UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
  Washington,
D.C. 20549
   Form
10-K
   ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
   For
the Fiscal Year Ended December 31, 2008
   Commission File Number 000-49957
   LocatePLUS
Holdings Corporation
  (Exact
name of registrant as specified in its charter)
  Delaware
              04-3332304(State
      or other jurisdiction of
                incorporation
      or organization)
              (I.R.S.
      EmployerIdentification
      No.)
  100
Cummings Center
 Suite
235m
 Beverly,
MA 01915
 (Address,
including zip code, of principal executive offices)
   978-921-2727
 (Registrants’
telephone number, including area code)
   Securities
Registered Under Section 12(b) of the Exchange Act:
   Common
Stock, par value $.01 per share
   Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes o No x
   Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Exchange Act. Yes o No x
   Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months and (2) has been subject to such filing requirements for the
past 90 days.
   Yes x No o
   Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. 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 o
Accelerated filer o
Non-accelerated filer oSmaller Reporting Company x
   Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes o No x
   Aggregate
market value of the voting stock held by non-affiliates of the registrant as
of May 12, 2009 based upon the closing price was approximately
$1,223,490
   The
number of outstanding shares of the registrant’s Common Stock on May 12,
2009 was 49,770,826








Table of Contents





PART I
                                      
                                      PageITEM 1
                                      Description
      of Business
                                      1ITEM 2
                                      Description
      of Property
                                      5ITEM 3
                                      Legal
      Proceedings
                                      5ITEM 4
                                      Submission
      of Matters to a Vote of Security Holders
                                      6PART IIITEM 5
                                      Market
      for Common Equity and Related Stockholder Matters
                                      6ITEM 6
                                      Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                                      9ITEM 7
                                      Financial
      Statements
                                      13ITEM 8
                                      Changes
      In and Disagreements with Accountants on Accounting and Financial
      Disclosure
                                      14ITEM 8A
                                      Controls
      and Procedures
                                      14PART IIIITEM 9
                                      Directors,
      Executive Officers, Promoters and Control Persons; Compliance with Section
      16(a) of the Exchange Act
                                      15ITEM 10
                                      Executive
      Compensation
                                      17ITEM 11
                                      Security
      Ownership of Certain Beneficial Owners and Management
                                      18ITEM 12
                                      Certain
      Relationships and Related Transactions
                                      18ITEM 13
                                      Exhibits
      and Reports on Form 8-K
                                      19ITEM 14
                                      Principal
      Accountant Fees and Services
                                      19







* *
*





Table of Contents









Part I





Item 1 - Description of Business




Overview





LocatePLUS
Holdings Corporation, through itself and its wholly-owned subsidiaries
LocatePLUS Corporation, Worldwide Information, Inc., Entersect Corporation,
f.k.a Certifion Corporation, Dataphant, Inc., and Metrigenics, Inc.,
(collectively, the “LocatePLUS Group”), are business-to-business,
business-to-government and business-to-consumer providers of public information
via our proprietary
data integration solutions.  Since 1996, we have sold a CD-ROM-based
product, which we refer to as Worldwide InformationTM, which enables users to
search certain motor vehicle records and driver’s license information in
multiple states.  Since March 1, 2000, we have maintained a database
that is accessible through the Internet, known as LocatePLUSÔ.  Our
LocatePLUSÔ product
contains searchable and cross-referenced public information on individuals
throughout the United States, including individuals’ names, addresses, dates of
birth, Social Security numbers, prior residences, and, in certain circumstances,
real estate holdings, recorded bankruptcies, liens, judgments, drivers’ license
information and motor vehicle records.  On September 1, 2003, our
newly formed wholly-owned subsidiary, Entersect Corporation, f.k.a Certifion
Corporation, acquired all of the assets of Project Entersect Corporation a
provider of data technology.  Entersect Corporation, f.k.a Certifion
provides self-screening for both resume and online dating services and has filed
for patent protection for both of these services.  In October 2003,
our newly formed wholly-owned subsidiary, Dataphant, Inc. acquired Voice Power
Technology through a merger.  Through this merger, Dataphant now has
information on virtually every land-based phone number in the United States and
approximately 30% of the cell phone numbers in the United States.  On
January 6, 2004, the Company formed a new wholly-owned subsidiary, Metrigenics,
Inc., with operations located in New York State.  Metrigenics was
formed to develop new ways to integrate biometrics with data.





