Attached files
| file | filename |
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| EXCEL - IDEA: XBRL DOCUMENT - LEAP TECHNOLOGY INC / DE | Financial_Report.xls |
| EX-31.1 - EXHIBIT 31.1 - LEAP TECHNOLOGY INC / DE | ex31_1.htm |
| EX-32.1 - EXHIBIT 32.1 - LEAP TECHNOLOGY INC / DE | ex32_1.htm |
| EX-31.2 - EXHIBIT 31.2 - LEAP TECHNOLOGY INC / DE | ex31_2.htm |
| EX-32.2 - EXHIBIT 32.2 - LEAP TECHNOLOGY INC / DE | ex32_2.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
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þ
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Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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For the quarterly period ended March 31, 2012
OR
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o
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Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Commission file number 0-5667
Le@P Technology, Inc.
(Exact Name of Registrant as Specified in Its Charter)
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Delaware
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65-0769296
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(State or Other Jurisdiction of Incorporation or Organization)
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(I.R.S. Employer Identification No.)
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5601 N. Dixie Hwy., Suite 411, Ft. Lauderdale, FL
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33334
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(Address of Principal Executive Offices)
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(Zip Code)
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(954) 771-1772
(Registrant’s Telephone Number, Including Area Code)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ Yes o 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 has been required to submit and post such files). þ Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o
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Smaller reporting company þ
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(Do not check if a smaller reporting company) | ||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
o Yes þ No
Class A Common Stock, par value $0.01 per share: 65,195,909 shares outstanding as of May 15, 2012
Class B Common Stock, par value $0.01 per share: 25,000 shares outstanding as of May 15, 2012
LE@P TECHNOLOGY, INC. AND SUBSIDIARIES
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Page Number
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PART I.
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4
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Item 1.
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4
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4
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Item 2.
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12
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Item 3.
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14
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Item 4.
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15
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PART II.
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15
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Item 1.
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15
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Item 1A.
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15
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Item 2.
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15
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Item 3.
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16
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Item 4.
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16
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Item 5.
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16
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Item 6.
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16
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| EXHIBIT 32.2 |
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PART I.
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Item 1.
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Le@P Technology, Inc. and Subsidiaries
(Unaudited)
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March 31,
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December 31,
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2012
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2011
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Assets
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Current assets:
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Cash
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$ | 96,077 | $ | 40,182 | ||||
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Prepaid expenses
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20,119 | 5,512 | ||||||
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Total current assets
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116,196 | 45,694 | ||||||
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Property and equipment, net
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400,000 | 400,000 | ||||||
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Other assets
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170 | 170 | ||||||
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Total assets
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$ | 516,366 | $ | 445,864 | ||||
See notes to condensed consolidated financial statements.
Le@P Technology, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(continued)
(Unaudited)
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March 31,
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December 31,
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2012
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2011
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Liabilities and Stockholders’ Deficiency
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Current liabilities:
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Accounts payable and accrued expenses
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$ | 23,346 | $ | 6,415 | ||||
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Accrued professional fees
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91,370 | 65,279 | ||||||
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Accrued compensation and related liabilities
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24,149 | 19,348 | ||||||
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Short-term notes payable to related party
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- | 1,076,819 | ||||||
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Short-term accrued interest payable to related party
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- | 247,704 | ||||||
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Total current liabilities
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138,865 | 1,415,565 | ||||||
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Long-term notes payable to related party
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1,571,713 | 110,000 | ||||||
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Long-term accrued interest payable to related party
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8,720 | 921 | ||||||
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Total liabilities
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1,719,298 | 1,526,486 | ||||||
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Commitments and contingencies
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Stockholders’ deficiency:
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Preferred stock, $0.001 par value per share. Authorized 25,000,000 shares. Issued and outstanding 2,170 shares at March 31, 2012 and December 31, 2011.
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2,170,000 | 2,170,000 | ||||||
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Class A Common Stock, $0.01 par value 149,975,000 shares authorized and 65,280,759 shares issued at March 31, 2012 and December 31, 2011.
