Edgar Filing: Location Based Technologies, Inc.

lbt_10q-022809.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

Q	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended February 28, 2009

o	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 333-139395

LOCATION BASED TECHNOLOGIES, INC.

(Name of small business issuer in its charter)

Nevada		20-4854758
(State of incorporation)		(I.R.S. Employer Identification No.)

4989 E. La Palma Avenue, Anaheim, California 92807

(Address of principal executive offices)

888-600-1044

(Issuer’s telephone number)

Check whether the issuer (1) 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 Q No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer (Do not check if a smaller reporting company)	¨	Smaller reporting company	Q

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No Q

There are 88,244,270 shares outstanding of the issuer’s common stock as of April 3, 2009.

TABLE OF CONTENTS

		PAGE
PART I	FINANCIAL INFORMATION	3

ITEM 1.	FINANCIAL STATEMENTS (UNAUDITED)	3

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	33

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	42

ITEM 4T.	CONTROLS AND PROCEDURES	43

PART II	OTHER INFORMATION	42

ITEM 1.	LEGAL PROCEEDINGS	42

ITEM 1.A.	RISK FACTORS	42

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	42

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	42

ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	12

ITEM 5.	OTHER INFORMATION	42

ITEM 6.	EXHIBITS	45

SIGNATURE		47

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Location Based Technologies, Inc.

(A Development Stage Company)

CONSOLIDATED BALANCE SHEET

February 28, 2009 and August 31, 2008

	February 28,			August 31,
	2009			2008
	(Unaudited)
ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	103,745		$	20,569
Accounts receivable		735			-
Prepaid expenses		122,421			86,616
Deferred financing costs		2,375,000			-

Total current assets		2,601,901			107,185

Property and equipment, net of accumulated depreciation		1,312,099			1,043,861

OTHER ASSETS
Patents and trademarks, net of accumulated amortization		1,168,916			1,120,728
Deposits		20,458			20,458

Total other assets		1,189,374			1,141,186

TOTAL ASSETS	$	5,103,374		$	2,292,232


LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
Accounts payable and accrued expenses	$	837,694		$	634,822
Accrued officer compensation		418,403			268,403
Unearned revenue		29,953			-
Advances from officers		3,388,410			159,409
Accrued interest, advances from officers		9,526			-
Notes payable		925,000			-
Accrued interest, note payable		18,937			-
Notes payable, related party		634,000			-
Accrued interest, related party notes payable		27,550			-

Total current liabilities		6,289,473			1,062,634

TOTAL LIABILITIES		6,289,473			1,062,634

Commitments and contingencies		-			-

STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, $0.001 par value, 10,000,000 shares
authorized; no shares issued or outstanding		-			-
Common stock, $0.001 par value; 300,000,000 shares authorized;
88,244,270 and 87,091,914 shares issued and outstanding
at February 28, 2009 and August 31, 2008, respectively		25,845			24,693
Additional paid-in capital		13,919,756			11,228,750
Deficit accumulated during the development stage		(15,131,700	)		(10,023,845	)

Total stockholders' equity (deficit)		(1,186,099	)		1,229,598

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$	5,103,374		$	2,292,232

See accompanying notes to unaudited financial statements.

Location Based Technologies, Inc.

(A Development Stage Company)

CONSOLIDATED STATEMENT OF OPERATIONS

For the three and six months ended February 28, 2009 and February 29, 2008

and for the period from Inception (September 16, 2005) to February 28, 2009

(Unaudited)

													Inception
	For the three months ended						For the six months ended						(Sept 16, 2005)
	February 28,			February 29,			February 28,			February 29,			to February 28,
	2009			2008			2009			2008			2009

Revenue
Consulting	$	70,782		$	5,818		$	70,782		$	5,818		$	76,600

Cost of revenue
Consulting		50,608			-			50,608			-			50,608

Gross profit (loss)		20,174			5,818			20,174			5,818			25,992

Operating expenses
General and administrative		143,138			239,946			311,076			404,948			1,280,784
Officer compensation		90,000			90,000			180,000			180,000			1,395,000
Professional fees		471,300			318,548			833,558			1,416,327			3,116,906
Rent		33,900			28,693			67,800			46,971			281,805
Research and development		221,353			262,749			797,464			548,441			3,435,817

Total operating expenses		959,691			939,936			2,189,898			2,596,687			9,510,312

Net operating loss		(939,517	)		(934,118	)		(2,169,724	)		(2,590,869	)		(9,484,320	)

Other income (expense)
Interest income (expense), net		(37,609	)		18,940			(56,333	)		63,556			(354,710	)
Interest forgiven, net		-			125,008			-			58,206			58,206
Debt issuance costs - commissions		-			(173,006	)		-			(491,775	)		(491,775	)
Debt issuance costs - warrants		-			(1,141,998	)		-			(1,971,791	)		(1,971,791	)
Financing costs		(1,032,000	)		-			(2,877,549	)		-			(2,877,549	)
Foreign currency gain (loss), net		(6,552	)		-			(3,449	)		-			(3,788	)
Loss on asset disposal		-			(373	)		-			(373	)		(373	)

Total other income (expense)		(1,076,161	)		(1,171,429	)		(2,937,331	)		(2,342,177	)		(5,641,780	)

Net loss before income taxes		(2,015,678	)		(2,105,547	)		(5,107,055	)		(4,933,046	)		(15,126,100	)

Provision for income taxes		-			-			800			1,600			5,600

Net Loss	$	(2,015,678	)	$	(2,105,547	)	$	(5,107,855	)	$	(4,934,646	)	$	(15,131,700	)

Accumulated Deficit:

Balance, beginning of period		(13,116,022	)		(5,118,442	)		(10,023,845	)		(2,289,343	)		-

Balance, end of period	$	(15,131,700	)	$	(7,223,989	)	$	(15,131,700	)	$	(7,223,989	)	$	(15,131,700	)

Basic - Earnings (loss) per share	$	(0.02	)	$	(0.02	)	$	(0.06	)	$	(0.07	)

Basic - Weighted Average Number
of Shares Outstanding		87,867,126			84,619,392			87,518,279			73,039,347

See accompanying notes to unaudited financial statements.

Location Based Technologies, Inc.

(A Development Stage Company)

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

For the period from Inception (September 16, 2005) to February 28, 2009

(Unaudited)

													Deficit
													Accumulated			Total
	Preferred Stock				Common Stock						Additional		During the			Stockholders
	Number				Number		To be				Paid-In		Development			Equity
	of Shares		Amount		of Shares		issued		Amount		Capital		Stage			(Deficit)

Balance, September 16, 2005		-	$	-		-	$	-	$	-	$	-	$	-		$	-

Cash received for 20,000 shares of common stock to be issued, November 30, 2005		-		-		-		-		20		19,980		-			20,000

Cash received for 30,000 shares of common stock to be issued, November 30, 2005		-		-		-		-		30		29,970		-			30,000

Cash received for 25,000 shares of common stock to be issued, March 14, 2006		-		-		-		-		25		24,975		-			25,000

Cash received for 50,000 shares of common stock to be issued, August 4, 2006, net of offering costs		-		-		-		50		-		46,950		-			47,000

Cash received for 50,000 shares of common stock to be issued, August 18, 2006		-		-		-		50		-		49,950		-			50,000

Issuance of common stock for services, July 2006		-		-		225,000		-		75		74,925		-			75,000

Additional paid-in capital in exchange for services		-		-		-		-		-		150,000		-			150,000

Net loss		-		-		-		-		-		-		(783,596	)		(783,596	)

Balance, August 31, 2006		-		-		225,000		100		150		396,750		(783,596	)		(386,596	)

Issuance of common stock, net of offering costs, for cash, September 2006		-		-		450,000		-		150		110,600		-			110,750

Issuance of common stock, net of offering costs, for cash, November 2006		-		-		90,000		-		30		22,470		-			22,500

Issuance of common stock, net of offering costs, for cash, February 2007		-		-		750,000		-		250		181,750		-			182,000

Issuance of common stock, net of offering costs, for cash, March 2007		-		-		75,000		-		25		18,725		-			18,750

See accompanying notes to unaudited financial statements.

Location Based Technologies, Inc.

(A Development Stage Company)

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

For the period from Inception (September 16, 2005) to February 28, 2009

(Unaudited)

Deficit

Accumulated

Total

Preferred Stock

Common Stock

Additional

During the

Stockholders

Number

To be

Paid-In

Development

Equity

of Shares

Amount

of Shares

issued

Amount

Capital

Stage

(Deficit)

Issuance of 525,000 shares of common stock, June 2007	-	-	525,000	(100	)	100	-		-		-

Issuance of 165,000 shares of common stock for cash proceeds of $55,000, June 2007	-	-	165,000	-		55	54,945		-		55,000

Issuance of 50,400,000 shares of common stock for cash proceeds of $168, June 2007	-	-	50,400,000	-		16,800	(16,632	)	-		168

Issuance of common stock for conversion of note payable, August 2007	-	-	45,000	-		15	14,985		-		15,000

Net loss	-	-	-	-		-	-		(1,505,747	)	(1,505,747	)

Balance, August 31, 2007	-	-	52,725,000	-		17,575	783,593		(2,289,343	)	(1,488,175	)

Issuance of Series A warrants, September 2007	-	-	-	-		-	1,408,167		-		1,408,167

Issuance of Series B warrants, September 2007	-	-	-	-		-	563,624		-		563,624

Issuance of common stock for services, October 2007	-	-	18,000	-		6	5,994		-		6,000

Issuance of common stock for conversion of related party note payable, October 2007	-	-	2,410,500	-		804	802,696		-		803,500

Share exchange with Springbank Resources resulting in recapitalization, October 2007	-	-	13,012,500	-		-	419		-		419

Issuance of common stock for services, November 2007	-	-	1,276,632	-		426	425,118		-		425,544

Issuance of common stock for services, November 2007	-	-	600,000	-		200	829,800		-		830,000

Issuance of common stock for conversion of notes payable, November and December 2007	-	-	15,726,000	-		5,242	5,236,758		-		5,242,000

Issuance of common stock for conversion of accrued interest on related party note payable, February 2008	-	-	361,797	-		120	120,479		-		120,599

See accompanying notes to unaudited financial statements.

Location Based Technologies, Inc.

(A Development Stage Company)

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

For the period from Inception (September 16, 2005) to February 28, 2009

(Unaudited)

Deficit

Accumulated

Total

Preferred Stock

Common Stock

Additional

During the

Stockholders

Number

To be

Paid-In

Development

Equity

of Shares

Amount

of Shares

issued

Amount

Capital

Stage

(Deficit)

Issuance of common stock for conversion of accrued officer compensation, February 2008	-		-	811,485	-		270		270,225		-			270,495

Issuance of common stock for services, June 2008	-		-	150,000	-		50		373,950		-			374,000

Issuance of Series C warrants, June 2008	-		-	-	-		-		353,447		-			353,447

Issuance of Series D and E warrants, August 2008	-		-	-	-		-		54,480		-			54,480

Net loss	-		-	-	-		-		-		(7,734,502	)		(7,734,502	)

Balance, August 31, 2008	-		-	87,091,914	-		24,693		11,228,750		(10,023,845	)		1,229,598

Issuance of common stock for services, October 2008	-		-	184,856	-		184		453,088		-			453,272

Issuance of common stock for services, November 2008	-		-	100,000	-		100		112,900		-			113,000

Issuance of Series G warrants, November 2008	-		-	-	-		-		160,939		-			160,939

Issuance of Series H warrants, November 2008	-		-	-	-		-		1,115,361		-			1,115,361

Issuance of common stock for services, December 2008	-		-	401,500	-		402		398,828		-			399,230

Issuance of common stock for services, January 2009	-		-	136,000	-		136		140,021		-			140,157

Issuance of common stock for services, February 2009	-		-	330,000	-		330		309,870		-			310,200

Net loss	-		-	-	-		-		-		(5,107,855	)		(5,107,855	)

Balance, February 28, 2009	-	$	-	88,244,270	-	$	25,845	$	13,919,756	$	(15,131,700	)	$	(1,186,099	)

See accompanying notes to unaudited financial statements.

