Exhibit 10.2


Fairness Opinion of the Conversion of Debt to


Class A Common Shares
of
Le@p Technology, Inc.


Valuation Date: March 15, 2006

Report Date: March 17, 2006


	
 


	






Report by:





1900 Corporate Blvd., Suite 305-W, Boca Raton, FL
33431

(561)241-9921





TABLE OF CONTENTS


	
 

	
 

	
 

	
 

	
 

	
 


	
1.0 INTRODUCTION

	
1


	
 

	
1.1

	
Fair Value

	
1


	
 

	
 

	
 

	
 

	
 

	
 


	
2.0 SUMMARY

	
2


	
 

	
 

	
 

	
 

	
 

	
 


	
3.0 RESTRICTION AND
  DISCLAIMER

	
2


	
 

	
 

	
 

	
 

	
 

	
 


	
4.0 UNIFORM STANDARDS OF
  PROFESSIONAL APPRAISAL PRACTICE

	
2


	
 

	
 

	
 

	
 

	
 

	
 


	
5.0 SCOPE OF REVIEW

	
3


	
 

	
 

	
 

	
 

	
 

	
 


	
6.0 BACKGROUND

	
4


	
 

	
6.1

	
Overview

	
4


	
 

	
 

	
6.1.1

	
Business

	
4


	
 

	
 

	
6.1.2

	
Competition

	
4


	
 

	
 

	
6.1.3

	
Investment in Healthology

	
5


	
 

	
 

	
6.1.4

	
Investment Company Act
  Considerations

	
5


	
 

	
 

	
6.1.5

	
History of Le@P
  Technology, Inc.

	
6


	
 

	
 

	
6.1.6

	
Employees

	
6


	
 

	
6.2

	
Description of Property

	
6


	
 

	
 

	
6.2.1

	
Investment in Real
  Property

	
6


	
 

	
6.3

	
Market for Common Equity
  and Related Stockholder Matters, and Small Business Issuer Purchases of
  Equity Securities

	
7


	
 

	
 

	
6.3.1

	
Dividends

	
7


	
 

	
 

	
6.3.2

	
Equity Compensation Plan
  Information

	
8


	
 

	
6.4

	
Management’s Plan of
  Operation

	
8


	
 

	
 

	
6.4.1

	
Business Strategy

	
8


	
 

	
 

	
6.4.2

	
Company Liquidity and Cash
  Requirements

	
8


	
 

	
 

	
6.4.3

	
Changes in Financial
  Condition and Results of Operations

	
9


	
 

	
 

	
 

	
6.4.3.1

	
Financial Condition at
  December 31, 2005 Compared to December 31, 2004

	
9


	
 

	
 

	
 

	
6.4.3.2

	
Results of Operations for
  the Year Ended December 31, 2005 Compared to the Year Ended December 31, 2004

	
9


	
 

	
6.5

	
Financial Statements and
  Supplementary Data

	
11


	
 

	
6.6

	
Funding Commitment

	
13


	
 

	
 

	
 

	
 

	
 

	
 


	
7.0 VALUATION APPROACH

	
14


	
 

	
7.1

	
Appraisal Definitions

	
14


	
 

	
7.2

	
Valuation Principles

	
14


	
 

	
7.3

	
Market Approach

	
18


	
 

	
 

	
7.3.1

	
Publicly Traded Guideline
  Companies

	
18


	
 

	
 

	
7.3.2

	
Prior Transaction Analysis

	
18


	
 

	
 

	
7.3.3

	
Mergers and Acquisitions
  Guideline Company Data

	
19


	
 

	
7.4

	
Asset Approach

	
20


	
 

	
 

	
7.4.1

	
Net Tangible Book Value

	
20


	
 

	
7.5

	
The Income Approach

	
21


	
 

	
 

	
7.5.1

	
Selection of Appropriate
  Capitalization and Discount Rates

	
21


	
 

	
 

	
7.5.2

	
Capitalized Returns
  (Single-Period Model)

	
23


	
 

	
 

	
7.5.3

	
Discounted Cash Flow
  Analysis

	
24











	
 

	
 

	
 

	
 

	
 

	
 


	
8.0 DETERMINATION OF VALUE

	
26


	
 

	
 

	
 

	
 

	
 

	
 


	
9.0 CONCLUSION

	
27


	
 

	
 

	
 

	
 

	
 

	
 


	
ASSUMPTIONS AND LIMITING
  CONDITIONS

	
28


	
 

	
 

	
 

	
 

	
 

	
 


	
APPRAISER’S CERTIFICATION

	
29


	
 

	
 

	
 

	
 

	
 

	
 


	
APPRAISER’S QUALIFICATIONS

	
30


	
 

	
 

	
 

	
 

	
 

	
 


	
APPENDIX I:

	
 

	
AUDITED FINANCIAL
  STATEMENTS FOR THE TWO YEARS ENDED DECEMBER 31, 2005

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
UNAUDITED FINANCIALS FOR
  THE TWO MONTHS ENDED FEBRUARY 28, 2006

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
SCHEDULE 14A INFORMATION
  STATEMENT FILED APRIL 11, 2005

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
APPENDIX II:

	
 

	
ECONOMIC AND PUBLIC SHELL
  TRANSACTION DATA

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
APPENDIX III:

	
 

	
FUNDING COMMITMENT AGREEMENT

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
APPENDIX IV:

	
 

	
SUPPORTING SCHEDULES

	
 















March 17, 2006


PRIVATE
AND CONFIDENTIAL


Board of Directors of 

Le@p Technology, Inc.

Mr. Tim Lincoln, Acting Principal Executive Officer 

5601 N. Dixie Hwy., Suite 411 

Ft. Lauderdale, FL 33334


Dear Mr. Lincoln:


Re: Fairness Opinion


1.0 INTRODUCTION


Stenton Leigh Valuation
Group, Inc. (“SL”) has been requested to provide Le@p Technology, Inc. (“LTI”
or the “Company”) with an independent Fairness Opinion of the decision
by the Board of Directors of LTI to terminate certain funding commitments made
by Dr. M. Lee Pearce to LTI on September 30, 1999, as amended on March 30,
2000, in conjunction with Dr. Pearce’s offer to convert his outstanding debt in
the approximate amount of $3.14 million into shares of the Company’s Class A
Common Stock at a price of $0.10 per share, which transactions shall take place
on or about March 15, 2006 (the “Valuation Date”) or any other date selected by
LTI’s Board of Directors, with our Opinion intended to assess fairness to the
minority shareholders of the Company.


The purpose of this
Independent Valuation Opinion is to be used as background information for use
by the Board of Directors of the Company in its decision to issue additional
shares for the conversion of Dr. Pearce’s debt.


This Valuation Opinion
Report (“Report”) is to be used only for the purpose outlined herein. This
Report should not otherwise be reproduced without the prior written consent of
SL.


1.1 Fair Value


	
   

  	
   

  	
   

  
	
   

  	
  Fair Value is defined in
  SFAS 123R as:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  The
  amount at which an asset (or liability) could be bought (or incurred) or sold
  (or settled) in a current transaction between willing parties, that is, other
  than in a forced liquidation or sale.

  	
   

  






	
   

  
	
  

  
	
   

  
	
  1900
  NW Corporate Blvd., Suite 305-West 

  Boca Raton, FL 33431 Phone (561) 241-9921



  











	
   

  	
   

  
	
  LEAP TECHNOLOGY, INC.

  	
   

  
	
  INDEPENDENT VALUATION OPINION

  	
  PAGE 2 

  
	
   

  	
   

  
	
  

  	
  

  



2.0 SUMMARY


According to the information
and documents reviewed, the explanations and forecasts provided to us, the
assumptions on the Company’s business at the Valuation Date, the other
assumptions set out in this Report, and subject to the restrictions and
qualifications noted herein, in our Opinion, the value conversion price of
$0.10/share is fair to the minority shareholders of LTI.


3.0 RESTRICTION AND DISCLAIMER


This Report is not intended
for general circulation or publication, nor is it to be reproduced or used for
any purpose other than that defined above without our written permission in
each specific instance. We do not assume any responsibility or liability for
losses occasioned users of this Report, other than those responsibilities or
liabilities outlined in our engagement letter with the Company. We reserve the
right to review all calculations included or referred to in this Report and, if
we consider it necessary, to revise our estimate in light of any new facts,
trends or changing conditions existing at any date prior to or at the Valuation
Date which become apparent to us subsequent to the date of this Report.


4.0 UNIFORM STANDARDS OF PROFESSIONAL APPRAISAL PRACTICE


Standards have established
the minimum basis for the development of and the reporting of an appraisal. The
standards are intended to aid users of appraisal services as well as set
minimum requirements for appraisal practitioners.


These standards are based on
the original Uniform Standards of Professional Appraisal Practice (“USPAP”)
developed in 1986-87 by the Ad Hoc Committee on Uniform Standards and
copyrighted in 1987 by The Appraisal Foundation. Prior to the establishment of
the Appraisal Standards Board in 1989, the USPAP had been adopted by major
appraisal organizations in North America and became recognized as the generally
accepted standards of appraisal practice.


Uniform Standards are the
rules under which professional appraisers will work. The Standards are
contained in a living document and, therefore, are subject to continual
updating and change. The appraisers are required to keep current with the
changes. A synopsis, brief reading or review of the standards will not suffice,
and an appraiser must study, understand, obtain clarification of, comply and
keep current with, and incorporate the standards into all appraisal practice.


The Appraisal Qualification
Board (“AQB”) has the function of establishing minimum qualifications for
appraisers for state licensing and certification. The AQB establishes
educational testing standards.


The Appraisal Standard Board
(“ASB”) has the function of promoting the acceptance and implementation of the
Uniform Standards of Professional Appraisal Practice. The ASB sets the rules
for developing an appraisal and communicating its results. USPAP sets the
professional standards for all appraisals and all disciplines.


Standards 9 and 10 pertain
to business valuations. Standards Rule 9-4 specifies the major requirements of
a business appraisal. This Report analyzes the appropriate approach to value
and as set out herein is the background information as required under USPAP.








	
   

  	
   

  
	
  LEAP TECHNOLOGY, INC.

  	
   

  
	
  INDEPENDENT VALUATION OPINION

  	
  PAGE 3

  
	
   

  	
   

  
	
  

  	
  

  



5.0 SCOPE OF REVIEW


The scope of our assignment
included discussions, meetings, reliance and review of the following:


	
   

  	
   

  	
   

  
	
   

  	
  A.

  	
  Audited financial
  statements for the two years ended December 31, 2005 and unaudited financials
  for the two months ended February 28, 2006 for LTI including Schedule 14A
  Information Statement filed April 11, 2005, all included in Appendix I;

  
	
   

  	
   

  	
   

  
	
   

  	
  B.

  	
  Information on the
  Company’s market and outlook at the Valuation Date; 

  
	
   

  	
   

  	
   

  
	
   

  	
  C.