Industry
Background





We are a
public information provider.  Users of our information have
historically included law enforcement, other government agencies, law firms,
investigation companies, private investigators and insurance
companies.  Information is used by those entities for various
activities ranging from legal discovery to the detection of fraud and the
prevention of crime and terrorism.  Additional users, such as large
businesses, have increasingly availed themselves of our information services in
connection with their identity validation and other business
decisions.





Non-traditional
users, such as individuals using job search and on-line dating service sites,
have also begun to avail themselves of background information in response to
concerns about identity theft.





The
majority of the data in the database is publicly available and it is only
through our proprietary matching and searching technology that creates
significant value to the data.  Examples of such public data
include:





·names
      and addresses
              
              ·aliases
              
              ·nationwide
      court records
            ·property
      ownership
              
              ·bankruptcies
              
              ·certain
      criminal records





The
sources of these types of public data, however, are often fragmented and
geographically dispersed.  In addition, the reliability of this
information and the data provided by various sources may not be
consistent.  In this environment, users that wish to use public
information are faced with the time-consuming, costly and difficult task of
gathering data from numerous locations and sources, verifying the information
acquired and organizing it into a useful format.  While services and
technologies have developed to enable remote access to certain information
sources, there have historically been few comprehensive access points for
information available
about individuals.  Traditional sources of information, including
credit reporting services and other database services, make available only
limited types of information for specific purposes, such as verifying credit
worthiness.  Such services may also be limited by applicable law to
specified uses and users.  Almost none of those sources are integrated
in a manner that allows easy and rapid access to data.





Business
Strategy





Our
business plan is to provide an entire suite of information products and services
for professionals in law enforcement agencies, law firms, insurance
underwriting, fraud investigation, private equity funds, private investigation
and financial institutions.  We believe that we will be able to
compete with comparable services based upon the pricing of our services and
based upon certain technical advantages incorporated in our
systems.  We have proprietary matching and searching capabilities that
give us an advantage over our competitors.  In addition, we acquired
the technology to gather virtually all the landline phone numbers and 30% of
cell phone numbers through our VPT merger which no known competitors
have.  To date, our products have primarily focused on the United
States market.  With the formation of Metrigenics, a research and
development company, we are expanding into products with worldwide
applicability.  Metrigenics is working on the development of matching
DNA with facial characteristics.




1
 Table of Contents







Our
Target Market and Screening of Users





Our
products have historically been marketed and sold to federal, state and local
government agencies (including law enforcement agencies), private investigators,
human resource professionals and the legal profession.  Our products
have been used in:





·
            crime
      and terrorism investigation (e.g., in conjunction
      with federal and state investigations in the aftermath of the September
      11th terrorist attacks and the subsequent anthrax
    incidents);




·
            detection
      of fraud;




·
            “skip
      tracing” (i.e.,
      the location of debtors and individuals in violation of parole or bail
      restrictions);




·
            background
      checks;




·
            legal
      due diligence; and




·
            Identity
      self certification




·
            Private
      security




·
            Risk-management.





Entersect
Corporation, f.k.a Certifion offers data for self-certification purposes in
connection with job search and Internet dating services and has provided an
addition channel in which to distribute the same data developed by
LocatePLUS.  Our LocatePLUSTM and Worldwide InformationTM products are
generally marketed and sold only to pre-screened business and government end
users.  Before obtaining access to our LocatePLUSTM database or our
Worldwide InformationTM product, we generally require commercial customers to
provide background information about their business need for data and about
themselves, such as business licenses, bar admission cards or private
investigator licenses.  Individuals involved in law enforcement must
provide similar evidence of their authority.





