEGACY WINE & SPIRITS INTERNATIONAL LTD.-

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (con’t.)

In May 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles”.  SFAS No. 162 sets forth the level of authority to a given accounting pronouncement or document by category. Where there might be conflicting guidance between two categories, the

more authoritative category will prevail. SFAS No. 162 will become effective 60 days after the SEC approves the PCAOB’s amendments to AU Section 411 of the AICPA Professional Standards. SFAS No. 162 has no effect on the Company’s financial position, statements of operations, or cash flows at this time.

In May 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 163, “Accounting for Financial Guarantee Insurance Contracts-and interpretation of FASB Statement No. 60”.  SFAS No. 163 clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement of premium revenue and claims liabilities. This statement also requires expanded disclosures about financial guarantee insurance contracts. SFAS No. 163 is effective for fiscal years beginning on or after December 15, 2008, and interim periods within those years.  The adoption of this standard during the period did not have a material impact on the Company’s financial position, results of operations or cash flows.

In January 2010, the FASB issued ASU No. 2010-06 regarding fair value measurements and disclosures and improvement in the disclosure about fair value measurements.  This ASU requires additional disclosures regarding significant transfers in and out of Levels 1 and 2 of fair value measurements, including a description of the reasons for the transfers.  Further, this ASU requires additional disclosures for the activity in Level 3 fair value measurements, requiring presentation of information about purchases, sales, issuances, and settlements in the reconciliation for fair value measurements.  This ASU is effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years.  We are currently evaluating the impact of this ASU; however, we do not expect the adoption of this ASU to have a material impact on our consolidated financial statements.

In February 2010, the FASB issued ASU No. 2010-09 regarding subsequent events and amendments to certain recognition and disclosure requirements.  Under this ASU, a public company that is a SEC filer, as defined, is not required to disclose the date through which subsequent events have been evaluated.  This ASU is effective upon the issuance of this ASU.  The adoption of this ASU did not have a material impact on our consolidated financial statements.

In April 2010, the FASB issued ASU No. 2010-18 regarding improving comparability by eliminating diversity in practice about the treatment of modifications of loans accounted for within pools under Subtopic 310-30 – Receivable – Loans and Debt Securities Acquired with Deteriorated Credit Quality (“Subtopic 310-30”).  Furthermore, the amendments clarify guidance about maintaining the integrity of a pool as the unit of accounting for acquired loans with credit deterioration.  Loans accounted for individually under Subtopic 310-30 continue to be subject to the troubled debt restructuring accounting provisions within Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors.  The amendments in this Update are effective for modifications of loans accounted for within pools under Subtopic 310-30 occurring in the first interim or annual period ending on or after July 15, 2010.  The amendments are to be applied prospectively.  Early adoption is permitted.  We are currently evaluating the impact of this ASU; however, we do not expect the adoption of this ASU to have a material impact on our consolidated financial statements.

NOTE 3 – DEPOSITS ON LEASEHOLD IMPROVEMENTS

The Company opened its first wine and spirits retail store located in Tianjin, China in December, 2008 for the distribution of its imported products. As at March 31,2010 the Company has advanced $85,000 towards the leasehold improvements of future store(s) planned for the latter half of 2010.

NOTE 4 – INTANGIBLE ASSETS

On May 5, 2008, the Company signed an agreement with Legacy Wine and Spirits Merchants Ltd (“Legacy Merchants”) a Hong Kong based Company, for the rights to a fifteen (15) year general license to import, bottle,

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LEGACY WINE & SPIRITS INTERNATIONAL LTD.-

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

blend, manufacture and distribute wine and spirits in China. The agreement did not take effect until the Company completed its name change, which was completed on May 27, 2008. Legacy Merchants was issued 1,000,000 restricted shares of the Company’s Rule 144 stock valued at $960,000 for the rights to the aforementioned license through its agreement with Beijing Nine Dragons Winery Co. Ltd (“Nine Dragons”) a China based company. Through Legacy Merchants and its agreement with Crown StarHoldings Ltd, an alcoholic beverage sourcing company with offices in Canada and Hong Kong, the Company has access to a wide selection of fine wine and spirits.