Location Based Technologies, Inc.

(A Development Stage Company)

CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended February 28, 2009 and February 29, 2008

and for the period from Inception (September 16, 2005) to February 28, 2009

(Unaudited)

							Inception
	For the six months ended						(Sept 16, 2005)
	February 28,			February 29,			to February 28,
	2009			2008			2009

Cash Flows from Operating Activities
Net loss	$	(5,107,855	)	$	(4,934,646	)	$	(15,131,700	)
Adjustment to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		18,617			4,381			34,825
Common stock issued for services		1,415,859			1,261,544			3,306,403
Warrants issued for services		1,276,299			1,971,791			3,656,017
Recapitalization adjustment		-			419			419
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable		(735	)		(5,818	)		(735	)
(Increase) decrease in prepaid expenses		(35,805	)		13,992			(122,421	)
(Increase) decrease in debt issuance/financing costs		475,000			446,776			475,000
(Increase) decrease in deposits		-			(13,398	)		(20,458	)
Increase (decrease) in accounts payable and accrued expenses		202,872			(627,165	)		837,694
Increase (decrease) in accrued officer compensation		150,000			40,020			688,898
Increase (decrease) in unearned revenue		29,953			-			29,953
Increase (decrease) in accrued interest		56,013			(58,206	)		176,612

Net cash used in operating activities		(1,519,782	)		(1,900,310	)		(6,069,493	)

Cash Flows from Investing Activities
Purchase of property and equipment		(286,621	)		(337,349	)		(1,346,274	)
Additions to patents and trademarks		(48,422	)		(101,998	)		(269,566	)

Net cash used in investing activities		(335,043	)		(439,347	)		(1,615,840	)

Cash Flows from Financing Activities
Proceeds from issuance of common stock, net of offering costs		-			-			404,168
Proceeds from common stock be to issued		-			-			142,000
Advances / (repayments) from officers		379,001			(25,020	)		538,410
Proceeds from convertible notes payable		-			350,000			5,242,000
Proceeds from notes payable		925,000			-			925,000
Proceeds from notes payable, related party		1,300,000			-			1,350,000
Repayment on notes payable, related party		(666,000	)		-			(812,500	)

Net cash provided by financing activities		1,938,001			324,980			7,789,078

Net increase (decrease) in cash and cash equivalents		83,176			(2,014,677	)		103,745

Cash and cash equivalents, beginning of period		20,569			3,671,900			-

Cash and cash equivalents, end of period	$	103,745		$	1,657,223		$	103,745

See accompanying notes to unaudited financial statements.

Location Based Technologies, Inc.

(A Development Stage Company)

CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended February 28, 2009 and February 29, 2008

and for the period from Inception (September 16, 2005) to February 28, 2009

(Unaudited)

					Inception
	For the six months ended				(Sept 16, 2005)
	February 28,		February 29,		to February 28,
	2009		2008		2009

Supplemental disclosure of cash flow information:
Income taxes paid	$	-	$	-	$	1,600
Interest paid	$	-	$	-	$	-


Supplemental disclosure of noncash financing and investing activities:

Deferred costs paid for with debt	$	2,850,000	$	-	$	2,850,000
Issuance of shares of common stock for services	$	1,415,859	$	1,261,544	$	3,306,403
Issuance of warrants for services	$	1,276,299	$	1,971,791	$	3,656,017
Acquisition of patents for note payable	$	-	$	-	$	900,000
Issuance of common stock for conversion of notes payable	$	-	$	5,242,000	$	5,512,000
Issuance of common stock for conversion of related party note payable	$	-	$	803,500	$	803,500
Issuance of common stock for conversion of accrued interest on related party note payable	$	-	$	120,599	$	120,599
Issuance of common stock for conversion of accrued officer compensation	$	-	$	270,495	$	270,495

See accompanying notes to unaudited financial statements.

LOCATION BASED TECHNOLOGIES, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008

1.	NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

Location Based Technologies, Inc. (formerly known as Springbank Resources, Inc.) (the “Company,” “our,” or “LBT”) was incorporated under the laws of the State of Nevada on April 10, 2006.

Location Based Technologies, Corp. (formerly known as PocketFinder, Inc.) was incorporated under the laws of the State of California on September 16, 2005. On July 7, 2006, it established PocketFinder, LLC (“LLC”), a California Limited Liability Company. On May 29, 2007, PocketFinder, Inc. filed amended articles with the Secretary of State to change its name to Location Based Technologies, Corp.

Merger

On August 24, 2007, Location Based Technologies, Corp. merged with PocketFinder, LLC. The merger was approved by the shareholders of Location Based Technologies, Corp. and PocketFinder, LLC by unanimous written consent. Location Based Technologies, Corp. was the survivor of the merger with PocketFinder, LLC.

Each Class A Membership Unit of the LLC was converted into 150,000 shares of common stock of the Company or fraction thereof and each Class C Membership Unit of the LLC was cancelled. Upon consummation of the merger, 10.9 Class A Membership Units of the LLC were converted into 1,635,000 shares of common stock of the Company.

Stock Exchange Agreement

On October 11, 2007, Location Based Technologies, Corp. effected a stock exchange agreement and plan of reorganization (the “Agreement”) with Springbank Resources, Inc. (“SRI”) whereby SRI acquired all of the issued and outstanding shares of Location Based Technologies, Corp. in exchange for shares of SRI’s common stock.

Subject to the terms and conditions of the Agreement, SRI issued, and the stockholders of Location Based Technologies, Corp. accepted 55,153,500 shares of SRI’s common stock in consideration for all of the issued and outstanding shares of Location Based Technologies, Corp. The shares of SRI’s common stock were allocated to the shareholders of Location Based Technologies, Corp. in accordance with the Agreement.

LOCATION BASED TECHNOLOGIES, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008

1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Stock Exchange Agreement (Continued)

The former shareholders of Location Based Technologies, Corp. acquired control of SRI upon the closing of the stock exchange transaction. The exchange was accounted for as a reverse acquisition. Accordingly, for financial statement purposes, Location Based Technologies, Corp. was considered the accounting acquiror, and the related business combination was considered a recapitalization of Location Based Technologies, Corp. rather than an acquisition by SRI. The historical financial statements prior to the Agreement are those of Location Based Technologies, Corp., and the name of the consolidated company was changed to Location Based Technologies, Inc.

Consolidation Policy

The accompanying financial statements include the operations of the Company and its wholly owned subsidiary. Intercompany balances and transactions have been eliminated in consolidation.

Stock Split

All share and per-share amounts in the accompanying financial statements, unless otherwise indicated, have been retroactively restated to reflect a 3 for 1 stock split approved by the Board in October 2008, as if the split had been in effect since inception.

Nature of Business

The Company is in the final development stage of creating PocketFinder® personal locators. PocketFinders® are small personal location devices designed to give parents, guardians, and pet owners peace of mind. Utilizing the U.S. Department of Defense’s multi-billion dollar Global Positioning System (GPS) satellites and existing wireless technology, our team of engineers have developed technology which allows our network of members to locate anyone carrying our device, whether that person is inside of a building/structure or in the great outdoors (Systems and Method Patent pending). PocketFinders® are small, rugged, and water tight. The devices can be used to locate children, elderly or disabled persons and pets as well as for the tracking of valued personal property.

LOCATION BASED TECHNOLOGIES, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008

1.	NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Basis of Presentation

The unaudited financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. They do not include all information and notes required by generally accepted accounting principles for complete financial statements. However, except as disclosed herein, there has been no material changes in the information disclosed in the notes to financial statements included in the annual report on Form 10-KSB of Location Based Technologies, Inc. for the year ended August 31, 2008. In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended February 28, 2009, are not necessarily indicative of the results that may be expected for any other interim period or the entire year. For further information, these unaudited financial statements and the related notes should be read in conjunction with the Company’s audited financial statements for the year ended August 31, 2008, included in the Company’s report on Form 10-KSB.

Use of Estimates

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

Cash and Cash Equivalents

For purposes of the balance sheets and statements of cash flows, the Company considers all highly liquid debt instruments purchased with maturity of three months or less to be cash equivalents.

LOCATION BASED TECHNOLOGIES, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008

1.	NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Concentration of Credit Risk

Cash and Cash Equivalents – The cash and cash equivalent balances at February 28, 2009, are principally held by one institution which insures our aggregated accounts with the Federal Deposit Insurance Corporation ("FDIC") up to $250,000. At times, the Company has maintained bank balances which have exceeded FDIC limits. The Company has not experienced any losses with respect to its cash balances.

Revenues – For the six months ended February 28, 2009, the Company transacted its business with two customers. The Company’s largest customer accounted for 99% of total revenues. Total revenues from this customer were $70,047 for the six months ended February 28, 2009.

Allowance for Doubtful Accounts

The allowance for doubtful accounts on accounts receivable is charged to operations in amounts sufficient to maintain the allowance for uncollectible accounts at a level management believes is adequate to cover any probable losses. Management determines the adequacy of the allowance based on historical write-off percentages and the current status of accounts receivable. Accounts receivable are charged off against the allowance when collectibility is determined to be permanently impaired. As of February 28, 2009, there was no allowance for doubtful accounts recorded, as all of the Company’s receivables were considered collectible.

Fair Value of Financial Instruments

Pursuant to Statement of Financial Accounting Standards No. 107, Disclosures About Fair Value of Financial Instruments, the Company is required to estimate the fair value of all financial instruments included on its balance sheet. The carrying value of cash, accounts receivable, prepaid expenses, accounts payable and accrued expenses approximate their fair value due to the short period to maturity of these instruments.

LOCATION BASED TECHNOLOGIES, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008

1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Intangible Assets – Patents and Trademarks

The Company capitalizes internally developed assets related to certain costs associated with patents and trademarks. These costs include legal and registration fees needed to apply for and secure patents. The intangible assets acquired from other enterprises or individuals in an “arms length” transaction are recorded at cost. As of February 28, 2009 and August 31, 2008, the Company capitalized $1,075,548 and $1,055,396 for patent related expenditures, respectively. As of February 28, 2009 and August 31, 2008, the Company has capitalized $94,018 and $65,748 for trademark related expenditures, respectively.

Patents are subject to amortization upon issuance by the United States Patent and Trademark Office. Intangible assets are amortized in accordance with Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, using the straight-line method over the shorter of their estimated useful lives or remaining legal life. Amortization expense totaled $234 and $0 for the six months ended February 28, 2009 and February 29, 2008, respectively.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated using the straight-line method and with useful lives used in computing depreciation ranging from 2 to 5 years. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Expenditures for maintenance and repairs are charged to operations as incurred; additions, renewals and betterments are capitalized.

