10QSB

Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-QSB

x Quarterly Report Pursuant To Section 13 Or 15(d) Of The Securities Exchange Act Of 1934

For The Quarterly Period Ended March 31, 1997.

o Transition Report Under Section 13 Or 15(d) Of The Securities Exchange Act Of 1934

For The Transition Period From ______________To_________________

Commission File Number 333-31238

LEGACY HOLDINGS, INC. FKA CST ENTERTAINMENT, INC.

(FORMERLY CST ENTERTAINMENT IMAGING, INC.)

(Exact Name Of Registrant As Specified In Its Charter)

DELAWARE (State or Other Jurisdiction of Incorporation or Organization) 13-2614435 (I.R.S. Employer Identification No.)

4160 TECHNOLOGY DRIVE, SUITE B

FREMONT, CA 94538

(510) 651-2312

(Address, Including Zip Code, And Telephone Number, Including

Area Code, Of Registrant's executive offices)

Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 o No x

The Registrant has 27,278,340 shares of common stock, par value $0.15 per share, issued and outstanding as of March 31, 1997.

TABLE OF CONTENTS

		Page
Part I
Item 1.	Financial Statements
Balance Sheet as of March 31, 1997 (Unaudited)		1
Statements of Operations for the three and nine Months ended March 31, 1997 and 1996 (Unaudited)		2
Statements of Stockholders Equity for the year ended June 30, 1996 and the nine months ended March 31, 1997 (unaudited)		3
Statements of Cash Flows for the nine months ended March 31, 1997 and 1996 (Unaudited)		4
Notes To Financial Statements (Unaudited)		5
Item 2.	Management's Discussion and Analysis	6
Item 3.	Controls and Procedures	7
Part II - Other Information
Item 1.	Legal Proceedings	7
Item 2.	Change in Securities	7
Item 3.	Defaults Upon Senior Notes	7
Item 4.	Submission of Matters to a Vote of Security Holders	7
Item 5.	Other Information	7
Item 6.	Exhibits and Reports on Form 8-K	7
Signatures		8

ITEM 1. FINANCIAL STATEMENTS

CST ENTERTAINMENT, INC.
BALANCE SHEETS (Unaudited)
As of March 31, 1997
ASSETS
Current assets:
Cash	$	-
Accounts receivable, net		-
Work-in-process		-
Prepaid expense		-
Receivable from related parties		-
Total current assets		-
Property and equipment:
Color conversion equipment		-
Leasehold improvements and other equipment		-
Capitalized software		-
		-
Less accumulated depreciation		-
Other assets:		-
Film library, net of amortization of $5,180,900		-
Other assets		-
Notes receivable from directors and officers		-
		-
	$	-
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Related party loan	$	-
Current portion of long term debt		-
Notes payable		-
Accounts payable		-
Accrued expenses		-
Total current liabilities		-
Non current portion of long term debt		-
Stockholders' Deficit:
Common stock, par value $0.15; 40,000,000 authorized; issued
and outstanding 27,278,340 at March 31, 1997		4,091,752
Additional paid in capital		56,115,740
Accumulated deficit		(60,207,492	)
Total stockholders' deficit		-
Total liabilities and stockholders' deficit	$	-

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS

1

CST ENTERTAINMENT, INC.
STATEMENTS OF OPERATIONS (Unaudited)
For the Three and Nine Months Ended March 31, 1997 and 1996
	For the Three Months Ended						For the Nine Months Ended
	March 31,						March 31,
	1997			1996			1997			1996
Revenue:
Coloring income				$	312,285		$	1,293,050		$	1,604,385
License royalty income		-			105,709			175,000			1,990,775
Library sales income		-			-			500,000			-
		-			417,994			1,968,050			3,595,160
Operating expenses:
Production		-			181,929			996,437			935,585
Cost of library rights sold		-			-			500,000			-
Research and development		-			22,593			5,694			85,406
Depreciation and amortization		-			150,340			302,523			413,093
Film library amortization		-			147,500			398,125			1,356,000
Film library write-down		-			649,740			-			649,740
Participation and licensing		-			-			-			440,000
General and administrative		-			511,294			510,657			1,381,709
Lawsuits and litigation		-			737,000			-			737,000
Interest expense		-			39,080			45,401			87,239
Total operating expenses		-			2,439,476			2,758,836			6,085,772
Discharge of debt in bankruptcy		3,216,724			-			2,768,800			-
Loss at termination of bankruptcy		(2,953,233	)		-			(2,953,233	)		-
Total bankruptcy		263,491						(184,433	)
Net loss	$	263,491		$	(2,021,482	)	$	(975,219	)	$	(2,490,612	)
Weighted average common shares outstanding
Basic and fully diluted		27,278,340			27,225,007			27,278,340			26,745,723
Net income (loss) per share common	$	(0.01	)	$	(0.07	)	$	(0.04	)	$	(0.09	)