The Company  opened one wine and spirits retail stores to be located in Tianjin, China in December, 2008 These approximate 1,900 sq. ft. store is named “Legacy Wine and Spirits” and will initially stock imported red and white wines as well as a selection of spirits from Bronco winery in California, USA.. This initial store will be a flagship model for a franchising plan designed to further broaden the Company’s distribution facilities and gain further market awareness and penetration of the Legacy brand.  Once the Legacy retail stores have been established, the Company will exercise its First Right of Refusal to start-up its manufacturing facility in Beijing through Legacy Merchants agreement with Nine Dragons.

Intangible assets include the following:

NOTE 5 – DEFERRED COMPENSATION

On November 1, 2008, the Company entered into an agreement with Charlton Investments Limited. (“Charlton”), a private company controlled by a significant shareholder, with a two-year term, whereby Charlton will provide investment-banking services to the Company (valued at $120,000) in exchange for 200,000 restricted shares of the Company’s common stock .

On November 1, 2008, the Company entered into an agreement with Compte de Sierge Accomodative Corp. Ltd.., (“Compte”) a private company owned by a significant shareholder of the Company, for a two year term, whereby Compte  will provide investor relations services to the Company (valued at $120,000) in exchange for 200,000 restricted shares of the Company’s common stock. Compte will provide such services as researching, editing and generating a company profile, relaying the Company’s business perspectives and distribution of corporate updates, including press releases .

The Company amortizes the costs of these services over the respective terms of the contracts.  During the three months ended March 31, 2010, the Company recorded amortization of deferred compensation totaling $30,000 and as at March 31, 2010 the unamortized portion of the deferred compensation totaled $70,000.

NOTE 6 – STOCKHOLDERS’ EQUITY

The Company’s capitalization is 100,000,000 common shares with a par value of $0.0001 per share.  

2010 Transactions

On January 20, 2010 the Company issued 200,000 restricted common shares with a fair value of $14,000 to a consultant for his current services.

During the three months ended March 31, 2010 the Company issued 4,195,000 shares under the Company’s 2010 & 2009 Employee Stock Option Incentive Plans with a value of $144,700 for satisfaction of debt to related parties.  

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LEGACY WINE & SPIRITS INTERNATIONAL LTD.-

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

NOTE 6 – STOCKHOLDERS’ EQUITY (con’t.)

2009 Transactions

During the three months ended March 31, 2009, the Company issued 400,000 restricted common shares with a fair value of $240,000 pursuant to deferred compensation agreements.

2010 Stock Options

During the three months ended March 31, 2010 the Company issued 4,195,000 shares under the Company’s 2010 & 2009 Employee Stock Option Incentive Plans at various prices between $0.03 to $0.07 with a total value of $144,700 for satisfaction of debt to related parties.  Accordingly, no further stock based compensation was recorded.

The Company’s stock option activity is as follows:

As of March 31, 2010 there were 587,500 stock options available for grant under the Company’s 2008 Stock Incentive and Option Plan.

As of March 31,2010 there were 3,965,000 stock options available for grant under the Company’s 2009 Stock Incentive and Option Plan

On February 9 2010, the Company filed Registration Statements on Form S-8 to register 9,000,000 to be issued pursuant to the Company’s 2010 Stock Incentive and Option Plan. As of March 31, 2010 there were 5,150,000 stock options available for grant under the Company’s 2010 Stock Incentive and Option Plan

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LEGACY WINE & SPIRITS INTERNATIONAL LTD.-

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

NOTE 6 – STOCKHOLDERS’ EQUITY (con’t.)

2009 Stock Options

No stock options were granted during the three month period ended March 31, 2009

(a)

The Company’s stock option activity is as follows:

(b)

As of March 31, 2009, there were 617,500 stock options available for grant under the Company’s 2008 Stock Incentive and Option Plan.

