Information Statement Pursuant to Section 14(c) of the Securities Exchange Act of 1934
5601 N. DIXIE HIGHWAY
INFORMATION STATEMENT
November 28, 2016
The attached Information Statement is being furnished to the stockholders of Le@P Technology, Inc. (the “Company” or “we”), in connection with the adoption of a plan of voluntary liquidation and dissolution of the Company pursuant to a Plan of Dissolution (the “Plan of Dissolution”). Our board of directors and a holder of a majority of the voting power of our stockholders entitled to vote approved the adoption of a Plan of Dissolution.
This Information Statement is being provided to you for your information pursuant to Rule 14c-2 under the Securities Exchange Act of 1934, as amended (“Rule 14c-2”). This Information Statement contains a detailed description of the Plan of Dissolution. This Information Statement also constitutes the notice to the Company's stockholders of taking of a corporate action without a meeting by less than unanimous written consent of the stockholders, as required by Section 228(e) of the Delaware General Corporation Law. Pursuant to Rule 14c-2, the corporate actions will not be effective until at least twenty (20) calendar days after the mailing of this Information Statement to our stockholders. I encourage you to read this Information Statement in its entirety. A copy of the Plan of Dissolution is attached as
Exhibit A
to this Information Statement.
Our wholly-owned subsidiary, Parkson Property LLC, sold its sole remaining asset, the Real Property (as defined below). We currently have no operations, or funds to pursue new and/or additional opportunities. As a result of this and other factors described in this Information Statement, management and the board of directors believe voluntary liquidation and dissolution of the Company is in the best interests of the Company and its stockholders. Due to the size of our liabilities
and lack of any significant assets
, holders of shares of our common stock have no prospect of receiving any distribution of any kind as a result of the liquidation and dissolution of the Company.
Because we already received the requisite written consent from the holder
of a majority of the voting power of the stockholders
entitled to vote for the adoption of the Plan of Dissolution, you are not being requested to send proxies to vote your shares with respect to such actions. No proxy card has been provided for stockholders and no meeting of stockholders will be held to consider the approval of the Plan of Dissolution.
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Very truly yours,
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/s/ Timothy C. Lincoln
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Chairman and Acting Principal Executive Officer
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TABLE OF CONTENTS
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A-1
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B-1
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Le@P Technology, Inc.
5601 N. DIXIE HIGHWAY
SUITE 411
FORT LAUDERDALE, FLORIDA
NOTICE OF ACTION BY WRITTEN CONSENT OF STOCKHOLDERS
NOTICE IS HEREBY GIVEN that a holder of a majority of the voting power of the stockholders of Le@P Technology, Inc., a Delaware corporation (the “Company”, “we”, “us,” or “our”), has approved without a meeting of stockholders in accordance with the Delaware General Corporation Law
the following:
1. The voluntary liquidation and dissolution of the Company pursuant to a Plan of Dissolution (the “Plan of Dissolution”).
The action will become effective on the 20
th
day after the definitive Information Statement is mailed to our stockholders.
WE ARE NOT ASKING YOU FOR A PROXY, AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
Because the written consent of a holder of a majority of the voting power of our stockholders entitled to vote approving the Plan of Dissolution satisfies all applicable stockholder voting requirements, we are not asking you for a proxy; please do not send us one. We are furnishing this Information Statement to you solely to inform you of the approval of the actions set forth above by a holder of the majority voting power of our common stock. No action is required by you.
THE PLAN OF DISSOLUTION IS CONDITIONED UPON, AMONG OTHER THINGS, THE IMPLEMENTATION OF THE PLAN OF DISSOLUTION AND VARIOUS OTHER FACTORS AND CONSIDERATIONS, AND NO ASSURANCE CAN BE GIVEN THAT IT WILL BE FULLY IMPLEMENTED. NOTWITHSTANDING AUTHORIZATION OF OR CONSENT TO THE PLAN OF DISSOLUTION, AND THE TRANSACTIONS CONTEMPLATED THEREBY BY THE STOCKHOLDERS, THE BOARD OF DIRECTORS MAY, TO THE EXTENT PERMITTED BY THE DELAWARE GENERAL CORPORATION LAW, MODIFY, AMEND OR ABANDON THE PLAN OF DISSOLUTION AND THE TRANSACTIONS CONTEMPLATED THEREBY WITHOUT FURTHER ACTION BY THE STOCKHOLDERS. SEE "PLAN OF DISSOLUTION."
DUE TO THE SIZE OF OUR LIABILITIES AND LACK OF ANY SIGNIFICANT ASSETS, HOLDERS OF OUR SHARES OF COMMON STOCK HAVE NO PROSPECT OF RECEIVING A DISTRIBUTION OF ANY KIND AS A RESULT OF THE LIQUIDATION AND DISSOLUTION OF THE COMPANY.
This Information Statement is being furnished in connection with the action by written consent of the holder of a majority of the voting power of our stockholders taken without a meeting of a proposal to approve the actions described in this Information Statement. We are mailing this Information Statement to our stockholders of record as of November 18, 2016, on or about November 29, 2016.
This Information Statement is for information purposes only — Please read it carefully.
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By order of the Board of Directors
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/s/ Timothy C. Lincoln
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Chairman and Acting Principal Executive Officer
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November 28, 2016
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FORWARD-LOOKING STATEMENTS
This Information Statement contains forward-looking statements with respect to our plans and objectives, the sale of the Company's assets and cancellation of certain liabilities, general economic conditions and other matters. Those statements include statements regarding our intent, belief, or current expectations, as well as the assumptions on which such statements are based. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those contemplated by such forward-looking statements. Important factors currently known to us that could cause the results to differ materially from those in forward-looking statements include, but are not limited to: (i) the ability of the Company to effect the Plan of Dissolution and handle matters associated with the winding up of its affairs, (ii) the implementation of the Plan of Dissolution, (iii) the fees and expenses associated with implementation of the Plan of Dissolution, and (iv) the market value of any remaining assets. In light of the significant uncertainties inherent in the forward-looking statements included herein particularly in view of the current state of the Company, the inclusion of such information should not be regarded as a statement by the Company or any other person that these forward-looking statements (or the Company’s goals, objectives, plans, pursuits, intentions or other forward-looking information derived therefrom) will be achieved. The Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
Why did I receive this Information Statement?