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS

2

CST ENTERTAINMENT, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited)
For the Three and Nine Months Ended March 31, 1997 and 1996
					Additional					Total
	Common Stock				Paid-In		Deficit			Stockholders'
	Shares		Amount		Capital		Accumulated			Equity
Balances, June 30, 1995		26,199,624	$	3,929,944	$	55,667,022	$	(56,210,711	)	$	3,386,255
Common stock, restricted, issued as payment
for services rendered		274,450		41,168		123,558					164,726
Common stock issued in connection with
exercise of stock options		4,266		640		3,160					3,800
Common stock, restricted, issued in connection
with debt restructuring		500,000		75,000		175,000					250,000
Common stock, restricted, issued in connection
with animation rights repurchase		300,000		45,000		105,000					150,000
Warrants issued as payment for services rendered						24,000					24,000
Net loss								(3,469,486	)		(3,469,486	)
Balances, June 30, 1996		27,278,340	$	4,091,752	$	56,097,740	$	(59,680,197	)	$	509,295
Warrants issued						18,000					18,000
Net loss								(527,295	)		(527,295	)
Balances, March 31, 1997		27,278,340	$	4,091,752	$	56,115,740	$	(60,207,492	)	$	-

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS

3

CST ENTERTAINMENT, INC.
STATEMENTS OF CASH FLOWS (Unaudited)
For the Nine Months Ended March 31, 1996 and 1995
	For the Nine Months Ended
	March 31,
	1997			1996
Cash flows from operating activities:
Net income (loss)	$	(527,295	)	$	(2,490,612	)
Adjustments to reconcile increase in net assets to net
cash provided by (used in) operating activities:
Bankruptcy, net		(282,197	)		-
Depreciation and amortization		297,398			1,769,093
Non-cash revenue from commitments payable		-			(174,258	)
Film library write-down		898,125			649,740
Non cash payment of expenses		-			183,006
Decrease (increase) in:
Accounts receivable		674,619			(243,054	)
Work in process		428,391			486,520
Prepaid expenses		(14,632	)		(46,766	)
Receivable from related party		25,000			200,000
Other		18,000			(2,789	)
Increase (decrease) in:
Accounts payable		(68,780	)		260,931
Accrued expense		(50,042	)		690,771
Deferred income		(825,300	)		369,796
Loan payable related party		(85,000	)		50,000
Net cash provided (used in) operating activities		488,287			1,702,378
Cash flows from investing activities:
Additions to property and equipment		-			(22,085	)
Additions of capitalized software		(28,194	)		(243,298	)
Additions to film library		-			(2,878,967	)
Net cash provided by (used in) investing activities		(28,194	)		(3,144,350	)
Cash flows from financing activities:
Proceeds from exercise of stock options		-			3,800
Proceeds from notes payable		-			1,250,000
Payment on note payable		(63,318	)		(6,398	)
Payment on term loan		-			(46,875	)
Line of credit		(451,079	)		204,914
Net cash provided by (used in) financing activities		(514,397	)		1,405,441
Net increase (decrease) in cash		(54,304	)		(36,531	)
Cash at beginning of year		54,304			24,694
Cash at end of year	$	-		$	(11,837	)
Supplementary Information:
Cash paid for interest	$	-		$	8,269
Cash paid for income taxes	$	-		$	-

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS

4

CST ENTERTAINMENT, INC.