NOTE 7 – RELATED PARTY TRANSACTIONS

During the three months ended March 31, 2010, the Company incurred expenses for consulting fees of $90,000 (2009 - $Nil) to a significant shareholder and Companies controlled by a significant shareholder and $9,189 (2009 - $3,913) for directors fees.

During the three months ended March 31, 2010, the Company incurred expenses for services of $30,000 (2009 - $30,000) to two companies controlled by a significant shareholders pursuant to service contracts (See Note 5).  

During the three months ended March 31, 2010, the Company incurred expenses for rent of $6,529 (2009 - $7,306) to a Companies controlled by a significant shareholder.  

The following amounts are due to related parties:

All related party transactions are in the normal course of business and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties. All amounts owed to the above related parties are unsecured, non-interest bearing and have no specific terms of repayment.

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LEGACY WINE & SPIRITS INTERNATIONAL LTD.-

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

NOTE 8 – INCOME TAXES  

Potential benefits of United States Federal income tax losses are not recognized in the accounts until realization is more likely than not. As of March 31,2010, the Company has combined net operating losses carried forward totalling approximately 3,675,000 for tax purposes which expire through 2030. Availability of loss usage is subject to change of ownership limitations under Internal Revenue Code 382 for 2002 and prior year’s losses.  Pursuant to SFAS No. 109, the Company is required to compute tax asset benefits for net operating losses carried forward. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry forwards.

NOTE 9- SUPPLEMENTARY CASH FLOW INFORMATION AND NON-CASH INVESTING AND   FINANCING ACTIVITIES

The Company issued 4,195,000 common shares with a value of $144,700 for satisfaction of debt to related parties

during the three months ended March 31, 2010.

NOTE 10 – COMMITMENTS AND CONTINGENCIES

As of August 1, 2002, the Company leased 1250 sq. ft of office space from Holm Investments Ltd. at $1,000 per month for a period of 3 years which was renewed in 2005 for an additional 3 years at $1,100 per month and again in 2008 for 3 additional years at $1,100 per month.  Effective September 1, 2008, the Company has also leased an additional 900 sq. ft office from 1063244 Alberta Ltd. for a $1,100.00 per month on a month to month basis.

As of October 15, 2008, the Company leased its wine store in Tianjin for a period of 10 years (renewable for an additional 5 years), at $1,225 per month. See table below for Tianjin lease schedule.

NOTE 11 - SUBSEQUENT EVENTS

In April and May, 2010, the Company issued 1,375,000 shares at $0.12 per share pursuant to the Company’s 2010 Stock Incentive and Option Plan to satisfy debts to related parties in the amount of $41,250.

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

The following should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements.

Legacy Wine & Spirits International Ltd. (formerly Legacy Mining Ltd.) (“Legacy” or the “Company”) was incorporated on February 19, 1999 in the State of Nevada as Power Direct Tech.com.  On February 23, 1999, the Company changed its name to PD Tech.com and on June 8, 1999 the Company changed its name to Cardstakes.com to reflect management’s decision to shift the Company’s focus to internet-based business development. On January 13, 2004, the Company changed its name to Legacy Mining Ltd. to reflect management’s decision to shift the Company’s focus to mineral exploration and development. We also declared a one-for-two reverse stock split of all of the outstanding common stock, without any change in par value of the shares of common stock. Shareholder approval was obtained to affect the reverse stock split which became effective on January 30, 2004. The new CUSIP number for the Company is 5246EP 10 3.

On December 12, 2006, Legacy filed a Form SB-2 Registration Statement with the United States Security Commission. Following a number of amendments, the SB-2/A was declared effective on August 3, 2007. The trading symbol is “LEYM”.