The M. Lee Pearce Living Trust (the “Majority Stockholder Trust”), of which the Company’s indirect and beneficial majority stockholder, M. Lee Pearce, M.D. (“Dr. Pearce”), is the 100% beneficial owner (Dr. Pearce, together with entities owned or controlled by him that own capital stock of the Company, are collectively referred to as the “Majority Stockholder”) took action by written consent in lieu of a stockholders' meeting. Federal securities laws require that our other stockholders receive this Information Statement before the action can become effective.
What action was taken by written consent?
We obtained stockholder consent for the approval of the
voluntary liquidation and dissolution of the Company pursuant to a Plan of Dissolution
.
How many shares of common stock were outstanding on November
18
,
2016?
On November 18, 2016, there were 65,195,884 shares of Class A Common Stock and 25,000 shares of Class B Common Stock outstanding. The number of shares of Series B Preferred Stock of the Company outstanding as of November 18, 2016 was 2,170.
What vote was obtained to approve the actions described in this Information Statement?
We obtained the approval of the Majority Stockholder, which holds approximately 96.% of the voting power of our outstanding shares of Class A Common stock and all of the shares of our Class B Common Stock and Series B Preferred Stock. Therefore, no vote of any other stockholder is necessary and stockholder votes are not being solicited.
Who is paying the cost of this Information Statement?
We will pay for preparing, printing and mailing this Information Statement. Our costs are estimated at approximately $10,000.
What action do I need to take as a stockholder?
You are not required to take any action. The actions approved by written consent can take effect after twenty (20) days from the date of mailing this Information Statement.
Will any distribution be made to me as a stockholder as a result of the dissolution?
Due to the size of our liabilities and lack of any significant assets, holders of our shares of common stock and Series B Preferred Stock have no prospect of receiving a distribution of any kind as a result of the liquidation and dissolution of the Company.
Can I still sell my shares of common stock of the Company?
Yes, but only until the effective date of the filing of the Certificate of Dissolution with the Delaware Secretary of State. The Company’s Class A Common Stock was previously quoted on the OTC Bulletin Board (“OTCBB”), under the symbol LPTC, until February 23, 2011, at which time the Class A Common Stock was delisted due to a lack of market makers participating in the market for shares of the Class A Common Stock. Since February 23, 2011, there has been no public market for, and no quotation system reporting trading information or purchases and sales in, the shares of Class A Common Stock. There is no public market for shares of the Company’s Class B Common Stock or its Series B Preferred Stock, all of which shares are owned by the Majority Stockholder. In addition, we intend to close our stock transfer books and discontinue recording transfers of shares of our common stock at the close of business on the effective date of the filing of the Certificate of Dissolution. Thereafter, certificates representing shares of our common stock will not be assignable or transferable on our books except by will, intestate succession or operation of law.
Am I entitled to appraisal rights?
No. You are not entitled to appraisal rights in accordance with Delaware General Corporation Law (the “DGCL”) in connection with the actions taken by written consent.
Where can I find more information about the company?
As required by law, we file annual, quarterly and current reports and other information with the SEC that contain additional information about our company. You can inspect and copy these materials at the public reference facilities of the SEC's Washington, D.C. office, 100 F Street, NE, Washington, D.C. 20549 and on its Internet site at http://www.sec.gov.
OF
PLAN OF DISSOLUTION
The following is a brief summary of the material terms of the Plan of Dissolution. This summary highlights selected information in this Information Statement and may not contain all of the information that may be important to you. You should carefully read this Information Statement in its entirety and the other documents referenced herein for a more complete understanding of the matters described herein.
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Le@P Technology, Inc.
(See Page 5)
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The Company currently has no business operations, no revenues or revenue-producing activities, limited cash, and ongoing expenses as well as substantial indebtedness and liabilities.
During 2016, the Company’s Board of Directors (the “Board” or “Board of Directors”) considered and intended to pursue, subject to budget and cash constraints, potential acquisition and possibly joint venture and investment opportunities (particularly those in the health care technology, products and services and life sciences arenas) (“Opportunities”) that may have come to the attention of Board members or management, including Opportunities introduced by Dr. Pearce or his network of contacts. None of the Opportunities came to fruition. The Company’s wholly owned subsidiary, Parkson Property LLC (“Parkson”) sold its only material asset, the real property at street address 5601 N.E. 14th Avenue, Fort Lauderdale, Florida 33308 (the “Real Property”) for $1,400,000.00, net of related costs, of which $931,619.82 of the net proceeds was applied to related debt. The balance has been retained by the Company and will be applied to reduce the Company’s debt in connection with the liquidation and dissolution of the Company. The Company is in the process of dissolving Parkson.
Since February 23, 2011, there has been no public market for, and no quotation system reporting trading information or purchases and sales in, the shares of Class A Common Stock. There never has been a public market for the Company’s shares of Class A Common Stock or shares of Class B Common Stock or shares of Series B Preferred Stock, all of which shares are owned by the Majority Stockholder. Our principal executive office is located at 5601 N. Dixie Highway, Suite 411, Fort Lauderdale, Florida, and our telephone number is (954) 771-1772.
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The Stockholder Consent
(See Page 4)
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STOCKHOLDER VOTES WILL NOT BE SOLICITED. The Majority Stockholder, which holds approximately 96% of the voting power of our outstanding shares of Class A Common Stock and all of the shares of our Class B Common Stock and Series B Preferred Stock, consented in writing to the adoption of the Plan of Dissolution. Therefore, no vote of any other stockholder is necessary and stockholder votes are not being solicited.
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Approval of the Board of Directors
(See Page 4)
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On September 6, 2016, our board of directors, upon determining that its adoption is advisable, fair and in the best interests of the Company and its stockholders, unanimously approved the Plan of Dissolution.
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Principal Stockholder Ownership
(See Page 18)
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As of November 18, 2016, the record date, the Majority Stockholder beneficially owned, in the aggregate, 62,597,409 shares of the Company’s shares of Class A Common Stock, representing approximately 96.01% of our outstanding shares of Class A Common Stock, and all of the outstanding shares of Class B Common Stock and Series B Preferred Stock. On November 12, 2016, the Majority Stockholder approved the Plan of Dissolution.