To
prevent the misuse of our data, we have adopted a three-tier security schema for
our LocatePLUSTM Group products.  We believe that we lead the market in
protecting access to our data.  With recent challenges in the industry
relating to data access, we have been ahead of the curve in adopting a schema
that restricts the most sensitive data.  Our groups are classified in
the following manner.





Level
            Industry
      Users
            Sample
      Datasets Available to UsersI
            General
      Business
            Names,
      Addresses and Phone Numbers
              Past
      Residences, Neighbors and Affiliates
              Real
      PropertyII
            Private
      Investigators
              Insurance
              Attorneys/Law
      Firms
              Government
              Corporate
      Security
            Level
      I Data, plus:
              Liens
      and Judgments
              Drivers’
      Records
              Certain
      Motor Vehicle RecordsIII
            Law
      Enforcement
            Level
      I and II Data, plus:
              Comprehensive
      Criminal Records
              Restricted
      Motor Vehicle Records
              Certain
      Credit Reporting Data







LocatePLUSÔ





We
launched our LocatePLUSÔ Internet site in March
2000.  Our LocatePLUSÔ database contains
searchable and cross-referenced public information on individuals throughout the
United States.  Information is presented in a dynamic, hyper-linked
fashion, permitting users to rapidly identify and obtain personal information
relating to individuals and their associated residences, possible acquaintances,
and a variety of other types of data.  Our LocatePLUSÔ database consists of
approximately five billion individual data entries.  According to our
estimates, we have data entries relating to approximately 205 million adult
individuals in the United States (or approximately 98% of the adult population
of the United States, based on the 2000 United States Census).





Datasets
currently integrated in our LocatePLUSÔ product include nationwide
records relating to:





·names
      and addresses
                  
                  ·aliases
                  
                  ·dates
      of birth
                  
                  ·Social
      Security numbers
                  
                  ·driver’s
      license information
                  
                  ·residential
      address information
                  (including dates of residence)
                  
                  ·certain
      criminal arrest,
                  conviction and incarceration
                  records
                ·real
      estate records
                  
                  ·prior
      residences
                  
                  ·recorded
      bankruptcies
                  
                  ·liens
                  
                  ·motor
      vehicle records
                  
                  ·certain
      death records
                  
                  ·phone
      numbers
                  
                  ·vessel
      registrations





We intend
to continue integration of datasets into our LocatePLUSÔ product,
including:





·certain
      hunting and fishing licenses
              
              ·certain
      facial image files
              
              ·certain
      gun licenses
            ·certain
      professional licenses
              
              ·certain
      fingerprint files
              
              ·Federal
      Aviation Administration records





We can
currently give no assurance as to the timing of integration of such datasets,
however, or whether these new datasets will be integrated with our
LocatePLUSÔ product at
all.





2
 Table of Contents





We
believe that one of the significant advantages of our LocatePLUSTM product, in
comparison with many products with which we compete, is the ability of
LocatePLUSTM to “tie” data associated with a given individual to produce a single
report.  Our LocatePLUSTM system uses a proprietary methodology to
associate data in a manner that generally results in a matching of data entries
across diverse data sources, allowing users to obtain a single, comprehensive
data report about an individual, even when there is no single element that ties
data entries together (such as a Social Security number).  This
comprehensive data report is itself linked to other data potentially relevant to
a business or government agency researching an individual, such as names and
addresses of possible acquaintances, relatives and neighbors of that
individual.  Another of the advantages that LocatePLUS Group has is
its unlisted and cell phone data which we believe no other competitor
has.





LocatePLUS AnyWhereÔ





We also
offer a version of our LocatePLUSÔproduct
that is accessible through wireless personal digital assistants and e-mail
capable pagers, which we refer to as LocatePLUS AnyWhereÔ.  LocatePLUS
AnyWhereTM was commercially launched in mid-December 2002.  This
product is being marketed primarily to law enforcement.  The product
is sold on a subscription fee basis, permitting unlimited access to our
LocatePLUSÔ database
for a flat monthly fee provided that that the user agrees to a fixed term
commitment.  As of December 31, 2008, we had realized only nominal
revenue from this product.