On April 4, 2008, the Company held a Special Meeting whereby the Board of Directors, by unanimous consent, adopted, effective May 2, 2008, the following amendments to its Articles of Incorporation:

Name Change. A majority of the shareholders entitled to vote on such matters approved a change of name from Legacy Mining Ltd. to “Legacy Wine & Spirits International Ltd”. On April 8, 2008, a Certificate of Amendment to its Articles of Incorporation was filed with the State of Nevada changing the name to Legacy Wine & Spirits International Ltd.

Change of Symbol and CUSIP Number.  The Company also took the necessary steps to change its symbol and CUSIP Number. Therefore, the CUSIP Number has changed from 5246EP 10 3 to 52470N 10 1. Following the review of the NASD and FINRA, the Company was given a new effective date for trading. Effective at the opening of business on May 27, 2008, the symbol changed from LEYM to “LWSP”. 

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Our Wine & Spirits Operation

On May 28, 2008 Legacy Wine & Spirits International Ltd. reported that it had signed an agreement with Legacy Wine and Spirits Merchants Ltd (“Legacy Merchants”) a Hong Kong based Company, for the rights to a fifteen (15) year general license to import, bottle, blend, manufacture and distribute wine and spirits in China. Legacy Merchants received 1,000,000 shares of the Company’s Rule 144 stock valued at $960,000 for the rights to the aforementioned license through its agreement with Beijing Nine Dragons Winery Development Co. Ltd (“Nine Dragons”) a China based company. Through Legacy Merchants and its agreement with Crown Star Holdings Ltd, an alcoholic beverage sourcing company with offices in Canada and Hong Kong, the Company has access to a wide selection of fine wine and spirits. The Company’s initial plans were to open at least two (2) wine and spirits retail stores to be located in Beijing, China by September, 2008 for the distribution of its imported products. Through a number of delays after the completion of the Beijing 2008 Olympics, the plan has changed. Legacy renovated one (1) 1,900 sq.ft. store in Tianjin, China completed in November, 2008. This store will be named “Legacy Wine and Spirits” and will initially stock imported red and white wines as well as a selection of spirits from choice regions throughout the world. This initial store will be a flagship model for a franchising plan designed to further broaden the Company’s distribution facilities and gain further market awareness and penetration of the Legacy brand.  Once the Legacy retail stores have been established, the Company will exercise its First Right of Refusal to start-up its manufacturing facility in Beijing through Legacy Merchants agreement with Nine Dragons.

 On June 24, 2008 Legacy Wine & Spirits International Ltd. reported that it had signed a Distribution Agreement with a Canadian based supplier of Italian wines.  This Agreement provided for the supply of select bottled wines at the mid-range price-point from six (6) different wine regions in Italy.  The Company was at this time in talks with distributors and wineries in both Spain and California with regards to a Distribution Agreement for wine supply from those parts. During the year ended December 31, 2008, the Company decided to terminate its distribution agreement with 2174684 and it was refunded its $45,000 advance.

Thereafter, the Company secured a relationship with Bronco Wine Company of California and purchased its initial inventory of nine varietals of wine on September 26, 2008 for the purchase price of $37,800. Subsequent to September 30, 2008, 1050 cases of wine were shipped to China and displayed for the opening of the first wine store in December 2008.

The Company has also incurred $10,000 in costs for sourcing of product and brands with wine & spirits manufacturers in China. As at March 31, 2010, the inventory totaled $32,930 (December 2009- $39,863).

Bronco Wine Company is the single largest private grape grower in the world with ownership of 17,000 hectares of wine grapes and five Californian wineries. Legacy is importing 750 ml bottled wines in several varietals of Bronco Winery’s Hacienda Cellars Brand from Sonoma County, California.