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652,808 | 652,808 | ||||||
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Class B Common Stock, $0.01 par value per share. Authorized, issued and outstanding 25,000 shares at March 31, 2012 and December 31, 2011.
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250 | 250 | ||||||
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Additional paid-in capital
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35,981,387 | 35,981,387 | ||||||
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Accumulated deficit
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(39,957,917 | ) | (39,835,607 | ) | ||||
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Treasury stock, at cost, 84,850 shares at March 31, 2012 and December 31, 2011.
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(49,460 | ) | (49,460 | ) | ||||
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Total stockholders’ deficiency
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(1,202,932 | ) | (1,080,622 | ) | ||||
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Total liabilities and stockholders’ deficiency
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$ | 516,366 | $ | 445,864 | ||||
See notes to condensed consolidated financial statements.
Le@P Technology, Inc. and Subsidiaries
(Unaudited)
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Three Months Ended
March 31,
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2012
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2011
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Revenue
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$ | - | $ | - | ||||
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Expenses:
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Salaries and benefits
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13,219 | 10,711 | ||||||
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Professional fees
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72,659 | 43,310 | ||||||
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General and administrative
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21,444 | 22,130 | ||||||
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Total expenses
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107,322 | 76,151 | ||||||
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Loss from operations
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(107,322 | ) | (76,151 | ) | ||||
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Other income (expense):
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Interest expense
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(14,988 | ) | (12,950 | ) | ||||
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Total other income (expense)
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(14,988 | ) | (12,950 | ) | ||||
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Loss before income taxes
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(122,310 | ) | (89,101 | ) | ||||
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Provision for income taxes
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- | - | ||||||
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Net loss
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(122,310 | ) | (89,101 | ) | ||||
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Dividends undeclared on cumulative preferred stock
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54,250 | 54,250 | ||||||
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Net loss attributable to common stockholders
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$ | (176,560 | ) | $ | (143,351 | ) | ||
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Basic and diluted net loss per share:
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Net loss per common share-Class A
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$ | (0.00 | ) | $ | (0.00 | ) | ||
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Net loss per common share-Class B
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$ | (0.00 | ) | $ | (0.00 | ) | ||
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Net loss attributable to common stockholders
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$ | (0.00 | ) | $ | (0.00 | ) | ||
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Basic and diluted weighted average shares outstanding
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65,305,759 | 65,305,759 | ||||||
See notes to condensed consolidated financial statements.
Le@P Technology, Inc. and Subsidiaries
(Unaudited)
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Three months
Ended March 31,
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2012
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2011
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Cash flows from operating activities:
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Net loss
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$ | (122,310 | ) | $ | (89,101 | ) | ||
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Changes in operating assets and liabilities:
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Prepaid expenses and other current assets
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(14,606 | ) | (13,752 | ) | ||||
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Accounts payable and accrued expenses
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16,931 | 2,997 | ||||||
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Accrued interest payable to related party
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14,988 | 12,951 | ||||||
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Accrued compensation and related liabilities
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4,801 | 5,663 | ||||||
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Accrued professional fees
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26,091 | 3,250 | ||||||
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Net cash used in operating activities
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(74,105 | ) | (77,992 | ) | ||||
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Cash flows from financing activities:
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Proceeds from notes payable-related party
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130,000 | 125,000 | ||||||
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Net cash provided by financing activities
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130,000 | 125,000 | ||||||
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Net increase in cash
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55,895 | 47,008 | ||||||
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Cash at beginning of period
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40,182 | 2,448 | ||||||
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Cash at end of period
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$ | 96,077 | $ | 49,456 | ||||
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Supplemental disclosure of cash flow information
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Interest paid
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$ | - | $ | - | ||||
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Income taxes paid
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$ | - | $ | - | ||||
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Noncash financing activities
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Capitalized accrued interest payable
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$ | 254,893 | $ | 4,319 | ||||
Le@P Technology, Inc. and Subsidiaries
March 31, 2012
(Unaudited)
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1.