  	
  Relevant external and
  internal public information including economic, investment, industry, public
  market and transaction data as a background against which to assess findings
  specific to the business were considered, included in Appendix II;

  
	
   

  	
   

  	
   

  
	
   

  	
  D.

  	
  Discussions with
  management of the Company; 

  
	
   

  	
   

  	
   

  
	
   

  	
  E.

  	
  The existence of major
  contracts both existing and anticipated in the very near future, if any, were
  discussed with management, and any features or factors that may have an
  influence on value; 

  
	
   

  	
   

  	
   

  
	
   

  	
  F.

  	
  Review of general
  financial market data that may affect the conversion price;

  
	
   

  	
   

  	
   

  
	
   

  	
  G.

  	
  Reviewed the Funding Commitment
  Agreement and the effect of conversion, included in Appendix III;

  
	
   

  	
   

  	
   

  
	
   

  	
  H.

  	
  Reviewed publicly
  available financial information and other data with respect to LTI, including
  the Annual Report on Form 10-KSB for the year ended December 31, 2004 and the
  Quarterly Report on Form 10-QSB for the nine months ended September 30, 2005;

  
	
   

  	
   

  	
   

  
	
   

  	
  I.

  	
  Reviewed and analyzed
  certain financial characteristics of publicly-traded companies that were
  deemed to have characteristics comparable to LTI; and, 

  
	
   

  	
   

  	
   

  
	
   

  	
  J.

  	
  Reviewed and discussed
  with public market participants transactions in public “Shell” companies,
  selected information is included in Appendix IV.



  











	
   

  	
   

  
	
  LEAP TECHNOLOGY, INC.

  	
   

  
	
  INDEPENDENT VALUATION OPINION

  	
  PAGE 4

  
	
   

  	
   

  
	
  

  	
  

  



6.0 BACKGROUND 


6.1 Overview 


6.1.1 Business


On January 10, 2005, the
Company disposed of its most significant investment in a Partner Company
–Healthology, Inc. (“Healthology”) – resulting in the receipt by the Company of
more than $3,300,000 in cash plus 17,347 shares of restricted common stock of
iVillage Inc. (“iVillage”). In light of this increase in funds available for
investment, on March 16, 2005 the Board of Directors of the Company decided to
actively seek opportunities for the Company to make new investments or
acquisitions, whether in health care, life sciences or other industries, but
only in the form of controlling interests in the companies invested in or
acquired or other types of investments which would not cause the Company to be
required to register as an investment company pursuant to the Investment
Company Act of 1940, as amended (the “’40 Act”). The Company may also make
other acquisitions or investments outside of its normal business plan in order
to achieve other objectives, including investments necessary to maintain its exclusion
from regulation as an investment company under the ’40 Act.


The Company has written off
its existing investments in its Partner Companies over the last few years. The
Company believes that the activities of its initial Partner Companies were
adversely affected by, among other things, the general economic slowdown in the
United States economy and the September 11, 2001 terrorist attacks on the
United States. 


At the present time, the
Company intends to maintain its status as a reporting company under the
Securities Exchange Act of 1934, as amended, and consequently, intends to make
all requisite filings, including its Annual Report on Form 10-KSB and Quarterly
Reports on Form 10-QSB.


As of December 31, 2005, the
only significant noncurrent assets of the Company are the 17,347 shares of
restricted common stock of iVillage received in connection with the disposition
of its investment in Healthology and its ownership of certain land 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
entered into a two year lease (with an additional one year option) of the
property to an unrelated party effective July 10, 2005. 


Prior to September 26, 2002,
Le@P Technology, Inc. (“Le@P” or the “Company”) focused on the acquisition of,
and strategic investments in, companies providing services in health care and
life sciences (with particular emphasis on information technology companies).
Emerging companies into which the Company invested during this period are
sometimes referred to herein as “Partner Companies.” On September 26, 2002,
after an ongoing reevaluation by management and the Board of Directors of the
Company’s operating strategy and in light of difficulties associated with
investment in emerging companies and the significant decline in market value or
failure of many of such companies, the Board of Directors determined to cease
for the foreseeable future investigating or consummating further investment and
acquisition opportunities.


6.1.2 Competition


Le@P operates in a highly
competitive, rapidly evolving business environment for the identification of
prospects for future acquisition or investment. Competitors include a wide
variety of companies, investment funds and other organizations, many with
greater financial and technical resources than Le@P. Competitors for
acquisition or investment included public and private venture capital firms and
private equity funds, mutual funds and private individuals.







	
   

  	
   

  
	
  LEAP TECHNOLOGY, INC.

  	
   

  
	
  INDEPENDENT VALUATION OPINION

  	
  PAGE 5

  
	
   

  	
   

  
	
  

  	
  

  



6.1.3 Investment in Healthology


Le@P’s first healthcare
information technology investment was completed in March 2000, with the
purchase of a 21% interest in Healthology, a privately held health-media
company. Le@P purchased approximately 3,200,000 shares of the Series A
Convertible Voting Preferred Stock (“Healthology Preferred Stock”) of
Healthology (the “Healthology Transaction”) for $3,200,000 in cash, (plus
approximately $300,000 of related costs) then representing an approximate 21%
interest in the issued shares of Healthology. Subsequently to the purchase of
the interest in Healthology, the Company transferred 160,573 shares of
Healthology Preferred Stock to third parties in satisfaction of certain
obligations of the Company.


As a result of a third
party’s investment in Healthology during August 2000, the Company’s equity
interest was reduced to approximately 15% of the issued and outstanding shares
of Healthology. On February 5, 2001, Le@P purchased 800,000 shares of
Healthology common stock for $1,000,000 pursuant to a put option which had been
granted to Healthology, increasing Le@P’s interest to approximately 18%.


In 2002, the Company wrote
off its investment Healthology (whose 2001 audited financial statements were
subject to a “going concern” qualification) due to the latter’s heavy
continuing operating losses and its inability to successfully raise additional
equity or debt financing or effect a merger or joint venture arrangement to
obtain additional sources of funds.


Throughout 2003 and 2004,
the Company continued to monitor its investment in Healthology, which finally
attained profitability in 2003. In the latter half of 2004, the Company
participated in negotiations for a possible sale of Healthology to iVillage,
which came to a successful conclusion in January 2005. On January 10, 2005, the
Company completed the disposition of its entire investment in Healthology
pursuant to: (i) a Stock Exchange and Merger Agreement dated as of January 7,
2005 among Healthology, iVillage, Virtue Acquisition Corporation and certain
stockholders of Healthology, including the Company (the “Merger Agreement”) and
(ii) a Stock Purchase Agreement, dated as of the same date (the “Stock Purchase
Agreement”), between the Company and Steven Haimowitz (“Haimowitz”), the Chief
Executive Officer and a principal stockholder of Healthology. The Merger
Agreement and the Stock Purchase Agreement provided for the acquisition by
iVillage of all the outstanding capital stock of Healthology. Pursuant to the
Merger Agreement, the 3,050,880 shares of Healthology Preferred Stock held by
the Company were converted into $3,050,880 in cash. Pursuant to the Stock
Purchase Agreement, the Company sold its 800,000 shares of Healthology common
stock to Haimowitz, who, pursuant to the Merger Agreement, exchanged a portion
of such Healthology common stock for 17,347 shares of iVillage restricted
common stock and received $347,413 in cash for the remainder of such common
stock. Haimowitz, as consideration for the sale of Healthology common stock
pursuant to the Stock Purchase Agreement, paid the $347,413 in cash and
transferred the 17,347 shares of iVillage restricted common stock (which were
assigned an aggregate value of $99,745 in the transaction) to the Company.


6.1.4 Investment Company Act Considerations


The exclusion on which the
Company is currently relying to avoid registration under the ‘40 Act provides
that no more than 45% of the value of the Company’s total assets (exclusive of
government securities and cash items) may consist of, and no more than 45% of
its net income after taxes may be derived from, investments in securities
(other than, among other things, government securities or securities of
wholly-owned and majority-owned subsidiaries and certain companies controlled
primarily by the Company). Since registration and regulation as an investment
company are inconsistent with the Company’s business objectives and plans, they
would have a materially adverse effect on the Company.







	
   

  	
   

  
	
  LEAP TECHNOLOGY, INC.

  	
   

  
	
  INDEPENDENT VALUATION OPINION

  	
  PAGE 6

  
	
   

  	
   

  
	
  

  	
  

  



The Company measures its
relative asset holdings as of the end of each fiscal quarter to determine that
it is not subject to registration and regulation under the ‘40 Act. The Company
believes that based on its current asset mix and the terms and relative values
of its investments, it is not an investment company.


If in the future the
relative values of the Company’s investment securities to total assets
otherwise adversely change, and the Company does not qualify for some other
exclusion or exemption from investment company status, the Company may be
required to take further significant business actions that are contrary to its
business objectives and plans in order to avoid registration and regulation as
an investment company. For example, as was the case with the acquisition of the
Real Property, the Company might be compelled to acquire additional assets that
it might not otherwise have acquired, be forced to forego opportunities to
acquire interests in companies that it might otherwise wished to have acquired
or be forced to sell or refrain from selling such interests or assets. In the
alternative or in addition, the Company might find it necessary to sell
investment securities for which there may be little or no market at prices and
on terms that the Company would not otherwise have considered to be
satisfactory.


6.1.5 History of Le@P Technology, Inc.


The Company was organized in
March 1997 under the laws of the State of Delaware under the name “Seal
Holdings Corporation”. In June 1997, a reincorporation merger was effected
pursuant to which Seal Fleet, Inc., a Nevada corporation and the predecessor to
the Company (“Seal Fleet”), was merged into the Company. Seal Fleet was
originally incorporated in November 1969 under the name “First National
Corporation”. On April 2, 1999 the name of the Company was changed to “OH,
Inc.” and on July 5, 2000 it was further changed to “Le@p Technology, Inc.”
When used in this report, the terms “Le@P” and the “Company” refer to Le@p
Technology, Inc. and its predecessor described above and their respective
subsidiaries.


6.1.6 Employees


Le@P currently has one
part-time employee.


6.2 Description of Property


On October 1, 1999, Le@P
entered into a lease with an affiliate of its majority stockholder, M. Lee
Pearce, MD (together with his affiliates, the “Majority Stockholder”) for 2,060
square feet of space for its corporate offices in Fort Lauderdale, Florida. The
lease expired December 31, 2004, and the Company is currently leasing the space
on a month-to-month basis.


6.2.1 Investment in Real Property


Effective September 28,
2001, the Majority Stockholder sold land and buildings (the “Real Property”) in
Broward County, Florida to the Company in exchange for notes payable. The
purchase price for the Real Property was determined by an independent
third-party appraisal. The notes payable consist of a short-term promissory
note in the amount of $37,500 due and paid in November 2001 and a long-term note
and mortgage (the “Long-Term Note”) in the principal amount of $562,500 due on
September 28, 2006, and bearing interest at the rate of 7% per annum due and
payable first on September 28, 2004 and monthly thereafter. On October 12,
2004, the Company paid accrued interest on the Long-Term Note of $118,125 and
continues to pay the regular monthly interest payments.


