UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549   FORM 10-KSB (Mark One)x
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934for the fiscal year ended December 31, 2006 oTRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from ___________________ to __________________ Commission file number: 0-566LE@P TECHNOLOGY, INC.
(Name of small business issuer in its charter) DELAWARE
65-0769296(State or other jurisdiction of 
  Incorporation or organization)
(I.R.S. Employer 
  Identification No.)5601 N. DIXIE HIGHWAYSUITE 411FORT LAUDERDALE, FLORIDA
33334(Address of principal executive offices)
(Zip Code)  Registrants
  telephone number:
(954)
  771-1772Securities
  registered under Section 12(b) of the Exchange Act:
NoneSecurities
  registered under Section 12(g) of the Exchange Act:
Class A
  Common Stock, par value $.01 Check whether
the issuer is not required to file reports pursuant to Section 13 or 15(d) of
the Exchange Act.o Check whether
the issuer (1) has filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes  x
No o Check if there
is no disclosure of delinquent filers in response to Item 405 of Regulation S-B
contained in this form, and no disclosure will be contained, to the best of
registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. x Indicate by
checkmark whether the registrant is a shell company as defined in Rule 12b-2 of
the Exchange Act. o The issuers
revenues for its fiscal year ended December 31, 2006 were $0. The aggregate
market value of the common equity held by non-affiliates as of March 15, 2007
was approximately $1,778,825   based on
the $0.95 closing bid price for the common stock quoted on the OTC Bulletin
Board on such date. For purposes of this computation, all executive officers
and directors of the registrant have been deemed to be affiliates. Such
determination should not be deemed to be an admission that such directors and
officers are, in fact, affiliates of the registrant. The number of
shares of Class A Common Stock of the issuer outstanding as of March 15, 2007
was 65,195,909. The number of shares of Class B Common Stock of the issuer
outstanding as of March 15, 2007 was 25,000. DOCUMENTS INCORPORATED BY REFERENCE Certain
portions of the issuer Proxy Statement for its Annual Meeting of Stockholders
pursuant to Regulation 14A of the Securities Exchange Act of 1934, which will
be filed with the Commission subsequent to the date hereof, are incorporated by
reference into Part III of this Form 10-KSB. Transitional
Small Business Disclosure Format: Yes o No
x    FORM 10-KSB INDEX

PAGEGENERALPART
  IITEM
  1.
DESCRIPTION
  OF BUSINESS
4ITEM
  2.
DESCRIPTION
  OF PROPERTY
6ITEM
  3.
LEGAL
  PROCEEDINGS
6ITEM
  4.
SUBMISSION
  OF MATTERS TO A VOTE OF SECURITY HOLDERS
7PART
  IIITEM
  5.
MARKET
  FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS, AND SMALL BUSINESS ISSUER
  PURCHASES OF EQUITY SECURITIES
7ITEM
  6.
MANAGEMENTS
  PLAN OF OPERATION
8ITEM
  7.
FINANCIAL
  STATEMENTS AND SUPPLEMENTARY DATA
11ITEM
  8.
CHANGES
  IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
11ITEM
  8A.
CONTROLS
  AND PROCEDURES
11PART
  IIIITEM
  9.
DIRECTORS,
  EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16
  (a) OF THE EXCHANGE ACT
12ITEM
  10.
EXECUTIVE
  COMPENSATION
12ITEM
  11.
SECURITY
  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
  MATTERS
12ITEM
  12.
CERTAIN
  RELATIONSHIPS AND RELATED TRANSACTIONS
12ITEM
  13.
EXHIBITS,
  FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
12ITEM
  14.
PRINCIPAL
  ACCOUNTANT FEES AND SERVICES
162

FORWARD-LOOKING STATEMENTS

Certain statements in this Annual Report on Form 10-KSB, other than
purely historical information, including estimates, projections, statements
relating to our business plans, objectives and expected operating results, and
the assumptions upon which those statements are based, are forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These forward-looking statements generally are
identified by the words believes, project, expects, anticipates,
estimates, intends, strategy, plan, may, will,
would, will be,
will continue, will likely result, and similar expressions. Forward-looking
statements are based on current expectations and assumptions that are subject
to risks and uncertainties which may cause the actual results of Le@P
Technology, Inc. (the Company or Le@P) to differ materially from these
forward-looking statements. Factors, risks and uncertainties that
could cause actual results to differ materially from those in the
forward-looking statements (the Cautionary Factors), are listed below. This
is not an exhaustive list of all Cautionary Factors.

*
The ability
  to raise capital (whether as debt or equity),*
The ability
  to execute its business strategy in a very competitive environment,*
The degree
  of financial leverage the Company may obtain and sustain,*
The
  Companys ability to control future operating and other expenses,*
Risks
  associated with the capital markets and investment climate,*
Risks
  associated with selecting acquisitions including deal selection, due
  diligence, pricing and terms,*
Risks
  associated with the integration of businesses the Company may acquire,*
Risks
  associated with the Company being considered an investment company under the
  Investment Company Act of 1940,*
Contingent
  liabilities, and*
Other risks
  referenced from time to time in the Companys filings with the Securities and
  Exchange Commission.All subsequent
written and oral forward-looking statements attributable to the Company or
persons acting on its behalf are expressly qualified in their entirety by these
Cautionary Factors. The Company does not undertake any obligations to release
publicly any revisions to such forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.

3

PART I

ITEM 1.
DESCRIPTION OF BUSINESSBusiness

On January 10,
2005, the Company disposed of its most significant investment  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 actively to
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).

On November 1,
2006, in order to advance this plan, the Company appointed Dr. Donald J.
Ciappenelli as the Chief Executive Officer of the Company and Chairman of its
Board of Directors. In the latter part of 2006 and continuing into early 2007,
the Company has vigorously pursued its strategy of acquiring and
commercializing synergistic technologies to develop advanced products, and
decided to relocate its headquarters in the Boston area to maximize the
Companys opportunities to find and develop new technologies and start-up
companies that fit its business model for rapid growth in important
markets.  On February 1, 2007, the
Company opened an office in Wellesley Hills, Massachusetts. The Company is
leasing the space on a month-to-month basis with monthly rental payments of
approximately $1,000 per month. In addition, on March 5, 2007 the Company hired
Dr. Howard Benjamin as Vice-President of Research and Development.

As of December
31, 2006, the Company had cash of approximately $3 million, primarily
constituting remaining proceeds from the Companys sale of its Healthology
stock in January 2005, and subsequent sale of its stock in iVillage (resulting
in cash proceeds of approximately $147,000). The Companys other significant
asset is 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 with an unrelated
party effective July 10, 2005. The tenant has been in default of the lease and
the Company is currently in the process of eviction proceedings with the tenant.

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
acquisitions or investments include public and private venture capital firms
and private equity funds, mutual funds and private individuals.

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 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. Subsequent 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%.

4

In 2002, the
Company wrote off its investment in Healthology (whose 2001 audited financial
statements were subject to a going concern qualification) due to
Healthologys continuing operating losses and its inability to raise additional
equity or debt financing successfully 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 (fair market value) in the
transaction) to the Company. The Company sold the iVillage common stock on June
20, 2006 for a realized gain of $47,704.

Investment Company Act Considerations

The Company
currently relies upon an exclusion from registration under the 40 Act
requiring that no more than 40% of the value of the Companys total assets
(exclusive of government securities and cash items) may consist of, and no more
than 40% 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 the Companys business objectives
and plan do not include registration and regulation as an investment company
under the 40 Act, the Companys failure to qualify for this exemption could
materially adversely affect the Company.

The Company
measures its relative asset holdings as of the end of each fiscal quarter to
determine that it continues to qualify for exclusion from 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 under the 40 Act.

The Companys
continuing efforts to qualify for this exclusion from registration and
regulation may cause it to take significant business decisions that adversely
affect its performance, in order to avoid the greater burdens of complying with
the 40 Act requirements. For example, these considerations could require the
Company to acquire or dispose of assets (at inopportune times and values), or
refrain from favorable acquisition or investment opportunities. The Company
experienced some of these adverse effects in its acquisition of the Real
Property.

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, the Company effected a
reincorporation merger 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 Company changed its name to OH,
Inc. and on July 5, 2000, again changed its name to Le@P Technology, Inc.
When used in this report, the terms Le@P and the Company refer to Le@P
Technology, Inc, its predecessors described above and their respective
subsidiaries.

5

Employees

Le@P currently
has two full-time and one part-time employees.

ITEM 2.
DESCRIPTION OF PROPERTYOn 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 subsequently the
Company leased the space on a month-to-month basis. The monthly rental payment
is approximately $4,100 per month. On March 15, 2007, the Company entered into
a new lease for the corporate offices in Fort Lauderdale, Florida. The lease is
effective April 1, 2007 and provides for (i) a term of one year, with (ii) two one-year extension options, and (iii)
monthly rental payments remaining at approximately $4,100 per month. On March 16, 2007,
the Majority Stockholder and his affiliates sold the office building to an
unrelated party. The Company entered into the new lease to preserve the space and rental rate under the new owners.

On February 1, 2007 the Company relocated its Headquarters and opened
its chief executive offices in Wellesley Hills, Massachusetts. The Company is
leasing the space on a month-to-month basis with monthly rental payments of
approximately $1,000 per month.

Investment in Real Property

Effective September 28, 2001, the Majority Stockholder sold 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 consisted 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 bore 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 continued to pay the regular monthly interest payments. On March 17, 2006,
the Company replaced the original long-term $562,500 note with a new long-term
note with principal of the same amount. The new note bears interest at the rate
of 7% per annum and the principal and interest are due in one lump on January
8, 2008.