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Plan of Dissolution (See Page 5)
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Under the Plan of Dissolution, we will take the following actions at such times as our board of directors, in its absolute discretion, deems necessary, appropriate or advisable:
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file a certificate of dissolution with the Delaware Secretary of State in accordance with the Plan of Dissolution (the “Certificate of Dissolution”);
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cease conducting normal business operations, except as may be required to wind-up our business affairs;
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sell, exchange or otherwise dispose of all or substantially all of the Company’s non-cash property and assets, including but not limited to its remaining tangible assets, intellectual property and other intangible assets;
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pay or make reasonable provision as reasonably likely for payment of our liabilities and obligations, including setting aside a contingency reserve, consisting of cash or other assets that our board of directors believes to be adequate for payment of our known liabilities, as well as claims that are unknown or have not yet arisen but that are likely to arise or become known to us within ten years; and
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take all actions required or permitted under the dissolution procedures of Section 281(b) of the DGCL.
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Due to the size of our liabilities and lack of any significant assets, HOLDERS OF SHARES OF OUR COMMON STOCK HAVE NO PROSPECT OF RECEIVING A DISTRIBUTION OF ANY KIND AS A RESULT OF THE LIQUIDATION.
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For a more complete description of the terms of the Plan of Dissolution, please see “Plan of Dissolution” in this Information Statement and the Plan of Dissolution itself, which is attached as
Exhibit A
to this Information Statement.
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Amendment and Abandonment of Plan of Dissolution
(See Page 8)
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Under the Plan of Dissolution, if for any reason our board of directors determines that such action would be in our best interests, it may amend, modify or abandon the Plan of Dissolution and all actions contemplated thereunder, including our proposed dissolution, notwithstanding stockholder approval of the Plan of Dissolution, to the extent permitted by the DGCL.
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Reasons for the Plan of Dissolution
(See Page 5)
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In arriving at the determination that the Plan of Dissolution is advisable, fair and in the best interests of the Company and our stockholders, our board of directors considered a number of factors, including, without limitation, the following:
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The Company’s wholly-owned subsidiary, Parkson, sold its sole significant asset, the Real Property, and neither it nor the Company conducts operations any longer;
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the likely inability to raise significant additional capital to pursue Opportunities or acquire new companies;
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our current financial position including our lack of any meaningful assets, any current source of revenue and our current liabilities which materially exceed our assets;
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the terms of the Plan of Dissolution;
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the lack of viable strategic alternatives;
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the cost of our continuing to operate as a public reporting company;
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Reporting Obligations
(See Page 10)
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We are currently obligated to comply with the applicable reporting requirements of the Exchange Act. In order to eliminate expenses we incur to comply with these requirements, we intend to cease filing annual, quarterly and current reports with the SEC under the Exchange Act as soon as possible after the filing of the Certificate of Dissolution with the Delaware Secretary of State by filing the appropriate form with the SEC.
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Appraisal Rights for Plan of Dissolution
(See Page 10)
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Appraisal rights are not available to stockholders in connection with the Plan of Dissolution under either the DGCL or our Certificate of Incorporation and Bylaws.
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Material Federal Income Tax Consequences
(See Page 10)
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Stockholders are urged to consult their own tax advisors as to the specific tax consequences to them of our dissolution pursuant to the Plan of Dissolution.
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On September 6, 2016, our board of directors unanimously approved the Plan of Dissolution subject to approval of a majority of the stockholders of the Company. The Majority Stockholder, which holds approximately 96% of the voting power of our outstanding shares of common stock and all of the outstanding shares of our Class B Common Stock and Series A Preferred Stock consented in writing under Section 228 of the DGCL approving adoption of the Plan of Dissolution. Accordingly, no vote of any other stockholder is necessary and stockholder votes on this matter are not being solicited.
November 18, 2016, has been fixed as the record date for the determination of our stockholders entitled to receive this Information Statement. As of the close of business on the record date,
the Majority Stockholder beneficially owned, in the aggregate, 62,597,409 shares of the Company’s Class A Common Stock, representing approximately 96% of our outstanding shares of Class A Common Stock, and all of the outstanding shares of Class B Common Stock and Series B Preferred Stock.
The adoption of the Plan of Dissolution constitutes full and complete authority for the Board and officers, without further stockholder action, to do and perform any and all acts, and to make, execute and deliver any and all agreements, conveyances, assignments, transfers, certificates and other documents of any kind and character that the Board or such officers deem necessary, appropriate or advisable: (i) to dissolve the Company in accordance with the laws of the State of Delaware and cause its withdrawal from all jurisdictions in which it is authorized to do business; (ii) to sell, dispose, convey, transfer and deliver all of the remaining assets and properties of the Company; (iii) to satisfy or provide for the satisfaction of the Company’s obligations in accordance with Sections 280 and 281 of the DGCL; and (iv) to distribute any properties and assets of the Company and all remaining funds pro rata to the Company’s stockholders and in accordance with the distribution rights of the Company’s then outstanding shares of capital stock. However, due to the size of our liabilities
and lack of any significant assets
, HOLDERS OF SHARES OF OUR COMMON STOCK HAVE NO PROSPECT OF RECEIVING A DISTRIBUTION OF ANY KIND AS A RESULT OF THE LIQUIDATION AND DISSOLUTION.
No further vote or consent of any other stockholder of the Company is necessary to approve the Plan of Dissolution. Accordingly, we are not soliciting any stockholder votes or consents by this Information Statement. We may first take corporate action in accordance with the stockholder approval by filing the Certificate of Dissolution with the Delaware Secretary of State not less than twenty (20) days after the mailing of this Information Statement to stockholders. WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND A PROXY.
This Information Statement is being mailed to the stockholders on or about November 29, 2016. This Information Statement also serves as notice to stockholders under Section 228 of the DGCL of the approval of the Plan of Dissolution by less than unanimous written consent of the Company’s stockholders.
INFORMATION ABOUT THE COMPANY
The Company currently has no business operations, no revenues or revenue-producing activities, limited cash, and ongoing expenses as well as substantial indebtedness and liabilities.