The Real Property is zoned
light industrial and consisted of approximately one and one-third acres and
three buildings that collectively consist of approximately 8,200 square feet.
The buildings were demolished in August 2003, and in connection therewith the
Company recognized an impairment loss equal to the book value of the buildings
in the amount of $75,000 in the three month period ended June 30, 2003. On
October







	
   

  	
   

  
	
  LEAP TECHNOLOGY, INC.

  	
   

  
	
  INDEPENDENT VALUATION OPINION

  	
  PAGE 7

  
	
   

  	
   

  
	
  

  	
  

  



21, 2004, the Company
entered into a two- month lease to rent the property to an unrelated party. The
Company recognized $4,000 in rental income under this lease that is reflected
as other income in the accompanying 2004 Consolidated Financial Statements. The
Company has no plans to sell or develop the Real Property. On June 15, 2005,
the Company entered into a two-year lease to rent the property to an unrelated party.
The Company recognized approximately $17,000 in rental income under the lease
for the year ended 1005 that is reflected as other income in the 2005
Consolidated Financial Statements.


6.3 Market for Common Equity and Related Stockholder Matters,
and Small Business Issuer Purchases of Equity Securities


The Company’s Class A Common
Stock is traded on the OTC Bulletin Board (“OTCBB”), under the symbol LPTC. The
following table sets forth the range of high and low bid prices per share of
the Company’s Class A Common Stock for each of the quarters during the years
ended December 31, 2003 and 2004, as reported on the OTCBB system. The
quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commission and may not represent actual transactions.


	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PRICE
  PERIOD

  	
   

  	
  HIGH

  	
   

  	
  LOW

  	
   

  
	
  

  	
   

  	
  

  	
   

  	
  

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2004

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  First Quarter

  	
   

  	
  $

  	
  .03

  	
   

  	
  $

  	
  .01

  	
   

  
	
  Second Quarter

  	
   

  	
   

  	
  .17

  	
   

  	
   

  	
  .03

  	
   

  
	
  Third Quarter

  	
   

  	
   

  	
  .15

  	
   

  	
   

  	
  .05

  	
   

  
	
  Fourth Quarter

  	
   

  	
   

  	
  .08

  	
   

  	
   

  	
  .03

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2005

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  First Quarter

  	
   

  	
   

  	
  .12

  	
   

  	
   

  	
  .08

  	
   

  
	
  Second Quarter

  	
   

  	
   

  	
  .13

  	
   

  	
   

  	
  .07

  	
   

  
	
  Third Quarter

  	
   

  	
   

  	
  .12

  	
   

  	
   

  	
  .09

  	
   

  
	
  Fourth Quarter

  	
   

  	
   

  	
  .104

  	
   

  	
   

  	
  .08

  	
   

  



There is no public market
for the Class B Common Stock or the Series B Preferred Stock, all of which are
issued to entities beneficially owned by the Majority Stockholder.


Holders


The number of stockholders
of record as of February 17, 2006, was 898 for the Class A Common Stock.


6.3.1 Dividends


The Company
has not paid and has no plans to declare or pay dividends, in cash or
otherwise, in the foreseeable future. Any changes in those plans in the future
will depend on earnings, if any, of the Company, its financial requirements and
other factors. Further, payment of dividends on the Company’s Class A Common
Stock will only be made after payment of current and accumulated dividends on
the Company’s Series B Preferred Stock. At December 31, 2005, dividends of
$1,368,500 were accumulated and not paid on the Series B Preferred Stock.







	
 

	
 


	
LEAP TECHNOLOGY, INC.

	
 


	
INDEPENDENT VALUATION OPINION

	
PAGE
  8 


	
 

	
 


	


	






6.3.2 Equity Compensation Plan Information


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Plan Category

	
 

	
Number of
  securities to

  be issued upon exercise

  of outstanding options,

  warrants and rights

	
 

	
Weighted
  average

  exercise price of

  outstanding options,

  warrants and rights

	
 

	
Number of
  securities

  remaining available for

  future issuance

	
 


	


	
 

	


	
 

	


	
 

	


	
 


	
Equity
  compensation plans approved by security holders

	
 

	
 

	
 

	
952,500

	
 

	
 

	
 

	
$

	
1.41

	
 

	
 

	
 

	
 

	
4,374,500

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Equity
  compensation plans not approved by security holders

	
 

	
 

	
 

	
500,000

	
 

	
 

	
 

	
$

	
1.41

	
 

	
 

	
 

	
 

	
—

	
 

	
 


	
 

	
 

	
 

	


	


	
 

	
 

	
 

	


	


	
 

	
 

	
 

	


	


	
 

	
 


	
TOTAL

	
 

	
 

	
 

	
1,452,500

	
 

	
 

	
 

	
$

	
1.41

	
 

	
 

	
 

	
 

	
4,374,500

	
 

	
 


	
 

	
 

	
 

	


	


	
 

	
 

	
 

	


	


	
 

	
 

	
 

	


	


	
 

	
 





Equity
compensation plans not approved by security holders consist of an aggregate of
500,000 shares. Three non-employee former directors of the Company received
300,000 options. The options were fully vested on the date of grant and expire
five years after the date of their issuance. One former employee received
200,000 options. These options were fully vested on their date of grant and
expire ten years after the date of their issuance.


6.4 Management’s Plan of Operation


6.4.1 Business Strategy


On
January 10, 2005, the Company disposed of its investment in Healthology,
resulting in the receipt by the Company of more than $3,300,000 in cash plus
17,347 shares of restricted common stock of iVillage Inc. In light of this
increase in funds available for investment, on March 16, 2005 the Board of
Directors of the Company determined to actively seek opportunities for the
Company to make new investments or acquisitions (whether in health care, life
sciences or other industries), but only in the form of controlling interests in
the companies invested in or acquired or other types of investments which would
not cause the Company to be required to register as an investment company
pursuant to the ’40 Act. 


The
Company may also make other acquisitions or investments outside of its normal
business plan in order to achieve other objectives, including investments
necessary to maintain its exclusion from regulation as an investment company
under the ‘40 Act.


At
the present time, the Company intends to maintain its status as a reporting
company under the Securities Exchange Act of 1934, as amended, and
consequently, intends to make all requisite filings, including its Annual
Report on Form 10-KSB and Quarterly Reports on Form 10-QSB.


6.4.2 Company Liquidity and Cash Requirements


Since
the fourth quarter of 1999, the Company has funded its operations and its
investments in its Partner Companies through proceeds from its Majority
Stockholder pursuant to the Funding Commitment of up to $10,000,000 and certain
other working capital loans. Through December 31, 2005, the Company had
received $8,475,000 of the Funding Commitment which has been converted into
1,614,284 shares of the Company’s Class A Common Stock. On January 10, 2005,
the Company received cash proceeds in excess of $3.3 million from the
disposition of its investment in Healthology.







	
 

	
 


	
LEAP TECHNOLOGY, INC.

	
 


	
INDEPENDENT VALUATION OPINION

	
PAGE
  9 


	
 

	
 


	


	






The
Company anticipates that the balance of $1.525 million remaining under the
Funding Commitment and the $3.3 million in proceeds from the Healthology
disposition will be sufficient to cover operating expenses through 2006. The
Company may seek to raise additional capital in order to make additional
investments or acquisitions beyond those that can be funded from the foregoing
resources or to engage in any other business activity.


Through
December 31, 2005, the Company received working capital loans totaling
$2,814,487 from the Majority Stockholder. These loans are evidenced by
unsecured notes, bearing interest at the prime rate and interest and principal
are due and payable in one sum on March 15, 2006. In September 2001 the Company
purchased Real Property in Broward County, Florida in exchange for notes
payable. The outstanding note bears interest at the rate of 7% per annum which
is paid monthly. The principal amount of $562,500 is due on September 28, 2006.


Because
the Company does not have any active business operations to generate cash flow
funding for operations once the Funding Commitment and funds received from the
disposition of Healthology are exhausted and/or the working capital loans mature,
the Company will need to raise additional cash. There can be no assurance that
the Company will be successful in such efforts. Any financing activities by the
Company could result in substantial dilution of existing equity positions and
increased interest expense. Transaction costs to the Company in connection with
any such activities may also be significant.


6.4.3 Changes in Financial Condition and Results of
Operations


The
discussion below relates to material changes in financial condition during the
year ended December 31, 2005 compared with December 31, 2004 and to material
changes in results of operations when comparing the years ended December 31,
2005 to December 31, 2004. All amounts in the discussion below are approximate.


6.4.3.1 Financial Condition at December 31, 2005 Compared to
December 31, 2004


Total
assets increased to $3.8 million as of December 31, 2005 compared to $591,003
as of December 31, 2004. The increase in total assets is primarily a result of
the approximately $3.3 million in cash proceeds and approximately $140,000 in
restricted iVillage, Inc. common stock that the Company received from the
Healthology sale.


Total
liabilities increased to $3.7 million as of December 31, 2005 compared to $3.5
million as of December 31, 2004. This increase in liabilities is primarily a
result of accrued interest of approximately $187,000.


6.4.3.2 Results of Operations for the Year Ended December 31,
2005 (“Fiscal 2005”) Compared to the Year Ended December 31, 2004 (“Fiscal
2004”)


Operating
expenses for fiscal 2005 were $345,757 compared to $320,180 for fiscal 2004, an
increase of approximately $26,000 from the year ended December 31, 2004.
Professional fees increased by approximately $46,000 during fiscal 2004 due to
the increased professional fees associated with the Healthology transaction.
General and administrative expenses decreased by approximately $42,000 during
fiscal 2005 primarily due to a decrease in the directors and officers’
insurance premium of approximately $9,000, a decrease in office rent of
approximately $11,000, a decrease in travel expenses of approximately $8,300,
and a decrease in doc stamp taxes on loans of approximately $7,000. As a result
of the foregoing, the Company’s operating loss for fiscal 2005 was $345,757
compared to an operating loss of $320,180 for fiscal 2004. 







	
 

	
 


	
LEAP TECHNOLOGY, INC.

	
 


	
INDEPENDENT VALUATION OPINION

	
PAGE
  10 


	
 

	
 


	


	






The
Company’s net income for fiscal 2005 was $2.98 million compared to a net loss
of $470,729 in fiscal 2004. The Company’s net income was primarily a result of
the $3.46 million gain on the sale of the Healthology stock and interest and
other income of approximately $97,000 which was received from interest of
approximately $73,000 earned on the Healthology proceeds and rental income of
approximately $17,000 on the Parkson property. 


Accounting
for the Impairment or Disposal of Long-Lived Assets


In
October 2001, the Financial Accounting Standards Board (“FASB”) issued
Statement No. 144, “Accounting for the Impairment or Disposal of Long-Lived
Assets.” FASB Statement No. 144 addresses significant issues relating to the
implementation of FASB Statement No. 121, “Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,” and develops a
single accounting model, based on the framework established in FASB Statement
No. 121 for long-lived assets to be disposed of by sale, whether such assets
are or are not deemed to be a business. FASB Statement No. 144 also modifies
the accounting and disclosure rules for discontinued operations. The standard
was adopted on January 1, 2002, and as a result, the Company recognized an
impairment loss equal to the book value of the buildings located on certain
land in Broward County, Florida in the three-month period ending June 30, 2003.
The impairment loss is included in the accompanying Consolidated Financial
Statements.