The Hacienda brand from Bronco Winery will include Merlot, Cabernet Sauvignon, Chardonnay, Sauvignon Blanc, Riesling, Gewurztraminer, Viognier, White Zinfandel and Brut Sparkling Wine. All wine varietals are aimed at the mid-price point and will be distributed and retailed in China via wholesale retailers and Legacy’s own outlet showroom which caters to the retail buyer as well, located in TEDA, Tianjin, a second tier city of over 10 million people just outside of Beijing

The Company has a three phase of business operation:

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Phase One:

Legacy opened the initial corporately owned wine and spirits retail store in Tianjin, China in December, 2008.  This retail store is stocked with select, moderately priced imported wines and will serve as the design and sales model for all franchise boutiques opened thereafter.  This phase sees Legacy establishing its brand name and retail stores through Point of Purchase marketing and taste appreciation gatherings.  Legacy will also secure purchase orders from wholesale distributors for its ‘Bottled Exclusively for Legacy’ wine and spirits line.  This phase moves the Company towards the establishment of the Legacy brand.

Phase Two:

Legacy has $85,000 reserved for leasehold improvements required to be made to future store locations. Additionally, the Company is in negotiations with three (3) existing wine and spirit stores in China.  These stores are located in and around the Company's flagship store in TEDA (Tianjin Economic Development Area).

The location of these stores were strategically chosen for logistic reasons since this will enable the current Legacy staff to move between each store implementing the protocol and standards that Legacy Stores will be known for in China. A Legacy Wine and Spirits store should signify a reliable place for locals or foreigners to purchase their alcohol of choice whether it be for gift giving or personal consumption. With limited capital investment necessary and the Company's stock as a negotiable tool, Legacy's management feels that it will be advantageous to integrate these existing operating entities into a chain of Legacy retail outlets thus solidifying the Company's corporate branding.  This move will greatly expedite the Company's ability to distribute its inventory and increase its brand awareness in China. The proposed acquisition will enable Legacy to have the economy of scale working in their favor in terms of sales multiples and purchasing capabilities with wine and spirit suppliers and vendors.

Through its agreement with Beijing Nine Dragons Winery Development Co. Ltd., Legacy will start importing select wine and spirits to be bottled in-house and distributed by the Company to Legacy’s retail outlets.  This phase will allow Legacy to increase its profit margin via lower shipping costs and taxes as well as wholesale price reductions. This phase will begin in the third quarter of 2010.

Phase Three:

Legacy will begin the importing of select wine juice for the purpose of blending and manufacturing its own brand label wines and spirits.  This phase sees Legacy advance its market penetration, solidify its brand recognition and thus realize a further increase in its profit margin.  This phase will begin in the fourth quarter of 2010.

The Company attended the Shanghai-Fujian Seafood Association (SFSA) dinner where Legacy's wines were the only wines featured at the seafood/wine pairing dinner on December 11, 2009. The SFSA provides up to 40% of the seafood consumed in Shanghai. The event provided an excellent opportunity to broaden the base of acceptance for Legacy's wine selections and resulted in immediate orders for 400 cases of Legacy wines as well as the consumption of 30 cases of wine at the event.

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Approximately 40 percent of imported wine enters China through Shanghai, so it is natural that the city has become the base for the majority of the leading distributors. Shanghai's specialty retail wine shops are a growing phenomenon in Shanghai and are unique alternatives to traditional state-owned tobacco and liquor shops and other retail outlets. These shops have found a niche in the retail market due to their unique marketing strategies, educational events, and store locations. From wine tasting parties and definitive flavor labels to wine and food matching seminars, these small specialty shops offer a growing and personalized introduction to imported wine.

Legacy is expecting to join this market with its first wine outlet in Shanghai in 2010. The local partners currently buy wine from Legacy.

According to statistics, Xiamen, the capital city of Fujian Province, reports annual consumption volumes of wine exceeding 10,000 liters, of which 45% are premium wines. Sales volumes have been increasing by 15% each year making Xiamen one of the key wine markets in China. In addition to strong local demand for wine, Xiamen also plays an important role as a wine distribution centre to neighboring areas such as Quanzhou, Fuzhou and Zhejiang in Jiangxi province.

Legacy also intends to set up a joint venture in 2010 to aggressively enter the Xiamen market. Similar to Shanghai the local partners currently buy wine from Legacy.

As of March 31, 2010, the Company is in the process of producing the first of its own brand of select wines under private label from choice vintners around the world.