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 June 15, 2005, the Company entered
into a two-year lease (with an additional one year option) to rent the property
to an unrelated party. The Company recognized approximately $17,000 and $18,000
in rental income under lease for the years 2005 and 2006, respectively,
that is reflected as other income in the accompanying consolidated financial
statements. The tenant is currently in default under the lease terms, and the
Company is in eviction proceedings to remove the tenant. Currently, the Company
has no plans to sell or develop the Real Property.

ITEM 3.
LEGAL PROCEEDINGSThe Company is involved in litigation relating to the offshore supply
business conducted prior to August 14, 1996 by certain subsidiaries of the
Company which are now inactive. The cases were filed against such subsidiaries
and other ship-owning companies based on the alleged exposure of 64 former
seamen to maritime asbestos and other toxic substances while working on vessels
operated by such companies as part of an industry wide series of similar
claims. On May 1, 1996, the claims against the Companys subsidiaries and the
other defendants were administratively dismissed subject to reinstatement
against one or more specific defendants upon a specific showing that a
plaintiff suffers from an asbestos-related disease and that he was exposed to
asbestos containing products on the vessels operated by such defendant(s).
Since such date, none of the cases against the Companys subsidiaries have been
reinstated. During the past five years, the Company has incurred between
approximately $600 and $1,400 per year in legal fees monitoring the status of
the claims against the Companys subsidiaries. The Company believes it carried
sufficient insurance coverage for any claims. At the present time, the Company
does not believe such cases are likely to have a material adverse impact upon
the Company. However, there can be no assurance that

6

one or more plaintiffs will not be successful in reinstating claims or
that the insurance coverage would cover such claims against the Companys
subsidiaries, which could result in the incurrence by the Companys
subsidiaries of material defense or settlement costs.

As of December 31, 2006, the Company is not involved in any other
claims or lawsuits.

ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY
  HOLDERSNo matter was submitted to a vote of security holders during the fourth
quarter of the year ended December 31, 2006.

PART II

ITEM 5.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS, AND SMALL
  BUSINESS ISSUER PURCHASES OF EQUITY SECURITIESThe 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, 2005 and 2006, 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

LOW2005First
Quarter

$
.12

$
.08Second
Quarter


.13


.07Third
Quarter


.12


.09Fourth
Quarter


.10


.082006First
Quarter


.10


.073Second
Quarter


.10


.033Third
Quarter


.15


.04Fourth
Quarter


.47


.04There 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 Company
has 730 Class A Common stockholders of record as of March 15, 2007.

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, 2006,
dividends of $1,585,500 were accumulated and not paid on the Series B Preferred
Stock.

7

Equity Compensation Plan Information

The following table sets forth summary information regarding equity
compensation plans approved and not approved by the Companys stockholders.

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 issuanceEquity compensation plans
approved by security holders



52,500



$
3.00




5,247,500Equity compensation plans not
approved by security holders



3,075,350



$
0.12




3,724,650TOTAL



3,127,850



$
0.17




8,972,150The Company has four equity compensation plans approved by its
stockholders: (i) 1999 Le@P Technology, Inc. Long Term Incentive Plan (1999
Plan), (ii) Le@P Technology, Inc. 1998 Incentive Option Plan (1998 Plan),
(iii) Le@P Technology, Inc. Incentive Option Plan (1997 Plan), and (iv) Le@P
Technology, Inc. Long Term Incentive Plan (1996 Plan and collectively, the
Plans). All options under the 1998 Plan, the 1997 Plan and the 1996 Plan had
been granted, however 5,247,500 options have expired or been forfeited leaving
5,247,500 available for future grants. The 1999 Plan has 2,947,500 options
available for future grants.

In November, 2006, the Companys Board of Directors adopted an
additional equity compensation plan, the 2006 Le@P Technology, Inc. Long Term
Incentive Plan (2006 Plan). An aggregate of 6,500,000 shares of Class A
Common Stock may be issued under the 2006 Plan, subject to stockholder approval
of the 2006 Plan at the Companys next Annual Meeting of Stockholders. Subject
to such stockholder approval, the Company has issued options to purchase up to
2,775,350 shares of Class A Common Stock under the 2006 Plan. In addition, the
Company granted non-employee directors options, granted on May 7, 2002, to
purchase up to 300,000 shares of Class A Common Stock not covered by any of the
Companys stockholder-approved equity compensation plans; these options expire
five years after the date of grant.

ITEM 6.
MANAGEMENTS PLAN OF OPERATIONBusiness Strategy

On January 10, 2005, the Company disposed of its investment in
Healthology, resulting in the Companys receipt of more than $3.3 million in
cash plus 17,347 shares of restricted common stock of iVillage, Inc. and a gain
of approximately $3.4 million (reflecting that the Company had previously
written off this investment). In light of this increase in funds available for
investment, on March 16, 2005 the Board of Directors of the Company determined
actively to 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.

On November 1, 2006, the Company appointed Dr. Donald J. Ciappenelli as
the Chief Executive Officer of the Company and Chairman of its Board of
Directors. In the latter part of 2006 and continuing into early 2007, the
Company has vigorously pursued its strategy of acquiring and commercializing
synergistic technologies to develop advanced products, and decided to relocate
its headquarters in the Boston area to maximize the Companys opportunities to
find and develop new technologies and start-up companies that fit its business
model for rapid

8

growth in important markets. In addition, on March 5, 2007 the Company
hired Dr. Howard Benjamin as Vice-President of Research and Development.

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.

Company Liquidity and Cash Requirements

Since the fourth quarter of 1999, the Company has funded its operations
and its investments through proceeds from affiliates of Dr. Pearce pursuant to
a commitment dated September 30, 1999 to provide or arrange for funding of up
to ten million dollars (the Funding Arrangement) and certain working capital
loans. Through March 15, 2006, the Company had received an aggregate of $8.475
million pursuant to this Funding Arrangement. On March 31, 2000, the Company
and Dr. Pearce agreed that all funds contributed pursuant to the Funding
Arrangement would be treated as a subscription for additional shares of the
Companys Class A Common Stock at the purchase price of $5.25 per share.
Accordingly, through March 15, 2006, an aggregate of 1,614,285 shares of Class
A Common Stock had been issued to Dr. Pearce or his affiliates pursuant to such
agreement.

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 are due and payable in one
sum on March 15, 2006. As of March 15, 2006, there was $3,141,471 of principal
and accrued interest due on these loans. These loans are separate from the $10
million Funding Arrangement.

On March 17, 2006 the Company entered into an Exchange and Termination
Agreement (Exchange Agreement) effective March 15, 2006, with the M. Lee Pearce 2005 Irrevocable Trust
(2005 Trust), of which the Majority Stockholder is the sole beneficiary,
whereby all principal and accrued interest due on the Notes was converted into
31,414,706 shares of the Companys Class A Common Stock (the Shares), at an
effective conversion price of $0.10 per share. The 2005 Trust also agreed to
extend the Maturity Date of the Notes until May 12, 2006 or the closing date of
this transaction (the Closing Date). The Notes continued to bear interest at
the prime rate until the Closing Date. In consideration, the Company agreed to
terminate the Funding Arrangement. One of the conditions to the Exchange
Agreement was that the Company reduce the par value of its Class A Common Stock
from $0.20 per share to $0.01 per share. The stockholders approved the
reduction in the par value of its Common Stock at the Annual Meeting held on
May 12, 2006.

On March 17, 2006, the Company
refinanced a note for its Real Property in Broward County, Florida. The
Companys subsidiary purchased the Real Property from Bay Colony Associates,
Ltd. (Bay Colony), an entity wholly-owned by the Majority Stockholder in
exchange for a mortgage and note payable in the amount of $562,500 (Note) on
September 28, 2001. The Note bore interest at the rate of 7% per annum, with
interest payable monthly after September 28, 2004, and the maturity date was
September 28, 2006. The Company paid accrued interest of $118,125 on October
12, 2004 and continued to make monthly interest payments thereafter. On March
17, 2006, Bay Colony agreed to extend the maturity date of the Note until
January 8, 2008 and to defer all interest payments until the maturity date.
Except for the foregoing, all other terms and conditions of the Note remain the
same and principal and interest on the Note are due in one lump sum payment on
January 8, 2008.

On January 10, 2005, the Company received cash proceeds in excess of
$3.3 million from the disposition of its investment in Healthology. The Company
anticipates that the $3.3 million in proceeds from the Healthology disposition
will be sufficient to cover operating expenses through 2007. 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.

Because the Company does not have any active business operations to
generate cash flow funding for operations once the funds received from the
disposition of Healthology are exhausted, 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

9

positions and increased interest expense. Transaction costs to the
Company in connection with any such activities may also be significant.

Changes in Financial Condition and Results of
Operations

The discussion below describes the Companys material changes in
financial condition as of December 31, 2006 compared with
December 31, 2005 and its material changes in results of operations when
comparing the year ended December 31, 2006 to the year ended December 31, 2005.
All amounts in the discussion below are approximate.

Financial Condition at December 31, 2006 Compared to December 31,
2005

The Companys total assets decreased to $3.5 million as of December 31,
2006 compared to $3.5 million as of December 31, 2005. The primary decrease in
total assets reflects the Companys proceeds of approximately $147,000 from the
sale of its investment in iVillage, Inc. common stock, which only partially
funded the Companys operating expenses of approximately $632,000 during 2006.

The Companys total liabilities decreased to approximately $783
thousand as of December 31, 2006 compared to $3.7 million as of December 31,
2005. This decrease in liabilities primarily reflects the March 17, 2006 exchange
agreement of the $3.14 million in notes and accrued interest payable for
31,414,706 shares of Class A Common Stock.