Off-Balance
Sheet Arrangements


As
of December 31, 2005, the Company did not have any material off-balance sheet
arrangements that have or are reasonably likely to have a material effect on
the current or future financial condition, results of operations, liquidity, or
capital resources.


Risk
Factors


Based
on the nature of the Company’s operations, these factors, risks and
uncertainties relate not only to the Company, but also to Partner Companies.


	
 

	
 

	
 


	
 

	
1.

	
The ability to raise
  capital,


	
 

	
 

	
 


	
 

	
2.

	
The ability to execute
  business strategy in a very competitive environment,


	
 

	
 

	
 


	
 

	
3.

	
The degree of financial
  leverage,


	
 

	
 

	
 


	
 

	
4.

	
The ability to control
  future operating and other expenses,


	
 

	
 

	
 


	
 

	
5.

	
Risks associated with the
  capital markets and investment climate,


	
 

	
 

	
 


	
 

	
6.

	
Risks associated with
  acquisitions and the integration thereof,


	
 

	
 

	
 


	
 

	
7.

	
Risks associated with the
  Company being considered an investment company under the Investment Company
  Act of 1940,


	
 

	
 

	
 


	
 

	
8.

	
Contingent liabilities,
  and


	
 

	
 

	
 


	
 

	
9.

	
Other risks
  referenced from time to time in the Company’s filings with the Securities and
  Exchange Commission.













	
 

	
 


	
LEAP TECHNOLOGY, INC.

	
 


	
INDEPENDENT VALUATION OPINION

	
PAGE
  11 


	
 

	
 


	






6.5 Financial Statements and Supplementary Data


Le@P Technology, Inc. and Subsidiaries


Consolidated Balance Sheets


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
December 31,

	
 

	
 

	
 

	
 


	
 

	
 

	
2005

	
 

	
2004

	
 


	
 

	
 

	


	


	


	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Assets

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Current
assets:

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Cash

	
 

	
$

	
3,133,203

	
 

	
$

	
23,088

	
 


	
Due from
related party

	
 

	
 

	
21,191

	
 

	
 

	
3,250

	
 


	
Prepaid
expenses and other current assets

	
 

	
 

	
9,167

	
 

	
 

	
31,917

	
 


	
 

	
 

	


	


	
 

	


	


	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Total current
assets

	
 

	
 

	
3,163,561

	
 

	
 

	
58,255

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Property and
equipment, net

	
 

	
 

	
516,798

	
 

	
 

	
532,048

	
 


	
iVillage, Inc.
investment, available for sale

	
 

	
 

	
139,123

	
 

	
 

	
—

	
 


	
Other
assets

	
 

	
 

	
700

	
 

	
 

	
700

	
 


	
 

	
 

	


	


	
 

	


	


	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Total
assets

	
 

	
$

	
3,820,182

	
 

	
$

	
591,003

	
 


	
 

	
 

	


	


	
 

	


	


	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Liabilities
and stockholders’ equity (deficit)

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Current
liabilities:

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Accounts
payable

	
 

	
$

	
16,798

	
 

	
$

	
13,205

	
 


	
Accrued
professional fees

	
 

	
 

	
62,355

	
 

	
 

	
50,000

	
 


	
Accrued
compensation and related liabilities

	
 

	
 

	
3,650

	
 

	
 

	
2,810

	
 


	
Short-term
notes payable to related party

	
 

	
 

	
3,376,987

	
 

	
 

	
—

	
 


	
Short-term
accrued interest payable to related party

	
 

	
 

	
284,894

	
 

	
 

	
324

	
 


	
 

	
 

	


	


	
 

	


	


	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Total current
liabilities

	
 

	
 

	
3,744,684

	
 

	
 

	
66,339

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Long-term
notes payable to related party

	
 

	
 

	
—

	
 

	
 

	
3,376,987

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Long-term
accrued interest payable to related party

	
 

	
 

	
—

	
 

	
 

	
97,951

	
 


	
 

	
 

	


	


	
 

	


	


	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Total
liabilities

	
 

	
 

	
3,744,684

	
 

	
 

	
3,541,277

	
 


	
 

	
 

	


	


	
 

	


	


	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Commitments
and contingencies

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Stockholders’ equity (deficit):

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Preferred
stock, par value $0.001 per share. Authorized 25,000,000 shares.
  Issued and outstanding 2,170 shares at December 31, 2005 and 2004

	
 

	
 

	
2,170,000

	
 

	
 

	
2,170,000

	
 


	
Class A common
stock, par value $0.20 per share. Authorized
  99,975,000 shares. Issued 33,766,053 shares at December 31, 2005 and 2004

	
 

	
 

	
6,753,211

	
 

	
 

	
6,753,211

	
 


	
Class B common
stock, par value $0.20 per share. Authorized, issued
  and outstanding 25,000 shares at December 31, 2005 and 2004

	
 

	
 

	
5,000

	
 

	
 

	
5,000

	
 


	
Additional
paid-in capital

	
 

	
 

	
26,401,913

	
 

	
 

	
26,401,913

	
 


	
Accumulated
deficit

	
 

	
 

	
(35,244,543

	
)

	
 

	
(38,230,938

	
)


	
Accumulated
other comprehensive income

	
 

	
 

	
39,377

	
 

	
 

	
—

	
 


	
Treasury
stock, at cost, 84,850 shares at December 31, 2005 and 2004

	
 

	
 

	
(49,460

	
)

	
 

	
(49,460

	
)


	
 

	
 

	


	


	
 

	


	


	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Total
stockholders’ equity (deficit)

	
 

	
 

	
75,498

	
 

	
 

	
(2,950,274

	
)


	
 

	
 

	


	


	
 

	


	


	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Total
liabilities and stockholders’ equity
  (deficit)

	
 

	
$

	
3,820,182

	
 

	
$

	
591,003

	
 


	
 

	
 

	


	


	
 

	


	


	
 












	
 

	
 


	
LEAP TECHNOLOGY, INC.

	
 


	
INDEPENDENT VALUATION OPINION

	
PAGE
  12 


	
 

	
 


	


	






Le@P Technology, Inc. and Subsidiaries


Consolidated Statements of Operations


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
Year ended December 31,

	
 


	
 

	
 

	
2005

	
 

	
2004

	
 


	
 

	
 

	


	
 

	


	
 


	
Revenue

	
 

	
$

	
—

	
 

	
$

	
—

	
 


	
 

	
 

	


	


	
 

	


	


	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Expenses:

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Salaries and
benefits

	
 

	
 

	
59,044

	
 

	
 

	
37,656

	
 


	
Professional
fees

	
 

	
 

	
130,955

	
 

	
 

	
85,235

	
 


	
General and
administrative

	
 

	
 

	
155,758

	
 

	
 

	
197,289

	
 


	
 

	
 

	


	


	
 

	


	


	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Total expenses

	
 

	
 

	
345,757

	
 

	
 

	
320,180

	
 


	
 

	
 

	


	


	
 

	


	


	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Operating loss

	
 

	
 

	
(345,757

	
)

	
 

	
(320,180

	
)


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Interest and other income

	
 

	
 

	
96,713

	
 

	
 

	
4,104

	
 


	
Interest expense

	
 

	
 

	
(226,102

	
)

	
 

	
(154,653

	
)


	
Gain on sale of
  Healthology, Inc.

	
 

	
 

	
3,461,541

	
 

	
 

	
—

	
 


	
 

	
 

	


	


	
 

	


	


	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Net income (loss)

	
 

	
$

	
2,986,395

	
 

	
$

	
(470,729

	
)


	
 

	
 

	


	


	
 

	


	


	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Net income (loss)
  attributable to common stockholders

	
 

	
$

	
2,769,395

	
 

	
$

	
(687,729

	
)


	
 

	
 

	


	


	
 

	


	


	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Basic net income (loss)
  per share:

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Net income
(loss) per share:

	
 

	
$

	
0.09

	
 

	
$

	
(0.01

	
)


	
 

	
 

	


	


	
 

	


	


	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Net income
(loss) attributable to common stockholders

	
 

	
$

	
0.08

	
 

	
$

	
(0.02

	
)


	
 

	
 

	


	


	
 

	


	


	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Diluted net income (loss)
  per share:

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Net income
(loss) per share

	
 

	
$

	
0.09

	
 

	
$

	
(0.01

	
)


	
 

	
 

	


	


	
 

	


	


	
 


	
Net income
(loss) attributable to common stockholders

	
 

	
$

	
0.08

	
 

	
$

	
(0.02

	
)


	
 

	
 

	


	


	
 

	


	


	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Basic weighted average shares
  outstanding

	
 

	
 

	
33,706,203

	
 

	
 

	
33,706,203

	
 


	
 

	
 

	


	


	
 

	


	


	
 


	
Diluted weighted average
  shares outstanding

	
 

	
 

	
35,158,703

	
 

	
 

	
33,706,203

	
 


	
 

	
 

	


	


	
 

	


	


	
 











	
 

	
 


	
LEAP TECHNOLOGY, INC.

	
 


	
INDEPENDENT VALUATION OPINION

	
PAGE
  13 


	
 

	
 


	


	



	
 

	
 





6.6  Funding
Commitment


Dr. Pearce has agreed to
convert his $3.14 million in outstanding debt into shares of the Company’s
Class A Common Stock at a price of $0.10/share and the termination of his prior
funding commitment agreement.







	
 

	
 


	
LEAP TECHNOLOGY, INC.

	
 


	
INDEPENDENT VALUATION OPINION

	
PAGE 14 


	
 

	
 


	


	






7.0  VALUATION
APPROACH


In order to determine the
fairness of the issuance of 31,400,000 restricted voting common shares of LTI,
representing a majority interest in LTI, to
be issued upon the conversion of $3.14 million in debt owed to Dr.
Pearce, we determined it was appropriate to determine the Fair Value of LTI at
the Valuation Date and compare this result to $0.10/share.  This section outlines the concept of Fair
Value and identifies the criteria and approach which has been applied in
providing an independent Valuation Fairness Opinion of the Fair Value of the
31,400,000 restricted voting common shares to be issued at the Valuation Date. 


7.1  Appraisal
Definitions


Fair Value


Fair Value is defined in
SFAS 123R as:


	
 

	
 


	
 

	
The
  amount at which an asset (or liability) could be bought (or incurred) or sold
  (or settles) in a current transaction between willing parties, that is, other
  than in a forced liquidation or sale.





7.2  Valuation
Principles


The fair market value of a
going concern business is generally a function of the income and capital
recovery returns that are expected in light of the risks associated with the
realization of these future returns and the prospects for growth in the
expected returns.  In most going-concern
situations the worth of a business is expressed as a capital sum through the
application of a capitalization factor or multiple to an estimate of current or
expected future earnings or cash flows, or through application of a discount
rate to expected future cash flows.