The first selection will be from the region of Chile in South America, to be known as the Andes Primera Collection by Legacy. The Andes Primera Brand will consist of red wine varietals only such as Cabernet Sauvignon, Merlot, Malbec, Camanere and Cabernet-Merlot. Currently, imported bottled Chilean wines in China are competitive in price due to a special trade agreement between the two countries.

Liquidity and Capital Resources.

At March 31, 2010, we had total assets of $1,176,640, including current assets in cash of $10,324, inventory, at cost, $32,930 and prepaid expenses of $4,785.  We have a deposit on leasehold improvements of $85,000, actual leasehold improvements, net of depreciation of $10,801 in the amount of $108,705,equipment, net of depreciation of $32,611, in the amount of $916 and other intangible assets of , net of amortization of $91,120 in the amount of $933,080. As of December 31, 2009, we had total current assets of $57,477. The decrease in assets is due to depreciation and amortization of our assets, sale of inventory and expensing the expired portion of prepaid expenses.

At March 31, 2010, we had current liabilities of $282,755, which was represented by accounts payable and accrued liabilities of $49,980, a related party payable to Golden Spirit Enterprises Ltd. in the amount of $72,668, a related party payable to Organa Gardens International Inc. in the amount of $131,172 and $28,735 due to other related parties. As of December 31, 2009 we had total current liabilities of $269,102  The increase in liabilities was a result of an increase in amounts owing to related parties.  At March 31, 2010, we had a working capital deficiency of $234,716. (December 31, 2009 - $211,625).

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We do not believe that our current cash resources will be able to maintain our current operations for an extended period of time.  We will be required to raise additional funds or arrange for additional financing over the next 12 months to adhere to our development schedule.  No assurance can be given, however, that we will have access to additional cash in the future, or that funds will be available on acceptable terms to satisfy our working capital requirements. If we are not able to arrange for additional funding or if our officers, directors and shareholders stop advancing funds to us, we may be forced to make other arrangements for financing such as loans or entering into strategic alliances. The Company is currently attempting to raise capital through sophisticated private investors.

Results of Operations

We have begun to realize some revenues from our retail wine store in China operations. Revenues for the three month period ended March 31, 2010 were $9,088 (2009 - $13,533) Loss from operations for the three month period ended March 31, 2010 was $231,108 (2009 - $97,750).  This increase in loss was due to an increase in consulting expenses this quarter.

From inception to March 31, 2010 our Company has incurred cumulative net losses of $3,682,129, resulting primarily from the write-down of certain internet related activities we were previously involved in. These included a write-down of a proprietary internet technology license in the amount of $912,653, a write-down of URL’s acquired in the amount of $247,500, and a write-down of website development costs in the amount of $158,772, management and consulting fees of $805,010; travel and accommodation of $108,576; office and general expenses of $423,261, professional fees of $330,139; depreciation and amortization expense of $115,392, exploration costs of $17,214, a property option loss of $15,500 and interest on settlement of debt of $149,337.

The cash and equivalents constitute our present internal sources of liquidity. Because we are not generating any significant revenues, our only external source of liquidity is the sale of our capital stock and any advances from officers, directors or shareholders.

Our Plan of Operation for the Next Twelve Months

We do anticipate that we will need to raise additional capital within the next 12 months in order to continue as a going concern. To the extent that additional capital is raised through the sale of equity or equity- related securities, the issuance of such securities could result in dilution of our stockholders.  There can be no assurance that additional funding will be available on favorable terms, if at all.  If adequate funds are not available within the next 12 months, we may be required to curtail our operations significantly or to obtain funds through entering into arrangements with collaborative partners or others that may require us to relinquish rights to certain of our assets that we would not otherwise relinquish.

Legacy Wine & Spirits International Ltd. does anticipate some expenditures within the next 12 months for its expanding wine operations in China.