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The Company
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Prior to May 2009, Le@P Technology, Inc. (the “Company”) pursued a strategy of acquiring and commercializing synergistic technologies to develop advanced products. On May 22, 2009, the Company’s Board of Directors (the “Board” or “Board of Directors”) determined to cease for the foreseeable future investigating, pursuing or consummating investment or acquisition opportunities.
Notwithstanding the cessation of investigating investment and acquisition opportunities, the Company may from time to time consider such opportunities which otherwise come to the attention of Board members or acting officers. The ability of the Company to pursue or ultimately consummate any such investment or acquisition opportunities will be dependent upon, among other things, its ability to obtain financing for, and to source and execute on, such opportunities (including the investigation and pursuit of same).
The only significant asset of the Company is its ownership of certain property in Broward County, Florida (the “Real Property”). The Real Property is zoned light industrial and consists of approximately one and one-third acres. The Company’s lease of the Real Property to a tenant has expired and the Company has no immediate prospects for replacing the tenant.
Operating Losses and Cash Flow Deficiencies
The Company currently has no revenue-producing activities and has substantial indebtedness and liabilities. During the past few years, the Company has relied entirely upon the M. Lee Pearce Living Trust (the “Majority Stockholder Trust”), of which the Company’s indirect and beneficial majority stockholder, M. Lee Pearce, M.D. (“Dr. Pearce”), is the 100% beneficial owner (entities owned or controlled by Dr. Pearce that own capital stock in the Company are collectively referred to as the “Majority Stockholder”), to fund operations and expenses (and to extend maturities on indebtedness). Neither the Majority Stockholder nor any other party has any commitment or obligation to provide any additional financing or funding. If the Majority Stockholder, in its discretion, provides such financing or funding, there can be no assurance that the Majority Stockholder would continue to do so (or to extend maturities on existing indebtedness) in the future or regarding the amount, terms, restrictions or conditions of any such funding or financing. The Company’s efforts to obtain financing may require significant costs and expenditures, and if the Company succeeds in obtaining financing, the financing terms could result in substantial dilution of existing equity positions and increased interest expense.
Subsequent to March 31, 2012, and as previously reported on the Company’s Current Report on Form 8-K dated April 9, 2012, the Majority Stockholder Trust provided the Company with a working capital loan on April 9, 2012 in the principal amount of $500,000, which management believes, based upon the Company’s operating budget for 2012, will be sufficient to fund the Company’s working capital requirements through December 31, 2012. The loan is evidenced by a promissory note, bears interest at the rate of 3.75% per annum, and matures (with all principal and interest due in one lump sum) on June 30, 2013.
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2.
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Summary of Significant Accounting Policies
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Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial reporting. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete consolidated financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of financial information have been included. Operating results for the three months ended March 31, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012.
The condensed consolidated balance sheet at December 31, 2011 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete consolidated financial statements.
For further information, refer to the consolidated financial statements and footnotes thereto included in the Le@P Technology, Inc. Annual Report on Form 10-K for the year ended December 31, 2011.
Consolidation
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.
Reclassification
Certain reclassifications of amounts previously reported have been made to the accompanying consolidated financial statements in order to maintain consistency and comparability between periods presented.
Recent Accounting Pronouncements
In May 2011, the Financial Accounting Standards Board (“the FASB”) issued FASB ASU No. 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs (“ASU 2011-04”). ASU 2011-04 provides new guidance for fair value measurements intended to achieve common fair value measurement and disclosure requirements in U.S. GAAP and International Financial Reporting Standards. The amended guidance provides a consistent definition of fair value to ensure that the fair value measurement and disclosure requirements are similar between U.S. GAAP and International Financial Reporting Standards. The amended guidance changes certain fair value measurement principles and enhances the disclosure requirements, particularly for Level 3 fair value measurements. The amended guidance is effective for interim and annual periods beginning after December 15, 2011. Early adoption was not permitted. The Company adopted ASU 2011-04 in this Form 10-Q for the three months ended March 31, 2012.
