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Legacy Systems Holding, Inc. (OTCBB: LGYH) provides wafer cleaning and stripping technology to the semiconductor and related industries. Under the direction of its President and CEO, Robert Matthews, Legacy has developed and patented a new, breakthrough process that employs “Green Chemistry” to produce an environmentally safe process for photoresist stripping and cleaning of any size silicon wafer. Legacy delivers its cleaning technology through its own state of the art benches that employ the latest in robotic systems, or via specially designed modules that can be integrated into existing bench technology provided by other equipment manufacturing companies.

Another major salmonella outbreak was recently announced just a little over two months after the outbreak in Southern Colorado.

Still our powerful government doesn’t have a solution that can prevent another one.

I am just appalled at our government’s inability to implement, enforce and most importantly ensure that Americans are protected from deadly bacteria. This past outbreak has affected 167 Americans in 17 states, hospitalized 23 people and taken the life of a 67 year-old cancer patient.

To me this is unacceptable. A cancer patient that was already battling for his life is now dead because his weak and battered immune system couldn’t fight against the intestinal bacteria that he contracted from eating pico de galo from a Mexican restaurant in Texas.

Companies like Sanyo, Proton Laboratories (PLBI.PK) and EAU Technologies (EAUI.OB) have viable green solutions to defend against deadly bacteria. Their technologies take water and re engineer it through a process called electrolysis. In turn their solutions, have efficacy rates as high as 99% in regards to killing bacteria that includes Salmonella, E. coli, Streptococcus, Staphylococcus, Campylobacter, MRSA and other threats to our air, water and food supplies.

So, if the aforementioned companies have developed a means to eliminate deadly bacteria with minimal or zero use of toxic chemicals, then what is taking our government so long to implement them into our agriculture system? Not only would it keep Americans out of hospitals, it would save farmers and distribution companies millions of dollars. And isn’t that one of the FDA’s main goals to help minimize the health risk to Americans?

This technology has the means to tackle a growing problem in the United States and it can be done with out chemicals and no residual effects to the taste or overall presentation of the produce. However, until our government can remove its head from its sphincter we will continue to see salmonella outbreaks continue for years to come.

Legacy Systems Builds Another Wetstation for Tyco International

Ask a group of leading analysts about their 2008 semiconductor industry outlook and the responses will likely be all over the board.

On one side, you have the doom & gloomers of the opinion that there is simply far too much economic uncertainty in today’s world to warrant blue sky in ‘08. On the other hand, some would argue that rising International demand and the rapid emergence of solar applications that require the use of silicon wafers are offsetting problems brought on by a weakened U.S. economy.

Always in Demand

Luckily, for one of our newest portfolio companies, Legacy Holding Inc. (OTCPK: LGYH), it doesn’t seem to matter much. Legacy’s patented, award-winning processes provide such a massive value-proposition to the semiconductor industry, in addition to many others including Solar Cells, Flat Panel Displays, and Light Emitting Diodes (LEDs), that their products are in demand whether broader market conditions are favorable or not.

Tyco Orders More

LGYH is out with some major news this morning regarding another order from Tyco for the company’s patented DryZone Hydrophilic: Hydrophobic Wafer Drying System wetstation. If you don’t know already, Legacy has developed business relationships with Tyco, Micrel Systems, and Silicon Genesis, the largest semiconductor equipment manufacturer and the largest solder bump deposition manufacturer worldwide. Not bad for a company that just began trading a few months ago, eh?

The only semiconductor-related company to ever win the prestigious U.S. EPA ‘Green Chemistry’ Award, Legacy’s technology demonstrates a significant value proposition for the $7 billion per year silicon wafer cleaning industry in 4-industry key ways:

- Improving wafer processing time by 200%;
- Enhancing oxide removal control by 92%;
- Decreasing costs by 22% by reducing the amount of consumable materials used in wafer cleaning; and
- Reducing particles left on the wafer after cleaning by 76%.

So, clearly the company’s offering is an ideal fit for target customers regardless of the current economic environment, to a major extent, because of the offering’s proven ROI capabilities.

More on the Tyco Deal

In my opinion, the re-order from Tyco is major testament to the capabilities of Legacy’s products and technologies. According to today’s release, the relationship has been in place since 2003 when Tyco first evaluated Legacy’s proprietary processes and has led to two orders for the company’s DryZon Hydrophilic: Hydrophobic Wafer Drying System.

In addition to being a leader in the semiconductor space, Tyco is also an ideal business partner for just about any organization under the sun. The company did more than $19B in sales during 2007, has nearly 120,000 employees worldwide, and has billions to spend of R&D and sales/marketing. Tyco is also well-known for scooping up promising comrades, sometimes at a premium, and reaping the rewards of their innovative expertise.