For these and other reasons we decided to voluntarily liquidate and dissolve the Company. See also “Plan of Dissolution - Reasons for the Plan of Dissolution”
For a more detailed description of our business prior to our decision to voluntarily liquidate and dissolve, please see our Annual Report on Form 10-K for the year ended December 31, 2015, which is accompanying this Information Statement.
This Information Statement describes certain aspects of the Plan of Dissolution. We recommend that you read carefully the complete Plan of Dissolution for the terms and conditions of the liquidation and dissolution of the Company and other information that may be important to you. The full text of the Plan of Dissolution is included in this Information Statement as
Exhibit A
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Reasons for the Plan of Dissolution
In arriving at the determination that the Plan of Dissolution is advisable, fair and in the best interests of the Company and our stockholders, the Board considered a number of factors, including, without limitation, the following:
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Our wholly-owned subsidiary, Parkson, sold its sole significant asset, the Real Property and neither the Company, nor Parkson conducts operations any longer;
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the likely inability to raise significant additional capital to pursue Opportunities or acquire new companies;
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our current financial position including our lack of any current source of revenue and our current liabilities which exceed our assets;
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the terms of the Plan of Dissolution;
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the lack of viable strategic alternatives;
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Stockholders are urged to consult their own tax advisors as to the specific tax consequences to them of our dissolution pursuant to the Plan of Dissolution;
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the cost of our continuing to operate as a public reporting company;
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Dissolution under Delaware Law
Section 275 of the DGCL provides that a corporation may dissolve upon the approval of a corporation's board of directors followed by a majority vote of its stockholders at a meeting of such stockholders, or by unanimous stockholder consent. Following such approval, the dissolution is effected by filing a Certificate of Dissolution with the Delaware Secretary of State. The corporation is dissolved upon the effective date of its Certificate of Dissolution. Section 228 of the DGCL provides that, unless otherwise provided in the certificate of incorporation, any action (e.g., the approval of the liquidation and dissolution of the Company and the Plan of Dissolution) which may be taken at any annual or special meeting of the stockholders, may be taken without prior notice and without a vote if a consent setting forth the action taken is signed by the holders of outstanding stock having not less than the minimum number of votes necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.
Section 278 of the DGCL provides that once a corporation is dissolved, it continues its corporate existence for at least three years, but may not carry on any business except as appropriate to wind up and liquidate its business and affairs.
The process of winding up includes:
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the settling and closing of any business;
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the disposition and conveyance of any property,
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the discharge of any liabilities, and making reasonable provision for contingent and conditional contract claims, claims that are subject to pending litigation involving the corporation, and certain claims that have not arisen or are unknown but are likely to arise or become known within 10 years after the date of dissolution;
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the prosecution and defense of any lawsuits; and
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the distribution of any remaining assets to stockholders.
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If any action, suit or proceeding is commenced by or against the corporation before or within the three-year winding up period (or any extension thereof granted by a court), the corporation will, solely for the purpose of such action, suit or proceeding, automatically continue to exist beyond the three-year period until any judgments, orders or decrees are fully executed.
The DGCL requires a dissolved corporation to comply with either of two alternative procedures for winding up and liquidating its assets. Those procedures are set forth in Sections 280 and 281 of the DGCL. Section 280 sets forth a complex, elective procedure that requires, among other things, notice to claimants and the possible commencement of proceedings in the Delaware Court of Chancery seeking a judicial determination of the appropriate provision to be made with respect to particular types of claims.
Any dissolved Delaware corporation that does not elect to wind up pursuant to the judicially-supervised procedure set forth in Section 280 must comply with the "extrajudicial" procedure set forth in Section 281(b). Pursuant to Section 281(b), a dissolved corporation (or a successor entity to the dissolved corporation) is required, prior to the expiration of the statutory winding up period set forth in Section 278, to adopt a "plan of distribution" pursuant to which the dissolved corporation:
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shall pay or make reasonable provision to pay all claims and obligations, including contingent, conditional or unmatured contractual claims known to the corporation;
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shall make such provision as will be "reasonably likely to be sufficient" to compensate for any claim against the corporation that is the subject of a pending action, suit or proceeding to which the corporation is a party; and
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shall make such provision as will be "reasonably likely to be sufficient" to compensate for any claims that have not been made known to the corporation or that have not arisen but that, based on facts known to the corporation, are likely to arise or become known within ten (10) years after the date of dissolution.
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The statute requires that the plan of distribution provide that the payment of any such claims shall be made in full and for any necessary provisions for payment to be made in full if there are sufficient assets. If there are not sufficient assets, the plan of distribution must provide that claims and obligations are to be paid or provided for according to their priority and, among claims of equal priority, ratably to the extent of available assets. Excess assets and/or funds, if any, may be distributed to stockholders.
The Board is winding up our affairs in accordance with the "extrajudicial" procedures set forth in Section 281(b) of the DGCL. Nevertheless, the Board reserves the right to choose, at any time after the effectiveness of the dissolution, to utilize the more complex, judicially-supervised procedures for winding up its affairs.
Summary of the Plan of Dissolution
We believe this summary describes the material terms of the Plan of Dissolution. However, it does not purport to be complete and is qualified in its entirety by the provisions of the Plan of Dissolution, a copy of which is attached hereto as
Exhibit A
to this Information Statement.
Under the Plan of Dissolution, we plan to file with the Delaware Secretary of State a certificate of dissolution (the “Certificate of Dissolution”) in accordance with the DGCL (the time of such filing, or such later time as stated therein, the “Dissolution Date”).
From and after the Dissolution Date, we plan to proceed, in a timely manner, to liquidate the Company in accordance with the procedures set forth in Section 281(b) of the DGCL. In this respect, we plan to:
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pay or make reasonable provision to pay all claims and obligations, including all contingent, conditional or unmatured contractual claims known to the Company pursuant to Section 281(b)(i) of the DGCL;
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make such provision as will be "reasonably likely to be sufficient" to compensate for any claim against the Company that is the subject of a pending action, suit or proceeding to which the Company is a party pursuant to Section 281(b)(ii) of the DGCL; and
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make such provision as will be "reasonably likely to be sufficient" to compensate for any claims that have not been made known to the Company or that have not arisen but that, based on facts known to the Company, are likely to arise or become known to the Company within ten (10) years after the Dissolution Date pursuant to Section 281(b)(iii) of the DGCL.