Results of Operations for the Year Ended December 31, 2006 (fiscal
2006) Compared to the Year Ended December 31, 2005 (fiscal 2005)

The Companys operating expenses for fiscal 2006 were $631,654 compared
to $345,757 for fiscal 2005, an increase of approximately $286,000 or 82.7%.
The increase primarily reflects increases in salaries and benefits, share-based
compensation expense and professional fees incurred in connection with the
search and retention of the Companys new C.E.O.

The Companys net loss for fiscal 2006 was $531,734 compared to a net
income of $2,986,395 for fiscal 2005. The Companys net loss for fiscal 2006
primarily reflects operating expenses of $631,654, interest expense of $100,207
offset by interest income of $152,423, and gain on sale of the investment in iVillage, Inc. of
$47,704. The Companys net income in fiscal 2005 primarily reflects the $3.46
million gain on the sale of the Healthology stock, interest and other income of
approximately $97,000, partially offset by interest expense and operating
expenses of approximately $226,000 and $350,000, respectively, in fiscal 2005.

Critical Accounting Estimates

The application of GAAP involves the exercise of varying degrees of
judgement. While the resulting accounting estimates will, by definition, not
always precisely equal the related actual results, some of these estimates
involve more judgment than others.

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.

10

Off-Balance Sheet Arrangements

As of December 31, 2006, 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.

ITEM 7.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAThe accompanying consolidated financial statements of the Company and
report of independent registered public accounting firm required by this item are filed herewith as
Exhibit F and are incorporated herein by this reference.

ITEM 8.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
  FINANCIAL DISCLOSURENone

ITEM 8A.
CONTROLS AND PROCEDURESThe Company maintains systems of disclosure controls and procedures and
internal controls and procedures for financial reporting designed to provide
reasonable assurance as to the reliability of its published financial
statements and other disclosures included in this Annual Report on Form 10-KSB.
The Board of Directors, operating through its Audit Committee, provides
oversight to the financial reporting process.

On December 31, 2006, an evaluation was performed under the supervision
and with the participation of the Companys Audit Committee and management,
including the Audit Committee Chairman and the Acting Principal Financial
Officer, of the effectiveness of the design and operation of the Companys
disclosure controls and procedures. Based on that evaluation, the Companys
audit committee and management, including the Audit Committee Chairman and
Acting Principal Financial Officer, concluded that the Companys disclosure
controls and procedures were effective as of December 31, 2006.

On February 1, 2007, the Companys Audit Committee conducted an
additional evaluation of the Companys internal controls and procedures. In
light of the addition of the new Chief Executive Officer, the audit committee
added some additional internal controls. There were no significant changes in
the Companys internal controls or in other factors that could significantly
affect these controls subsequent to the date of such evaluation. There were no
changes in the Companys internal controls that occurred during the fourth
fiscal quarter that has materially affected, or is reasonably likely materially
to affect, the Companys internal controls over financial reporting.

11

PART III

ITEM 9.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
  COMPLIANCE WITH SECTION 16 (A) OF THE EXCHANGE ACT.Given that the Company is not presently engaged in active operations
and has only recently engaged full time executive officers, the Company has
not yet adopted a Code of Ethics applicable to its officers, including its
principal executive officer, principal financial officer, principal accounting
officer or controller and any other persons performing similar functions.
Except as provided above, the information called for by Part III, Item 9,
regarding the Companys directors is included in its Proxy Statement relating
to its annual meeting of stockholders, which involves the election of
directors, and is incorporated herein by reference. The Proxy Statement will be
filed within 120 days of December 31, 2006, the Companys year-end.

ITEM 10.
EXECUTIVE COMPENSATIONInformation called for by Part III, Item 10, is included in the
Companys Proxy Statement relating to its annual meeting of stockholders, which
involves the election of directors, and is incorporated herein by reference.
The Proxy Statement will be filed within 120 days of December 31, 2006, the
Companys year-end.

ITEM 11.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
  RELATED STOCKHOLDER MATTERSInformation called for by Part III, Item 11, is included in the
Companys Proxy Statement relating to its annual meeting of stockholders, which
involves the election of directors, and is incorporated herein by reference.
The Proxy Statement will be filed within 120 days of December 31, 2006, the
Companys year-end.

ITEM 12.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONSInformation called for by Part III, Item 12, is included in the
Companys Proxy Statement relating to its annual meeting of stockholders, which
involves the election of directors, and is incorporated herein by reference.
The Proxy Statement will be filed within 120 days of December 31, 2006, the
Companys year-end.

ITEM 13.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
8-K.(a)(1)
Financial
  StatementsReference is
  made to the Index set forth on Page F-1 of this Annual Report on Form 10-KSB.(a)(2)
Financial
  Statement SchedulesAll
  schedules have been omitted because they are inapplicable or the information
  is provided in the consolidated financial statements, including the notes thereto.(a)(3)
Exhibits12

EXHIBIT

DESCRIPTION3.1.1

Certificate
  of Incorporation of Le@P Technology, Inc., filed March 20, 1997 with the
  Delaware Secretary of State (incorporated by reference to Appendix B to the
  Companys Definitive Proxy Statement for the Annual Meeting of Stockholders,
  as filed with the Securities Exchange Commission (the SEC) April 11, 1997).3.1.2

Certificate
  of Ownership and Merger of Seal Holdings Corporation filed with the Delaware
  Secretary of State on June 13, 1997(incorporated by reference to Exhibit
  3.1.2 to the Companys Annual Report on Form 10-KSB for the year ended
  December 31, 2005, as filed with the SEC on March 27, 2006).3.1.3

Certificate
  of Preferred Stock Designation of Le@P Technology, Inc. filed with the
  Delaware Secretary of State on March 23, 1999 (incorporated by reference to
  Exhibit 3.3 to the Companys Current Report on Form 8-K, as filed with the
  SEC on April 19, 1999).3.1.4

Certificate
  of Amendment to Certificate of Incorporation of Le@P Technology, Inc. filed
  June 21, 1999 with the Delaware Secretary of State (incorporated by reference
  to Exhibit 3.1.3 to the Companys Annual Report on Form 10-KSB for the year
  ended December 31, 1999, as filed with the SEC on March 30, 2000).3.1.5

Certificate
  of Designation, Preferences, Rights and Limitations of 10% Cumulative
  Non-Voting Series B Preferred Stock of Le@P Technology, Inc. filed with the
  Delaware Secretary of State on November 15, 1999 (incorporated by reference
  to Exhibit 4 to the Companys Quarterly Report on Form 10-QSB for the quarter
  ended September 30, 1999, as filed with the SEC on November 15, 1999).3.1.6

Certificate
  of Amendment to Certificate of Incorporation of Le@P Technology, Inc. filed
  July 5, 2000 with the Delaware Secretary of State (incorporated by reference
  to Exhibit 3 to the Companys Quarterly Report on Form 10-QSB for the quarter
  ended June 30, 2000, as filed with the SEC on August 14, 2000).3.2

Bylaws of
  Le@P Technology, Inc. (incorporated by reference to Appendix C to the
  Companys Proxy Statement for the Annual Meeting of Shareholders of Le@P
  Fleet, Inc. held May 14, 1997, as filed with the SEC on April 11, 1997).10.1

Funding
  Arrangement by M. Lee Pearce, M.D. (incorporated by reference to Exhibit 99.1
  to the Companys Current Report on Form 8-K, as filed with the SEC on October
  15, 1999).10.2

Subscription
  Agreement dated March 30, 2000 with M. Lee Pearce, M.D. (incorporated by
  reference to Exhibit 10.2 in the Companys Annual Report on From 10-KSB for
  the fiscal year ended December 31, 2000, as filed with the SEC on March 30,
  2001).10.3

1999 Long
  Term Incentive Plan (incorporated by reference to Exhibit B to the Companys
  Definitive Proxy Statement for its Annual Meeting of Stockholders as filed
  with the SEC on June 4, 1999).10.4

1998
  Incentive Option Plan (incorporated by reference to Exhibit A to the
  Companys Definitive Proxy Statement for its Annual Meeting of Stockholders
  as filed with the SEC on June 8, 1998).10.5

1997 Incentive
  Option Plan (incorporated by reference to Appendix A to the Companys
  Definitive Proxy Statement for its Annual Meeting of Shareholders as filed
  with the SEC on April 11, 1997).13

10.6

Amended 1996
  Long-Term Incentive Plan (incorporated by reference to Exhibit 10.3 to the
  Companys Form 10-Q for the quarter ended March 31, 1997 as filed with the
  SEC on May 15, 1997).10.7

Promissory
  Note dated September 28, 2001, in the principal amount of $712,500, executed
  by Parkson Property LLC (incorporated by reference to Exhibit 10.3 to the
  Companys Current Report on Form 8-K as filed with the SEC on October 18,
  2001).10.8

Promissory
  Note dated November 5, 2002, in the principal amount of $1,755,710, issued to
  the M. Lee Pearce 1998 Irrevocable Trust, replacing certain promissory notes
  issued in 2001 and 2002 (incorporated by reference to Exhibit 10.1 to the
  Companys Quarterly Report on Form 10-QSB for the quarter ended September 30,
  2002, as filed with the SEC on November 14, 2002).10.9

Promissory
  Note dated January 30, 2003, in the principal amount of $65,000 issued to the
  M. Lee Pearce 1998 Irrevocable Trust (incorporated by reference to Exhibit
  10.18 in the Companys Annual Report on Form 10-KSB for the fiscal year ended
  December 31, 2002 as filed with the SEC on March 31, 2003).10.10

Promissory
  Note dated March 14, 2003, in the principal amount of $75,000 issued to the
  M. Lee Pearce 1998 Irrevocable Trust (incorporated by reference to Exhibit
  10.19 in the Companys Annual Report on Form 10-KSB for the fiscal year ended
  December 31, 2002, as filed with the SEC on March 31, 2003).10.11