With a highly-esteemed development team in-house and the budget in place to build and buy the best manufacturing solutions in the world, Tyco’s decision to align itself with Legacy speaks volumes for the company’s credibility and the capabilities of its solutions. This is very impressive for a company at its stage. Don’t forget as well that Legacy also sold one of its robotic wet process benches from Micrel Semiconductor and and had a reorder from Cree.

Demand is rising and the company’s products are indeed proven. I’ll be curious as to what type of effect this growing demand will have on the company’s appeal to the likes of Tyco and others from a buyout perspective.

Analyst Sentiment Varied on 2008 Semiconductor/Silicon Wafer Growth

The Good:

Market research firm Semico Research Corp. (Phoenix) has issued a study of the supply of polysilicon and silicon wafers, predicting that demand for silicon wafers for semiconductor production will grow at a compound annual growth rate (CAGR) of 13% over the next five years.

The Bad:

“Pardon my pessimism, but I see zero (that’s 0!) growth for semiconductors in 2008 over 2007. Going into 2008, there are some bad signs: the subprime fiasco, soaring oil prices and a U.S. presidential election that could bring more uncertainty to the party.” - Mark Lapedus – EE Times

The Ugly:

To tell you the truth, we don’t see any ugly here. . .

LGYH is green
LGYH is high tech
LGYH does it better

More on the Stock

Shares are up nearly 100% since our 2/8 update and settled into the $.80 range Wednesday after hitting a recent high of $.92 on 2/25. As mentioned in our last edition, the one dollar mark as well as recent highs of $1.10 and $1.43 look to be easily reached near term targets. With such positive news out this morning, I am very curious to see where LGYH lands at the end of today’s trading session.

Today, I saw something that put into perspective a trend that one cannot help but notice. In my neighborhood, we now have organic dry cleaning! We of course have organic grocery stores and restaurants but recently got organic paint and at long last organic dry cleaning.

The industrial age is (partly by choice and partly by necessity), taking a sharp turn in the way the simplest of products are manufactured – from that Versaci dinner jacket to the chip that go into your PC. Companies as large as Intel understand this growing industry standard of going green – hence their connection with today’s player in the rising green trend.

Buck the Trend with Legacy

As fears that the U.S. is entering a period of stagflation continue to rise, Legacy Holding Inc. (OTCPK: LGYH) is showing the characteristics of a fractious stock unwilling to succumb to the pressures of a weakening economy. Shares are up about 100% since our last update back on February 8th and the market seems to be warming up nicely to one of our favorite companies for ‘08.

Trading Commentary

Over the past ten trading days, LGYH stock has more than doubled in price on volume of about 125,000 shares (see accompanying chart). During this upward surge, the stock pulled back on just two of these days trading into an easy to spot up trending channel.

The one dollar mark as well as recent highs of $1.10 and $1.43 look to be easily reached near term targets.

Industry-Leading Solutions Coupled With Highly Esteemed Executives

When coupling industry-leading solutions with a battle- tested industry executive team the way that LGYH has, the chances for success are quite promising. Founded by four Texas Instruments engineers back in 1989, Legacy has developed and patented a new, breakthrough process that employs “Green Chemistry“; to produce an environmentally safe process for cleaning silicon wafers simultaneously improving efficiency.

Now providing both modular and complete solutions, LGYH has already developed business relationships with the likes of Tyco, Micrel Systems, and Silicon Genesis, the largest semiconductor equipment manufacturer and the largest solder bump deposition manufacturer worldwide.

The company’s President and CEO Robert R. Matthews is a chemist with nearly 30 years of experience in the semiconductor industry with time spent as a process engineer at Texas Instruments and Intel Corp. He’s also fostered deep ties with other leading semiconductor- related organizations including Applied Materials.

Industry Snapshot

The semiconductor world is largely dominated by five leading players with Intel leading the way and commanding about four-fifths of the PC microprocessor market. They are followed by Applied Materials, by far the world’s largest maker of the complex components used in the production of semiconductors.

STMicroelectronics and Texas Instruments are the two largest analog chip makers with Taiwan Semiconductor Manufacturing Company known as the largest producer of chips. TSM has revolutionized the chip manufacturing process, which has afforded companies that lack production facilities to outsource the production of their chips.

With little room for new competition, these companies are constantly developing new chips and production processes in order to stay competitive and ensure that their respective market shares do not diminish. This makes the market for LGYH’s solution virtually inexhaustible.