Asset values will constitute
the prime determinant of corporate worth where operations have historically
been unprofitable or earnings marginal in relation to invested capital and the
company may not be a going concern. In the case of a company which does not
possess sufficient earnings potential to warrant treatment as a going-concern,
assets are stated at their liquidation values.



There is no single correct
method or approach to valuation, and a comprehensive valuation report will
usually consider at least one method from each of the three broad valuation
approaches - the market approach, the asset approach and the income
approach.  In some instances, one or
more approaches to value may be either inappropriate or not applicable because
of the purpose of the appraisal, the type of business or interest being
appraised, or the lack of adequate information available to the appraiser.


The various methods often
arrive at value estimates based on different levels of control and
marketability. Therefore, the value estimates derived from the different
methods must be adjusted to a consistent level (i.e., marketable majority,
non-marketable majority, marketable minority, or non-marketable minority).  Finally, these results are then reconciled
to determine a final opinion of value for the entity being appraised.


During the course of this
appraisal, we considered various valuation methodologies, and have relied on
the chosen methods as being that most likely to be considered by the
hypothetical willing buyer and willing seller and hence, “mirror the
market.”  The chosen valuation method
was also considered for its applicability in this particular appraisal.  All relevant valuation approaches and
methods were considered in performing the valuation of the subject equity
interest.  The basic approaches to
valuing business interests and their consideration in this appraisal are
discussed below, as well as which approach(s) to value are relevant to this
particular valuation.







	
 

	
 


	
LEAP TECHNOLOGY, INC.

	
 


	
INDEPENDENT VALUATION OPINION

	
PAGE
  15 


	


	



	
 

	
 





Economic Outlook


Hampered by rising interest
rates and surging energy prices, the economy recorded its slowest growth in
three years during the fourth quarter of 2005.
Although the economy grew at a slower-than-predicted rate during the
final quarter of 2005, economists in the financial press feel strong spending
by businesses should bolster the nation’s economy in 2006, but a softening
housing market is likely to slow the overall pace of growth in the coming year.


According to Consensus
Economics, Inc., publisher of Consensus Forecasts - USA, the real GDP is
expected to grow by 3.6 percent in the first quarter of 2006 and by 3.3 percent
in the second quarter (percentage change from previous quarter, seasonally
adjusted annual rates). For 2006 and 2007, the real GDP growth rate is expected
to be 3.4 percent and 3.1 percent respectively (average percentage change on
previous calendar year). In the long term, the real GDP is expected to grow by
3.2 percent for 2007-2015 (average percentage change over previous year).


According to the survey,
consumer prices will increase 2.8 percent in 2006 and 2.3 percent in 2007.  In the long term, Consensus Forecasts - USA
also predicts consumer prices will grow by 2.4 percent for 2007-2015 (average
percentage change over previous year). Producer prices are expected to increase
3.3 percent in 2006 and 1.5 percent in 2007.


Interest rates on
three-month Treasury bills and 10-year Treasury bonds will rise over the next
year, according to the forecasters of Consensus Forecasts - USA.   According to the survey, three-month
Treasury bills will rise from 4.5 percent at the end of April 2006 to 4.7
percent by the end of January 2007.  The
yield on 10-year Treasury notes is expected to climb to 4.9 percent by the end
of April 2006 and to continue to increase to 5.1 percent by the end of January
2007. Both the three-month and the 10-year Treasury rates are expected to
experience an upward trend over the next 10 years. According to the survey, the
three-month Treasury rate will average 4.5 percent over 2007-2015.  The 10-year Treasury bond yield is expected
to average 5.4 percent for 2007-2010 and 5.5 percent for 2011-2015. 


The forecasters polled by
The Livingston Survey in December 2005 posted slightly more optimistic
expectations about the level of the S&P 500 index in 2006 and 2007 than
they did in June 2005 survey.  The
Livingston Survey, which reports the median value across the 42 forecasters on
the survey’s panel, predicts that the S&P 500 index will rise steadily
during the next two years. The December 8, 2005 survey estimates that the index
will reach 1300.0 by June 30, 2006. The June 2005 survey estimated the index
would only reach 1294.9 by June 30, 2006.
The index is projected to rise to 1343.4 by December 29, 2006 and 1419.9
by the end of 2007.  The growth rate in
after-tax corporate profits is expected to be 5.2 percent in 2006 followed by
2.7 percent in 2007.


The semiannual White House
economic forecast (December 1, 2005) predicted strong economic growth, healthy
job creation, and contained inflation. The administration’s new forecast calls
for the economy to grow 3.4 percent in 2006, down from 3.5 percent in 2005 and
consistent with the forecast issued in June 2005. The forecast, which predicted
moderate inflation for the next six years, called for CPI inflation to remain
at 2.4 percent during 2006 and beyond. The White House also predicted that the
nation would add about 176,000 jobs a month in 2006 and that the unemployment
rate would approximate 5.0 percent. The same source forecasts that the Federal
Reserve will raise interest rates in 2006, but they will remain fairly steady
during the next five years. Specifically, it forecasts that rates on
three-month Treasury bills will jump from 3.2 percent in 2005 to 4.2 percent in
2006 and 2007, but will then remain at 4.3 percent from 2008 through 2011. In
the fourth quarter, the FOMC raised the federal funds rate from 3.75 to 4.0
percent in November and to 4.25 percent in December. The Committee noted that
“Elevated energy prices and hurricane-related disruptions in economic activity
have temporarily depressed output and employment. However, monetary








	
 

	
 


	
LEAP TECHNOLOGY, INC.

	
 


	
INDEPENDENT VALUATION OPINION

	
PAGE
  16 


	
 

	
 


	


	






policy accommodation,
coupled with robust underlying growth in productivity, is providing ongoing
support to economic activity that will likely be augmented by planned
rebuilding in the hurricane-affected areas.” Respecting plans for future
interest rate actions, the policymakers estimated that further policy
structuring is probably going to be needed to keep sustainable growth and price
stability in balance. 1


Approaches Considered


It is widely recognized that
there is no one correct method of valuation, and that any valuation depends
upon an analysis of the relevant facts, common sense, and the informed judgment
of the appraiser. A full and complete appraisal requires the analyst to
implement all relevant valuation methods that are appropriate to the particular
valuation assignment. For this valuation, the appraiser has considered at least
one method under each approach.


Market Approach


The market approach suggests
that the value of the entity can be determined by examining the “market” that
has been established by historical experience. This approach is a general way
of determining a value indication for a business interest by using one or more
methods that compare the subject to similar businesses, or partial interests in
similar businesses, that have been sold. Examples of market approach methods
include the guideline company method and the analysis of prior transactions in
the ownership of the subject business. The business used for comparison must
serve as a reasonable basis for such comparison. In searching for guideline
companies, factors to be considered in judging whether a reasonable basis for
comparison exists include:


	
 

	
 


	
•

	
A sufficient similarity of
  qualitative and quantitative investment characteristics.


	
 

	
 


	
•

	
The amount and
  verifiability of data known about the similar investment.


	
 

	
 


	
•

	
Whether or not the price
  of the similar investment was obtained in an arm’s length transaction or was
  instead purchased in a forced or distressed sale.





Should comparable market
transaction data be located that is deemed to be reasonably similar,
comparisons are normally made through the use of valuation ratios. The
computation and use of these ratios should provide meaningful insight and guidance
about the subject, considering all relevant factors. Therefore, care should be
exercised with respect to issues such as:


	
 

	
 


	
•

	
The selection of the
  underlying data used to compute the valuation ratios.


	
 

	
 


	
•

	
The selection of the time
  periods and/or the averaging methods used for the underlying data.


	
 

	
 


	
•

	
The computation of the
  valuation ratios.


	
 

	
 


	
•

	
The timing of the price
  data used in the valuation ratios.


	
 

	
 


	
•

	
How the valuation ratios
  were selected and applied to the subject entity’s underlying data.





Finally, comparisons should
be made by using comparable definitions of the components of the valuation
ratios, such as earnings and cash flow.


	
 

	
 


	



	
1

	
“Part of the contents of
  the economic outlook section of this valuation report are quoted from the Economic
  Outlook UpdateTM 4Q 2005 published by
  Business Valuation Resources, LLC, © 2006, reprinted with permission. The
  editors and Business Valuation Resources, LLC, while considering the contents
  to be accurate as of the date of publication of the Update, take no responsibility for the information
  contained therein. Relation of this information to this valuation engagement
  is the sole responsibility of the author. of this valuation report.” See
  Appendix II for the full Economic Outlook Update 4Q 2005.











	
 

	
 


	
LEAP TECHNOLOGY, INC.

	
 


	
INDEPENDENT VALUATION OPINION

	
PAGE
  17 


	
 

	
 


	


	






Asset Approach


The asset approach,
sometimes referred to as the cost approach, is conceptually the least complex
of all approaches to consider and use as an appraisal guideline. The
asset-based approach is a general way of determining a value indication of a
business interest using one or more methods based directly on the value of the
assets owned by the business less the business’s liabilities. In theory, a
buyer would not pay more than it would cost to create an entity of equivalent
economic utility. Therefore, the concept is to adjust all assets and
liabilities, whether or not recorded on the entity’s balance sheet, to market
value. Generally, the entity is presumed to be a going concern and the
adjustments will reflect that premise. The asset approach typically does not
take into consideration the “intangible” value of the enterprise, unless these
assets are specifically identified and valued. The asset-based approach should
be considered in valuations conducted at the total entity level or involving a
business appraised on a basis other than a going concern. Valuations of
particular ownership interests in an entity may or may not require the use of
the asset-based approach.


Income Approach


The income approach develops
a value that arises from the presumed ability of the entity to produce a profit
or return on investment (“ROI”) for its owner. This approach is a general way
of determining a value indication of a business by using one or more methods
through which anticipated benefits are converted into value as of the valuation
date. Anticipated benefits are expressed in monetary terms and may be
reasonably represented by such items as dividends or various forms of earnings
cash flow.


Both capitalization of
benefits method and discounted future benefits methods are acceptable. In
capitalization of benefits methods, a representative benefit level is divided
or multiplied by an appropriate capitalization factor to convert the benefit of
value. In discounted future benefits methods, benefits are estimated for each
of several future periods. These benefits are converted to value by applying an
appropriate discount rate and using present value procedures.


Anticipated benefits are
converted to value by using procedures that consider the expected growth and
timing of benefits, the risk profile of the benefits stream, and the time value
of money.


The conversion of
anticipated benefits to value normally requires the determination of a
capitalization factor or discount rate. In that determination, the appraiser
should consider such factors as the level of interest rates, the rates of
return expected by investors on alternative investments, and the specific risk
characteristics of the anticipated benefits. Therefore, the two basic
components of the income approach are the measure of income and the required
rate of return.