Promissory
  Note dated April 23, 2003, in the principal amount of $55,000 issued to the
  M. Lee Pearce 1998 Irrevocable Trust (incorporated by reference to Exhibit
  10.1 in the Companys Quarterly Report on Form 10-QSB for the quarter ended
  March 31, 2003, as filed with the SEC on May 15, 2003).10.12

Written
  Consent to Action dated May 6, 2003 extending the due date of a note to January
  15, 2005 (incorporated by reference to Exhibit 10.2 in the Companys
  Quarterly Report on Form 10-QSB for the quarter ended March 31, 2003, as
  filed with the SEC on May 15, 2003).10.13

Promissory
  Note dated June 30, 2003, in the principal amount of $71,000 issued to the M.
  Lee Pearce 1998 Irrevocable Trust (incorporated by reference to Exhibit 10.1
  in the Companys Quarterly Report on Form 10-Q for the quarter ended June 30,
  2003 as filed with the SEC on August 8, 2003).10.14

Promissory Note
  dated July 24, 2003, in the principal amount of $80,000 issued to the M. Lee
  Pearce 1998 Irrevocable Trust (incorporated by reference to Exhibit 10.2 in
  the Companys Quarterly Report on Form 10-Q for the quarter ended June 30,
  2003 as filed with the SEC on August 8, 2003).10.15

Promissory
  Note dated November 3, 2003, in the principal amount of $37,000 issued to M.
  Lee Pearce, M.D. (incorporated by reference to Exhibit 10.22 in the Companys
  Annual Report on Form 10-KSB for the fiscal year ended December 31, 2003, as
  filed with the SEC on March 22, 2004).10.16

Promissory
  Note dated December 8, 2003, in the principal amount of $30,000 issued to M.
  Lee Pearce, M.D. (incorporated by reference to Exhibit 10.23 in the Companys
  Annual Report on Form 10-KSB for the fiscal year ended December 31, 2003, as
  filed with the SEC on March 22, 2004).10.17

Promissory
  Note dated December 29, 2003, in the principal amount of $25,000 issued to M.
  Lee Pearce, M.D. (incorporated by reference to Exhibit 10.24 in the Companys
  Annual Report on Form 10-KSB for the fiscal year ended December 31, 2003, as
  filed with the SEC on March 22, 2004).10.18

Promissory
  Note dated March 11, 2004, in the principal amount of $2,295,464 issued to
  the M. Lee Pearce 1998 Irrevocable Trust (incorporated by reference to
  Exhibit 10.25 in the Companys Annual14

Report on
  Form 10-KSB for the fiscal year ended December 31, 2003 as filed with the SEC
  on March 22, 2004).10.19

Promissory
  Note dated March 11, 2004, in the principal amount of $93,022 issued to M.
  Lee Pearce, M.D. (incorporated by reference to Exhibit 10.26 in the Companys
  Annual Report on Form 10-KSB for the fiscal year ended December 31, 2003 as
  filed with the SEC on March 22, 2004).10.20

Promissory
  Note dated March 12, 2004, in the principal amount of $38,000 issued to M.
  Lee Pearce M.D. (incorporated by reference to Exhibit 10.27 in the Companys
  Annual Report on Form 10-KSB for the fiscal year ended December 31, 2003 as
  filed with the SEC on March 22, 2004).10.21

Promissory
  Note dated April 14, 2004, in the principal amount of $126,000 issued to M.
  Lee Pearce, M.D. (incorporated by reference to Exhibit 10.28 in the Companys
  Quarterly Report on Form 10-QSB for the quarter ended March 31, 2004, as
  filed with the SEC on May 12, 2004).10.22

Promissory
  Note dated July 6, 2004, in the principal amount of $23,000 issued to M. Lee
  Pearce, M.D. (incorporated by reference to Exhibit 10.1 in the Companys
  Quarterly Report on Form 10-QSB for the quarter ended June 30, 2004, as filed
  with the SEC on August 13, 2004).10.23

Promissory
  Note dated August 6, 2004, in the principal amount of $35,000 issued to M.
  Lee Pearce, M.D. (incorporated by reference to Exhibit 10.1 in the Companys
  Quarterly Report on Form 10-QSB for the quarter ended September 30, 2004, as
  filed with the SEC on November 15, 2004).10.24

Promissory
  Note dated October 11, 2004, in the principal amount of $140,000 issued to M.
  Lee Pearce, M.D. (incorporated by reference to Exhibit 10.2 in the Companys
  Quarterly Report on Form 10-QSB for the quarter ended September 30, 2004, as
  filed with the SEC on November 15, 2004).10.25

Promissory
  Note dated November 18, 2004, in the principal amount of $29,000 issued to M.
  Lee Pearce, M.D. (incorporated by reference to Exhibit 10.32 in the Companys
  Annual Report on Form 10-KSB for the fiscal year ended December 31, 2004, as
  filed with the SEC on March 30, 2005).10.26

Promissory
  Note dated December 2, 2004, in the principal amount of $35,000 issued to M.
  Lee Pearce, M.D. (incorporated by reference to Exhibit 10.33 in the Companys
  Annual Report on Form 10-KSB for the fiscal year ended December 31, 2004, as
  filed with the SEC on March 30, 2005).10.27

Stock
  Exchange and Merger Agreement dated as of January 7, 2005 among Healthology,
  Inc., iVillage, Inc., Virtue Acquisition Corporation and certain stockholders
  of Healthology, Inc., including the Company (incorporated by reference to
  Exhibit 10.34 in the Companys Annual Report on Form 10-KSB for the fiscal
  year ended December 31, 2004, as filed with the SEC on March 30, 2005).10.28

Stock
  Purchase Agreement dated as of January 7, 2005 between the Company and Steven
  Haimowitz (incorporated by reference to Exhibit 10.35 in the Companys Annual
  Report on Form 10-KSB for the fiscal year ended December 31, 2004, as filed
  with the SEC on March 30, 2005).10.29

Exchange and
  Termination Agreement dated March 17, 2006, effective as of March 15, 2006, between
  Le@P Technology, Inc. and the M. Lee Pearce 2005 Irrevocable Trust
  (incorporated by reference to Exhibit 10.1 in the Companys Current Report on
  Form 8-K as filed with the SEC on March 21, 2006).10.30

Fairness
  Opinion dated March 15, 2006 issued by Stenton Leigh Valuation Group, Inc. on
  March 16, 2006 (incorporated by reference to Exhibit 10.2 in the Companys
  Current Report on Form 8-K as filed with the SEC on March 21, 2006).15

10.31

Promissory
  Note dated March 17, 2006 in the principal amount of $562,500 executed by
  Parkson Property, LLC in favor of Bay Colony Associates, Ltd. (incorporated
  by reference to Exhibit 10.3 in the Companys Current Report on Form 8-K as
  filed with the SEC on March 21, 2006).10.32

Employment
  Agreement, dated as of November 1, 2006 by and between Le@P Technology, Inc.
  and Dr. Donald J. Ciappenelli (incorporated by reference to Exhibit 10.1 in
  the Companys Current Report on Form 8-K as filed with the SEC on November 3,
  2006)10.33

Employment
  Agreement, dated as of March 5, 2007 by and between Le@P Technology, Inc. and
  Dr. Howard Benjamin.**

Filed
  herewith,21

Subsidiaries of the
Registrant.*31.1

Certification of the Acting Principal Executive
Officer relating to
  Periodic Financial Report pursuant to Section 302 of the Sarbanes-Oxley Act
  of 2002.*31.2

Certification of the Acting Principal Financial
Officer relating to
  Periodic Financial Report pursuant to Section 302 of the Sarbanes-Oxley Act
  of 2002.*32.1

Certification of the Acting Principal Executive
Officer of Periodic
  Financial Report Pursuant to 18 U.S.C. Section 1350.*32.2

Certification of the Acting Principal Financial
Officer of Periodic
  Financial Report Pursuant to 18 U.S.C. Section 1350.*(b)

Reports on
  Form 8-KReport on Form
8-K filed March 21, 2006, relating to an event dated March 15, 2006. Pursuant
to Items 1.01 and 1.02, of such Report, the Registrant reported entry into a
material definitive agreement and termination of a material agreement.

Report on Form
8-K filed November 3, 2006, relating to an event dated October 31, 2006.
Pursuant to Item 1.01 and 5.02, of such Report, the Registrant reported the
appointment of its Chief Executive Officer and related compensatory
arrangements.

ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICESInformation
called for by Part III, Item 14, regarding principal accountant fees and
services, is included in the Companys Proxy Statement relating to its annual
meeting of stockholders, which involves the election of directors, and is
incorporated herein by reference. The Proxy Statement will be filed within 120
days of December 31, 2006, the Companys year-end.

16

SIGNATURES

Pursuant to
the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

LE@P
  TECHNOLOGY, INC.By:
/s/Donald J.
  CiappenelliDonald J.
  Ciappenelli,Chief
  Executive OfficerBy:
/s/ Mary E.
  ThomasMary E.
  Thomas,Acting
  Principal Financial OfficerDated:    March 28, 2007

Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the Company and in the
capacities and on the dates indicated.

SIGNATURE

TITLE

DATE/s/ Donald
  J. Ciappenelli

President,
  Chief Executive Officer and Director

March 28,
  2007Donald J.
  Ciappenelli/s/ Mary E.
  Thomas

Acting
  Principal Financial Officer and Director

March 28,
  2007Mary E.
  Thomas/s/ Mayra
  Diaz

Director

March 28,
  2007Mayra Diaz/s/ Jerome
  Fields, M.D.