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Our activities will be limited to distributing our assets in accordance with the Plan of Dissolution, establishing a contingency reserve for payment of the Company's expenses and liabilities, including liabilities incurred but not paid or settled prior to authorization of the Plan of Dissolution, selling any of the Company's remaining assets, and terminating any of the Company's remaining contracts, agreements, relationships and other outstanding obligations. In addition to satisfying or settling the liabilities currently on our balance sheet and contingent claims, we anticipate using available cash for a number of items, including but not limited to, payment of:
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Payment or the provision for payment of federal, state and local taxes;
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Settlement of obligations on our balance sheet, including certain non-trade creditors;
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Obtaining directors’ and officers’ insurance coverage; and
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Legal and accounting fees and expenses related to our liquidation and dissolution and the implementation of the Plan of Dissolution.
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The Board has determined that our assets, consisting of chattel (furniture and equipment) with a combined value of less than $15,000.00, as well as cash in the amount of
$674,000.00
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which will be used against liabilities. Our liabilities total approximately $3,153,000 as of the date of this Information Statement.
As a result of the size of our liabilities
and lack of any significant assets
, no funds will be generated from the sale of the Company’s assets. THEREFORE, HOLDERS OF SHARES OF OUR COMMON STOCK HAVE NO PROSPECT OF A DISTRIBUTION OF ANY KIND AS A RESULT OF THE DISSOLUTION. If you wish to do so, you may, but are not required to, at any time following the Dissolution Date surrender all, but not less than all, of the outstanding common stock of the Company held in complete cancellation of such shares, by (i) surrendering your certificates evidencing the common stock to us or our agents for cancellation on the records of the Company, or (ii) furnishing us with evidence satisfactory to the Board of the loss, theft or destruction of your certificates evidencing the common stock, together with such surety bond or other security or indemnity as may be required by and satisfactory to the Company. We plan to finally close our stock transfer books and discontinue recording transfers of common stock on the date on which we file our Certificate of Dissolution with the Delaware Secretary of State and thereafter all outstanding shares of stock in the Company, together with any other options, warrants, or other rights, contractual or otherwise, to acquire or receive any stock or other ownership interests in the Company will be extinguished and the certificates and any other documents representing such shares of common stock will be deemed to have been cancelled and to be of no force or effect.
Amendment of Plan of Dissolution
Under the Plan of Dissolution, if for any reason the Board determines that such action would be in our best interests, it may amend, modify or abandon the Plan of Dissolution and all actions contemplated thereunder, including our proposed dissolution, notwithstanding stockholder approval of the Plan of Dissolution, to the extent permitted by the DGCL; provided that the Board will not amend or modify the Plan of Dissolution under circumstances that would require additional stockholder solicitations under the DGCL or federal securities laws without complying with the DGCL and federal securities laws.
Interests of Directors and Officers in the Plan of Dissolution
Members of the Board and our executive officers may have interests in the approval of our liquidation and dissolution pursuant to the Plan of Dissolution that are different from, or are in addition to, the interests of our stockholders generally. The Board was aware of these interests and considered them, among other matters, in approving the Plan of Dissolution.
Indemnification and Insurance
In connection with the dissolution of the Company pursuant to the Plan of Dissolution, we will continue to indemnify our directors and officers to the maximum extent permitted in accordance with applicable law, our Certificate of Incorporation and Bylaws, and any contractual arrangements, for actions taken in connection with the Plan of Dissolution and the winding-up of our business and affairs. We also intend to maintain our current directors’ and officers’ insurance policy through the Dissolution Date, and obtain runoff coverage for at least an additional six (6) years after filing the Certificate of Dissolution. We are authorized in our absolute discretion to obtain and maintain insurance as may be necessary, appropriate, or advisable to cover such indemnification obligations.
As a result of the aforementioned indemnification and insurance, our directors and executive officers generally could be more likely to vote to approve the liquidation and dissolution of the Company pursuant to the Plan of Dissolution, including the dissolution of the Company contemplated thereby, than our other stockholders.
Professional Fees and Expenses
It is specifically contemplated that we will obtain legal, tax and accounting advice and guidance from one or more law and accounting firms and tax advisors in implementing the Plan of Dissolution, and we will pay all fees and expenses reasonably incurred by us in connection with or arising out of the implementation of the Plan of Dissolution, including the prosecution, defense, settlement or other resolution of any claims or suits by or against us, the discharge, filing and disclosure of outstanding obligations, liabilities and claims, filing and resolution of claims with local, county, state and federal tax authorities, and the advancement and reimbursement of any fees and expenses payable by us pursuant to the indemnification we provide in our Certificate of Incorporation and Bylaws, the DGCL or otherwise. In addition, in connection with and for the purpose of implementing and assuring completion of the Plan of Dissolution, we may, in the absolute discretion of the Board, pay any brokerage, agency, professional and other fees and expenses of persons rendering services to us in connection with the collection, sale, exchange or other disposition of our property and assets and the implementation of the Plan of Dissolution.
Appraisal Rights
Under Delaware law, appraisal rights are not available in connection with a plan of dissolution. Our Certificate of Incorporation and Bylaws do not provide appraisal rights for stockholders upon the adoption of the Plan of Dissolution.
Regulatory Approvals
To the best of our knowledge, there are no state or federal regulatory requirements with which the Plan of Dissolution must comply, nor are there any such governmental consents or approvals that must be obtained in connection with the Plan of Dissolution, other than the filing with the Delaware Secretary of State a Certificate of Dissolution of the Company, the filing of a notice to FINRA and tax-related filings.
Material Federal Income Tax Consequences of the Plan of Dissolution
The following discussion does not address all of the United States federal income tax consequences that may be relevant to our stockholders, including Company stockholders who, in light of their particular circumstances, may be subject to special rules, including, without limitation, holders that are not “United States persons” (as defined in the Code), mutual funds, retirement plans, financial institutions, banks, thrift institutions, tax-exempt organizations, insurance companies, regulated investment companies, real estate investment trusts, brokers or dealers in securities, traders who mark to market, stockholders who hold their shares as part of a straddle, hedge or conversion transaction, personal holding companies, stockholders that hold shares through a partnership or other pass-through entity, U.S. expatriates, persons subject to the alternative minimum tax, and persons that hold our common stock as part of an integrated investment transaction for federal tax purposes. Furthermore, this discussion does not apply to holders of options or warrants or stockholders who acquired their shares by exercising options or warrants, nor does it apply to stockholders who received their shares in connection with the performance of services. This discussion assumes that stockholders hold their stock as capital assets within the meaning of Section 1221 of the Code. In addition, the discussion does not address any aspect of federal non-income, state, local or non-U.S. taxation that may be applicable to a particular stockholder.