Legacy Wine & Spirits International Ltd. does not anticipate any further significant exploration costs within the next 12 months, nor does Legacy Wine & Spirits International Ltd. anticipate that it will lease or purchase any significant equipment within the next 12 months.

Off-Balance Sheet Arrangements

Our company has not entered into any off balance sheet arrangements.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

As of March 31, 2010, we had cash in the amount of $10,324. We have generated small revenues in the amount of $56,596 since inception and have incurred a net loss of $3,682,129 from our inception on February 19, 1999 to March 31, 2010. Our current operating funds are insufficient to expand the  operation of our  business venture as well as providing funds for anticipated operating overheads, professional fees and regulatory filing fees. Legacy Wine & Spirits International Ltd. does expect significant costs to complete the leasehold improvements and supply wine & liquor inventory to future liquor store locations for its business venture. It will have to obtain funds through entering into arrangements with collaborative partners or others to accomplish these expenditures. It currently is attempting to raise capital through sophisticated private investors. There is no assurance that we will be able to raise sufficient funding from the sale of our common stock to fund our anticipated business plan.

Item 4T Controls and Procedures.

An evaluation was conducted by our Chief Executive Officer (CEO) and Chief Financial Officer (CFO) of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2010. Based on that evaluation, the CEO and CFO concluded that our controls and procedures were effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

There was no change in our internal control over financial reporting that occurred during the fiscal quarter ended March 31, 2010 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

This quarterly report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of our registered public accounting firm due to a transition period established by rules of the Securities and Exchange Commission for newly public companies.

PART II - OTHER INFORMATION

ITEM 1. Legal Proceedings

ITEM 1A. Risk Factors

Not applicable

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

The Company’s capitalization is 100,000,000 common shares with a par value of $0.0001 per share.

2010 Transactions

On January 20, 2010 the Company issued 200,000 restricted common shares with a fair value of $14,000 to a consultant for his current services.

During the three months ended March 31, 2010 the Company issued 4,195,000 shares under the Company’s 2010 & 2009 Employee Stock Option Incentive Plans with a value of $144,700 for satisfaction of debt to related parties.  

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2009 Transactions

During the three months ended March 31, 2009, the Company issued 400,000 restricted common shares with a fair value of $240,000 pursuant to deferred compensation agreements.

2010 Stock Options

During the three months ended March 31, 2010 the Company issued 4,195,000 shares under the Company’s 2010 & 2009 Employee Stock Option Incentive Plans at various prices between $0.03 to $0.07 with a total value of $144,700 for satisfaction of debt to related parties.  Accordingly, no further stock based compensation was recorded.

The Company’s stock option activity is as follows:

As of March 31, 2010 there were 587,500 stock options available for grant under the Company’s 2008 Stock Incentive and Option Plan.

As of March 31, 2010 there were 3,965,000 stock options available for grant under the Company’s 2009 Stock Incentive and Option Plan

On February 9 2010, the Company filed Registration Statements on Form S-8 to register 9,000,000 to be issued pursuant to the Company’s 2010 Stock Incentive and Option Plan. As of March 31, 2010 there were 5,150,000 stock options available for grant under the Company’s 2010 Stock Incentive and Option Plan.

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No stock options were granted during the three month period ended March 31, 2009

(a)

The Company’s stock option activity is as follows:

(b) As of March 31, 2009, there were 617,500 stock options available for grant under the Company’s 2008 Stock Incentive and Option Plan.

ITEM 3.  Defaults Upon Senior Securities

None.

ITEM 4. Submission of Matters to Vote of Security Holders

None

ITEM 5.  Other Information

None

ITEM 6. EXHIBITS

Exhibit 31.1 - Section 906 Certification of Periodic Report of the Chief Executive Officer.

Exhibit 31.2 - Section 906 Certification of Periodic Report of the Chief Financial Officer.

Exhibit 32.1 - Section 302 Certification of Periodic Report of the Chief Executive Officer.

Exhibit 32.2 - Section 302 Certification of Periodic Report of the Chief Financial Officer.

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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.

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