In June 2011, the FASB issued Accounting Standards Update No. 2011-05, Presentation of Comprehensive Income (“ASU 2011-05”), to require an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. ASU 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of equity. The standard does not change the items which must be reported in other comprehensive income, how such items are measured or when they must be reclassified to net income. This standard is effective for interim and annual periods beginning after December 15, 2011 and is to be applied retrospectively. The FASB has deferred the requirement to present reclassification adjustments for each component of accumulated other comprehensive income in both net income and other comprehensive income. Companies are required to either present amounts reclassified out of other comprehensive income on the face of the financial statements or disclose those amounts in the notes to the financial statements. During the deferral period, there is no requirement to separately present or disclose the reclassification adjustments into net income. The effective date of this deferral will be consistent with the effective date of the ASU 2011-05. The implementation of ASU 2011-05 did not have a material effect on the Company’s consolidated financial statements.
In September 2011, the FASB issued ASU 2011-08, Testing for Goodwill Impairment (“ASU 2011-08”). ASU 2011-08 permits an entity to make a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount before applying the two-step goodwill impairment test. If an entity concludes it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, it need not perform the two-step impairment test. ASU 2011-08 is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 31, 2011. Early adoption was permitted. The implementation of ASU 2011-08 did not have a material impact on the Company’s consolidated financial statements.
In December 2011, the FASB issued ASU 2011-11, “Disclosures about offsetting Assets and Liabilities” requiring additional disclosure about offsetting and related arrangements. ASU 2011-11 is effective retrospectively for annual reporting periods beginning on or after January 1, 2013. The adoption of ASU 2011-11 will not have a material impact on the Company’s future financial position, results of operation, or liquidity.
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3.
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Notes Payable to Related Parties
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Parkson Property LLC (“Parkson”), a wholly-owned subsidiary of the Company, owns the Real Property. Parkson purchased the Real Property on September 28, 2001 from Bay Colony Associates, Ltd. (“Bay Colony”), an entity wholly-owned by the Majority Stockholder in exchange for a two-month note in the amount of $37,500 and a five-year note (the “Long Term Note”) and related mortgage in the amount of $712,500. The Long-Term Note was replaced several times, most recently on February 7, 2012 with a renewal promissory note in the amount of $794,650.68 (the “2012 Parkson Replacement Note”). The 2012 Parkson Replacement Note bears interest at the rate of 3.75% per annum; both principal and all accrued interest on the note are due in one lump sum on June 30, 2013.
On January 31, 2011, the Company consolidated three working capital loans made in 2009 and 2010 by the Majority Stockholder Trust (and their corresponding accrued interest of $4,319) that matured on January 8, 2011 into one renewal promissory note in the amount of $99,319.39 that matured on January 8, 2012. Interest and principal on that note were due in one lump sum on the maturity date of January 8, 2012. With the exception of extending the maturity date until January 8, 2012, the terms of such renewal note were the same as the terms of the original notes. On March 3, 2010, September 1, 2010, January 6, 2011, and April 22, 2011 the Company received working capital loans from the Majority Stockholder Trust in the amount of $130,000, $60,000, $125,000, and $100,000, respectively. All four of the loans were unsecured and evidenced by promissory notes which accrued interest at the prime rate. Interest and principal were due on these notes in one lump sum on the maturity date of January 8, 2012. The Company received an additional working capital loan on September 28, 2011 in the principal amount of $110,000 from the Majority Stockholder Trust. The loan was unsecured and evidenced by a promissory note which accrued interest at the prime rate. Interest and principal on that note, prior to being consolidated (see below), were due in one lump sum on the maturity date of January 8, 2013. The Company received an additional working capital loan on January 18, 2012 in the principal amount of $130,000 from the Majority Stockholder Trust. The loan was unsecured and evidenced by a promissory note which accrued interest at the prime rate. Interest and principal on that note were due in one lump sum on the maturity date of January 8, 2013 (the foregoing notes are collectively referred to as the “Working Capital Notes”). On February 7, 2012, the Company consolidated all of the Working Capital Notes (and their corresponding accrued interest) into one renewal promissory note in the amount of $777,062.04 (the “2012 Le@P Consolidated Renewal Note”). The principal and all accrued interest – at the (lowered) rate of 3.75% per annum – under the 2012 Le@P Consolidated Renewal Note are due in one lump sum on the maturity date of June 30, 2013.