In capitalization of
benefits methods, expected growth is incorporated in the capitalization factor.
In discounted future benefits methods, expected growth is considered in
estimated in the future stream of benefits.







	
 

	
 


	
LEAP TECHNOLOGY, INC.

	
 


	
INDEPENDENT VALUATION OPINION

	
PAGE
  18


	
 

	
 


	


	






MARKET APPROACH 


7.3 Market Approach


7.3.1 Publicly Traded Guideline Companies


One method within the market
approach is to search for transaction data for similar and relevant “guideline”
corporations. The appraiser must locate publicly traded companies that are
similar in nature and operations to the company being valued. When guideline
companies can be identified and are deemed to be applicable, the appraiser may
form comparisons between the performance of the group of guideline companies
and the subject business. These comparisons are known as indicators of value or
price multiples and may include Price/Earnings, Price/Cash Flow, Price/Sales
and Tangible Book Value Multiple. Since LTI sold its only operating business
unit in January 2005, there are no guideline companies to compare it to.
Non-operating entities will not have operating earnings, cash flow, or sales to
apply multiples to and therefore this approach cannot be applied to LTI.


7.3.2 Prior Transaction Analysis


The market approach suggests
that the value of the entity can be determined by examining the “market” that
has been established by historical experience. One method, usually applicable
to larger, publicly held corporations, is to refer to the value set by the most
recent trading of the stock by private and public investors who have made their
own determination as to value. In the instance of LTI the following is relevant
information:


	
 

	
 


	
•

	
In early 2006 an arm’s
  length investor, Dr. Fields, purchased 100,000 common shares of the Company
  for $0.10/share.


	
 

	
 


	
•

	
The following tables show
  the stock trading pattern of LTI since it has become a non-operating entity
  and over the last three years. For the two years prior to the sale of the
  operating business of LTI, the Company’s public stock publicly traded to a
  high of $0.12/share and very light volume, and a low of $0.02/share. Since
  the sale of Healthology in January 2005, LTI’s public stock has traded in a
  range of $0.07/share to a spike of $0.12/share on very light volume. Other
  than a few peaks, the stock traded below $0.10/share for the last three years
  as displayed on the following page.













	
 

	
 


	
LEAP TECHNOLOGY, INC.

	
 


	
INDEPENDENT VALUATION OPINION

	
PAGE
  19 


	
 

	
 


	


	












7.3.3 Mergers and Acquisitions Guideline Company Data


This market approach obtains and
analyzes
information from mergers and acquisitions of entire guideline companies, both
public and privately held. The sales and pricing information is then applied to
the subject company to determine its value. We performed a search of the Public
Stats transaction databases, since other databases such as Pratt’s Stats and
BizComps do not include transactions for non-public entities. Public Stats did
not have any transactions included for non-operating entities. However, we were
able to analyze transactions in the public markets with “Shell” companies and
determined the value of a quoted over the counter bulletin board (“OTCBB”)
shell to be equal to approximately $1.0 million plus the value of their net
tangible assets (selected information included in Appendix IV).


LTI had approximately $475,000
net tangible assets at the Valuation Date (prior to Dr. Pearce’s conversion)
and that would put the value of LTI at approximately $1.475 million or
approximately $0.044/share. See Appendix II for details of public market shell
transactions. 







	
 

	
 


	
LEAP TECHNOLOGY, INC.

	
 


	
INDEPENDENT VALUATION OPINION

	
PAGE
  20 


	
 

	
 


	


	



	
 

	
 





ASSET APPROACH


7.4 Asset Approach 


7.4.1 Net Tangible Book Value 


The net tangible book value
of a business is the value of that entity’s assets less the value of its
liabilities and intangibles. To calculate the net tangible book value of LTI,
we referred to the internally prepared financial statements for February 28,
2006. 


At the Valuation Date LTI had a negative net book value of
approximately $15,000, however, LTI management estimates the Fair Market Value
of the Parkson undeveloped land is approximately $1.0 million or $490,000 over
the carrying value of this asset.


The net book value does not reflect the market position
specific to LTI at the Valuation Date since LTI is not an asset intensive
business and is a going concern. As such, this is not a good indicator of fair
market value and the Net Tangible Book Value Approach will not be used to
determine the value of LTI. 







	
 

	
 


	
LEAP TECHNOLOGY, INC.

	
 


	
INDEPENDENT VALUATION OPINION

	
PAGE
  21


	
 

	
 


	


	



	
 

	
 





INCOME APPROACH


7.5 The Income Approach 


Capitalized Returns 


Under the capitalized
benefits method the normalized earnings or net cash flow for a single period
are capitalized by applying a formulated capitalization rate, calculated from
an appropriate discount rate, to arrive at the value of the business.


In valuation theory a
discount rate represents the total expected rate of return, stated as a
percentage, that a buyer or investor would demand on the purchase of an asset
given the level of inherent risk in the asset. The discount rate is not
utilized as a divisor or multiplier; instead, it is used to determine present
value factors that discount a future benefit stream to a present value.


The capitalized returns
appraisal method determines the value of a company based on the availability of
a stabilized stream of benefits to equity holders, or dividend paying capacity
and therefore results in a going concern value. The value is obtained by
measuring an anticipated income or cash flow level and then determining its
worth by using a rate of return which reflects the annual return an equity
investor should require for an investment in a business of the risk level of
LTI. This required return, or discount rate, is adjusted for the expected
long-term growth of the benefit stream.


7.5.1 Selection of Appropriate Capitalization and Discount
Rates


The cost of capital is the
total rate of return that a buyer or investor would demand from an ownership
interest in a company. This rate is either applied to the company’s expected
future earnings (discount rate) or is applied to the current or representative
earnings of the company (capitalization rate). The capitalization rate is
derived from the discount rate by subtracting a company’s expected long-term
average annual compound growth rate from its discount rate. It is used directly
in the value computation as a divisor, and it is applied to a single year
benefit stream. This single year benefit stream represents what the company can
be expected to generate in the future, based on historical normalized cash
flows. Determining a required rate of return on a closely held business is
perhaps the single most difficult step in the appraisal process.


The discount rate represents
the rate that would be required by an investor considering the inherent risks
of a particular company, as well as the rate of return available for
investments with similar risks in the marketplace. In other words, the discount
rate is the required rate of return an investor would consider necessary to
invest in an asset with the amount of risk comparable to that associated with
the company being valued.


Consistent with the
risk/reward relationship in almost any investment, the greater the investment
risk, the greater the required reward will be. The discount rate uses the
risk/reward relationship to convert sums of cash to be received in the future
into a present value.


In many cases, appraisers
use a build-up approach to arrive at an appropriate discount rate. The build-up
approach is based on the principle that each investment has various levels or
types of risk characteristic of other investments in the financial markets.
These components are added together to arrive at a “built-up” discount rate,
which is then used to compute the cost of the capital.







	
 

	
 


	
LEAP TECHNOLOGY, INC.

	
 


	
INDEPENDENT VALUATION OPINION

	
PAGE
  22


	
 

	
 


	


	



	
 

	
 





Components of the Cost of Capital


Risk Free Rate: The risk free rate of return an investor could
obtain from a low risk
guaranteed investment. Such a return is assumed to be approximately equal to
the yield to maturity of long-term Treasury bonds even though this investment
is not completely risk free. The rate of return on long-term U.S. Government
bonds is considered a good proxy for the risk-free rate of return. At December
31, 2005, the most practicable date prior to the Valuation Date, the rate of
return on a twenty year U.S. Government Treasury Bond was 4.61%.


Long-Horizon Equity Risk Premium: The equity risk premium is the
extra return
earned by an average equity investor in excess of the return on long-term
Treasury securities and was 7.2% through 2004. The source of this
information is the Ibbotson Associates Stocks, Bonds, Bills, and Inflation
Yearbook for 2004 (the 2005 Yearbook). The sum of the risk-free rate and the
equity risk premium results in the average market return for publicly traded
stocks.


Expected Micro-Capitalization Equity Size Premium: Historically,
more risk has been associated
with the typical small company than with a large, publicly traded company;
therefore, investors in a typical small business will demand a higher rate of
return. The Ibbotson Yearbook indicates that the difference between the total
returns on large stocks and small stocks was 9.9% through 2004. The
average small company in this study was listed on the New York Stock Exchange
and has a market capitalization of less than $98 million.


Specific Company Risk Premium: Other risk factors that must be
analyzed
include the Company’s industry, the Company’s financial risk, the
diversification of the Company’s operations, depth and quality of management
and other operational characteristics of the Company as denoted below.


Risk Factors


Profitability and Working Capital


Since LTI is a non-operating
entity and has Dr. Pearce to fund its growth, we have assigned 3% to account
for this risk factor, recognizing Dr. Pearce could decide to stop funding.


Competition


LTI is not operating, and
therefore faces no competition. We have assigned no increase to account for
this risk factor.


Determination of Weighted Average Cost of Capital
(“WACC”)


The calculation of the WACC
resulted in an estimated discount rate of 17.61% (refer to Appendix IV and the
following page).







	
 

	
 


	
LEAP TECHNOLOGY, INC.

	
 


	
INDEPENDENT VALUATION OPINION

	
PAGE
  23


	
 

	
 


	


	



	
 

	
 








	
 

	
 

	
 

	
 

	
 


	
Cost of
Equity Calculation

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
Risk Free rate
as of December 31, 2005 (rounded)

	
 

	
 

	
4.6

	
%


	
Plus equity
risk premium

	
 

	
 

	
7.2

	
%


	
Plus small
stock risk premium

	
 

	
 

	
9.9

	
%


	
Plus company
specific risk premium

	
 

	
 

	
3.0

	
%


	
 

	
 

	


	


	
 


	
Equals
discount rate (cost of capital) (rounded)

	
 

	
 

	
24.7

	
%


	
 

	
 

	


	


	
 








	
 

	
 

	
 

	
 

	
 


	
Weighted
Average Cost of Capital Calculation (“WACC”)

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
Cost of Equity
per above analysis

	
 

	
 

	
24.7

	
%


	
Cost of Debt -
Average of Moody’s Aaa and Baa

	
 

	
 

	
5.58

	
%


	
Percentage of
Equity - Average of Guideline Companies

	
 

	
 

	
66.7

	
%


	
Percentage of
Debt - Average of Guideline Companies

	
 

	
 

	
33.3

	
%


	
Assumed
Corporate Tax Rate

	
 

	
 

	
38.5

	
%


	
 

	
 

	
 

	
 

	
 


	
WACC = (66.7%
x 24.7%) + (33.3% x 5.58%) x 
(1-38.5%) = 

	
 

	
 

	
17.61

	
%


	
 

	
 

	


	


	
 





7.5.2 Capitalized Returns (Single-Period Model)


Under the capitalized
benefits method the normalized earnings or net cash flow for a single period
are capitalized by applying a formulated capitalization rate, calculated from
an appropriate discount rate, to arrive at the value of the business.


In valuation theory a
discount rate represents the total expected rate of return, stated as a
percentage, that a buyer or investor would demand on the purchase of an asset
given the level of inherent risk in the asset. The discount rate is not
utilized as a divisor or multiplier; instead, it is used to determine present
value factors that discount a future benefit stream to a present value.