Worldwide
InformationTM





Since
1996, we have produced CD-ROM products that enable users to quickly search motor
vehicle records in multiple states through a dynamic search engine, known as
Worldwide InformationTM.  Our Worldwide InformationTM product enables
users to search certain motor vehicle records and drivers’ license information
in multiple states through a dynamic search engine.  Unlike many
competing products, our Worldwide InformationTM product enables users to rapidly
identify vehicles or drivers using complete or partial search
criteria.  We believe that this ability to search partial data is a
valuable tool in circumstances in which incomplete information is available, as
is often the case in criminal investigations.  Unlike data provided by
Internet-based services, searches on our CD-ROM product are confidential and
unavailable to any person other than the user of our CD-ROM
product.  We believe that the confidential nature of this CD-ROM
product makes it particularly attractive to law enforcement agencies, which must
often conduct criminal investigations in strict secrecy.





As of
December 31, 2008, there were approximately 3,500 pre-screened purchasers of our
Worldwide InformationTM CD-ROM product.





Entersect





On
September 1, 2003, our newly formed wholly-owned subsidiary, Entersect
Corporation, f.k.a Certifion Corporation, acquired all of the assets of Project
Entersect Corporation a provider of data technology.  Entersect
Corporation, f.k.a Certifion operates under the trade name of "Entersect," and
it provides self-screening for both resume and online dating
services.





Dataphant





In
October 2003, Voice Power Technology merged into our newly formed wholly-owned
subsidiary, Dataphant, Inc.  Through this merger, Dataphant now has
information on virtually every land-based phone number in the United States and
approximately 30% of the cell phone numbers in the United States.  We
believe that we are the only company that has this information.  The
Dataphant data has been integrated into both LocatePLUS and Worldwide
Information products.  Currently the only distribution of this data is
through the other subsidiaries.




Metrigenics





On
January 6, 2004, the Company formed a new wholly-owned subsidiary, Metrigenics,
Inc., with operations located in New York State.  Metrigenics was
formed to develop new ways to integrate biometrics with
data.  Metrigenics has finished first stage testing on matching DNA to
facial characteristic 
 In March,
2009, management made the decision to suspend funding of this subsidiary which
consisted primarily of research and development costs.  Management is
hopeful that it will be able to resume funding by year end and that a beta
product be ready to test within that timeframe.
   3
 Table of
Contents


Sources
of Our Data





Our
operations depend upon information derived from a wide variety of automated and
manual sources.  External sources of data include public records
information companies, governmental authorities and on-line search
systems.  We license or otherwise obtain our data from five primary
sources, as well as over twenty other ancillary sources (including both private
and government sources).  In the event that any of our primary sources
of data were no longer available to us, we believe that we would be able to
integrate alternate sources of data without significant disruption to our
business or operations, as we believe there are currently a number of equivalent
providers of such data.





Regulatory
Restrictions on our Business





Both
federal and state laws regulate the sale of data.  Recently, consumer
advocates and federal regulators have voiced concerns regarding public access
to, or commercial use of, personal information.  As a result,
increased pressure has been placed upon federal and state legislators to
regulate the dissemination or commercial use of personal
information.





One such
legislative enactment that has had an effect on our business was the Financial
Services Modernization Act of 2000, also known as the “Gramm-Leach-Bliley
Act”.  Among other things, this law restricts the collection, use, and
transfer of certain data that includes “credit header” information, which had
historically functioned as the backbone of our data
resources.  Implementation of this law’s restrictions by the Federal
Trade Commission significantly limited the availability of certain data for our
database, but we have subsequently developed datasets that function
independently of “credit header” information.  Although we have not
engaged counsel to review this matter or the conduct of our operations
generally, we believe that our operations are currently unaffected by the
Gramm-Leach-Bliley Act or any law specifically applicable to the dissemination
of data concerning individuals.  More recently, congress has been
addressing the access to public data such as ours.  Any further
restriction on our use of personal information, however, could limit the
usefulness and have a material adverse affect on operations, our products,
including our LocatePLUSÔ product, and our
operations.  Federal and state law prohibits us from selling
information about minors.  Our products have been designed to prevent
the dissemination of such data.