Internal Website Development Costs

Under Financial Accounting Standards Board (“FASB”) Emerging Issues Task Force Statement 00-2 ("EITF 00-2"), Accounting for Web Site Development Costs, costs and expenses incurred during the planning and operating stages of the Company's web site development are expensed as incurred. Under EITF 00-2, costs incurred in the web site application and infrastructure development stages are capitalized by the Company and amortized to expense over the web site's estimated useful life or period of benefit. As of February 28, 2009 and August 31, 2008, the Company capitalized costs totaling $1,221,959 and $985,122, respectively, related to its website development. The website development costs will be depreciated when the website is completed and ready for use.

LOCATION BASED TECHNOLOGIES, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008

1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Long-Lived Assets

The Company accounts for its long-lived assets in accordance with Statement of Financial Accounting Standards No. 144 (“SFAS No. 144”), Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS No. 144 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset's carrying value and fair value or disposable value. As of February 28, 2009, the Company did not deem any of its long-term assets to be impaired.

Revenue Recognition

Revenues are recognized in accordance with Staff Accounting Bulletin (“SAB”) No. 101, Revenue Recognition in Financial Statements, as amended by SAB No. 104, Revenue Recognition, when (a) persuasive evidence of an arrangement exists, (b) the products or services have been provided to the customer, (c) the fee is fixed or determinable, and (d) collectibility is reasonably assured. In instances where the customer, at its discretion, has the right to reject the product or services prior to final acceptance, revenue is deferred until such acceptance occurs.

Consulting Revenue – The Company’s consulting revenue consists of software customization and consulting service contracts recognized utilizing the percentage-of-completion method in accordance with Accounting Research Bulletin No. 45, Long-Term Construction-Type Contracts and the relevant guidance of Statement of Position (“SOP”) No. 81-1, Accounting for Performance of Construction-Type and Certain Production-Type Contracts, as prescribed by SOP 97-2, Software Revenue Recognition. For fixed fee contracts the percentage-of-completion is measured by the percentage of software customization or consulting hours incurred to date to total estimated hours. This method is used because management believes that hours expended is the best measure of progress on these engagements. Revisions in total estimated hours are reflected in the accounting period in which the required revisions become known. Anticipated losses on contracts are charged to income in their entirety when such losses become evident.

LOCATION BASED TECHNOLOGIES, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008

1.	NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Research and Development

Research and development costs are clearly identified and are expensed as incurred in accordance with Statement of Financial Accounting Standards No. 2, Accounting for Research and Development Costs. For the six months ended February 28, 2009 and February 29, 2008, the Company incurred $797,464 and $548,441 of research and development costs, respectively.

Provision for Income Taxes

The Company accounts for income taxes under Statement of Financial Accounting Standards No. 109 (“SFAS No. 109”), Accounting for Income Taxes. Under the asset and liability method of SFAS No. 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements’ carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under SFAS No. 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. The Company has included its $800 franchise fee in its provision for income taxes for the six months ended February 28, 2009 and February 29, 2008.

Earnings/ Loss Per Share

The Company computes basic earnings (loss) per share using the weighted average number of common shares outstanding during the period in accordance with Statement of Financial Standards No. 128 ("SFAS No. 128"), Earnings Per Share, which specifies the compilation, presentation, and disclosure requirements for income per share for entities with publicly held common stock or instruments which are potentially common stock. Under SFAS No. 128, diluted earnings (loss) per share are computed using the weighted average number of common shares outstanding and the dilutive potential common shares outstanding during the period. Dilutive potential common shares primarily consist of stock options and warrants issued by the Company. These potential common shares are excluded from diluted loss per share as their effect would be anti-dilutive.

LOCATION BASED TECHNOLOGIES, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008

1.	NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent Accounting Pronouncements

FASB Interpretation No. 48 – In July 2006, the FASB issued Interpretation No. 48 (“FIN No. 48”), Accounting for Uncertainty in Income Taxes, which supplements SFAS No. 109, Accounting for Income Taxes, by defining the confidence level that a tax position must meet in order to be recognized in the financial statements. The Interpretation requires that the tax effects of a position be recognized only if it is “more-likely-than-not” to be sustained based solely on its technical merits as of the reporting date. The more-likely-than-not threshold represents a positive assertion by management that a company is entitled to the economic benefits of a tax position. If a tax position is not considered more-likely-than-not to be sustained based solely on its technical merits, no benefits of the position are to be recognized. This Interpretation is effective for fiscal years beginning after December 15, 2006. The Company has adopted this interpretation.

SFAS No. 157 – In September 2006, the FASB issued Statement of Financial Standards No. 157 (“SFAS No. 157”), Fair Value Measurements. This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (“GAAP”), and expands disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements, the Board having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, this Statement does not require any new fair value measurements. However, for some entities, the application of this Statement will change current practice. In February 2008, the FASB staff issued Staff Position No. 157-2, Effective Date of FASB Statement No. 157 ("FSP FAS 157-2"). FSP FAS 157-2 delayed the effective date of SFAS No. 157 for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). The provisions of FSP FAS 157-2 are effective for the Company's fiscal year beginning September 1, 2009. The Company believes that the adoption of this standard will not have a material impact on its financial statements.

LOCATION BASED TECHNOLOGIES, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008

1.	NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent Accounting Pronouncements (Continued)

SFAS No. 158 – In September 2006, the FASB issued Statement of Financial Standards No. 158 (“SFAS No. 158”), Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans - an amendment of FASB Statements No. 87, 88, 106, and 132(R). This Statement improves financial reporting by requiring an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income of a business entity or changes in unrestricted net assets of a not-for-profit organization. This Statement also improves financial reporting by requiring an employer to measure the funded status of a plan as of the date of its year-end statement of financial position, with limited exceptions. An employer with publicly traded equity securities is required to initially recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the fiscal year ending after December 15, 2006. An employer without publicly traded equity securities is required to recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the fiscal year ending after June 15, 2007. The Company presently has no such defined benefit pension or other post retirement plan. If and at such time the Company establishes a defined benefit pension or other post retirement plan, the Company will apply SFAS No. 158.

SAB No. 108 – In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 108 (“SAB No. 108”), Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements. The guidance in SAB No. 108 requires Companies to base their materiality evaluations on all relevant quantitative and qualitative factors. This involves quantifying the impact of correcting all misstatements, including both the carryover and reversing effects of prior year misstatements, on the current year financial statements. The Company has adopted this standard.

LOCATION BASED TECHNOLOGIES, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008

1.	NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent Accounting Pronouncements (Continued)

SFAS No. 141(R) – In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141(R) (“SFAS No. 141(R)”), Business Combinations. SFAS No. 141(R) requires the acquiring entity in a business combination to recognize all assets acquired and liabilities assumed in the transaction, establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed, and requires the acquirer to disclose the nature and financial effect of the business combination. SFAS No. 141(R) is effective for fiscal years beginning on or after December 15, 2008. If and when the Company acquires one or more entities in the future, it will apply SFAS No. 141(R) for the purposes of accounting for such acquisitions.

SFAS No. 160 – In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160 (“SFAS No. 160”), Noncontrolling Interests in Consolidated Financial Statements. SFAS No. 160 amends Accounting Research Bulletin No. 51, Consolidated Financial Statements, to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS No. 160 is effective for fiscal years beginning on or after December 15, 2008. The Company presently has no such noncontrolling interests. If and at such time as such an interest exists, it will apply SFAS No. 160.

SFAS No. 161 – In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161 (“SFAS No. 161”), Disclosures about Derivative Instruments and Hedging Activities. SFAS No. 161 amends and expands the disclosure requirements of SFAS No. 133, Accounting for Derivative Instruments and Hedging. SFAS No. 161 is effective for fiscal years beginning after November 15, 2008. The Company believes that the adoption of this standard will not a have a material impact on its financial statements.

FSP No. 142-3 – In April 2008, the FASB issued Staff Position No. 142-3 (“FSP No. 142-3”), Determination of the Useful Life of Intangible Assets. FSP No. 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets. The FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Early adoption is prohibited. The Company is currently assessing the potential effect of FSP No. 142-3 on its financial statements.

LOCATION BASED TECHNOLOGIES, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008

1.	NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent Accounting Pronouncements (Continued)

SFAS No. 162 – In May 2008, the FASB issued Statement of Financial Accounting Standards No. 162 (“SFAS No. 162”), The Hierarchy of Generally Accepted Accounting Principles. SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles in the United States. SFAS No. 162 will become effective 60 days following Securities and Exchange Commission (“SEC”) approval of the Public Company Accounting Oversight Board (“PCAOB”) amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. The Company does not anticipate the adoption of SFAS No. 162 to have a material impact on its financial statements.

EITF No. 03-6-1 – In June 2008, the FASB issued Staff Position No. EITF 03-6-1 (“EITF No. 03-6-1”), Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities. EITF No. 03-6-1 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting, and therefore, need to be included in the earnings allocation in calculating earnings per share under the two-class method described in Statement of Financial Accounting Standards No. 128, Earnings per Share. EITF No. 03-6-1 requires companies to treat unvested share-based payment awards that have non-forfeitable rights to dividend or dividend equivalents as a separate class of securities in calculating earnings per share. EITF No. 03-6-1 is effective for fiscal years beginning after December 15, 2008. The Company is currently assessing the potential effect of EITF No. 03-6-1 on its financial statements.

LOCATION BASED TECHNOLOGIES, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008

2.	PROPERTY AND EQUIPMENT

Property and equipment at February 28, 2009 and August 31, 2008 consists of the following:

	February 28,			August 31,
	2009			2008
Website development costs	$	1,221,959		$	985,122
Machinery and equipment		63,388			38,990
Computer software		27,316			-
Computer and video equipment		21,216			21,216
Office furniture		11,546			11,546
Leasehold improvements		2,445			2,445

		1,347,870			1,059,319
Less: accumulated depreciation		(35,771	)		(15,458	)

Total property and equipment	$	1,312,099		$	1,043,861

Depreciation expense for the six months ended February 28, 2009 and February 29, 2008 amounted to $18,383 and $4,381, respectively.

3. ADVANCES FROM OFFICERS

From time to time, the Company’s officers advance funding to the Company to cover operating expenses. Beginning December 1, 2008, existing advances from officers and all future advances will accrue interest at the rate of 8% per annum. The advances from officers have no formal repayment terms. In January 2009, officers of the Company transferred 2,500,000 shares of their personally owned LBT common stock to certain advisors in exchange for capital raising services to be provided in 2009. The amount recorded totaled $2,850,000, which represents the fair value of the stock transferred, and of the services to be received. For the six months ended February 28, 2009, cash advances from officers totaling $412,000 were provided to the Company to cover operating expenses. As of February 28, 2009, advances from officers and accrued interest amounted to $3,388,410 and $9,526, respectively.

LOCATION BASED TECHNOLOGIES, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008

4. CONVERTIBLE NOTES PAYABLE

From March 2007 through October 2007, the Company entered into convertible note agreements totaling $5,242,000. Under the terms of the agreements, amounts borrowed must be repaid by March 31, 2008 and accrue interest at the rate of 8% per annum. At the option of the Company or the convertible note holder, the notes plus any accrued and unpaid interest may be converted into shares of the Company’s common stock on the basis of $0.33 per share. The notes may be prepaid at any time, at the option of the Company, in whole or in part without penalty.