The capitalized returns
appraisal method determines the value of a company based on the availability of
a stabilized stream of benefits to equity holders, or dividend paying capacity
and therefore results in a going concern value. The value is obtained by
measuring an anticipated income or cash flow level and then determining its
worth by using a rate of return which reflects the annual return an equity
investor should require for an investment in a business of the risk level of
LTI. This required return, or discount rate, is adjusted for the expected
long-term growth of the benefit stream.


The income that is to be capitalized is supposed to be normal
and recurring. LTI has no consistent history of profitability and therefore
this approach cannot be applied.







	
 

	
 


	
LEAP TECHNOLOGY, INC.

	
 


	
INDEPENDENT VALUATION OPINION

	
PAGE
  24


	
 

	
 


	


	



	
 

	
 





7.5.3 Discounted Cash Flow Analysis


The discounted cash flow
approach is favored by those involved in the commitment of capital to fixed
assets where reasonably reliable cash flow forecasts can be made. However,
future business cash flows are often difficult to project accurately.
Discounted cash flows are normally applied where future cash flows can be
reasonably and consistently forecasted. Historically, the discounted cash flow
approach to value has been used extensively on capital budgeting decisions. The
discounted cash flow approach is simply the present value of future cash flows.
Our value conclusion is based upon management’s forecasts. Taking into
consideration the factors set out above and the returns realized for various
investments as discussed above, we selected discount rates as previously
described as reflective of investor expectations for an investment into LTI at
the Valuation Date (refer to Appendix IV for Supporting Schedules). 


When computing net present
value it is appropriate to capitalize the final year of the forecast to reflect
the future cash flows to be realized, but since LTI is forecasting a loss in
the last year of the forecast, no terminal value exists..










	
 

	
 


	
LEAP TECHNOLOGY, INC.

	
 


	
INDEPENDENT VALUATION OPINION

	
PAGE
  25


	
 

	
 


	



	
 

	
 





LEAP

Discounted Cashflow Analysis

(000’s)







	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Fiscal Year

  Ended

	
 

	
EBITDA

	
 

	
Less: Depr.

  (2)

  & Non-Cash

	
 

	
EBIT

	
 

	
Less: (1)

  Taxes

	
 

	
Add:

  Application

  Of Loss

  Carry.

	
 

	
EBI

	
 

	
Add: Depr.

  (2)

  & Non-Cash

	
 

	
Less:

  Capital

  Expend.

	
 

	
Less:

  Working

  Cap. Needs

	
 

	
Net Post Tax

  Cash Flow

	
 

	
Present (3)

  Value

  17.61%

	
 

	
Total

  Present

  Value


	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	



	
2006
  (E)

	
 

	
(748,702

	
)

	
 

	
 

	
8,445

	
 

	
 

	
 

	
$

	
(757,147

	
)

	
 

	
(291,502

	
)

	
 

	
 

	
$

	
—

	
 

	
 

	
 

	
$

	
(465,645

	
)

	
 

	
 

	
$

	
8,445

	
 

	
 

	
 

	
$

	
10,000

	
 

	
 

	
 

	
$

	
—

	
 

	
 

	
 

	
$

	
(467,200

	
)

	
 

	
 

	
0.8998

	
 

	
 

	
 

	
$

	
(420,387

	
)


	
2007
  (E)

	
 

	
(947,874

	
)

	
 

	
 

	
—

	
 

	
 

	
 

	
 

	
(947,874

	
)

	
 

	
(364,931

	
)

	
 

	
 

	
$

	
—

	
 

	
 

	
 

	
 

	
(582,943

	
)

	
 

	
 

	
 

	
—

	
 

	
 

	
 

	
 

	
10,000

	
 

	
 

	
 

	
$

	
—

	
 

	
 

	
 

	
 

	
(592,943

	
)

	
 

	
 

	
0.7286

	
 

	
 

	
 

	
 

	
(432,018

	
)


	
2008
  (E)

	
 

	
(948,369

	
)

	
 

	
 

	
—

	
 

	
 

	
 

	
 

	
(948,369

	
)

	
 

	
(365,122

	
)

	
 

	
 

	
$

	
—

	
 

	
 

	
 

	
 

	
(583,247

	
)

	
 

	
 

	
 

	
—

	
 

	
 

	
 

	
 

	
10,000

	
 

	
 

	
 

	
$

	
—

	
 

	
 

	
 

	
 

	
(593,247

	
)

	
 

	
 

	
0.5900

	
 

	
 

	
 

	
 

	
(350,016

	
)


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Terminal Value of future cash
flows:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
—

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
—

	
 

	
 

	
 

	
 

	
—

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
—

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	


	



	
 


	
Total Value of Future Cash
Flows

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
$

	
(1,202,421

	
)


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	


	


	
 










	
 

	
 


	
(1)

	
Taxes
  at 38.5%


	
 

	
 


	
(2)

	
Includes
  depreciation


	
 

	
 


	
(3)

	
Utilizes
  mid-year discount rate











	
 

	
 


	
LEAP TECHNOLOGY, INC.

	
 


	
INDEPENDENT VALUATION OPINION

	
PAGE 26


	
 

	
 


	






8.0 DETERMINATION OF VALUE


In determining the combined
value of LTI, we analyzed the results of the various approaches to value. Below
are the results from our analyses:


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
Value/Share

	
 

	
Weighting

	
 

	
Total/Share

	
 


	
 

	
 

	


	
 

	


	
 

	


	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
I. MARKET

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Publicly Traded Guideline
  Companies:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Price/Earnings

	
 

	
N/A

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Price/Sales

	
 

	
N/A

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Price/Cash
Flow

	
 

	
N/A

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Net Book
Value

	
 

	
N/A

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Arm’s Length Transactions

	
 

	
$0.10

	
 

	
 

	
33.3

	
%

	
$

	
0.033

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Publicly Traded Stock

	
 

	
$0.07
  - $0.12

	
 

	
 

	
33.3

	
%

	
 

	
0.033

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Public Shells

	
 

	
$0.04

	
 

	
 

	
33.4

	
%

	
 

	
0.015

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
II. ASSET

	
 

	
N/A

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
III. INCOME

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Capitalized Returns

	
 

	
N/A

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Discounted Cash Flow

	
 

	
N/A

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	


	


	
 

	


	


	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Value Conclusion per Share

	
 

	
 

	
 

	
 

	
100.0

	
%

	
$

	
0.081

	
 


	
 

	
 

	
 

	
 

	


	


	
 

	


	


	
 





Each Market approach was
given approximately 33.3% weight each since in our Opinion, we believe an arm’s
length purchaser would consider each of these approaches to value equally.







	
 

	
 


	
LEAP TECHNOLOGY, INC.

	
 


	
INDEPENDENT VALUATION OPINION

	
PAGE 27


	
 

	
 


	






9.0 CONCLUSION


Based on the analysis
performed above and the various factors and assumptions considered necessary to
the development of this conclusion, the value of the shares of LTI at March 15,
2006 is approximately $0.081/share.
Since Dr. Pearce has agreed to convert his debt outstanding of approximately
$3.14 million to equity in the form of Class A Common Stock of LTI and the
termination of his prior Funding Commitment Agreement, and based on our
findings of the value of LTI of approximately $0.081/share, which value
reflects a total value versus a minority interest, as the block Dr. Pearce is
to receive, the Dr. Pearce transaction is Fair to the minority shareholders of
LTI in our Opinion.


Very truly yours,

STENTON LEIGH VALUATION GROUP, INC.



/s/ Milton H. Barbarosh

Milton H. Barbarosh,
CPA/ABV, CA/CBV, MBA, CBV, ASA, CVC

President







	
 

	
 


	
LEAP TECHNOLOGY, INC.

	
 


	
INDEPENDENT VALUATION OPINION

	
PAGE 28


	
 

	
 


	






ASSUMPTIONS AND LIMITING CONDITIONS


This appraisal incorporated
the following assumptions and limiting conditions:


	
 

	
 

	
 


	
 

	
1.

	
This appraisal was made,
  and this Fairness Opinion Report has been prepared, for the purposes stated
  in the letter section, “RESTRICTION AND DISCLAIMER.” Neither the Fairness
  Opinion Report nor the information that it contains should be used for any
  other purpose, and they are invalid if so used.


	
 

	
 

	
 


	
 

	
2.

	
This appraisal is based
  upon information obtained from sources that, with exceptions as noted herein,
  the appraiser believes to be reliable. However, the appraiser has not had the
  opportunity to confirm the validity of all information obtained. This
  includes technical information, competition analysis, market size and
  penetration which were provided by LTI management.


	
 

	
 

	
 


	
 

	
3.

	
The appraiser assumes no
  responsibility for matters of a legal nature affecting this Opinion. 


	
 

	
 

	
 


	
 

	
4.

	
The distribution of total
  value of the purchase price applies only for the purposes of this appraisal,
  and should not be used for any other purpose, and are invalid if so used.


	
 

	
 

	
 


	
 

	
5.

	
Neither this appraisal nor
  any part of it shall be used in connection with any other appraisal.


	
 

	
 

	
 


	
 

	
6.

	
The appraiser, by reason
  of performing this appraisal and preparing this Fairness Opinion Report, is
  not to be required to give testimony, nor to be in attendance in court or at
  any governmental hearing, with reference to the matters herein, unless prior
  arrangements have been made with the appraiser relative to such additional
  employment.


	
 

	
 

	
 


	
 

	
7.

	
There were no significant
  undisclosed liabilities, contingent liabilities, contractual obligations,
  commitments or litigation pending or threatened except as disclosed in the Company’s
  financial statements or reflected in our Fairness Opinion Report.


	
 

	
 

	
 


	
 

	
8.

	
There were no material,
  unusual or non-recurring expense or revenue items during the five-year period
  prior to the Valuation Date other than those reflected in this Fairness
  Opinion Report.


	
 

	
 

	
 


	
 

	
9.

	
There were no redundant
  assets which were not necessary for day-to-day operations other than those
  discussed in this Fairness Opinion Report.


	
 

	
 

	
 


	
 

	
10.

	
It is appropriate for us
  to use and rely upon the various information prepared by management as
  detailed in the scope section of this Fairness Opinion Report.


	
 

	
 

	
 


	
 

	
11.

	
The financial statements
  are accurate and can be relied on.


	
 

	
 

	
 


	
 

	
12.

	
This Valuation has been
  performed based on a going concern for the Company, therefore assuming it
  will obtain sufficient capital to continue operations. 





The Fair Value for any
specific asset changes from time-to-time as a result of possible changes in
internal and external conditions affecting the Company’s business and future
prospects. It should be appreciated that in accordance with the terms of our
engagement, a valuation determination for the LTI stock options relates to a
specific point in time, March 15, 2006. For purposes of our Valuation Opinion,
our review has not taken into account transactions or events that have taken
place subsequent thereto.