Immediately prior to the liquidation, we expect to have remaining liabilities of approximately $3,327,000.
Our shareholders will receive no consideration for their stock in connection with the liquidation. Assuming the loss was not claimed in an earlier tax year the shareholders should have a worthless stock loss upon cancellation of their stock. If the stock is held as a capital asset, the Treasury regulations provide that the loss may be deducted, but only as a loss from the sale or exchange of a capital asset on the last day of the taxable year. The amount of the loss will be equal to each shareholder's adjusted basis in our stock. The deduction so allowed will be subject to the limitations on capital losses. Each shareholder is encouraged to consult with his own tax advisor to determine the specific federal and state income tax consequences of the Company's liquidation.
The Company expects to realize cancellation of indebtedness income of approximately $2,653,000 upon liquidation of the Company and cancellation of the Company's remaining debt and other liabilities. However, because the Company will be insolvent at that time by the amount of the remaining liabilities, the Company should not recognize any cancellation of indebtedness income for federal income tax purposes. The Internal Revenue Code provides that cancellation of indebtedness income is excluded from gross income to the extent the taxpayer is insolvent immediately before the discharge. For this purpose, insolvency is defined as the excess of the taxpayer's liabilities over the fair market value of the taxpayer's assets. At the time of the liquidation, the Company will have no assets, and remaining liabilities totaling approximately $3,327,000 million.
Accounting Treatment
In the event we prepare any further financial statements we may need to change our basis of accounting to the liquidation basis of accounting. Under the liquidation basis of accounting, assets are stated at their estimated net realizable values, and liabilities are stated at their estimated settlement amounts. Recorded liabilities will include the estimated expenses associated with carrying out the Plan of Dissolution. For periodic reporting, a statement of net assets in liquidation is required to summarize the liquidation value per outstanding share of common stock. Valuations presented in the statement are required to represent management’s estimates, based on present facts and circumstances, of the net realizable values of assets, satisfaction amounts of liabilities, and expenses associated with carrying out the Plan of Dissolution based upon management assumptions.
The valuation of assets and liabilities may require many estimates and assumptions, and there will be substantial uncertainties in carrying out the provisions of the Plan of Dissolution. Ultimate values realized for our assets and ultimate amounts paid to satisfy our liabilities are expected to differ from estimates recorded in any future financial statements.
In order to eliminate expenses, we intend to cease filing annual, quarterly and current reports with the SEC under the Exchange Act as soon as possible after the filing of the Certificate of Dissolution with the Delaware Secretary of State by filing the appropriate form with the SEC and by waiting the requisite time periods without objection from the SEC regarding our plans to deregister.
Relationships and Transactions with M. Lee Pearce, M.D.
Parkson Property
As noted above, Parkson, the Company’s wholly owned subsidiary, previously owned the Real Property and on September 1, 2016 received net proceeds from its sale of $931,619.82. Parkson purchased the Real Property on September 28, 2001 from Bay Colony Associates, Ltd., an entity wholly-owned by Dr. Pearce, in exchange for a two-month note in the amount of $37,500 and a long term note and related mortgage in the amount of $712,500. The purchase price was based upon an independent third-party appraisal. The note was replaced multiple times and at the time of the sale of the Real Property was evidenced by a note dated December 2015 bearing interest at the rate of 2.50% per annum, with both principal and all accrued interest due in one lump sum on March 31, 2017. The indebtedness evidenced by the note at the time of the sale was $931,619.82 and was repaid at the time of the sale from net proceeds.
Loans, Funding of Working Capital and Other Relationships
On December 31, 2015, the Majority Stockholder Trust, as holder of and payee under a variety of debt instruments issued by the Company in prior years, other than the mortgage loan by which the Company acquired the Real Property, entered into a new arrangement with the Company and combining all of the Company’s indebtedness with it, and the related interest, into a single promissory note, in the principal amount of $3,063,424.61. The principal and all accrued interest – at the agreed rate of 2.50% per annum – of this new note are due in one lump sum on March 31, 2017. Other than the new principal amount, which includes the principal amount of the prior loans, the decrease in the rate to 2.50%, and the extension of the maturity date, in each case as noted above, the terms of prior debt were not materially changed.
During Le@P Technology Inc.’s recent history, the Company has relied entirely upon the Majority Stockholder Trust, acting in its discretion, to fund working capital and expenses (and to extend maturities on indebtedness owing to the Majority Stockholder Trust and other affiliates of Dr. Pearce). Notwithstanding this, neither Dr. Pearce, nor the Majority Stockholder Trust nor any other party has made any commitment or undertaken any obligation to provide additional
funding or financing (or to extend the maturity dates on existing indebtedness), including in connection with preparing, negotiating or reaching a definitive agreement with respect to or consummating any Opportunities. The Company has had no assurance that the Majority Stockholder Trust (or any other affiliate of the Majority Stockholder or any other party) will provide funding or financing to the Company, or that the Majority Stockholder Trust (or any other affiliate of the Majority Stockholder) would agree to extend the maturity dates on any existing indebtedness, which was one of the factors considered by the Board in concluding that there were no viable sources of Company revenue from which to fund operations.
The Majority Stockholder Trust is the sole owner of the issued and outstanding shares of the Company’s Series B Preferred Stock; as of December 31, 2015, dividends of $3,538,500 were accumulated and unpaid on the Company’s Series B Preferred Stock.
The Company subleases a portion of its office space to an entity which is beneficially owned and controlled by the Majority Stockholder Trust.
Ms. Mary E. Thomas, who served as the Company’s Acting Principal Financial Officer, Chief Accounting Officer, Vice President, Treasurer and Secretary (and a Class A Director) until her resignation prior to September 6, 2016 also serves or served as an officer for a number of entities which are directly or indirectly beneficially owned or controlled by Dr. Pearce. During 2015, an entity that is beneficially owned and controlled by Dr. Pearce paid the Company approximately $103,975 in professional fees for services provided by Ms. Thomas to such entity.