Notes to Consolidated Financial Statements (Unaudited)

For The Three and Nine Months Ended March 31, 1997 and 1996

NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

To the best of Company's management knowledge, the accompanying unaudited financial statements contain all adjustments, consisting of only normal recurring accruals, necessary to present fairly the Company's financial position at March 31, 1997, the results of operations for the quarter ended March 31, 1997 and 1996 and the cash flows for the quarter ended March 31, 1997 and 1996. Although management of the Company believes that the disclosures in the financial statements are adequate to make the information presented not misleading, certain information and footnote disclosures normally included in financial statements that have been prepared in accordance with generally accepted accounting principles have been condensed or omitted. For further information, refer to the financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended June 30, 1996, and December 31, 2007.

Summary of Significant Accounting Principles

Net Loss Per Share

Net loss per share is based on the weighted average number of shares of common stock outstanding during each year, exclusive of common share equivalents which, for the years presented, would be anti-dilutive.

Accounting Estimates

The preparation of financial statements in conformity with generally accepted accounting principles 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 those estimates.

NOTE B - BANKRUPTCY

On January 13, 1997 the Company filed a chapter 7 bankruptcy motion seeking protection from all creditors. As of January 13, 1997 all Company assets and liabilities were put into the bankruptcy estate, a trustee was appointed and Company operations ceased. On May 23, 2001 the bankruptcy terminated. Former management concluded that at December 31, 2005 all undischarged liabilities created as a result of operations in years prior to filing for bankurptcy had terminated due to the running of the statue of limitations. These financial statements, though for a period prior to December 31, 2005, reflect the termination of such liabilities from pre bankruptcy operations.

NOTE C - SUBSEQUENT EVENT

On July 11, 2007, Legacy Systems, Inc. signed a definitive agreement to be merged into CST Entertainment, Inc, (CST). The CST stockholders acquired all of the issued and outstanding common stock of Legacy Systems, Inc. The transaction was accounted for as a capital transaction and recapitalization by the accounting acquirer and as a re-organization by the accounting acquiree wherein CST Entertainment, Inc. is the acquiree and, Legacy Systems, Inc. is the acquirer. CST Entertainment, Inc. changed its name to Legacy Holdings at the date of merger July 11, 2007. Furthermore, to conform with the fiscal year of its acquirer, Legacy Systems, Inc. the Company changed its fiscal year end from June 30^th to December 31^st effective December 31, 2005.

Legacy Holdings, Inc, (formerly CST Entertainment, Inc.) is filing Forms 10QSB and 10KSB for all interim and annual periods beginning with the quarter ended December 31, 1996 through December 31, 2005.

5

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS

Results of Operations

Coloring revenue for the quarter ended March 31, 1997 was $0 compared to $417,994 during the same quarter of 1996 representing a 100% decrease. Coloring revenue for the six months ended March 31, 1997 was $1,968,050 compared to $3,595,160 during the same period in 1996 representing a decrease of $1,627,110 or 45%. In the first quarter ended September, 1996, the Company delivered two significant colorized projects. The Company also delivered numerous color FX projects which contributed to revenue in fiscal 1997. However, during the second quarter ended December 31, 1996, the Company experienced a significant fall-off in sales as anticipated sales never materialized. There were no sales for the third quarter ended March 31, 1997 due to the company ceasing operations and filing for Chapter 7 bankruptcy protection which became effective on January 13, 1997

License royalty income for the quarter ended March 31, 1997 was $0 compared to $105,709 during the same quarter of 1996 representing a 100% decrease. License royalty income for the nine months ended March 31, 1997 was $175,000 compared to $1,990,775 during the same period in 1996 representing a decrease of $1,815,775 or 91%. The decrease in Licensing/royalty income is due primarily to the results of the Featurizations division. The Company did not complete any projects for its Featurizations division during the three or nine months ended March 31, 1997. However, the Company did sell certain rights in a previously produced project during the nine months ended March 31, 1996. In August 1996, the Company entered in to an agreement with Allied Communications, Inc. whereby the Company sold certain rights in its Wyatt Earp - Return to Tombstone project. In exchange, the Company received $175,000.