From November 2007 through December 2007, all of the convertible notes payable totaling $5,242,000 were converted into 15,726,000 shares of the Company’s common stock on the basis of $0.33 per share. In connection with the note payable conversions, each note holder agreed to forgive accrued interest on the notes totaling $168,989.

5. NOTES PAYABLE

On November 18, 2008, the Company entered into a senior secured promissory note agreement for $625,000, the proceeds from which were used to pay down related party debt (see note 6). Under the terms of the promissory note agreement, principal and any unpaid interest shall be repaid by February 18, 2009, or upon a minimum of $1,500,000 being raised by the Company. The note bears interest at 12% per annum through February 18, 2009, may be repaid at any time before the repayment date, in part or in full, without penalty, and is secured by common stock personally owned by an officer of the Company. In addition, the Company issued 50,000 shares of common stock valued at $55,000 on the date of issuance. On January 30, 2009, the promissory note agreement was extended for an additional three months and due on May 18, 2009. As consideration for the promissory note extension, the Company issued an additional 50,000 shares of common stock valued at $47,000 on the date of issuance. As of February 28, 2009, the note payable balance and accrued interest totaled $625,000 and $12,329, respectively.

On December 24, 2008, the Company entered into a promissory note agreement for $300,000. Under the terms of the promissory note agreement, principal and any unpaid interest shall be repaid by March 24, 2009, or upon a minimum of $1,500,000 being raised by the Company. The note bears interest at 12% per annum through March 24, 2009, and may be repaid at any time before the repayment date, in part or in full, without penalty. In addition, the Company issued 100,000 shares of common stock valued at $94,000 on the date of issuance. As of February 28, 2009, the note payable balance and accrued interest totaled $300,000 and $6,608, respectively.

LOCATION BASED TECHNOLOGIES, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008

6. NOTES PAYABLE – RELATED PARTY

On November 28, 2005, the Company entered into a promissory note agreement with the Company’s CEO and stockholder for $900,000 in exchange for the assignment of certain intellectual property and trademark rights. Under the terms of the promissory note agreement, the principal and any unpaid interest shall not become due until the Company attains financial stability, defined as strong revenue generation and cash flow. Up to twelve quarterly payments may be made to fulfill payment of this note. The note may be prepaid without premium or penalty. The note bears interest at 8% per annum and is payable at any time before the repayment date. The note is secured by all intellectual property, trademarks, ongoing research and development and all other assets owned by the Company. On October 29, 2007, the CEO elected to convert the outstanding balance on the promissory note agreement into common stock of the Company. The note payable balance totaling $803,500 was converted into 2,410,500 shares of the Company’s common stock on the basis of $0.33 per share. In February 2008, accrued interest on the note payable totaling $120,599 was converted into 361,797 shares of the Company’s common stock on basis of $0.33 per share.

On September 3, 2008, the Company entered into an unsecured promissory note agreement with the Company’s Co-President and stockholder for $950,000. Under the terms of the promissory note agreement, the principal and any unpaid interest shall be repaid by March 3, 2009, six months from the date of issuance. The note bears interest at 8% per annum and may be repaid at any time before the repayment date, in part or in full, without penalty. On November 18, 2008, the Company entered into a senior secured promissory note with an unrelated party for $625,000. The proceeds of $625,000 were used to pay down the $950,000 related party promissory note payable in the second quarter. As of February 28, 2009, the note payable balance and accrued interest totaled $284,000 and $24,942, respectively.

On January 26, 2009, the Company entered into an unsecured promissory note agreement with the Company’s Co-President and stockholder for $350,000. Under the terms of the promissory note agreement, the principal and any unpaid interest shall be repaid by April 26, 2009, three months from the date of issuance. The note bears interest at 8% per annum and may be repaid at any time before the repayment date, in part or in full, without penalty. As of February 28, 2009, the note payable balance and accrued interest totaled $350,000 and $2,608, respectively.

7. COMMITMENTS AND CONTINGENCIES

Consulting Agreements

In July 2007, the Company entered into a financial consulting agreement whereby the consultant will be compensated 2% of the Company’s first ten million dollars of sales and 1% of the second ten million dollars of sales. The agreement expires July 16, 2010.

LOCATION BASED TECHNOLOGIES, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008

7. COMMITMENTS AND CONTINGENCIES

Consulting Agreements (Continued)

In January 2008, the Company entered into a consulting and sales representative agreement whereby the consultant will be compensated 5% of certain product sales. In addition, the consultant may earn warrants to purchase up to 600,000 shares of the Company’s common stock upon meeting certain sales targets. The agreement expires December 31, 2008, and shall automatically renew from year to year until terminated by either party.

In February 2008, the Company entered into a framework, platform development and assistance services agreement related to technological developments of the database and website. Under the terms of the agreements, the Company is obligated to pay approximately $270,000 from March 2008 through January 2009. The agreements expire February 2011.

In March 2008, the Company entered into a consulting services agreement for business development and capital raising services. Under the agreement, the consultant will be compensated $10,000 per month in cash or in the form of warrants. In addition, the consultant will be paid a 7% commission for capital raised and sales commissions ranging from 3% to 7% of net revenue from certain customers. The agreement expires August 1, 2008 and may be extended for an additional six-month period. In February 2009, the agreement was extended for an additional six-month period expiring August 1, 2009.

Other Commitments

On September 26, 2008, the Company received a purchase order for approximately $3,700,000 from TagWorks LLC for PetFinderTM devices. The Company expects to begin delivery in June 2009. TagWorks LLC was co-founded by a shareholder of the Company.

Operating Leases

The Company leases approximately 7,000 square feet of general office space in Anaheim, California, for base rent of $11,300. The Company is also responsible for its share of lease related operating expenses approximating $1,500 per month. The lease expires on December 31, 2009.

LOCATION BASED TECHNOLOGIES, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008

7. COMMITMENTS AND CONTINGENCIES (Continued)

Operating Leases (Continued)

Total rental expense on operating leases for the six months ended February 28, 2009 and February 29, 2008 was $67,800 and $46,971, respectively.

As of February 28, 2009, the future minimum lease payments on operating leases for the year ended February 28, 2010 amounted to $116,390.

Contingencies – Convertible Note Shares

In 2007, the Company sold convertible notes to accredited investors in reliance on an exemption from registration provided by Section 4(2) of the Securities Act and similar state exemptions. Management has been advised by counsel that the availability of those exemptions cannot be determined with legal certainty due to the fact that the company or its predecessors may not have complied with all of the provisions of exemption safe-harbors for such sales offered by rules promulgated under the Securities Act by the SEC. Thus, it is possible that a right of rescission may exist for shares underlying the convertible notes for which the statute of limitations has not run. As disclosed in note 4, convertible notes totaling $5,242,000 were exchanged for common shares, and subsequently, some of the shares were sold in the open market. Management has performed an analysis under FAS 5, Accounting for Contingencies, and concluded that the likelihood of a right of rescission being successfully enforced on the remaining convertible note shares is remote, and consequently, has accounted for these shares in permanent equity in the financial statements.

8. EQUITY

Common Stock (Reflects 3 for 1 stock split distributed October 20, 2008)

All shares of common stock for amounts received during the period from inception (September 16, 2005) through August 31, 2006 were issued in June 2007.

In November 2005, the Company performed a private placement and agreed to issue 60,000 shares of common stock at $0.33 per share for an aggregate total of $20,000.

In November 2005, the Company agreed to issue 90,000 shares of its common stock in exchange for legal services related to patents. The shares were valued at $30,000, which represents the fair market value on the date the services were rendered.

LOCATION BASED TECHNOLOGIES, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008

8. EQUITY (Continued)

Common Stock (Continued)

In March 2006, the Company performed a private placement and agreed to issue 75,000 shares of common stock at $0.33 per share for an aggregate total of $25,000.

In August 2006, the Company performed a private placement and agreed to issue 300,000 shares of common stock at $0.33 per share for an aggregate total of $100,000. The Company received cash proceeds totaling $97,000.

In July 2006, the Company issued 225,000 shares of common stock in exchange for $25,000 of accounting services and $50,000 in legal services. The shares were valued at $75,000, which represents the fair market value of the services provided on the date of issuance.

In July 2006, the Company received services valued at $150,000 and treated it as additional paid-in capital.

In September 2006, the Company issued 450,000 shares of common stock for net cash of $110,850 which is net of offering costs of $39,250, in cash proceeds.

In November 2006, the Company issued 90,000 shares of common stock for net cash of $22,500, which is net of offering costs of $7,500, in cash proceeds.

In February 2007, the Company issued 750,000 shares of common stock in exchange for net cash of $182,000, which is net of offering costs of $68,000, in cash proceeds.

In March 2007, the Company issued 75,000 shares of common stock in exchange for net cash of $18,750, which is net of offering costs of $6,250 in cash proceeds.

In June 2007, the Company issued 165,000 shares of common stock for $55,000 in cash proceeds.

In June 2007, the Company issued 50,400,000 shares of its common stock for cash proceeds of $168.

In August 2007, the Company issued 45,000 shares of common stock in exchange for the conversion of a $15,000 note payable.

LOCATION BASED TECHNOLOGIES, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008

8. EQUITY (Continued)

Common Stock (Continued)

In October 2007, the Company issued 18,000 shares of common stock in exchange for $6,000 of legal services. The shares were valued at $6,000, which represents the fair market value of the services provided.

In October 2007, the Company issued 2,410,500 shares of common stock in exchange for the conversion of a $803,500 related party note payable (see Note 6).

In November 2007, the Company issued 1,276,632 shares of common stock in exchange for $425,544 of consulting services. The shares were valued at $425,544, which represents the fair market value of the services provided.

In November 2007, the Company issued 600,000 shares of common stock in exchange for $830,000 of consulting services. The shares were valued at $830,000, which represents the fair market value of the services provided on the date of issuance.

In November 2007, the Company issued 3,202,500 shares of common stock in exchange for the conversion of $1,067,500 in notes payable (see Note 4).

In December 2007, the Company issued 12,523,500 shares of common stock in exchange for the conversion of $4,174,500 in notes payable (see Note 4).

In February 2008, the Company issued 361,797 shares of common stock in exchange for the conversion of $120,599 in accrued interest on a related party note payable (see Note 6).

In February 2008, the Company issued 811,485 shares of common stock in exchange for the conversion of $270,495 in accrued officer compensation.

In June 2008, the Company issued 150,000 shares of common stock in exchange for consulting services related to research and development. The shares were valued at $374,000, which represents the fair market value of the services provided on the date of issuance.

LOCATION BASED TECHNOLOGIES, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008

8. EQUITY (Continued)

Common Stock (Continued)

On October 13, 2008, the Board of Directors declared a 3 for 1 stock split to be effected in the nature of a 200% stock dividend, whereby the holders of each share of common stock received an additional two shares of common stock. The record date for the stock dividend was October 20, 2008 and resulted in the issuance of an additional 58,061,276 (pre-split) shares of common stock. In addition, the Company’s articles of incorporation were amended to increase its authorized shares in an amount that corresponds to the stock split, thereby increasing the authorized shares of common stock from 100,000,000 to 300,000,000. Unless otherwise indicated, all share and per-share amounts in these financial statements have been retroactively restated to reflect the 3 for 1 stock split as if the split had been in effect since inception.

In October 2008, the Company issued 1,500 shares of common stock in exchange for consulting services related to technology development. The shares were valued at $4,050, which represents the fair market value of the services provided on the date of issuance.