Mr. Timothy C. Lincoln, who serves as the Company’s Acting Principal Executive Officer, Chairman of the Board of Directors and President (and a Class B Director) served in various legal and management roles for Marquette Realty, Inc. from August 1995 to December 2008. Marquette Realty, Inc. managed a number of entities of which Dr. Pearce is the beneficial owner. In addition, Mr. Lincoln is the President and Treasurer of Lauderdale Holdings, Inc. (the entity which holds the Class B Common Stock of the Company and of which Dr. Pearce is the sole shareholder) and is the President and Secretary of Broward Trading Corporation (the entity which is the owner of 700,000 shares of Class A Common Stock of the Company and of which Dr. Pearce is the sole stockholder). Mr. Lincoln also serves as a director for a number of entities which are directly or indirectly beneficially owned or controlled by Dr. Pearce. From 1993 to 1996, Mr. Lincoln served as a mortgage loan officer for the Bank of North America, which was formerly controlled by Dr. Pearce.
Mr. Chris Minev, one of the Company’s Class A Directors, works as President and Executive Director for the Mariinsky Foundation of America, Inc. (formerly the White Nights Foundation of America). Dr. Pearce is a donor to the Mariinsky Foundation of America, Inc. and has a long-standing relationship with Mr. Minev related to the Mariinsky Foundation of America, Inc. and other philanthropic and performing arts endeavors.
From April 1991 to October 1996, Mr. Jose B. Valle, one of the Company’s Class A Directors, served first as CFO and later as CEO of Bank of North America in Miami, Florida. Until its sale in October 1996, Bank of North America was formerly controlled by Dr. Pearce.
Information required by Item 14 of Schedule 14A is contained in the Company's Annual Report on the Form 10-K for the fiscal year ended December 31, 2015 and is incorporated herein by reference. Such information includes but is not limited to the description of our business, property and legal proceedings, the "Management's Discussion and Analysis of Financial Condition and Results of Operations", and the financial statements for the fiscal years ended December 31, 2015 and 2014. The information incorporated by reference is considered to be a part of this Information Statement, and later information that we file with the SEC, including in this Information Statement, will update and supersede that information. A copy of the Annual Report on Form 10-K for the fiscal year ended December 31, 2015, as filed with the SEC is being mailed to stockholders with this Information Statement.
ADDITIONAL AVAILABLE INFORMATION
We are subject to the information and reporting requirements of the Securities Exchange Act of 1934, as amended, and in accordance with such act we file periodic reports, documents and other information with the Securities and Exchange Commission relating to our business, financial statements and other matters. Such reports and other information may be inspected and are available for copying at the public reference facilities of the Securities and Exchange Commission at 100 F Street, N.E., Washington D.C. 20549 or may be accessed at www.sec.gov.
DELIVERY OF DOCUMENTS TO SECURITY HOLDERS SHARING AN ADDRESS
Under SEC rules, only one annual report, information statement or Notice of Internet Availability of Proxy Materials, as applicable, need be sent to any household at which two or more of our stockholders reside if they appear to be members of the same family and contrary instructions have not been received from an affected stockholder. This procedure, referred to as householding, reduces the volume of duplicate information stockholders receive and reduces mailing and printing expenses for us. Brokers with accountholders who are our stockholders may be householding these materials. Once you have received notice from your broker that it will be householding communications to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, now or at any time in the future, you no longer wish to participate in householding and would like to receive a separate annual report, information statement or Notice of Internet Availability of Proxy Materials, or if you currently receive multiple copies of these documents at your address and would prefer that the communications be householded, you should contact us at 5601 N. Dixie Highway, Suite 411, Fort Lauderdale, Florida, Attn: Corporate Secretary or by telephone (954) 771-1772.
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By order of the Board of Directors of Le@P Technology, Inc.
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/s/ Timothy C. Lincoln
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Chairman and Acting Principal Executive Officer
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November 28, 2016
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PLAN OF DISSOLUTION
OF
LE@P TECHNOLOGY, INC.
The following Plan of Dissolution (this “
Plan
”), and the actions described in this Plan are intended to effect the dissolution and complete liquidation of Le@P Technology, Inc., a Delaware corporation (the “
Corporation
”), in accordance with Section 275 and other applicable provisions of the Delaware General Corporation Law (the “
DGCL
”).
1.
Adoption and Approval of this Plan.
The board of directors of the Corporation (the “
Board of Directors
”), at a meeting duly noticed and convened on September 6, 2016 (the “
Adoption Date
”), has adopted resolutions deeming it advisable and in the best interest of the stockholders of the Corporation to dissolve and liquidate the Corporation and adopt this Plan. Promptly after the Adoption Date, the Board of Directors shall take such action as is necessary to call a meeting of the Corporation’s stockholders, or if feasible, solicit a written consent in accordance with Section 228 of the DGCL, for purposes of conducting a vote so as to determine whether this Plan is approved. Upon each of the adoption of this Plan and stockholder approval of this Plan, the Corporation shall make as necessary such public filings and serve such notices with the U.S. Securities and Exchange Commission (the “
SEC
”) and state securities and other regulatory authorities, the Corporation’s stock transfer agent, any and all securities exchanges upon which the Corporation’s shares of stock are listed for trading or quotation services on which such shares are quoted for trading, and such other governmental, quasi-governmental and other regulatory agencies.
2.
Certificate of Dissolution.
The officers of the Corporation shall obtain any certificates required from the Delaware taxing authorities or any other governmental authority and, upon obtaining such certificates and paying such taxes as may be owing, and thereafter, provided the stockholders of the Corporation have approved this Plan, file with the Secretary of State of the State of Delaware a certificate of dissolution (the “
Certificate of Dissolution
”) in accordance with the DGCL (the effective time of such filing, or, such later time as stated therein, is referred to herein as the “
Effective Date
”). The Effective Date shall be no earlier than twenty (20) days following the Corporation’s filing of a Definitive Information Statement on Schedule 14C with the SEC, advising the stockholders of the corporation that the
holder of a majority of the voting power of our stockholders
has approved the liquidation and dissolution of the Corporation and that the Certificate of Dissolution will be filed.