Subsequent to March 31, 2012, and as previously reported on the Company’s Current Report on Form 8-K dated April 9, 2012, the Majority Stockholder Trust provided the Company with an additional working capital loan on April 9, 2012 in the principal amount of $500,000. The loan is evidenced by a promissory note, bears interest at the rate of 3.75% per annum, and matures (with all principal and interest due in one lump sum) on June 30, 2013.
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4.
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Financial Instruments and Fair Values
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The fair value of a financial instrument represents the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Fair value estimates are made at a specific point in time, based upon relevant market information about the financial instrument.
The carrying amount of cash and other assets approximates fair value due to the short-term maturities of these instruments.
The fair values of all other financial instruments, including debt, approximate their book values as the instruments are short-term in nature or contain market rates of interest.
Forward-Looking Statements
Certain statements in Management’s Discussion and Analysis (“MD&A”), other than purely historical information, including estimates, projections, statements relating to the plans, objectives and expected or anticipated business, liquidity, capital resources, financing condition or operating results of the Company, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “seek”, “estimate,” “intend,” “strategy,” “plan,” “objective”, “goal”, “propose”, “may,” “should,” “will,” “would,” “will be,” “can”, “could”, “will continue,” “will likely result,” and similar statements and expressions. Forward-looking statements are based on current beliefs, expectations and assumptions that are subject to risks and uncertainties that can be difficult to predict or ascertain and which may cause actual results to differ materially from the forward-looking statements. In light of the significant uncertainties inherent in the forward-looking statements included herein particularly in view of the current state of the Company, the inclusion of such information should not be regarded as a statement by the Company or any other person that these statements (or our goals, objectives, plans or other forward-looking information derived therefrom) will be achieved. Factors, risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements herein include, without limitation, the items listed below:
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The ability to raise capital;
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The ability to execute the Company’s strategy in a very competitive environment;
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The degree of financial leverage;
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The ability to control future operating and other expenses;
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Risks associated with the capital markets and investment climate;
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Risks associated with acquisitions and their integration;
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Regulatory considerations under the Investment Company Act of 1940;
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Contingent liabilities; and
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Other risks referenced from time to time in the Company’s filings with the Securities and Exchange Commission.
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The Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
Business Strategy
As discussed more fully in Item 1 above (under “The Company”), the Company ceased for the foreseeable future investigating, pursuing or consummating investment or acquisition opportunities. Notwithstanding this, from time to time the Company considers investment and acquisition opportunities, which come to the attention of Board members or the Company’s acting officers. The ability of the Company to pursue or ultimately consummate any such investment or acquisition opportunities is dependent upon, among other things, its ability to fund and obtain financing for, and to source and execute on, such opportunities (including the investigation and pursuit of same).
Competition
The Company would face a highly competitive, rapidly evolving business environment if the Company were to resume its efforts to seek, identify, pursue and execute upon acquisition or investment opportunities. Competitors include a wide variety of venture capital, private equity, mutual and other funds, as well as private and public investors and acquirors, and other organizations, most with access to capital and greater financial, management and technical resources than the Company.