In October 2008, the Company issued 50,000 shares of common stock in exchange for financial related advisory services. The shares were valued at $122,500, which represents the fair market value of the services provided on the date of issuance.

In October 2008, the Company issued 125,000 shares of common stock in exchange for capital raising advisory services. The shares were valued at $306,250, which represents the fair market value of the services provided on the date of issuance.

In October 2008, the Company issued 8,356 shares of common stock in exchange for legal advisory services. The shares were valued at $20,472, which represents the fair market value of the services provided on the date of issuance.

In November 2008, the Company issued 100,000 shares of common stock in exchange for consulting services related to capital raising efforts. The shares were valued at $113,000, which represents the fair market value of the services provided on the date of issuance.

In December 2008, the Company issued 250,000 shares of common stock in exchange for consulting services related to capital raising efforts. The shares were valued at $275,000, which represents the fair market value of the services provided on the date of issuance.

LOCATION BASED TECHNOLOGIES, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008

8. EQUITY (Continued)

Common Stock (Continued)

In December 2008, the Company issued 101,500 shares of common stock in exchange for consulting services related to technology development. The shares were valued at $83,230, which represents the fair market value of the services provided on the date of issuance.

In December 2008, the Company issued 50,000 shares of common stock in exchange for sales consulting services. The shares were valued at $41,000, which represents the fair market value of the services provided on the date of issuance.

In January 2009, the Company issued 36,000 shares of common stock in exchange for legal advisory services. The shares were valued at $33,157, which represents the fair market value of the services provided on the date of issuance.

In January 2009, the Company issued 100,000 shares of common stock in exchange for sales and business advisory services. The shares were valued at $107,000, which represents the fair market value of the services provided on the date of issuance.

In February 2009, the Company issued 30,000 shares of common stock in exchange for legal advisory services. The shares were valued at $28,200, which represents the fair market value of the services provided on the date of issuance.

In February 2009, the Company issued 100,000 shares of common stock in exchange for consulting services related to capital raising efforts. The shares were valued at $94,000, which represents the fair market value of the services provided on the date of issuance.

In February 2009, the Company issued 100,000 shares of common stock in connection with a debt issuance. The shares were valued at $94,000, which represents the fair market value of the debt issuance costs on the date of issuance.

In February 2009, the Company issued 100,000 shares of common stock in exchange for business advisory services. The shares were valued at $94,000, which represents the fair market value of the services provided on the date of issuance.

LOCATION BASED TECHNOLOGIES, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008

8. EQUITY (Continued)

Warrants

In August 2007, the Company issued a “Series A” warrant to purchase 1,500,000 common shares at $0.33 per share and a “Series B” warrant to purchase 750,000 common shares at $0.67 per share, in exchange for consulting services related to the sale of the Company’s convertible promissory notes. The fair value of the warrants using the Black-Scholes option pricing model amounted to $1,408,167 and $563,624 for the “Series A” and “Series B” warrants, respectively (see Note 9).

In June 2008, the Company issued “Series C” warrants to certain technology and legal consultants to purchase a total of 180,000 common shares at $2.00 per share, in exchange for consulting and advisory services related to developing the PocketFinder®. The fair value of the warrants using the Black-Scholes option pricing model amounted to $353,447 (see Note 9).

In August 2008, the Company issued a “Series D” warrant to purchase 18,405 common shares at $4.89 per share and a “Series E” warrant to purchase 15,000 common shares at $2.00 per share, to a sales consultant in exchange for advisory services related to product sales. The fair value of the warrants using the Black-Scholes option pricing model amounted to $18,088 and $36,392 for the “Series D” and “Series E” warrants, respectively (see Note 9).

In November 2008, the Company issued “Series G” warrants to certain consultants to purchase 81,724 common shares at $2.45 per share in exchange for consulting services related to capital raising efforts. The fair value of the warrants using the Black-Scholes option pricing model amounted to $160,939 (see Note 9).

In November 2008, the Company issued “Series H” warrants to certain consultants to purchase 1,528,410 common shares at $0.88 per share in exchange for consulting services related to capital raising efforts. The fair value of the warrants using the Black-Scholes option pricing model amounted to $1,115,361 (see Note 9).

LOCATION BASED TECHNOLOGIES, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008

8. EQUITY (Continued)

Stock Incentive Plan

On September 10, 2007, the directors and shareholders adopted a 2007 Stock Incentive Plan. The plan reserves 2,250,000 shares of common stock of the Company for issuance pursuant to options, grants of restricted stock or other stock-based awards. The plan is administered by the board of directors which has the power, pursuant to the plan, to delegate the administration of the plan to a committee of the board. There were 219,356 shares of common stock granted under the plan for the six months ended February 28, 2009.

9. STOCK OPTIONS AND WARRANTS

On August 15, 2007, the Company issued a “Series A” warrant to a consultant to purchase 1,500,000 shares of the Company’s common stock at $0.33 per share and a “Series B” warrant to purchase 750,000 shares of the Company’s common stock at $0.67 per share. Both warrants terminate at the earlier of August 14, 2012 or upon the Company’s sale and issuance of stock in a public offering with gross proceeds in excess of $10 million. The fair value of the Series A and Series B warrants is capitalized as debt issuance costs, and will be amortized over the remaining life of the note payable. For the year ended August 31, 2008, the Company recognized debt issuance cost amortization totaling $1,971,791 for the Series A and Series B warrants. The Company calculated the fair value of the warrants by using the Black-Scholes option pricing model. No warrants were exercised as of February 28, 2009.

On June 2, 2008, the Company issued “Series C” warrants to six technology and legal consultants to purchase a total of 180,000 common shares at $2.00 per share, in exchange for consulting and advisory services related to developing the PocketFinder®. The warrants expire June 2, 2013. The fair value of the warrants using the Black-Scholes option pricing model amounted to $353,447 and is included in general and administrative operating expenses for the year ended August 31, 2008. No warrants were exercised as of February 28, 2009.

LOCATION BASED TECHNOLOGIES, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008

9. STOCK OPTIONS AND WARRANTS (Continued)

On August 29, 2008, the Company issued a “Series D” warrant to purchase 18,405 common shares at $1.63 per share and a “Series E” warrant to purchase 15,000 common shares at $2.00 per share, to a sales consultant in exchange for advisory services related to the sale of the Company’s PocketFinder® family of products. The “Series D” warrants and “Series E” warrants expire March 3, 2013 and June 2, 2013, respectively. The fair value of the warrants using the Black-Scholes option pricing model amounted to $18,088 and $36,392 for the “Series D” and “Series E” warrants, respectively. No warrants were exercised as of February 28, 2009.

On November 3, 2008, the Company issued “Series G” warrants to certain consultants to purchase 81,724 common shares at $2.45 per share in exchange for consulting services related to capital raising efforts. The warrants expire November 3, 2011. The fair value of the warrants using the Black-Scholes option pricing model amounted to $160,939. No warrants were exercised as of February 28, 2009.

On November 24, 2008, the Company issued “Series H” warrants to certain consultants to purchase 1,528,410 common shares at $0.88 per share in exchange for consulting services related to capital raising efforts. The warrants expire November 24, 2011. The fair value of the warrants using the Black-Scholes option pricing model amounted to $1,115,361. No warrants were exercised as of February 28, 2009.

10. PROVISION FOR INCOME TAXES

Deferred income taxes are reported using the liability method. Deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences arise from the difference between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and tax rates on the date of enactment.

The Company did not provide any current or deferred U.S. federal income taxes or benefits for any of the periods presented because the Company has experienced operating losses since inception. The Company provided a full valuation allowance on the net deferred tax asset, consisting of net operating loss carry forwards, because management has determined that it is more likely than not that we will not earn sufficient income to realize the deferred tax assets during the carry forward period.

LOCATION BASED TECHNOLOGIES, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008

10. PROVISION FOR INCOME TAXES (Continued)

The components of the Company’s deferred tax asset as of February 28, 2009, are as follows:

Net operating loss carry forward	$	4,149,000
Valuation allowance		(4,149,000	)

Net deferred tax asset	$	-

A reconciliation of the combined federal and state statutory income taxes rate and the effective rate is as follows:

Federal tax at statutory rate	$	34.00	%
State income tax net of federal benefit		5.83	%
Valuation allowance		(39.83	%)

	$	-

The Company’s valuation allowance increased by $701,000 for the six months ended February 28, 2009.

As of February 28, 2009, the Company had federal and state net operating loss carryforwards of approximately $10,417,000 which can be used to offset future federal income tax. The federal and state net operating loss carryforwards expire at various dates through 2029. Deferred tax assets resulting from the net operating losses are reduced by a valuation allowance, when, in the opinion of management, utilization is not reasonably assured. These carryforwards may be limited upon a change in ownership or consummation of a business combination under IRC Sections 381 and 382.

11. SUBSEQUENT EVENT

On March 3, 2009, the Company extended the terms of the $950,000 promissory note agreement with the Company’s Co-President and stockholder for an additional six months. The extended promissory note is due on September 3, 2009, and will continue to accrue interest at a rate of 8% per annum.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

Information in this report contains “forward looking statements” which may be identified by the use of forward-looking terminology, such as “may”, “shall”, “will”, “could”, “expect”, “estimate”, “anticipate”, “predict”, “probable”, “possible”, “should”, “continue”, or similar terms, variations of those terms or the negative of those terms. The forward-looking statements specified in the following information have been compiled by our management on the basis of assumptions made by management and considered by management to be reasonable. Our future operating results, however, are impossible to predict and no representation, guaranty, or warranty is to be inferred from those forward-looking statements.

The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives requires the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. No assurance can be given that any of the assumptions relating to the forward-looking statements specified in the following information are accurate, and we assume no obligation to update any such forward-looking statements.

Unless otherwise noted, the terms "LBT ", the "Company", "we", "us", and "our" refer to the ongoing business operations of Location Based Technologies, Inc.

Overview. We are a corporation incorporated in Nevada on April 20, 2006. We are qualified to do business in California. Our shares of common stock are currently traded in the over-the-counter market and our stock price is reported on the OTC Bulletin Board under the symbol “LBAS.” We are headquartered in Anaheim, California.

Our Business. Location Based Technologies, Inc. designs and develops personal locator devices and services. We are the developer of the PocketFinder® Family of Products and the PocketFinder® Network. The PocketFinder® Family of Products currently includes the PocketFinder®, PetFinder®, PocketFinder® Luggage, and PocketFinder’s fleet management system that also provides environmental monitoring of temperatures in refrigeration trailers. The PocketFinder® is a small location device that enables a user to locate a device, person, or pet, at anytime from almost anywhere. PocketFinder® Personal Locator devices are completely wireless. Users can monitor the safety and location of family members, pets, and valuables using GPS and GPRS technologies.

Our Company is focusing on sales, marketing, and delivery of our product in the United States (“US”), the United Kingdom (“UK”), and selected parts of Europe. We have begun to generate consulting revenue from the LoadRack agreement (described below) as well as sales from mobile application downloads. In September 2008, the Company secured its first Purchase Order of $3,700,000 for its PetFinder® product and will deliver the first PetFinder products in the US to fill this order upon securing approval from our wireless carrier for our device. We have begun sales from mobile applications that allow the Android phone (Google, T-Mobile), Apple’s iPhone, Blackberry’s Bold and Curve, and GPS enabled smartphones using the Windows Mobile Professional 6.0 Operating System to act as a PocketFinder® with all of the features and functionality of our devices. These mobile applications work world-wide as long as the phone has access to a network. Furthermore, as the actual PocketFinder® and PetFinder® devices enter the US market, the mobile applications will be able to seamlessly add those devices to its account and optimize the family’s ability to stay connected. In the first quarter of 2009, we developed these Global Positioning System (“GPS”) mobile applications so that they interact with our easy to use web-based interface from any telecom network (GSM or Code Division Multiple Access (“CDMA”)).