Director

March 28,
  2007Jerome
  Fields, M.D./s/ Timothy
  Lincoln

Director

March 28,
  2007Timothy
  Lincoln17

Exhibit F
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Le@P Technology, Inc. and Subsidiaries

PAGEReport
  of Independent Registered Public Accounting Firm

F-2Consolidated
  Balance Sheets as of December 31, 2006 and 2005

F-3Consolidated
  Statements of Operations for the years ended December 31, 2006 and 2005

F-5Consolidated
  Statements of Stockholders Equity for the years ended December 31, 2006 and
  2005

F-6Consolidated
  Statements of Cash Flows for the years ended December 31, 2006 and 2005

F-7Notes
  to Consolidated Financial Statements

F-8F-1

REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM

To the Board
of Directors and Stockholders of
Le@P Technology, Inc.

We have
audited the accompanying consolidated balance sheets of Le@P Technology, Inc.
and Subsidiaries as of December 31, 2006 and 2005 and the related consolidated
statements of operations, stockholders equity, and cash flows for the years
then ended. These consolidated financial statements are the responsibility of
the Companys management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted
our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatements. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our
opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Le@P Technology,
Inc. and Subsidiaries as of December 31, 2006 and 2005, and the results of
their operations and their cash flows for the years then ended in conformity
with accounting principles generally accepted in the United States of America.

/s/ Berkowitz
Dick Pollack & Brant, LLP

Fort Lauderdale, Florida 
March 28, 2007

F-2

Le@P Technology,
Inc. and Subsidiaries

Consolidated
Balance Sheets

December
  31,2006

2005AssetsCurrent assets:Cash and cash equivalents

$
3,001,314

$
3,133,203Due from related
  party





21,191Prepaid expenses
  and other current assets


8,667


9,167Total current
  asset


3,009,981


3,163,561Property and
  equipment, net


513,392


516,798iVillage, Inc.
  investment, available for sale





139,123Other assets


170


700Total assets

$
3,523,543

$
3,820,182See
notes to consolidated financial statements.

F-3

Le@P Technology,
Inc. and Subsidiaries

Consolidated
Balance Sheets (continued)

December
  31,2006

2005Liabilities and stockholders
  equity (deficit)Current
  liabilities:Accounts payable

$
23,737

$
16,798Accrued
  professional fees


150,800


62,355Accrued
  compensation and related liabilities


15,184


3,650Short-term notes
  payable to related party





2,814,487Short-term
  accrued interest payable to related party





284,894Total current
  liabilities


189,721


3,182,184Long-term notes
  payable to related party


562,500


562,500Long-term
  accrued interest payable to related party


31,176


Total
  liabilities


783,397


3,744,684Commitments and
  contingenciesStockholders
  equity:Preferred stock,
  par value $0.001 per share.
  Authorized 25,000,000 shares. Issued and outstanding 2,170 shares at December 31, 2006 and 2005.


2,170,000


2,170,000Class A common
  stock, $0.01 and $0.20 par value per share at December 31, 2006 and December
  31, 2005, respectively. Authorized 149,975,000 and 99,975,000 shares at
  December 31, 2006 and December 31, 2005, respectively. Issued 65,280,759 and
  33,766,053 shares at December 31, 2006 and 2005, respectively.


652,808


6,753,211Class B common
  stock, $0.01 and $0.20 par value per share at December 31, 2006 and December
  31, 2005, respectively. 25,000 shares authorized, issued and outstanding at
  December 31, 2006 and 2005.


250


5,000Additional
  paid-in capital


35,742,825


26,401,913Accumulated
  deficit


(35,776,277
)

(35,244,543
)Accumulated
  other comprehensive income





39,377Treasury stock,
  at cost, 84,850 shares at December 31, 2006 and 2005


(49,460
)

(49,460
)Total
  stockholders equity


2,740,146


75,498Total
  liabilities and stockholders equity

$
3,523,543

$
3,820,182See
notes to consolidated financial statements.

F-4

Le@P Technology,
Inc. and Subsidiaries

Consolidated
Statements of Operations

Years ended
  December 31,2006

2005Revenue

$


$
Expenses:Salaries and
  benefits


119,141


59,044Share-based
  compensation expense


84,288


Professional
  fees


280,449


130,955General and
  administrative


147,776


155,758Total expenses


631,654


345,757Operating loss


(631,654
)

(345,757
)Interest and
  other income


152,423


96,713Interest expense


(100,207
)

(226,102
)Gain on sale of
  investment in iVillage, Inc.


47,704


Gain on sale of
 investment in Healthology, Inc.





3,461,541Income (loss)
  before provision for income taxes


(531,734
)

2,986,395Provision for
  income taxes





Net income
  (loss)

$
(531,734
)
$
2,986,395Net income
  (loss) attributable to common stockholders

$
(748,734
)
$
2,769,395Basic net income
  (loss) per share:Net income
  (loss) per share:

$
(0.01
)
$
0.09Net income
  (loss) attributable to common stockholders

$
(0.01
)
$
0.08Diluted net
  income (loss) per share:Net income (loss)
  per share

$
(0.01
)
$
0.09Net income (loss)
  attributable to common stockholders

$
(0.01
)
$
0.08Basic weighted
  average shares outstanding


53,930,426


33,706,203Diluted weighted
  average shares outstanding


53,930,426


35,158,703See
notes to consolidated financial statements.

F-5

Le@P Technology, Inc. and SubsidiariesConsolidated Statements of Stockholders Equity


|                                                                                                                                                                                                                                                |  |                    |       |                                    |   |                      |  |             |            |          |   |                                       |   |       |            |        |   |             |   |   |         |   |   |         |   |   |            |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ----- | ---------------------------------- | - | -------------------- |  | ----------- | ---------- | -------- | - | ------------------------------------- | - | ----- | ---------- | ------ | - | ----------- | - | - | ------- | - | - | ------- | - | - | ---------- | -
|                                                                                                                                                                                                                                                |  | Preferred 
  Stock |       | Class A and Class B
  Common Stock |   | Additional
  Paid-in |  | Accumulated |            | Treasury |   | Accumulated 
  Other 
  Comprehensive |   |       |           
|                                                                                                                                                                                                                                                |  | Shares             |       | Amount                             |   | Shares               |  | Par Value   |            | Capital  |   | Deficit                               |   | Stock |            | Income |   | Total       |  
|                                                                                                                                                                                                                                                |  |                   
|Balance at
  December 31, 2004                                                                                                                                                                                                                  |  |                    | 2,170 |                                    | $ | 2,170,000            |  |             | 33,791,053 |          | $ | 6,758,211                             |   | $     | 26,401,913 |        | $ | (38,230,938 | ) | $ | (49,460 | ) | $ |        |   | $ | (2,950,274 | )
|                                                                                                                                                                                                                                                |  |                    |       |                                    |   |                      |  |             |            |          |   |                                       |   |       |            |        |   |             |   |   |         |   |   |         |   |   |            |  
|Net income                                                                                                                                                                                                                                      |  |                    |      |                                    |   |                     |  |             |           |          |   |                                      |   |       |           |        |   | 2,986,395   |   |   |        |   |   |        |   |   | 2,986,395  |  
|                                                                                                                                                                                                                                                |  |                    |       |                                    |   |                      |  |             |            |          |   |                                       |   |       |            |        |   |             |   |   |         |   |   |         |   |   |            |  
|Unrealized gain
  on investment, net of tax                                                                                                                                                                                                     |  |                    |      |                                    |   |                     |  |             |           |          |   |                                      |   |       |           |        |   |            |   |   |        |   |   | 39,377  |   |   | 39,377     |  
|                                                                                                                                                                                                                                                |  |                    |       |                                    |   |                      |  |             |            |          |   |                                       |   |       |            |        |   |             |   |   |         |   |   |         |   |   |            |  
|Balance at
  December 31, 2005                                                                                                                                                                                                                  |  |                    | 2,170 |                                    |   | 2,170,000            |  |             | 33,791,053 |          |   | 6,758,211                             |   |       | 26,401,913 |        |   | (35,244,543 | ) |   | (49,460 | ) |   | 39,377  |   |   | 75,498     |  
|                                                                                                                                                                                                                                                |  |                    |       |                                    |   |                      |  |             |            |          |   |                                       |   |       |            |        |   |             |   |   |         |   |   |         |   |   |            |  
|Net loss                                                                                                                                                                                                                                        |  |                    |      |                                    |   |                     |  |             |           |          |   |                                      |   |       |           |        |   | (531,734    | ) |   |        |   |   |        |   |   | (531,734   | )
|                                                                                                                                                                                                                                                |  |                    |       |                                    |   |                      |  |             |            |          |   |                                       |   |       |            |        |   |             |   |   |         |   |   |         |   |   |            |  
|Issuance of
  100,000 Class A Common Stock shares for $0.10 per share, February 27, 2006                                                                                                                                                        |  |                    |      |                                    |   |                     |  |             | 100,000    |          |   | 20,000                                |   |       | (10,000    | )      |   |            |   |   |        |   |   |        |   |   | 10,000     |  
|                                                                                                                                                                                                                                                |  |                    |       |                                    |   |                      |  |             |            |          |   |                                       |   |       |            |        |   |             |   |   |         |   |   |         |   |   |            |  
|Issuance of
  31,417,706 Class A Common Stock shares on May 12, 2006 for conversion of short-term notes
  payable and accrued interest to related party  at $0.10 per share pursuant to an Exchange and Termination
  Agreement, March 12, 2006 |  |                    |      |                                    |   |                     |  |             | 31,414,706 |          |   | 314,147                               |   |       | 2,827,324  |        |   |            |   |   |        |   |   |        |   |   | 3,141,471  |  
|                                                                                                                                                                                                                                                |  |                    |       |                                    |   |                      |  |             |            |          |   |                                       |   |       |            |        |   |             |   |   |         |   |   |         |   |   |            |  
|Amendment to
  Articles of Incorporation changing the par value of Class A and B common
  stock from $0.20 to $0.01, May 12, 2006                                                                                                               |  |                    |      |                                    |   |                     |  |             |           |          |   | (6,439,300                            | ) |       | 6,439,300  |        |   |            |   |   |        |   |   |        |   |   |           |  
|                                                                                                                                                                                                                                                |  |                    |       |                                    |   |                      |  |             |            |          |   |                                       |   |       |            |        |   |             |   |   |         |   |   |         |   |   |            |  
|Issuance of
  2,775,350 stock options to purchase
  2,775,350 shares of  Class A
  Common Stock pursuant to Employment Agreement, October 31, 2006                                                                                              |  |                    |      |                                    |   |                     |  |             |           |          |   |                                      |   |       | 214,395    |        |   |            |   |   |        |   |   |        |   |   | 214,395    |  
|                                                                                                                                                                                                                                                |  |                    |       |                                    |   |                      |  |             |            |          |   |                                       |   |       |            |        |   |             |   |   |         |   |   |         |   |   |            |  
|Unrecognized share-based compensation on Stock options                                                                                                                                                                                          |  |                    |      |                                    |   |                     |  |             |           |          |   |                                      |   |       | (130,107   | )      |   |            |   |   |        |   |   |        |   |   | (130,107   | )
|                                                                                                                                                                                                                                                |  |                    |       |                                    |   |                      |  |             |            |          |   |                                       |   |       |            |        |   |             |   |   |         |   |   |         |   |   |            |  
|Reclassification
  adjustment for gains realized in net loss, net of tax                                                                                                                                                                        |  |                    |      |                                    |   |                     |  |             |           |          |   |                                      |   |       |           |        |   |            |   |   |        |   |   | (39,377 | ) |   | (39,377    | )
|                                                                                                                                                                                                                                                |  |                    |       |                                    |   |                      |  |             |            |          |   |                                       |   |       |            |        |   |             |   |   |         |   |   |         |   |   |            |  
|                                                                                                                                                                                                                                                |  |                    |       |                                    |   |                      |  |             |            |          |   |                                       |   |       |            |        |   |             |   |   |         |   |   |         |   |   |            |  
|Balance at
  December 31, 2006                                                                                                                                                                                                                  |  |                    | 2,170 |                                    | $ | 2,170,000            |  |             | 65,305,759 |          | $ | 653,058                               |   | $     | 35,742,825 |        | $ | (35,776,277 | ) | $ | (49,460 | ) | $ |        |   | $ | 2,740,146  |  
|                                                                                                                                                                                                                                                |  |                    |       |                                    |   |                      |  |             |            |          |   |                                       |   |       |            |        |   |             |   |   |         |   |   |         |   |   |            |  