	
 

	
 


	
LEAP TECHNOLOGY, INC.

	
 


	
INDEPENDENT VALUATION OPINION

	
PAGE 29


	
 

	
 


	






APPRAISER’S CERTIFICATION


I certify that, to the best
of my knowledge and belief:


	
 

	
 


	
1.

	
That the statements and
  Opinions expressed in this Fairness Opinion Report are correct to the best of
  my knowledge and belief, subject to the assumptions and conditions stated and
  are my personal, unbiased professional analyses, opinions, and conclusions.


	
 

	
 


	
2.

	
That my engagement to
  perform this appraisal, and my compensation therefore, are independent of the
  value conclusion.


	
 

	
 


	
3.

	
That I have no present
  ownership interest in the Company appraised.


	
 

	
 


	
4.

	
That this appraisal has
  been performed in accordance with the Code of Ethics of The American Society
  of Appraisers my analyses, opinions, and conclusions were developed, and this
  Report has been prepared, in conformity with the Uniform Standards of
  Professional Appraisal Practice.


	
 

	
 


	
5.

	
That it is my Opinion as
  stated in this Fairness Opinion Report and no one other than in-house staff
  provided significant professional assistance to the person signing this
  Fairness Opinion Report. 








	  
	  
	  

	  
	 /s/ Milton H. Barbarosh

      
 	  

	  
	 Milton
        H. Barbarosh, CPA/ABV, CA/CBV, MBA, CBV, ASA, CVC
	  










	
 

	
 


	
LEAP TECHNOLOGY, INC.

	
 


	
INDEPENDENT VALUATION OPINION

	
PAGE 30



	
 

	
 


	







APPRAISER’S QUALIFICATIONS


Milton H. Barbarosh is a
business appraiser and consultant specializing in business valuations and
appraisals, business acquisitions and divestitures, and transactions in the
public marketplace.


His formal education and
business experience is outlined in the attached resume.


He is a member of The Institute
of Business Appraisers, a Senior Member of the American Society of Appraisers -
Business Valuations, a member of the Canadian Association of Chartered Business
Valuators, a Certified Public Accountant, Accredited in Business Valuations, a
Canadian Chartered Accountant - Expert in Business Valuations, a member of the
National Association of Certified Valuators and a Certified Real Estate
Appraiser, as well as other memberships, licenses, diplomas and degrees as more
fully described in the attached resume.









	
   

  
	
  MILTON
H. BARBAROSH

  
	
   

  
	
  


  



Professional Experience


	
   

  	
   

  	
   

  
	
  1989 to
  present

  	
   

  	
  Chief
  Executive Officer

  Stenton Leigh Group, Inc.

  Full service
  financial advisory company with merchant banking capability. Activities
  include advising on mergers, acquisitions, divestitures, public offerings,
  performing business valuations and fairness opinions, and implementing
  turnarounds, in addition to making select principal investments. Also, act as
  Director and Officer to various private and public companies.

  
	
   

  	
   

  	
   

  
	
  1987 to 1989

  	
   

  	
  Chief
  Executive Officer

  JW Charles Group, Inc.

  This Company
  was a holding company which included a 200 person New York Stock Exchange
  securities brokerage company (JW Charles Securities, Inc.) an investment
  banking company (JW Charles Capital Corp.), a 200 person real estate
  brokerage company (JW Charles Realty, Inc.), a mortgage insurance company, a residential
  development company, combined annual gross transactions of over $1.75
  billion. 

  As CEO, a
  major restructuring was performed which involved selling core businesses,
  reducing staff, closing offices and enhancing revenues.

  
	
   

  	
   

  	
   

  
	
  1986 to 1989

  	
   

  	
  President

  JW Charles Capital Corp.

  Commenced
  employment to establish a full service Investment Banking group providing
  acquisition, divestiture, valuation, corporate finance and financial
  restructuring services, and continued to oversee this area after becoming CEO
  of JW Charles Group in 1987.

  
	
   

  	
   

  	
   

  
	
  1983 to 1986

  	
   

  	
  Manager: Mergers
  & Acquisitions - Merchant Banking (Canada)

  The Royal Bank of Canada

  Commenced
  employment as Assistant Manager and was promoted to Manager in early 1985 as
  a result of achievements and the comprehensive nature of duties performed. Instrumental
  in establishing The Royal Bank’s Canadian M&A Group by applying
  professional and technical M&A expertise not previously available in this
  newly formed department. 

  As Manager,
  responsible for conducting and directing all aspects of M&A assignment
  including acquisitions, divestitures, valuations, financing, leveraged
  buyouts, strategic planning, etc., for assignments in numerous industries
  with transaction values ranging from millions to billions of dollars, and
  being both domestic and international in nature.

  
	
   

  	
   

  	
   

  
	
  1980 to 1983

  	
   

  	
  Manager:
  Mergers and Acquisitions Services

  Ernst & Young (formerly Clarkson
  Gordon)

  Commenced
  employment as Senior Staff Member and was promoted to Manager in June, 1981
  in recognition of outstanding performance.
  This included handling numerous high profile mergers and acquisitions
  and business valuations assignments.

  Part of the
  founding team of Clarkson Gordon/Woods, Gordon Mergers and Acquisitions
  Services Group. Responsible for conducting and directing all aspects of
  business valuation acquisitions, divestitures, financing and Foreign
  Investment Review Act assignments in various industries, including: oil &
  gas; manufacturing; securities brokerage; and high technology.

  
	
   

  	
   

  	
   

  
	
  1976 to 1979

  	
   

  	
  Audit Senior
  Accountant

  KPMG Peat Marwick (formerly Thorne Riddell
  and Co.)

  Responsible
  for the completion of all aspects of audits in a diverse number of
  industries. Given special assignment to the Bankruptcy & Insolvency Department receiving
  exposure to a large variety of clients and receivership and insolvency
  matters.

  











Educational/Professional
Designations


	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2005

  	
   

  	
  National
  Association of Real Estate Appraisers Certified Valuation Consultant (CVC)

  
	
   

  	
  2004

  	
   

  	
  American
  Institute of Certified Public Accountants (“AICPA”) Accredited in Business
  Valuation (ABV)

  
	
   

  	
  2003

  	
   

  	
  Certified
  Public Accountant (CPA) (Illinois and Florida)

  
	
   

  	
  2002

  	
   

  	
  Canadian
  Chartered Accountant - Expert in Business Valuations (CA-CBV)

  
	
   

  	
  1995

  	
   

  	
  National
  Association of Certified Valuators - Member

  
	
   

  	
  1989

  	
   

  	
  National
  Association of Real Estate Appraisers (RPM)

  
	
   

  	
  1989

  	
   

  	
  Certified
  Real Estate Appraiser (CREA)

  
	
   

  	
  1989

  	
   

  	
  Florida Real
  Estate Commission Salesman’s License

  
	
   

  	
  1987

  	
   

  	
  The
  Institute of Business Appraisers, Inc., Member (IBA)

  
	
   

  	
  1987

  	
   

  	
  Securities
  Licenses: (Inactive)

  
	
   

  	
   

  	
   

  	
  Series 7 -
  General license

  
	
   

  	
   

  	
   

  	
  Series 63 -
  State license

  
	
   

  	
   

  	
   

  	
  Series 24 -
  General principal

  
	
   

  	
  1987

  	
   

  	
  American
  Society of Appraisers

  
	
   

  	
   

  	
   

  	
  Senior
  Member of American Society of Appraisers

  
	
   

  	
   

  	
   

  	
  Business
  Valuations (ASA)

  
	
   

  	
  1985

  	
   

  	
  York University,
  Fellow Canadian Institute of Chartered Bankers (FICB)

  
	
   

  	
  1983

  	
   

  	
  University
  of Toronto, Member Canadian Association of Chartered Business Valuators (CBV)

  
	
   

  	
  1980

  	
   

  	
  York
  University, Masters in Business Administration (MBA)

  
	
   

  	
   

  	
   

  	
  Major in
  International Finance, with Distinction

  
	
   

  	
  1978

  	
   

  	
  Canadian
  Chartered Accountant Member in Ontario and Quebec (CA)

  
	
   

  	
  1977

  	
   

  	
  McGill
  University, Graduate Diploma in Public Accounting (DPA)

  
	
   

  	
  1976

  	
   

  	
  Concordia
  University, Bachelor of Commerce (B. Comm.)

  
	
   

  	
   

  	
   

  	
  Honors in
  Accountancy, with Distinction Gold Medal in Accountancy

  
	
   

  	
   

  	
   

  	
  Program
  completed on full tuition scholarship on accelerated basis.

  
	
   

  	
  1974

  	
   

  	
  Vanier
  College, Diploma in Business (CEGEP), Scholarship Winner

  



Memberships & Affiliations


	
   

  	
   

  
	
   

  	
  National
  Investment Bankers Association (NIBA)

  
	
   

  	
  The National
  Center for Employee Ownership - Consultant Member

  
	
   

  	
  American
  Bankruptcy Institute - Member

  
	
   

  	
  The ESOP
  Association

  
	
   

  	
  Presidential
  Business Commission - State of Florida (Congressional Committee)

  
	
   

  	
  Honorary
  Chairman - Republican Party Business Advisory Council

  
	
   

  	
  International
  Association of Consultants, Valuers and Analysts (IACVA)

  
	
   

  	
  Fleet Bank -
  Director on Florida Advisory Board

  
	
   

  	
  National
  Association of Certified Valuators

  
	
   

  	
  Young
  Presidents’ Organization

  
	
   

  	
  Chairman,
  International Mergers & Acquisitions Forum, Young Presidents’
  Organization

  
	
   

  	
  Association
  for Corporate Growth

  
	
   

  	
  International
  Business Brokers Association

  
	
   

  	
  Florida
  Business Brokers Association

  
	
   

  	
  American
  Society of Appraisers

  
	
   

  	
  The
  Institute of Business Appraisers

  
	
   

  	
  Florida Real
  Estate Association

  
	
   

  	
  York University
  Alumni

  
	
   

  	
  Concordia
  University Alumni

  
	
   

  	
  McGill
  University Alumni

  
	
   

  	
  University
  of Toronto Alumni

  
	
   

  	
  Institute of
  Canadian Bankers

  
	
   

  	
  Boca Raton
  Golf Club & Resort

  
	
   

  	
  National
  Association of Securities Dealers (NASD) - Membership Committee - Former
  Member

  
	
   

  	
  Treasurer
  and Board Member of Charitable and Religious Institutions

  



Publications


	
   

  	
   

  	
   

  
	
   

  	
  •

  	
  HARRIS-BENTLEY
  LIMITED, MERGERS AND ACQUISITIONS IN CANADA, founder and former editor

  
	
   

  	
   

  	
   

  
	
   

  	
  •

  	
  THE
  ACQUISITION DECISION, book published February, 1985 by The National Association
  of Accountants (United States) and the Society of Management Accountants of
  Canada (co-authored).

  
	
   

  	
   

  	
   

  
	
   

  	
  •

  	
  Author of
  numerous other short articles and lecturer.