In January 2009, we signed a Professional Services Agreement with LoadRack, LLC, for $1,250,000 to customize our Web interface to optimize existing truck tracking and monitoring hardware. Payment for interface customization has begun and we expect an order for the hardware components in the very near future. The Jabil facility in Meung-sur-Loire, France, is ready for high quality, mass volume production runs which, pursuant to existing purchase orders, we expect to begin in May 2009 and expanding over the following five months. The Company has the option of opening additional manufacturing lines at other Jabil plants as demand requires. PocketFinder® devices were submitted to RFI Global Services, Ltd. (“RFI”) labs in November 2008, but were withdrawn by the Company to improve upon the accuracy of the devices. Over the intervening months, we have been working with our geospatial provider and our device software engineers in Europe in order to achieve the level of accuracy that will merit recognition as a highly reliable and dependable Personal or Asset Location Device. The Company resubmitted its devices to RFI in late February 2009 and expects to secure Federal Communications Commission (“FCC”) certification during the month of April with PCS Type Certification Review Board (“PTCRB”) testing underway. Before beginning sales in the US we must also secure Carrier Network approval from AT&T.

We have secured sufficient funds (revenues and shareholder loans) to continue operations for an additional 60 to 90 days and are in discussion with a small number of strategic individuals/companies with interest in providing significant cash infusion as debt or equity investments to fund inventory, support sales and marketing initiatives, and for general operational expenses. However, there is no assurance that we will be successful in the fundraising efforts. The desired outcome is to form long-term relationships that deliver both immediate and long-term mutual benefit to all parties.

We will continue to enhance the functional capability of our products on an ongoing basis as new vertical market opportunities are regularly being discovered. OEM opportunities are also an element of our strategic direction.

In spite of the dramatic downturn in the economy and the financial markets, we continue to see evidence of the market demand for location-based services that will allow family members to keep in touch with one another in an increasingly busy world and for products that allow companies to more efficiently utilize their vehicles and their mobile workforce. ABI Research reports that the North American and worldwide personal navigation device (“PND”) market will remain flat in 2009 as the impact of the economy and the narrow range of applications has its effect. The main offering of PNDs are real-time traffic or Internet access.

At the same time, navigation on cellular phones is gaining momentum. According to ABI Research, in the long-term, PNDs will face increasing competition from new form factors such as mobile Internet devices (“MID”), portable media players, and multipurpose, large-screen, connected portable devices.

We believe that the PocketFinder family of products represents the sought for application that ABI recognizes is missing to stimulate the growth of personal location or navigation devices. By taking advantage of the latest in GPS, GSM, and Internet technology, small and medium sized businesses will be able to more effectively and efficiently manage their mobile assets and human resources. In addition, the PocketFinder® will optimize the ability for families to stay connected. A 2008 national survey by the Pew Internet & American Life Project has found that the Internet and cell phones have become central to modern family life. Rather than hurt families, Pew said, new technologies allow new forms of connectivity. Pew also reports positive impacts from the high rates of technology ownership in today’s families.

"Some analysts have worried that new technologies hurt family togetherness, but we see that technology allows for new kinds of connectedness built around cell phones and the Internet," said Tracy Kennedy, author of a new report about the survey called Networked Families. "Family members touch base with each other frequently with their cell phones, and they use those phones to coordinate family life on the fly during their busy lives."

Time Deal, a senior analyst at Pike & Fischer, remembers that when he was a kid, he'd disappear on his bike for most of Saturday, he said, and maybe check-in with his parents for lunch and dinner. The times have changed -- and so have safety concerns. "We are much more concerned about threats of a number of types against our children today," Deal said. "Wireless devices have enabled us to enjoy greater connectivity when we are not physically together. I can't imagine a world now where I can't contact my wife or son via cell phone to check on their location and to see if they can pick something up."

The Mobile Web provides people with access to the Internet anytime and anywhere mobile phone service is available -- at its most basic, it enables you to browse the Internet with a mobile device. IBM envisions a substantial build-out of the Mobile Web and a significant shift in the way the majority of people will interact with the Web over the next 5-10 years. Their own business think-tank predicts the Mobile Web market for consumer services such as entertainment and email is expected to reach $80 billion by 2011, more than 36 percent annual growth. This enhanced capability greatly increases the benefits of the PocketFinder® products. This research was conducted prior to the substantial economic downturn that we are now experiencing. It is unclear how the finds will or will not be affected by current economic conditions.

The PocketFinder® family of products enhances the ability for families with young children to stay connected and to meet the demands of a fast-paced life. Knowing the whereabouts of family members is a crucial step to coordination and planning.

In addition, vertical applications may include: outdoor and extreme sports enthusiasts, parents, adult children of the elderly, elder care providers of patients with Alzheimer’s and dementia, special needs providers for those with disabilities, pet owners, and for the tracking and recovery of valuable property and luggage while traveling. Our device is fifty millimeters in diameter or about 2 inches. It fits easily into a child’s pocket, their backpack, or onto a belt. The PocketFinder® and PetFinder® devices will come with a form fitting silicone pouch that can easily slide onto a belt or a pet’s collar.

We operate with an “outsourced” model of highly selected individuals and organizations that have quick growth capacity to keep pace with our anticipated fast growth. We have a small number of employees, yet have approximately 80 full and part time contractors working on our endeavor. It allows us to tightly control our overhead and ensures that we have the right resources in place at the right time. The infrastructure and critical organizations for success are in place. We have a very talented senior management team that brings the right knowledge, skills and abilities to deliver world-class products and services. Distribution opportunities are expanding and we are carefully analyzing each market opportunity against potential growth, economic value, and support capability metrics. Our contract with 24-7 INtouch will handle our call-center customer services demand in the US and Canada. We are developing a business model for international market opportunities and are in discussions with distributors in at least eleven countries at this time.

The government-owned global positioning satellite, or GPS, system is neither patentable nor exclusive in source. As a result, other entrants may utilize the same capability as well as existing wireless technologies. However, it is not GPS and wireless technologies that differentiate our product from the competition. Rather, it is the proprietary software that transforms available technologies into an intuitive and user-friendly interface that offers greater value, capabilities, and convenience to the customer.

Our Personal Locator Services. We have begun the manufacturing process of the PocketFinder®. We have entered into a manufacturing agreement with Jabil to produce the PocketFinder® devices in France. Jabil is one of the world’s largest original equipment manufacturer (OEM) of electronics with facilities in China, Mexico, the US and Europe. We will provide end-user customer service and support in the US and Canada through 24-7 INtouch, headquartered in Toronto, Ontario. We anticipate exploring multiple vertical markets including the following:

Parents of young children (primarily 5 to 12 years of age) who seek the peace of mind of being able to know that their children are where they are supposed to be when they are supposed to be there;
Families with members who are Autistic or have Down Syndrome, Alzheimer’s, etc.;
Elder Care support and applications;
Pet care and location capability; and
Asset tracking and location capability: cars, trucks, fleet management, luggage, and other personal assets.

We signed a contract with KORE Telematics, a provider of “Machine-to-Machine” or M2M protocol access, on November 26, 2007 and have been testing our devices and our systems for more than a year. Our products will offer wide network coverage throughout North America via KORE Telematics utilizing the largest GSM carrier networks in the United States and Canada. With this agreement, our personal locators will have the ability to roam seamlessly on the networks of 400 wireless providers in over 220 countries. In addition, our locators have the ability to work on any GSM network in the world.

Our Intellectual Property Investment. We have invested significantly, and continue to invest, in intellectual properties, which consist of apparatus patents and applications and system and method patents and applications. We have filed claims that cover all aspects of the PocketFinder®, its operating system and user interface. We have expanded and filed additional claims this fiscal year that cover new aspects of the personal locator, its operating system and user interface. We received Trademark approvals for the following: PetFinder; PocketFinder and the associated Service Mark; Your World Located; iTalk; Luggage Tracker; the avatars (or stylized heads) found on our website and on the product’s box.

We own the Internet domain name www.pocketfinder.com as well as the names of other related domains that could have use in future business and vertical marketing initiatives. Under current domain name registration practices, no one else can obtain an identical domain name, but someone might obtain a similar name, or the identical name with a different suffix, such as “.org,” or with a country designation. The regulation of domain names in the United States and in foreign countries is subject to change, and we could be unable to prevent third parties from acquiring domain names that infringe or otherwise decrease the value of our domain names.

Our Target Markets and Marketing Strategy. Location Based Technologies provides wireless location based solutions for global positioning products and its proprietary “friendly user interface” software system. Its PocketFinder® family of products delivers rugged, compact products with real-time location-based information over its proprietary server architecture. Our products simplify the ability for families to stay connected with one another, for pet owners to know where their pets are on demand, and solutions for asset tracking – such as LoadRack’s trucking solution. The Company has the ability to provide platform support for the integration of other location-based GPS services within its applications in order to simplify the customers need to locate all location-based devices in one easy tool.

The Company is preparing for the launch of our first three products, the PocketFinder® and PetFinder® as well as PocketFinder’s fleet management system, while also involved in numerous other “white label” marketing opportunities. In addition, several licensing opportunities are being explored.

For our PocketFinder® family of products, the Company believes that the primary target market will consist of parents with school-aged children from ages five to thirteen. Secondary markets may include medical and elder care providers, campers, hikers, backpackers, adventure seekers, extreme sports enthusiasts, freight and cargo carriers, delivery services, pet owners, vehicle finance companies, auto dealerships, law enforcement agencies, military organizations and individuals wishing to track valuable personal items.

Based on census information, there are over 37,000,000 children in the 5 to 13 year old market segment in the United States with an additional 4,000,000 in the prime focus areas in Canada. The European Community has an additional 42,500,000 children in this primary age group. Adding in the elder care market this represents a target market of more than 109,200,000 potential customers in our focus age group.

Closely related to personal locators is the desire for pet locators as it is estimated there are 70,000,000 pets in the US. A locator device will give a pet owner the ability to locate their pet if it were to become lost or missing as well as to ensure that services paid for are received, i.e., that a walking service or pet care facility actually provide the outdoor activity contractually agreed to. In addition, we are finding significant interest in the PetFinder® product in European countries.

Location Based Technologies marketing initiatives will include:

Licensing opportunities for the products in other areas or regions;
Self branded or “white label” opportunities for niche market or vertical market sales;
Affinity group marketing and outreach opportunities;
Utilization of direct response sales due to public relations outreach in special interest magazines and newsletters; and
Retail distribution initiatives.

Our Revenue Sources. We expect our revenues to be based on the following sales and revenue sources:

Potential licensing fees;
Organizations that will self-brand the PocketFinder® for specialized niche markets (“white label”);
Personal Locator device sales to Retailers;
Personal Locator device sales through Affinity groups and through our web site;
Personal Locator device accessory sales;
Monthly re-occurring service fees; and
GPS Smartphone mobile application sales (one-time or monthly fees as applicable)

Our Growth Strategy. Our objective is to become a major provider of personal and asset location services in the Location Based Services market. Our strategy is to provide high quality devices that meet the market’s requirements whether it is for their children, their pets, or asset tracking (luggage, vehicles, boats, etc.). Key elements of our strategy include:

A mass market retail price of under $150.00 for Personal Location devices (customized trucking solutions with additional features and capabilities will be sold at a higher cost);
A basic monthly service fee of under $20.00 with multiple convenient access points (mobile phone, land line, or via the internet);
Ease of use at the location interface point as well as with the device; and
Rugged design that meets the rigors of an active child or pet.