See
notes to consolidated financial statements. F-6   Le@P Technology,
Inc. and Subsidiaries

Consolidated
Statements of Cash Flows

Years ended
  December 31,2006

2005Cash flows from operating
  activities:Net income
  (loss)

$
(531,734
)
$
2,986,395Adjustments to
  reconcile net income (loss) to net cash used in operating activities:Depreciation


6,646


15,250Gain on sale of
  investment in Healthology, Inc.





(3,461,541
)Gain on sale of
  investment in iVillage, Inc.


(47,704
)

Share-based
  compensation expense


84,288


Changes in
  operating assets and liabilities:Due from related
  party


21,191


(17,941
)Prepaid expenses
  and other  assets


1,030


22,749Accounts payable


6,939


3,593Accrued
  professional fees


88,445


12,355Accrued
  compensation and related liabilities


11,534


840Accrued interest
  payable to related party


73,323


186,619Net cash used in
  operating activities


(286,042
)

(251,681
)Cash flows from investing
  activities:Purchase of
  certificates of deposits





(3,000,000
)Proceeds on sale
  of certificates of deposits





3,000,000Purchase
  treasury bills


(2,706,221
)

Proceeds from
  sale of treasury bills


2,706,221


Net proceeds
  from sale of investment in iVillage, Inc.


147,449


Net proceeds from
  sale of investment in Healthology, Inc.





3,361,796Acquisition of
  equipment


(3,296
)

Net cash
  provided by investing activities


144,153


3,361,796Cash flows from financing activitiesProceeds from
  issuance of Class A Common Stock


10,000


Net cash
  provided by financing activities


10,000


Net change in
  cash and cash equivalents


(131,889
)

3,110,115Cash and cash equivalents at
  beginning of year


3,133,203


23,088Cash and cash equivalents at end of
  year

$
3,001,314

$
3,133,203Supplemental disclosure of cash
  flow information:Cash paid during
  year for:  Interest

$
18,634

$
42,827Cash paid during
  year for:  Income taxes

$


$
Schedule of noncash investing and
  financing activities:Conversion of
  short-term notes payable and accrued interest payable to related party for
  Class A Common stock

$
3,141,471

$
Gain on sale of
  investment in Healthology, Inc.

$


$
3,461,541Less: Net amount
  received in cash

$


$
(3,361,796
)Amount received
  in form of iVillage, Inc. common stock

$


$
99,745Issuance of stock options for share based compensation

$
214,395

$
See notes to consolidated financial statements.

F-7

Le@P Technology, Inc.
and SubsidiariesNotes to Consolidated Financial Statements

1. The Company

Le@P
Technology, Inc. and Subsidiaries (Le@P or the Company), formerly known as
Seal Holdings Corporation and Subsidiaries, is a holding company that was formerly
focused on the acquisition of, and strategic investments in, companies
providing services in health care and life sciences (with particular interest
in information technology companies). 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. On September 26, 2002, the Board of Directors determined to
cease for the foreseeable future investigating or consummating further
investment and acquisition opportunities.

On January 10,
2005, the Company disposed of its investment in 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). The Company sold the iVillage common stock on June 30, 2006
for a gain of $47,704. In light of this increase in funds available for
investment, on March 16, 2005 the Board of Directors of the Company determined
to actively to seek opportunities for the Company to make new investments or
acquisitions, but only in the form of controlling interests in the companies
invested in or acquired or other types of investments which would not require
the Company to register as an investment company pursuant to the Investment
Company Act of 1940, as amended (the 40 Act).

In the latter
part of 2006 and continuing into early 2007, the Company has vigorously pursued
its strategy of acquiring and commercializing synergistic technologies to
develop advanced products, and decided to relocate its headquarters in the
Boston area to maximize the Companys opportunities to find and develop new
technologies and start-up companies that fit its business model for rapid
growth in important markets.

2. Summary of
Significant Accounting Policies

Consolidation

The
accompanying consolidated financial statements (the financial statements)
include the accounts of Le@P Technology, Inc. and its wholly-owned
subsidiaries. All significant intercompany accounts and transactions are
eliminated in consolidation.

Income Taxes

The Company
accounts for income taxes under FASB Statement No. 109, Accounting for Income
Taxes. Deferred income tax assets and liabilities are determined based upon
differences between the financial reporting and tax basis of assets and liabilities
and are measured using the enacted tax rates and laws that will be in effect
when the differences are expected to reverse.

F-8

Recent Accounting
Pronouncements

In September
2006, FASB Statement No. 157, Fair Value Measurements was issued. FASB
Statement No. 157 defines fair value, establishes a framework for measuring
fair value in accordance with accounting principles generally accepted in the
United States of America, and expands disclosures about fair value
measurements. FASB No. Statement 157 is effective January 8, 2008. The Company
is in the process of evaluating the impact that FASB Statement No. 157 will
have on its financial statements.

In June 2006,
FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxes  an interpretation of FASB Statement No. 109 (FIN 48). FIN 48
clarifies the accounting for uncertainty in income taxes by prescribing a
recognition threshold and measurement attribute for the financial statement
recognition and measurement of a tax position taken or expected to be taken in
a tax return. The interpretation also provides guidance on derecognition,
classification, interest and penalties, accounting in interim periods, and
disclosure. FIN 48 is effective January 1, 2007. The Company is in the process
of evaluating the impact that FIN 48 will have on its financial statements.

In February
2006, the FASB issued FASB Statement No. 155, Accounting for Certain Hybrid
Financial Instruments, which amends FASB Statement No. 133, Accounting for
Derivative Instruments and Hedging Activities (SFAS 133) and FASB Statement
No. 140, Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities. FASB Statement No. 155 simplifies the
accounting for certain derivatives embedded in other financial instruments by allowing
them to be accounted for as a whole if the holder elects to account for the
whole instrument on a fair value basis. FASB Statement No. 155 also clarifies
and amends certain other provisions of FASB Statement No. 133 and FASB
Statement No. 140. FASB Statement No. 155 is effective for all financial
instruments acquired, issued or subject to remeasurement event occurring after
January 1, 2007. The Company does not expect the adoption of FASB Statement No.
155 to have a material impact on its financial statements.

Cash and Cash
Equivalents

The Company
considers all highly liquid investments purchased with an original maturity of
three months or less to be cash equivalents.

Property and Equipment

Property and
equipment are recorded at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the assets which range
from 3-9 years.

Use of Estimates

The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that effect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

Financial Instruments

The Companys
financial instruments primarily consisting of cash, due from related parties,
investments, accounts payable, accrued professional fees, accrued compensation and related liabilities
approximate fair value as of December 31, 2006 and 2005. Notes payable to related parties are not arms-length transactions.