3.
Cessation of Business Activities.
After the Effective Date and in accordance with Section 278 of the DGCL, the Corporation shall not engage in any business activities except for the purpose of preserving the value of its assets, winding up and liquidating its business and affairs, including, but not limited to, prosecuting and defending suits, whether civil, criminal or administrative, by or against the Corporation, collecting its assets, discharging or making provision for discharging its liabilities, dissolving its wholly-owned corporate subsidiaries (or taking such similar applicable corporate action with regard to such subsidiaries), withdrawing from all jurisdictions in which it is qualified to do business, distributing its remaining property, if any, to its stockholders, and doing every other act necessary to wind up and liquidate its business and affairs, but not for the purpose of continuing the business for which the Corporation was organized.
4.
Liquidation Process.
From and after the Effective Date and subject to the provisions hereof, the Corporation shall complete the following corporate actions:
a.
Sale of All or Substantially All of the Non-Cash Assets.
The Corporation shall sell, exchange or otherwise dispose of all or substantially all of its non-cash property and assets, including but not limited to all real property, other tangible assets, intellectual property and other intangible assets, in one or more transactions upon such terms and conditions in the best interests of the Corporation and its stockholders, without any further vote or action by the Corporation’s stockholders. It is understood that, to the extent that the Corporation has already commenced the sale and disposition of its assets, such sales and dispositions are hereby ratified and approved. The Corporation’s non-cash assets and properties may be sold in one transaction or in several transactions to one or more buyers. The Corporation shall obtain or shall have obtained an appraisal or other third-party opinion as to the value of any real property to be sold in connection with the liquidation.
b.
Payment Obligations.
The
Corporation shall (i) pay or make reasonable provision to pay all claims and obligations, including all contingent, conditional or unmatured contractual claims known to the Corporation, (ii) make such provisions as will be reasonably likely to be sufficient to provide compensation for any claim against the Corporation which is the subject of a pending action, suit or proceeding to which the Corporation is a party and (iii) make such provision as will be reasonably likely to be sufficient to provide compensation for claims that have not been made known to the Corporation or that have not arisen but that, based on facts known to the Corporation or a successor entity, are likely to arise or to become known to the Corporation or successor entity within ten (10) years after the Effective Date, if any. All such claims shall be paid in full (to the extent financial resources exist) and any such provision for payment made shall be made in full if there are sufficient assets. If there are insufficient assets of the Corporation, such claims and obligations of the Corporation shall be paid or provided for in accordance with their priority and, among claims of equal priority, ratably to the extent of assets of the Corporation legally available therefor.
c.
Distributions to Stockholders.
Any assets of the Corporation remaining after the payment of claims or the provision for payment of claims and obligations of the Corporation as provided in subsection (b) above shall be distributed by the Corporation to its stockholders in accordance with the priorities associated with the shares of stock so held, and among each class of common stock and series of preferred stock, ratably to the extent of assets of the Corporation legally available therefor.
5.
Cancellation of Capital Stock.
Upon the filing of the Certificate of Dissolution, regardless of whether or not there has been a distribution to the stockholders pursuant to Section 4.c. hereof or otherwise, each and every outstanding share of capital stock of the Corporation shall be cancelled by operation of law.
6.
Abandoned Property.
If any distribution to a stockholder cannot be made, then the distribution to which such person is entitled shall be transferred, at such time as the final liquidating distribution is made by the Corporation, to the extent permitted by law, to the official of such state or other jurisdiction authorized by applicable law to receive the proceeds of such distribution. The proceeds of such distribution shall thereafter be held solely for the benefit of and for ultimate distribution to such person and shall be treated as abandoned property and escheat to the applicable state or other jurisdiction in accordance with applicable law. In no event shall the proceeds of any such distribution revert to or become the property of the Corporation.
7.
Stockholder Approval of Sale of Assets.
Approval of the proposed dissolution and adoption of this Plan by the stockholders shall constitute the approval of the stockholders of the Corporation of the dissolution and winding-up of the Corporation and the sale, exchange or other disposition in liquidation of all or substantially all of the property and assets of the Corporation pursuant to the terms hereof, whether such sale, exchange or other disposition occurs in one transaction or a series of transactions, and shall constitute ratification of all contracts for sale, exchange or other disposition which are conditioned on adoption of this Plan.
8.
Expenses of Dissolution.
In connection with and for the purposes of implementing and assuring completion of this Plan, the Corporation may pay any brokerage, agency, professional, legal and other fees and expenses of persons rendering services to the Corporation in connection with the collection, sale, exchange or other disposition of the Corporation’s property and assets and the implementation of this Plan.
9.
Employees and Independent Contractors.
In connection with effecting the dissolution of the Corporation and for the purpose of implementing and assuring completion of this Plan, the Corporation may hire or retain such employees, consultants, independent contractors, agents and advisors as the Board of Directors deems necessary or desirable to supervise or facilitate the dissolution and winding-up.
10.
Indemnification
. The Corporation shall continue to indemnify its officers, directors, employees, and agents in accordance with its certificate of incorporation, bylaws and contractual arrangements as therein or elsewhere provided, the Corporation’s directors’ and officers’ liability insurance policy and applicable law. Such indemnification shall apply to acts or omissions of such persons in connection with the implementation of this Plan and the winding up of the affairs of the Corporation. The Board of Directors is authorized to obtain and maintain insurance as may be necessary or advisable to cover the Corporation’s indemnification obligations.
11.
Power of Board of Directors and Officers.
Upon approval of this Plan by the Corporation’s stockholders, the Board of Directors is hereby authorized, without further action by the Corporation’s stockholders, to do and perform, or cause, and hereby authorizes, the officers of the Corporation to do and perform, any and all acts, and to make, execute, deliver or adopt any and all agreements, resolutions, conveyances, certificates and other documents of every kind that are deemed necessary, appropriate or desirable, in the absolute discretion of the Board of Directors or such officers, to implement this Plan and the transactions contemplated hereby, including, without limitation, all filings or acts required by any state or federal law or regulation to wind up its affairs.
Adopted by the Board of Directors at a Special Meeting held on September 6, 2016.