Our Website. Our corporate website, www.locationbasedtech.com, provides a description of our corporate business along with our contact information including address, telephone number and e-mail address. Our website also provides prospective customers with relevant information about our products, pricing and payment options, pre-ordering capability, frequently asked questions and access to corporate investor relations information. Information contained on our website is not a part of this report.

Our Competition. Personal location and property tracking devices are just beginning to significantly penetrate the marketplace. We believe this condition represents a tremendous opportunity as customers will be attracted in large numbers once the intrinsic value of such devices is recognized and mass market adoption begins.

Our competitors include Geospatial Platform Providers, Application Developers, Zoombak, Snitch, Lo-Jack, and Spot. These competitors may be better financed, or have greater marketing and scientific resources than we do.

In related markets, GPS devices have become widely used for automotive and marine applications where line-of-sight to GPS satellites is not a significant issue. Manufacturers such as Garmin, Navman, Magellan, TomTom, Pharos, NovAtel and DeLorne are finding a market interested in using these products for both business and leisure purposes. As a result, use of GPS technology in devices such as chart plotters, fitness and training devices, fish finders, laptop computers, and personal digital assistant (“PDA”) location devices are gaining significant market acceptance and commercialization. Prices range from $199.00 to several thousand dollars. We expect that increasing consumer demand in these markets will drive additional applications and lower price points.

Government Regulation. We are subject to federal, state and local laws and regulations applied to businesses generally as well as FCC, Internationale Canada (“IC”) and CE (European Economic Area) wireless device regulations and controls. We believe that we are in conformity with all applicable laws in all relevant jurisdictions. We do not believe that we are subject to any environmental laws and regulations of the United States and the states in which we operate.

Our Research and Development. We are currently in the final steps of the research and development phase. Certifications being finalized will include FCC, IC, CE, PTCRB, and then we will move on to Carrier Network certification for product coming into the United States. Our manufacturing will continue to work with our company and several other entities that are conducting research on key aspects of the device itself (including expanded antennae capability, battery capacity, and enhanced location reliability and accuracy) in an ongoing effort to provide the best quality product at the very best size and value on the market. We anticipate ongoing involvement with some level of developmental activities throughout the foreseeable future.

Employees and Outsourced Assistance. As of December 29, 2008, we are leveraging our outsourcing model to world class partners and have three full-time employees and approximately 80 contracted professionals engaged in hardware and software development, early marketing and sales preparation, and will soon add customer service contracted professionals. Mr. Scalisi, our Co-President and Chief Development Officer, Mr. Morse, our Co-President and Chief Executive Officer, and Ms. Mejia, our Chief Operating Officer, currently devote 100% of their business time to our operations. We anticipate that we will hire two to four key employees once significant revenues have been secured, with selective and controlled growth commensurate with significant increases in our revenues over time. Remaining true to our “outsourced” model for growth and expansion, any large personnel increases will be accomplished through sales and customer support organizations contracted to provide respective services.

In furtherance of our efforts to prepare to move into the marketplace, we have entered into the following contract with an independent service provider during the quarter ended February 28, 2009:

Endorsement Agreement, dated February 12, 2009, with John Riegger (a professional golfer) to act as a spokesperson for the Company through endorsements. The agreement is in effect from March 1, 2009 through December 31, 2009. Mr. Riegger will be compensated 10,000 shares of the Company’s common stock. Shares issued to Mr. Riegger will be issued in reliance on the exemption provided by Section 4(2) of the Securities Act of 1933. Such shares will be “restricted” securities as defined in SEC Rule 144.

RESULTS OF OPERATIONS.

For the six months ended February 28, 2009 as compared to the six months ended February 29, 2008.

Revenue.

For the six months ended February 28, 2009, we generated $70,782 of consulting and service revenue primarily from the Professional Services Agreement with LoadRack, LLC. For the six months ended February 29, 2008, we generated $5,818 of consulting revenue. The LoadRack consulting revenues were earned pursuant to a development agreement for the design, construction and implementation of a location system for transportation fleets. We are recognizing this revenue according to our estimate of our current progress to completion toward identifiable project milestones. We anticipate recognizing a total of $800,000 during the design, construction and implementation phases. The $450,000 balance of the contract is related to hardware customization and will be fully earned upon delivery and client acceptance.

Cost of Revenue.

For the six months ended February 28, 2009, cost of revenue totaled $50,608, resulting in a 28.5% gross profit margin. There was no cost of revenue for the six months ended February 29, 2008. As contract revenues are recognized using management’s estimate of total costs to complete a project, it is at least reasonably possible that the profit margin estimate could change in the near term, although management is not aware of any factors which would have a material bearing on its present revenue recognition.

Operating Expenses.

For the six months ended February 28, 2009, our total operating expenses were $2,189,898 as compared to total operating expenses of $2,596,687 for the six months ended February 29, 2008. The decrease in operating expenses is attributed to the following:

A decrease in professional fees to $833,558 for the six months ended February 28, 2009, as compared to $1,416,327 for the six months ended February 29, 2008. The decrease in professional fees is primarily due to the recognition of $830,000 in stock based compensation issued to consultants for technology services rendered during the six months ended February 29, 2008, whereby there were no such expenses were recognized during the six months ended February 28, 2009;
An overall decrease in general and administrative costs for the six months ended February 28, 2009, to $311,076 as compared to $404,948 for the six months ended February 29, 2008 as significant efforts were made to control and reduce general and administrative costs; and
An increase in research and development costs for the six months ended February 28, 2009, to $797,464 as compared to $548,441 for the six months ended February 29, 2008, as significant efforts were made to finalize production ready devices and the website and mapping interface services.

Other Expenses.

For the six months ended February 28, 2009, we reported other expenses consisting of net interest expense, financing costs and foreign currency gains and losses totaling $2,937,331 as compared to $2,342,177 for the six months ended February 29, 2008. The increase at February 28, 2009, is primarily attributed to an increase in stock based compensation paid to consultants providing capital raising services. In January 2009, the Company contracted for professional capital raising services to be performed during 2009, at a total cost to the Company of $2,850,000. The cost of these services has been deferred and is charged to operations ratably over a twelve month period beginning January 2009.

Net Loss.

For the six months ended February 28, 2009, we reported a net loss of $5,107,855 as compared to a net loss of $4,934,646 for the six months ended February 29, 2008, due to a decrease in operating expenses and an increase in other expenses as previously discussed.

Liquidity and Capital Resources.

We had cash and cash equivalents of $103,745 as of February 28, 2009, as compared to $20,569 as of August 31, 2008. Prepaid expenses totaled $122,421 as of February 28, 2009, as compared to $86,616 as of August 31, 2008, and primarily consisted of advisor retainers and prepaid manufacturing and production costs. Deferred financing costs totaled $2,375,000 as of February 28, 2009, and consisted of unamortized fees paid to consultants for capital raising advisory services

As of February 28, 2009, the total of our property and equipment, less accumulated depreciation, was a net value of $1,312,099, compared to the net value of $1,043,861 for our property and equipment, less accumulated depreciation, as of August 31, 2008. The increase is primarily due to the development of the website and database during the six months ended February 28, 2009. Amortization of the website and database has not commenced, and will begin when our product line is launched. We continue to assess these assets for potential impairment and none has been recorded to date.

Other assets, consisted of patents, trademarks and deposits, amounted to $1,189,374 as of February 28, 2009, as compared to $1,141,186 as of August 31, 2008. The increase is the result of increased legal fees to obtain and secure additional international patents and trademarks. We periodically assess our patents and intellectual property for impairment; none has been recorded to date.

Our total assets as of February 28, 2009, were $5,103,374 as compared to our total assets as of August 31, 2008, which were $2,292,232. The increase in our total assets as between the two years was due primarily to an increase in deferred financing costs as of February 28, 2009.

As of February 28, 2009, our accounts payable and accrued expenses, including accrued officer compensation, were $1,256,097 as compared to $903,225 as of August 31, 2008. The increase in accounts payable and accrued expenses, including accrued officer compensation, is primarily a result of cash flow management that has resulted in extending payables and accruing officer compensation.

Advances from officers including accrued interest, totaled $3,397,936 as of February 28, 2009, as compared to $159,409 as of August 31, 2008. The increase is primarily a result of $2,850,000 in capital raising costs being paid by the officers on behalf of the Company in January 2009. In addition, cash advances made to the Company for the six months ended February 28, 2009, amounted to $412,000.

Related party notes payable and accrued interest totaled $634,000 and $39,879, respectively, as of February 28, 2009, whereby there were no such related party notes payable at August 31, 2008. The amount represents short term borrowings by the Company in September 2008 and January 2009 which have been used to fund operations, research and development. The note holder has agreed to extend the portion of these loans which became payable in March 2009 for an additional six months.

Notes payable and accrued interest totaled $925,000 and $18,937, respectively, as of February 28, 2009, whereby there was no such note payable at August 31, 2008. The $925,000 in promissory notes are short term, to be repaid out of potential future permanent financing.

In 2007, we sold $5,242,000 in convertible notes that were subsequently converted into 5,242,000 shares of common stock. The notes were sold to accredited investors. We made these sales in reliance on an exemption from registration provided by Section 4(2) of the Securities Act and similar state exemptions. Our counsel has advised us that the availability of those exemptions cannot be determined with legal certainty due to the fact that we may not have complied with all of the form filings or other notice filing provisions of safe-harbor exemptions for such sales offered by rules promulgated under the Securities Act by the SEC and applicable state laws. Thus, it is possible that the sale of the convertible notes may have violated the registration requirements of the Securities Act and applicable state laws. As to those sales, a right of rescission may exist on which the statute of limitations has not run. The Company performed an analysis under FAS 5, Accounting for Contingencies, and has concluded that the likelihood of a right of rescission being successfully enforced on the convertible note sales is remote.

We had no other long term liabilities, commitments or contingencies.

Other than the proposed increases in revenue and cost of revenue upon launching our products into the market, we are not aware of any other known trends, events or uncertainties, which may affect our future liquidity.

Cash Requirements.

We are an early stage wireless technology company focused on the marketing and sales of the PocketFinder® family of products for retail distribution. Since our inception, we have generated significant losses. As of February 28, 2009, we had an accumulated deficit of $15,131,700 and we expect to incur continual losses until sometime in calendar year 2009.

We have a limited history of operations. To date, we have funded our operations primarily through personal loans by the founders and the private placement of our common stock and convertible notes.

As of February 28, 2009, we had $103,745 in cash, cash equivalents and short-term investments. During the six months ended February 28, 2009, we received loans totaling $1,600,000 of which $1,300,000 were related party loans, to fund operations. Over the next several quarters we expect to invest significant amounts of funds (in addition to cooperative advertising costs of approximately five percent which costs are included in the cost of goods sold) to develop our sales, marketing and manufacturing programs associated with the commercialization and launch of the PocketFinder® family of products. We expect to fund additional inventory and any necessary general overhead requirements through capital raised through the sale of debt or equity securities although there is no assurance that we will be successful in that regard.