Liquidity and Capital Resources
On January 31, 2011, the Company consolidated three working capital loans made in 2009 and 2010 by the Majority Stockholder Trust (and their corresponding accrued interest of $4,319) that matured on January 8, 2011 into one renewal promissory note in the amount of $99,319.39 that matured on January 8, 2012. Interest and principal on that note were due in one lump sum on the maturity date of January 8, 2012. With the exception of extending the maturity date until January 8, 2012, the terms of such renewal note were the same as the terms of the original notes. On March 3, 2010, September 1, 2010, January 6, 2011, and April 22, 2011 the Company received working capital loans from the Majority Stockholder Trust in the amount of $130,000, $60,000, $125,000, and $100,000, respectively. All four of the loans were unsecured and evidenced by promissory notes which accrued interest at the prime rate. Interest and principal were due on these notes in one lump sum on the maturity date of January 8, 2012. The Company received an additional working capital loan on September 28, 2011 in the principal amount of $110,000 from the Majority Stockholder Trust. The loan was unsecured and evidenced by a promissory note which accrued interest at the prime rate. Interest and principal on that note, prior to being consolidated (see below), were due in one lump sum on the maturity date of January 8, 2013. The Company received an additional working capital loan on January 18, 2012 in the principal amount of $130,000 from the Majority Stockholder Trust. The loan was unsecured and evidenced by a promissory note which accrued interest at the prime rate. Interest and principal on that note were due in one lump sum on the maturity date of January 8, 2013 (the foregoing notes are collectively referred to as the “Working Capital Notes”). On February 7, 2012, the Company consolidated all of the Working Capital Notes (and their corresponding accrued interest) into one renewal promissory note in the amount of $777,062.04 (the “2012 Le@P Consolidated Renewal Note”). The principal and all accrued interest – at the (lowered) rate of 3.75% per annum – under the 2012 Le@P Consolidated Renewal Note are due in one lump sum on the maturity date of June 30, 2013.
Until the Company secures financing for and acquires operations or other revenue-generating activities to become self-sufficient, the Company will remain dependent upon the Majority Stockholder. Neither the Majority Stockholder nor any other party has any commitment or obligation to provide any additional financing or funding (or to extend maturities on existing indebtedness). If the Majority Stockholder, in its discretion, provides such financing or funding, there can be no assurance that the Majority Stockholder would continue to do so (or to extend maturities on existing indebtedness) in the future or regarding the amount, terms, restrictions or conditions of any such funding or financing. The Company’s efforts to obtain financing may require significant costs and expenditures, and if the Company succeeds in obtaining financing, the financing terms could result in substantial dilution of existing equity positions and increased interest expense.
The Company’s continued operation and existence, therefore, depends entirely upon obtaining additional funding or financing in the form of debt or equity for which it has no present commitments. If the Company does not succeed in raising additional funding or financing before its cash is exhausted, it will be forced to cease operations, terminate its reporting as a public company and ultimately, liquidate and/or dissolve, resulting in the complete loss of equity investments in the Company.
Subsequent to March 31, 2012, and as previously reported on the Company’s Current Report on Form 8-K dated April 9, 2012, the Majority Stockholder Trust provided the Company with an additional working capital loan on April 9, 2012 in the principal amount of $500,000. The loan is evidenced by a promissory note, bears interest at the rate of 3.75% per annum, and matures (with all principal and interest due in one lump sum) on June 30, 2013.
Financial Condition at March 31, 2012 Compared to December 31, 2011
The Company’s total assets increased from approximately $446,000 at the end of 2011 to approximately $516,000 at March 31, 2012, primarily reflecting the increase in cash from receipt of the $130,000 working capital loan from the Majority Stockholder on January 18, 2012 offset by the use of approximately $60,000 in payments for operating expenses.
The Company’s total liabilities increased from approximately $1,526,000 at the end of 2011 to approximately $1,719,000 at March 31, 2012, primarily due to the Company’s incurring liabilities under long-term notes payable to a related party of $130,000, and an increase in accrued liabilities of approximately $48,000.
The Company’s working capital deficit decreased from approximately ($1,370,000) at the end of 2011 to approximately ($23,000) at March 31, 2012, primarily reflecting the extended maturity date of the debt agreements, resulting in the reclassification of the Company’s obligations for principal and accrued interest to the Majority Stockholder from a short term liability at the end of 2011 to a long term liability at March 31, 2012.
Comparison of Results of Operations for the Three Months Ended March 31, 2012 to the Three Months Ended March 31, 2011
The Company’s net operating loss increased from approximately $89,000 for the three months ended March 31, 2011 to approximately $122,000 for the three months ended March 31, 2012. The variance primarily reflects an increase in professional fees of approximately $29,000 and an increase in interest expense of approximately $2,000.