The increase in library sales income is due to the sale of all rights to the MGM films previously produced. In September 1996, the Company entered into an agreement with MGM/UA whereby the Company sold its rights in the first four films produced under its minimum seven picture agreement. In exchange, the Company received $500,000. There was no such sale for the three or nine months ended There was no such sale for the three or nine months ended March 31, 1996.

Operating expenses for the quarter ended March 31, 1997 was $0 compared to $2,758,836 during the same quarter of 1996 representing a 100% decrease. Operating expenses for the nine months ended March 31, 1997 was $2,758,836 compared to $6,085,772 during the same quarter of 1996 representing a decrease of $3,326,936 or 55%. The decrease in operating expenses was due primarily to a significant decrease in operations as a result of management’s realization that the company cannot continue as a going concern. The nine month decrease in operating expenses was primarily the result of significantly reduced second and third quarter operations offset by higher than normal operating expenses incurred during the first quarter of fiscal 1997 ended September 30, 1996.

As a result of the Company’s bankruptcy, the Company wrote-off all terminated assets and liabilities effectively eliminating the value of all assets and liabilities as of March 31, 1997. This resulted in a gain of $3,216,724 for the discharged debt and a loss of $2,953,233 for the write-down of all assets for a net gain due to the bankruptcy of $263,491 in addition to the operating loss of $790,786 for a total loss during the nine months ended March 31, 1997 of $527,295.

6

Liquidity and Capital Resources

As a result of filing for chapter 7 bankruptcy protection on January 13, 1997, the Company ceased operations and has written-off all terminated assets and liabilities.

ITEM 3. CONTROLS AND PROCEDURES

(a)Evaluation of disclosure controls and procedures

As required by Rule 13a-15(b) under the Exchange Act, we conducted an evaluation, under the supervision and participation of our management, including the Company’s President and Chief Financial Officer (who is the principal accounting officer). No weaknesses were noted and both the President and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of the most recent fiscal quarter covered by this Form 10-QSB.

(b) Changes in internal controls

In accordance with Item 308 (c) of Regulation S-B, there were no changes in the Company’s internal control reporting in connection with the Company’s evaluation of its internal controls that occurred during the most recent fiscal quarter covered by this Form 10-QSB.

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings. None.
Item 2.	Change in Securities. None.
Item 3.	Defaults Upon Senior Securities. None.
Item 4.	Submission of Matters to a Vote of Security Holders. None.
Item 5.	Other Information. None.
Item 6.	Exhibits

Exhibit Number	Title of Document
31.1	Certification of Principal Executive Officer and Principal Accounting Officer Pursuant to Rule 13a-14
32.1	Certification of Chief Executive Officer and Principle Accounting Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

7

SIGNATURES

Pursuant to the requirement 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 HOLDINGS, INC.

/S/ Robert Matthews

Robert Matthews

Chief Executive Officer and Principle Accounting Officer

8

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Robert Matthews, the Chief Executive Officer and Principle Accounting Officer of Legacy Holdings, Inc. FKA CST Entertainment, Inc. (the “Company” or the “small business issuer”), certify that:

1. I have reviewed this quarterly report on Form 10QSB of the Company for the fiscal quarter ended March 31, 1997;

2. To the best of 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. To the best of 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 small business issuer as of, and for, the periods presented in this report;

4. As the small business issuer’s certifying 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)) for the small business issuer 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 small business issuer, 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) Evaluated the effectiveness of the small business issuer’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

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

5. The small business issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’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 small business issuer’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 small business issuer’s internal control over financial reporting.

/S/ Robert Matthews

Name: Robert Matthews

Title: Chief Executive Officer and Principle Accounting Officer

Dated August 21, 2008

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

EXCHANGE ACT RULE 15D-14(B) AND

18 U.S.C. SECTION 1350

In connection with the quarterly Report of Legacy Holdings, Inc. FKA CST Entertainment, Inc. (the ”Company”) on Form 10QSB for the period ending March 31, 1997, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert Matthews, Chief Executive Officer of the Company, certify, to the best of my knowledge, pursuant to Exchange Act Rule 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002, that:

(i) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(ii) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Dated: August 21, 2008

/S/ Robert Matthews

Name: Robert Matthews

Title: Chief Executive Officer