F-9

Stock Based Compensation

On January 1,
2006, the Company adopted the fair value recognition provisions of FASB
Statement No. 123R (Share-Based Payment). Prior to January 1, 2006, the
Company accounted for share-based payments to employees under the recognition
and measurement provisions of Accounting Principles Board Opinion (APB) No.
25, and related interpretations, as permitted by FASB Statement No. 123
(Accounting for Stock-Based Compensation).

The Company
adopted FASB Statement No. 123R using the modified prospective transition
method. Under this transition method, compensation cost for all share-based
payments granted subsequent to January 1, 2006 is based on the grant-date fair
value estimated in accordance with the provisions of FASB Statement No. 123R.
The results for periods prior to January 1, 2006 are not required to be
restated.

There is
no pro forma effect on net loss from outstanding options if compensation costs
had been recognized in accordance with FASB Statement No. 123, for the year ended December 31, 2005.

3. Operating Losses and Cash Flow
Deficiencies

The Company
has experienced operating losses and deficiencies in operating cash flows.
Until the Company has operations or other revenue generating activities to be
self-sufficient, the Company will remain dependent upon other sources of
capital. In the past, such capital has come from the Companys Majority
Stockholder and the proceeds from the Healthology and iVillage stock sales.

On September
30, 1999, the Companys Chairman and Majority Stockholder agreed to provide
Le@P, directly or through his affiliates (collectively, the Majority
Stockholder), funding of up to $10,000,000 to be used to fund working capital
requirements and future acquisitions, as approved by the Companys Board of
Directors (the Funding Commitment). Through December 31, 2005, the Company
had received $8,475,000 of the Funding Commitment and working capital notes
aggregating $2,814,487 from the Majority Stockholder. The notes were not part
of the Funding Commitment. As of December 31, 2005, $1,525,000 was available to
the Company pursuant to the Funding Commitment. On March 17, 2006, the Company
terminated the Funding Commitment and exchanged the principal and interest on
the notes for shares of the Companys Class A common stock. See Note 5.

The Company
anticipates that the remaining proceeds from the Healthology disposition
will be sufficient to cover
operating expenses through the next twelve months.

4. Investments

Healthology

On March 27,
2000, the Company purchased an approximate 21% interest in the issued shares of
Healthology (computed on an as-converted basis). Healthology is a privately
held, health-media company based in New York, NY that produces and distributes
original healthcare content generated by health professionals. The Company
acquired approximately 3,200,000 shares of Healthology Series A Convertible
Voting Preferred Stock (Healthology Preferred Shares) at a total cost of
approximately $3,500,000. The Company obtained the funds for the Healthology
acquisition through a capital contribution from its Majority Stockholder
pursuant to the Funding Commitment described in Note 5 herein. Subsequent 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.

F-10

On February 5,
2001, Healthology exercised a put option and Le@P purchased 800,000 shares of
Healthology common stock for $1,000,000.

The audited
financial statements of Healthology as of and for the year ended December 31,
2000 contained a going concern explanatory paragraph and its financial
statements as of and for the year ended December 31, 2001 reflected a net loss
of approximately $5,000,000. Healthologys plans for the years ended December
31, 2002 and 2001, included raising additional equity or debt financing,
investigating the possibility of merger or joint venture arrangements to obtain
additional sources of funds, and scaling back operations. Healthology was
unsuccessful in such endeavors to obtain financing and continued to experience
significant losses. As a result of these factors, the Company believed its
investment in Healthology was materially impaired and further reduced the value
of its investment by $1,354,358 during 2001. During 2002, Healthology was
unsuccessful in its endeavors to form a merger or joint venture arrangement,
and suffered continued losses amounting to approximately $988,000. Accordingly,
the Company wrote-off its remaining investment of approximately $115,000 in the
quarter ended December 31, 2002.

For the year
ended December 31, 2003, Healthologys unaudited net income was $1,087,000. As
the Company records its investments under the cost method of accounting, the
book value of the Companys investment in Healthology remained at zero.

On January 7,
2005, Healthology entered into a Stock Exchange and Merger Agreement with
iVillage, and the Company completed the disposition of its entire investment in
Healthology on January 10, 2005 pursuant to that agreement and a related Stock
Purchase Agreement (See Note 1).

5. Funding Commitment

In connection
with the Funding Commitment, as of December 31, 2005, the Majority Stockholder
had contributed $8,475,000 to the Company. Of this amount, approximately
$4,544,000 was to fund the investment in Healthology and related transaction
expenses, and the remaining balance was substantially used to fund operating
expenses. In consideration of these contributions, the Company issued, in
previous years, 1,614,284 shares of the Companys Class A Common Stock to the
Majority Shareholder at a purchase price of $5.25 per share.

As of December
31, 1999, a balance amounting to $1,525,000 (the Additional Funds) was
available to the Company pursuant to the Funding Commitment. On March 30, 2000,
the Board of Directors of the Company and the Majority Stockholder agreed that
all funds contributed pursuant to the Funding Commitment, including such Additional
Funds if subsequently so contributed, could be exchanged for additional shares
of the Companys Class A Common Stock at $5.25 per share (an aggregate of
290,476 shares if the remaining $1,525,000 were contributed). On March 17, 2006
the Company entered into an Exchange and Termination Agreement with the
Majority Shareholder whereby the working capital loans and accrued interest
(through March 2006) which were due the Majority Shareholder on the maturity
date of March 15, 2006 (the Maturity Date) totaling $3,141,471 are to be
exchanged for newly issued shares of the Companys Class A Common Stock (the
Shares), at an effective exchange price of $0.10 per share. The Maturity Date
of these obligations was extended until May 12, 2006 or the date on which the
next Annual Shareholder Meeting of the Company was held (the Closing Date),
and the Notes would continue to bear interest at the prime rate until the
Closing Date. In consideration for the Majority Shareholders extension of the
applicable Maturity Date of these obligations until the Closing Date and
agreement to accept the Shares as full payment therefore, the Company has
agreed to terminate the Funding Commitment.

F-11

6.
Property and Equipment

Property and equipment consists of the following:December
  31,2006

2005Land

$
510,000

$
510,000Leasehold improvements


17,842


17,842Equipment and software


12,841


49,524Furniture and fixtures


84,553


84,553625,236


661,919Less accumulated depreciation


111,844


145,121$
513,392

$
516,798Depreciation expense for
the years ended December 31, 2006 and 2005 was $6,646 and $15,250,
respectively.

7.
Commitments and Contingencies

Legal
Proceedings

The Company is involved
in litigation relating to the offshore supply business conducted prior to
August 14, 1996 by certain subsidiaries of the Company which are now inactive.
The cases were filed against such subsidiaries and other ship-owning companies
based on the alleged exposure of 64 former seamen to maritime asbestos and
other toxic substances while working on vessels operated by such companies as
part of an industry wide series of similar claims. On May 1, 1996, the claims
against the Companys subsidiaries and the other defendants were
administratively dismissed subject to reinstatement against one or more
specific defendants upon a specific showing that a plaintiff suffers from an
asbestos-related disease and that he was exposed to asbestos containing
products on the vessels operated by such defendant(s). Since such date, none of
the cases against the Companys subsidiaries have been reinstated. At the
present time, the Company does not believe such cases are likely to have a
material adverse impact upon the Company.

The Company is also
involved from time to time in various other claims and lawsuits in the ordinary
course of its current or prior business, none of which the Company anticipates
would have a material adverse effect on its consolidated financial condition or results of
operations.

8.
Related Party Transactions

The Companys Majority
Stockholder, directly or indirectly, owns a number of real estate entities with
which the Company has done or currently does business. At December 31, 2006,
the Company was leasing administrative office space from one such real estate
entity. This lease expired December 31, 2004, and the Company was leasing the
space on a month-to-month basis at approximately $4,100 per month as of
December 31, 2006. On March 15, 2007, the Company entered into a lease
agreement effective April 1, 2007 for this office space for approximately
$4,100 per month. The lease is for one year with two one year options. The
Majority Stockholder sold the building to an unrelated party on March 16, 2007. The Company entered into the new lease to preserve the space and rental rate under the new owners.

Employment Agreement

Effective November 1, 2006,
Dr. Donald J. Ciappenelli became the Chief Executive Officer of the Company and
was appointed as the Chairman of the Board of Directors of the Company. Pursuant
to an Employment Agreement dated October 31, 2006 (the Employment
Agreement), Dr. Ciapapenelli will serve the Company in these capacities
for a three year term, and is entitled to receive an annual base salary of
$280,000 and a board awarded discretionary annual bonus opportunity. For 2007,
Dr. Ciappenelli will be entitled to receive a $120,000 guaranteed bonus if he
(and the Company) achieve certain performance milestones in that year.

The Employment
Agreement also provides for the grant of stock options, vesting 1/3 at the
employment effective date and 1/3 on each of November 1, 2007 and 2008 to
purchase common stock of the Company. These options will be exercisable to
purchase 4% of the Companys fully diluted equity as of the date the
options were granted (or 2,775,350 shares of common stock), at an exercise price
of $0.79 per share.

Effective September 28,
2001, the Majority Stockholder contributed land and buildings in Broward
County, Florida to the Company in exchange for a note payable. The land and
buildings have been recorded at fair value as determined by an independent
third-party appraisal. The note payable consists of a short-term promissory
note in the amount of $37,500 which was due and paid on November 28, 2001 and a
longer-term note and mortgage in the

F-12

amount of $562,500 due in
one lump sum on September 28, 2006. The Company paid the accrued interest of
$118,125 on October 12, 2004, and continued to pay the regular monthly interest
payments until March 17, 2006 when the note was replaced by a new note on March
17, 2006. The new note extends the due date to January 8, 2008 from September
28, 2006. The note bears interest at 7% per annum, and the total accrued
interest and principal are due in one lump sum on the maturity date of January
8, 2008.