We expect to have to raise additional funds in the coming months to purchase and maintain inventory and for related purposes such as packaging, shipping, and direct sales and marketing costs. We are not able to estimate the amount of funds necessary as it will be determined by the volume represented by purchase orders from targeted retailers who desire to sell our product.

Our funding requirements will depend on numerous factors, including:

Costs involved in production and manufacturing to fill Purchase Orders, software and interface customization for OEM partners, and the network necessary to commence the commercialization of the PocketFinder® Personal Locator;
The costs of outsourced manufacturing;
The costs of commercialization activities, including product marketing, sales and distribution; and customer service and support.
Our revenues, if any, from successful commercialization of the PocketFinder® Personal Locator and the PocketFinder® Network platform services.

As noted above, we will need to raise additional external funds through the sale of additional equity or debt securities. We will need to raise additional funds during the next three months to finance the inventory necessary to meet current and anticipated demand and to support related marketing, sales, and distribution expenses. The sale of additional equity securities may result in additional dilution to our shareholders. Sale of debt securities could involve substantial operational and financial covenants that might inhibit our ability to follow our business plan. Additional financing may not be available in amounts or on terms acceptable to us or at all. If we are unable to obtain additional financing, we may be required to reduce the scope of, delay or eliminate some or all of our planned commercialization activities, which could harm our financial conditions and operating results.

Product Research and Development

Production ready units are now available. We plan to continue to develop new product enhancements while we deliver the initial market launch of the PocketFinder® and PetFinder® including manufacturing in the fourth quarter of 2009. Our first purchase order was secured in September 2008, and others are being negotiated at this time. Many of our distributors were waiting for the Company to deliver final production ready product. These were delivered by Jabil in late October 2008. We anticipate that we will be prepared to begin delivery of product to retailers in the fourth quarter of 2009, although there can be no assurance that we will meet that target time period.

Plant and Equipment, Employees

We do not plan to purchase or sell any significant equipment, plant or properties during the foreseeable future. Our business operations are based on a strategic outsourcing model, thereby negating the need for additional plant and equipment, or significant numbers of employees. Thus, we do not anticipate hiring any significant number of additional employees during the next 12 months but will add a few selected and strategic employees.

Off-Balance Sheet Arrangements

As of February 28, 2009, we had no off-balance sheet arrangements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4T. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Management is responsible for establishing adequate internal controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.

As of the end of the period covered by this report, the company carried out an evaluation, under the supervision and with the participation of the company's management, including the company's chief executive officer and the company's chief operating officer and principal financial officer, of the effectiveness of the design and operation of the company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based on this evaluation, the company's chief executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective in ensuring that (i) information required to be disclosed in the reports that the company files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission and (ii) information required to be disclosed in the reports the company files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to management, including the company's chief executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Controls Over Financial Reporting

There were no changes in our internal controls over financial reporting during or that could significantly affect these controls subsequent to the date of the evaluation of those controls by the chief executive officer and principal financial officer.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are not aware of any pending or threatened litigation against us that we expect will have a material adverse effect on our business, financial condition, liquidity, or operating results. However, legal claims are inherently uncertain, and we cannot assure you that we will not be adversely affected in the future by legal proceedings.

ITEM 1.A. RISK FACTORS

Not applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

(a)	Not applicable.

(b)

We have no procedure in place for shareholders to nominate persons to serve on our Board of Directors other than nominations for the position of Director will be accepted from the floor as long as the person nominated has given written consent to his/her nomination and has agreed to serve if elected.

ITEM 6. EXHIBITS

Exhibit No.*	Document Description
3.1	Articles of Incorporation of Springbank Resources, Inc. (now known as Location Based Technologies, Inc.) (1)
3.1A	Amended Articles of Incorporation, dated October 20, 2008 (15)
3.2	Amended and Restated By-Laws of Location Based Technologies, Inc. (2)
10.1	Executive Employment Agreement, dated October 11, 2007, between the Company and David Morse (3)
10.2	Executive Employment Agreement, dated October 11, 2007, between the Company and Joseph Scalisi (3)
10.3	Executive Employment Agreement, dated October 11, 2007, between the Company and Desiree Mejia (3)
10.4	Stock Option Award Agreement between Location Based Technologies, Corp. and David Morse, dated August 30, 2007 (obligation assumed by the Company) (3)
10.5	Stock Option Award Agreement between Location Based Technologies, Corp. and Joseph Scalisi, dated August 30, 2007 (obligation assumed by the Company) (3)
10.6	Stock Option Award Agreement between Location Based Technologies, Corp. and Desiree Mejia, dated August 30, 2007 (obligation assumed by the Company) (3)
10.7	Series A Warrant Agreement, dated August 15, 2007, in favor of Northstar Investments, Inc. (3)
10.8	Series B Warrant Agreement, dated August 15, 2007, in favor of Northstar Investments, Inc. (3)
10.9	Finder’s Fee Agreement, dated March 9, 2007, between Northstar Investments, Inc. and PocketFinder, LLC (obligation assumed by the Company) (3)
10.10	Consulting Agreement, dated July 16, 2007, between Northstar Investments, Inc. and PocketFinder, LLC (obligation assumed by the Company ) (3)
10.11	2007 Stock Incentive Plan of Location Based Technologies, Corp., adopted September 10, 2007 (obligation assumed by the Company) (3)
10.12	Product Design Agreement, dated May 1, 2007, between Location Based Technologies and Aero Technology UK, Ltd. (obligation assumed by the Company) (3)
10.13	PocketFinder Branding and Website – Control Agreement, dated September 20, 2006, between Coregenic LLC and PocketFinder, LLC (obligation assumed by the Company) (3)
10.14	Coregenic Professional Services Contract, dated September 27, 2006, between Coregenic LLC and PocketFinder, LLC (obligation assumed by the Company) (3)
10.15	Consulting Agreement, dated October 3, between Location Based Technologies and Michael Beydler (obligation assumed by the Company) (3)
10.16	Consulting Agreement, dated July 10, 2006, between Location Based Technologies and Roger Anderson (obligation assumed by the Company) (3)
10.17	Loan Promissory Note in the amount of $900,000, dated November 28, 2005, with PocketFinder, Inc. as maker and David Morse as payee, secured by the intellectual property of maker (obligation assumed by the Company) (3)
10.18	M2M Telecommunications Services Agreement (portions of Attachment D to this Exhibit 99.1 have been omitted pursuant to a request for confidential treatment which has been approved by the Commission) (4)
10.19	Consulting Agreement between the Company and Brooks Secrest, dated December 10, 2007 (13)
10.20	Consulting and Sales Representative Agreement, dated January 2, 2008, with WhizBiz, LLC, to act as the Company’s consultant and sales representative. (13)
10.21	Consulting Agreement, dated January 2, 2008, with Tina Florance, CPA, for services to serve as the Company’s Controller. (13)
10.22	Framework Agreement between the Company and NXP Software, B.V. (“NXP”), dated February 27, 2008. (6)
10.23	Technology License and Distribution Agreement between the Company and NXP, dated February 27, 2008. (7)
10.24	Platform Development Agreement between the Company and NXP, dated February 27, 2008. (8)
10.25	Assistance Services Agreement between the Company and NXP, dated February 27, 2008. (9)
10.26	Call Center Services Contract between the Company and 24/7 INtouch, dated September 25, 2007. (14)
10.27	Manufacturing Services Agreement between the Company and Jabil Circuit, Inc., dated May 30, 2008. (10)

10.28	Business Development Consulting Agreement between the Company and The Scigliano Group, dated March 1, 2008. (14)
10.29	Consulting Services Agreement between the Company and Richard Mejia, Jr., dated August 15, 2008. (15)
10.30	Loan Promissory Note in the amount of $950,000, dated September 3, 2008, with the Company as maker and Joseph Scalisi as payee. (11)
10.31	Consulting Services Agreement between the Company and Michael Dautermann, dated October 16, 2008. (15)
10.32	Consent of Independent Registered Accounting Firm (15)
10.33	Loan Promissory Note in the amount of $625,000, dated November 18, 2008, with the Company as maker and Gemini Master Fund, Ltd. as payee.
10.34	Loan Promissory Note in the amount of $300,000, dated December 24, 2008, with the Company as maker and Steve Finley as payee.
10.35	Loan Promissory Note in the amount of $350,000, dated January 26, 2009, with the Company as maker and Joseph Scalisi as payee.
10.36	Professional Services Agreement between the Company and LoadRack, LLC, dated January 28, 2009.
10.37	Loan Extension Agreement, dated January 30, 2009, between the Company and Gemini Master Fund, Ltd.
10.38	Endorsement Agreement between the Company and John Riegger, dated February 12, 2009.
31.1	Sarbanes Oxley Act Section 302 Certification of Chief Executive Officer
31.2	Sarbanes Oxley Act Section 302 Certification of Principal Financial Officer
32	Sarbanes Oxley Act Section 906 Certification of Chief Executive Officer and Principal Financial Officer
99.1	Code of Ethics(5)

(1)	Filed as Exhibit 3.(I) to registrant’s registration statement on Form SB-2 filed with the SEC December 15, 2006 (Commission File No. 333-139395) (the “SRI SB-2”) and incorporated herein by this reference.
(2)	Filed as Exhibit 3.(II) to the SRI SB-2 and incorporated herein by this reference.
(3)	Filed as like-numbered exhibits to the registrant’s Current Report on Form 8-K filed with the SEC on October 12, 2007 (the “October 12, 2007 8-K”) and incorporated herein by this reference.
(4)	Filed as Exhibit 99.1 to registrant’s Current Report on Form 8-K filed with the SEC on December 5, 2007 and incorporated herein by this reference.
(5)	Filed as Exhibit 99.4 to the October 12, 2007 8-K.
(6)	Filed as Exhibit 10.1 to registrant’s Current Report on Form 8-K filed with the SEC on February 29, 2008 (“February 29, 2008 8-K”).
(7)	Filed as Exhibit 10.2 to registrant’s February 29, 2008 8-K.
(8)	Filed as Exhibit 10.3 to registrant’s February 29, 2008 8-K.
(9)	Filed as Exhibit 10.4 to registrant’s February 29, 2008 8-K.
(10)	Filed as Exhibit 99.1 to registrant’s Current Report on Form 8-K filed with the SEC on June 4, 2008 (“June 4, 2008 8-K”).
(11)	Filed as Exhibit 99.1 to registrants’ Current Report on Form 8-K filed with the SEC on September 12, 2008 (“September 12, 2008 8-K”)
(12)	Filed as Exhibit 3.01 to registrants’ Current Report on Form 8-K filed with the SEC on October 22, 2008 (“October 22, 2008 8-K”)
(13)	Filed as like-numbered exhibits to registrant’s Form 10-QSB filed with the SEC on April 10, 2008
(14)	Filed as like-numbered exhibits to registrant’s Form 10-QSB filed with the SEC on July 14, 2008
(15)	Filed as like-numbered exhibits to registrant’s Form 10-KSB filed with the SEC on December 12, 2008

*	Exhibit numbers follow the numbering pattern for exhibits set forth in Item 601 of Regulation S-K

SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Issuer has duly caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.

	LOCATION BASED TECHNOLOGIES, INC.

Date: April 14, 2009	By:	/s/ David M. Morse
		David M. Morse
		Co- President and Chief Executive Officer