Significant Value-Proposition in the Semiconductor World

Legacy’s technology demonstrates a significant value proposition for the $7 billion per year silicon wafer cleaning industry in 4-industry key ways:

Improving wafer processing time by 200%;
enhancing oxide removal control by 92%;
decreasing costs by 22% by reducing the amount of consumable materials used in wafer cleaning; and
reducing particles left on the wafer after cleaning by 76%.

At present, LGYH’s unique technology enables it to compete in a market space of approximately $5.5 Billion in annual sales or 13.5% of the $41B wafer equipment market. LGYH has also identified a secondary market for its technology in the packaging solder bump process, which is projected to increase to approximately $142 million by 2009.

The company appears to just be scratching the surface of a multi-billion dollar market. And by the way it has traded over the last couple of weeks; it appears that the market is willing to pay increasingly more for the potential here.

With proven, patented products already placed with leading semiconductor players and a highly regarded CEO with extensive industry contacts at the helm, we’re excited about the company’s future. We’ll be tracking it closely so check back soon for updated coverage on Legacy Holdings Inc.

Without the availability of sufficient government incentives in many industries, a growing number of companies are now faced with a very difficult decision: protect the environment or protect corporate profits.

Despite the plethora of measurable environmental benefits associated with “Going Green”, most organizations are still struggling to make a viable ROI case for doing so. A lack of practical solutions in a number of vertical markets further exacerbates the problem.

Capitalists and Environmentalists Agree

In response to this trend, companies like Legacy Systems Holdings Inc. (OTC PK: LGYH) are developing offerings that are friendly on both the wallet and the environment. With the vision to become the leading U.S. wet process supplier by 2011, the company is a frontrunner in the “Green Chemistry” movement within the silicon wafer world and has already attracted the attention of Applied Materials, Micrel Inc., and Tyco International.

For the record, LGYH provides wafer cleaning etching and photoresist stripping equipment and process technology to the semiconductor and related industries such as Solar Cells, Flat Panel Display’s, and Light Emitting Diodes. Translated into English, Legacy has developed breakthrough technologies and products that help clean silicon wafers faster and in a more efficient and environmentally friendly manner than ever before.

Legacy Holds the ONLY U.S. EPA Green Chemistry Award in its Field

Legacy’s expertise is evidenced by it being the only semiconductor equipment company to ever receive the prestigious U.S. EPA Green Chemistry Award. The founder and CEO, Robert R. Matthews, is a chemist with nearly 30-years of experience in the semiconductor industry. A number of these years were spent as a process engineer with Texas Instruments and Intel. Mr. Matthews has developed and patented a revolutionary technology that employs “Green Chemistry” to produce an environmentally safe process for cleaning silicon wafers of any size. This includes and is largely focused on the 32-nm chip, the industry’s state-of-the art technology and a major focus of semiconductor manufacturers of all size.

Revolutionary Products with Widespread Appeal

Legacy’s patented products have gained exposure in recent years for their ability to facilitate tremendous improvements to the existing silicon wafer cleaning processes employed by today’s leading semiconductor players. Legacy’s patented technology helps adopters slash production costs by eliminating the use of toxic (sometimes referred to as piranha) solutions and reducing the overall usage of water in the cleaning process. By employing the company’s “Green Chemistry” technology, users can forget about shelling out big bucks to remove toxic waste and/or pay hefty government imposed fines for not properly disposing.

In regards to the value-proposition that Legacy’s “Green Chemistry” technologies demonstrate to the semi-conductor world; it has improved the removal of oxide by 92%. This in turn, reduces the cost of consumable materials including harmful chemicals used in wafer cleaning by 22%. Furthermore, the process has improved wafer- processing time by 200% while at the same time beating the industry standards for particles left on the wafer by 76%. Now that’s an improvement!

Now to be quite honest, not much of this means a whole lot to you or me. Sure these wafer chips are being cleaned better and with less waste (that is non- toxic) but if you were to ask me what a wafer chip was a month ago, I would have immediately thought of Nabisco’s deliciously non-toxic Wheat Thins! So while Legacy’s product is impressive to us (well, as impressive as wafer chip cleaning can be), what we really like are the fundamental components of LGYH as a company. Let’s recap. . .

1. Legacy has top-notch, industry-seasoned management.
2. Legacy has contracts with leading computer companies like Intel and Applied Materials – the biggest of the big dogs.
3. And Legacy has a revolutionary product that is not only in extreme demand but also progressive and in line with a major trend.

If you ask me (and many other analysts in the market today), these are the true makings of a company with places to go.