Off-Balance Sheet Arrangements
As of March 31, 2012, the Company did not have any off-balance sheet arrangements that have or are reasonably likely to have a material effect on the current or future financial condition, revenues, expenses, results of operations, liquidity, capital expenditures, or capital resources.
Note that this MD&A discussion contains forward-looking statements that involve risks and uncertainties. Please see the section entitled “Forward-Looking Statements” on page 12 for important information to consider when evaluating such statements and related notes included under Item 1 hereof.
Not required.
Evaluation of Disclosure Controls and Procedures
The Company maintains a system of disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). As required by Rule 13a-15(b) under the Exchange Act, management of the Company, under the direction of the Company’s Acting Principal Executive Officer and Acting Principal Financial Officer, reviewed and performed an evaluation of the effectiveness of design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of March 31, 2012, the end of the period covered by this report. Based on that review and evaluation, the Acting Principal Executive Officer and Acting Principal Financial Officer, along with the management of the Company, have determined that as of March 31, 2012, the disclosure controls and procedures are effective.
Changes in Internal Controls Over Financial Reporting During Last Fiscal Quarter
Our Acting Principal Executive Officer and Acting Principal Financial Officer have identified no change in the Company’s “internal control over financial reporting” (as defined in Exchange Act Rule 13a-15(f)) that occurred during the period covered by this quarterly report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II.
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Item 1.
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As of March 31, 2012, the Company was not involved in any material claims or lawsuits, or legal proceeding. From time to time, the Company is party to business disputes arising in the normal course of its business operations. As of March 31, 2012, the Company’s management believed that none of these actions, standing alone, or in the aggregate, was material to the Company’s operations or financial condition.
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Item 1A.
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As a “smaller reporting company,” as defined by the Securities and Exchange Commission regulations promulgated under the Exchange Act, the Company is not required to provide the information required by this item.
The Company did not have any unregistered sales of equity securities during the fiscal quarter ending March 31, 2012.
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Item 3.
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As of March 31, 2012, dividends of $2,724,750 were accumulated and unpaid on the Series B Preferred Stock.
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Item 4.
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Not applicable.
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Item 5.
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None.
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Item 6.
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| 10.1 |
Renewal Promissory Note (Parkson) dated February 7, 2012 in the principal amount of $794,650.68 in favor of Bay Colony Associates, Ltd. (incorporated by reference to Exhibit 10.2 in the Company’s Current Report on Form 8-K dated February 7, 2012).
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| 31.1 |
Certification of Acting Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
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| 31.2 |
Certification of Acting Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
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| 32.1 |
Certification of Acting Principal Executive Officer relating to Periodic Financial Report Pursuant to 18 U.S.C. Section 1350.*
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| 32.2 |
Certification of Acting Principal Financial Officer relating to Periodic Financial Report Pursuant to 18 U.S.C. Section 1350.*
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* Filed herewith
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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LE@P TECHNOLOGY, INC.
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|||
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Dated: May 15, 2012
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By:
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/s/ Timothy Lincoln
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Timothy Lincoln
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|||
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Acting Principal Executive Officer
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|||
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Dated: May 15, 2012
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By:
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/s/ Mary E. Thomas
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Mary E. Thomas
|
|||
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Acting Principal Financial Officer
|
|||
Exhibit Index
| Exhibit |
Description
|
|
| 10.1 |
Renewal Promissory Note (Parkson) dated February 7, 2012 in the principal amount of $794,650.68 in favor of Bay Colony Associates, Ltd. (incorporated by reference to Exhibit 10.2 in the Company’s Current Report on Form 8-K dated February 7, 2012).
|
|
| 31.1 |
Certification of Acting Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
| 31.2 |
Certification of Acting Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
| 32.1 |
Certification of Acting Principal Executive Officer relating to Periodic Financial Report Pursuant to 18 U.S.C. Section 1350.
|
|
| 32.2 |
Certification of Acting Principal Financial Officer relating to Periodic Financial Report pursuant to 18 U.S.C. Section 1350.
|
18