The land is zoned light
industrial and consists of approximately one and one-third acres. On July 16,
2003, the Board of Directors determined that it was in the best interest of the
Company to demolish the existing buildings. The demolition of the buildings
took place in August 2003. FASB Statement No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets, requires that long-lived assets
be reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. As a result, the
Company recognized an impairment loss equal to the book value of the buildings
in the amount of $75,000. On June 15, 2005, the Company entered into a
three-year lease to rent the property to an unrelated party. The Company
recognized approximately $18,000 and $17,000 in rental income under this lease
for the years 2006 and 2005, respectively, that is reflected as other income in
the accompanying financial statements. The tenant is currently in default under
the lease terms, and the Company is in eviction proceedings to remove the
tenant. The Company has no plans to sell or develop the Real Property.

The interest expense
included in the accompanying financial statements relates to interest charged
on the indebtedness due to the Majority Stockholder.

9. Stock
Based Compensation

Options may be granted to
Company employees, directors and consultants under various stock option plans.
All options granted under the plans through December 31, 2006 have been at
prices which have been equal to or greater than the fair market value of the
Companys common stock at the date of grant. At December 31, 2006, the Company
had reserved 8,972,150 shares of Class A common stock for possible future
issuance under its stock option plans.

The Company recognizes
compensation expense for the Companys share-based payment awards on a
straight-line basis using a separate vesting tranche for each stock option
issued. The Company determined the grant-date fair value of share-based payment
awards using the Black-Scholes pricing model.

The Company granted
2,775,350 stock options to purchase 2,775,350 shares of the Companys Class A
Common Stock during the year ended December 31, 2006. The stock options
provide for the following: an exercise price of $.079 per share, an expiration date of
October 31, 2016, and 1/3 of the stock options vest on each of the following dates:
October 31, 2006, October 31, 2008 and October 31, 2009. There were no stock options granted during the
year ended December 31, 2005. During the year ended December 31, 2006, the Company recorded approximately $84,000 in compensation expense related to the share-based payment awards.

F-13

The following table
summarizes the weighted average grant-date fair values and assumptions that
were used to estimate the grant-date fair values of the share options granted
during the year ended December 31, 2006:

Grant-date fair value

Value per stock option

$
.08AssumptionsDividend yield


0%Expected volatility


127%Risk free interest rate


4.73%Expected life


10 yearsOption activity under the Companys plans is
summarized below:

2006

2005Shares

Weighted
  Average
  Exercise Price

Shares

Weighted
  Average
  Exercise PriceOutstanding at beginning of year


1,452,500


$
1.41



1,452,500


$
1.41Options granted


2,775,350


$
0.079







Options forfeited


(1,100,000
)

$
0.63







Outstanding at end of year


3,127,850


$
0.17



1,452,500


$
1.41Options exercisable at year-end


1,277,617


$
0.18



1,452,500


$
1.41Shares available for future grant


8,972,150







4,374,500The following table summarizes information about stock
options outstanding at December 31, 2006:

Stock Options Outstanding

Stock Options ExercisableExercise
  Price

Number of
  Options

Weighted
  Average
  Remaining
  Contractual
  Life

Weighted
  Average
  Exercise Price

Number of
  Options

Weighted
  Average
  Exercise Price$0.50


300,000


0.3


$
0.50



300,000


$
0.50$3.00


52,500


3.2


$
3.00



52,500


$
3.00$0.079


2,775,350


9.9


$
0.079



925,117


$
0.079$0.079 - $3.00


3,127,850


8.9


$
0.17



1,277,617


$
0.18F-14

10. Net
Income (Loss) Per Share

Basic and diluted earnings per share for the years
ended December 31, 2006 and 2005 are computed using the following information:

For the
  years ended
  December 31,2006

2005BASIC EARNINGS PER SHARE
  COMPUTATION:NUMERATOR:Net income
  (loss)

$
(531,734
)
$
2,986,395Dividends
  (undeclared) on cumulative preferred stock


(217,000
)

(217,000
)Net income
  (loss) attributable to common stock

$
(748,734
)
$
2,769,395DENOMINATOR:Average number
  of common shares outstanding


53,930,426


33,706,203DILUTED EARNINGS PER SHARE
  COMPUTATION:NUMERATOR:Net income
  (loss)

$
(531,734
)
$
2,986,395Dividends
  (undeclared) on cumulative preferred stock


(217,000
)

(217,000
)Net income
  (loss) attributable to common stockholders

$
(748,734
)
$
2,769,395DENOMINATOR:Average number
  of common shares outstanding


53,930,426


33,706,203Incremental
  shares for assumed exercise of securities


(a
)

1,452,500Total shares


53,930,426


35,158,703(a)
The weighted average
  shares of common stock outstanding are not adjusted for potential effects of
  the Companys stock options because of their antidilutive effect.11.
Preferred Stock

The Certificate of
Incorporation of the Company, as amended, authorizes the issuance of 25,000,000
shares of Preferred Stock, $.001 par value of which 2,500 shares have been
designated as Series B 10% Cumulative Preferred Stock, $.001 par value, (the
Series B Preferred Stock). The Series B Preferred Stock is nonvoting and
nonconvertible. Dividends on the Series B Preferred Stock are cumulative and
accrue at a rate of 10% per annum on the preferred stocks stated value of
$1,000 per share and must be paid before any dividends may be paid on any other
class of common or preferred stock. No other class of common or preferred stock
may be redeemed or repurchased nor may the Series B Preferred Stock be altered
or modified without the approval of the holders of the Series B Preferred
Stock. Effective November 15, 1999, the Company issued 2,170 shares of the
Series B Preferred Stock to the majority shareholder in exchange for
$2,170,000, which had previously been contributed to the Company. At December
31, 2006 dividends of $1,585,500 were accumulated on the Series B Preferred
Stock. Such amount will be accrued and charged to retained earnings, if any, or
additional paid-in capital when declared by the Companys Board of Directors.

12.
Class B Common Stock

The Company has 25,000 shares
of Class B Common Stock outstanding. Such shares are held by an affiliate of
the Companys Majority Stockholder and enable the holder to elect a majority of
the Board of Directors of the Company; otherwise the Class B Common Stock is
identical to the Companys Class A Common Stock.

F-15

13.
Income Taxes

Significant components of the Companys net deferred
income taxes are as follows:

For the years ended
  December 31,2006

2005Deferred tax assets:Net operating loss carryforwards

$
3,017,481

$
1,929,103Accruals


14,497


107,737Stock -based compensation


61,709


29,991Other


1,032


1,558Deferred tax assets


3,055,111


2,068,421Less valuation allowance


(3,055,111
)

(2,068,421
)Net deferred tax assets

$


$
A reconciliation of the U.S. statutory federal income
tax rate to the effective income tax rate (benefit) follows:

For the years ended
  December 31,2006

2005U.S. Federal Statutory rate


34.00
%

34.00
%State income taxes, net of federal benefit


3.63


3.63Change in valuation allowance


(37.63
)

(40.26
)Non-deductible items


(0.00
)

(0.00
)Other


(0.00
)

2.630.00
%

0.00
%FASB Statement No. 109 requires a valuation allowance
to reduce the deferred tax assets reported if, based on the weight of the
evidence, it is more likely than not that some portion or all of the deferred
tax assets will not be realized. After consideration of the evidence, both
positive and negative, management has determined that a $3,055,111 valuation
allowance at December 31, 2006 is necessary to reduce the deferred tax assets
to the amount that will more likely than not be realized. The change in the valuation
allowance for the current year is $986,690. At December 31, 2006, the Company
has available net operating loss carryforwards for Federal income tax purposes of approximately $7,914,000
expiring at various times through 2026.

14.
Valuation and Qualifying Accounts

A summary of the activity in the Companys valuation
and qualifying accounts is as follows:

Description

Balance at
  Beginning of
  Period

Charged to
  Costs and
  Expenses

Write-offs

Other
  Changes

Balance at
  End of
  PeriodDeferred tax
  asset valuation allowanceYear ended
  December 31, 2005

$
3,270,744

$
(1,202,323
)






$
2,068,421Year ended
  December 31, 2006

$
2,068,421

$
986,690







$
3,055,11115.
Concentration of credit risk

The Company maintains cash balances at a high credit
quality financial institution which at times exceeds the federally insured
amounts. As of December 31, 2006 and 2005, approximately $2,829,000 and
$3,033,000, respectively, exceeded the federally insured amount.

F-16

16. Subsequent events

On February 1, 2007, the
Company relocated its headquarters and opened its chief executive offices in
Wellsley Hills, Massachusetts. The Company is leasing the office space on a
month-to-month basis with monthly rental payments of approximately $1,000 per
month.

On March 15, 2007, the
Company entered into a leasing agreement effective April 1, 2007 for
administrative office space in Ft. Lauderdale, Florida. The monthly rent is
approximately $4,100, and the lease is for a period of one year with two
one-year options.

Effective March 5, 2007,
Dr. Howard Benjamin became  the Companys Vice President of Research and Development.
Pursuant to an employment agreement executed March 16, 2007 (the Employment
Agreement), Dr. Benjamin will serve in this capacity for a term of one year,
with additional one year renewal provisions,
and is entitled to an annual base salary of $200,000, and a board evaluated and
awarded discretionary bonus opportunity of 1/3 of his base salary.

The Employment Agreement
also provides for the grant of stock options, vesting 1/3 at the employment
effective date and 1/3 on each of March 5, 2009 and March 5, 2010, to purchase
common stock of the Company. These options are exercisable to purchase 1% of
the Companys fully diluted equity as of the date the options were granted (or
683,238 shares of common stock) at an exercise price of $0.80 per share.

F-17