Distribution
of Our Products





We
distribute our content both directly (though the Internet in the case of our
LocatePLUSÔ product
and through the mail in the case of our Worldwide InformationTM CD-ROM) and
through “channel partner” arrangements, by which third parties access our
databases in consideration for a royalty.  We also, from time to time,
provide certain consulting services to third party database providers on the
integration and assimilation of public data.  To date, our efforts to
license data have resulted in several channel partnerships.  For the
year ending December 31, 2008, we have recognized revenue of $2,111,816 on these
agreements.





Competition





Current
competitors for our LocatePLUSTM and Entersect include ChoicePoint,
Confi-chek.com, and Lexis-Nexis.  Many of the companies that currently
compete with this product, as well as other companies with whom we may compete
in the future, are national or international in scope and have greater resources
than we do.  Those resources could enable those companies to initiate
price cuts or take other measures in an effort to gain market share in our
target markets.




Our
Worldwide InformationTM product primarily competes with the registries of motor
vehicles of various states that sell their data to screened
users.  These State agencies generally provide data in “raw form”
without the search capabilities that we provide in our Worldwide InformationTM
product.







Employees





As of
December 31, 2008, the LocatePLUS Group had 53 employees.  We believe
that our relations with our employees are good.


4
 Table of
Contents


Item 2 - Description of Property




Facilities




LocatePLUS
Holdings Corporation and LocatePLUS Corporation, are presently headquartered in
Beverly, Massachusetts, where we lease approximately 32,000 square
feet.  The lease on that facility expires on February 28, 2012, and
our annual lease obligation is approximately $486,389.  Subsequent to
2008 year end, Management has extended and re-negotiated its current lease which
is expected to lower the annual rent expense by about $120,000 in the first year
and $100,000 in years thereafter with the lease expiring in 2015.




Worldwide
Information, Inc., was previously located in Byfield, Massachusetts, however, in
March of 2009, the decision was made to consolidate office space and now
Worldwide Information operates out of the same office space as
LocatePLUS.
  Dataphant, Inc., is located in Austin, Texas, where it leases approximately
3,000 square feet pursuant to a month-to-month lease (which includes the use of
office equipment, with current monthly rent of $3,680).





Entersect
Corporation, f.k.a Certifion is located in Santa Ana, California, where it
leases approximately 1,900 square feet pursuant to a month-to-month lease with
current monthly rent of $3,859.





Metrigenics
Inc., has access to University office and lab space with no lease or rental
commitment.  We believe that our facilities are sufficient for our
projected needs.





Intellectual
Property





Publicly
available data concerning individuals is generally
non-proprietary.  As a result, our intellectual property consists
largely of certain trade secrets and know-how associated with the integration of
databases and our ability to link diverse datasets.  We rely on a
combination of confidentiality agreements, restrictions on access to our
proprietary systems, and contractual provisions (such as in our user agreements)
to protect our intellectual property.





We have
registered LOCATEPLUS.COMâ
as a trademark with the United States Patent and Trademark Office.  We
maintain LOCATEPLUSÔ,
WORLDWIDE INFORMATIONTM, ENTERSECTTM, CareerScanTM, and TrustmeIDTM as unregistered
trademarks relating to our products.  We may, from time to time, claim
certain other rights under trademark law, however, we currently have no other
marks registered or pending with the United States Patent and Trademark Office
or the equivalent agency of any other country.





In 2003,
we filed for patent protection covering certain aspects of two of our
products.  We have filed for patent protection covering certain
aspects of our unique search product, "Bull's Eye," that electronically matches
database information with current public phone and utility information to
identify current information.  We also filed, through our Entersect
Corporation, f.k.a Certifion subsidiary, for patent protection covering certain
aspects of our self-validation products Career ScreenTM and
TrustmeIDTM.





Item 3 - Legal Proceedings




On
September 15, 2008, Carl L. Green on behalf of Dawn Martinson Green, a
stockholder, filed a complaint against the Company, James Fields, and Jon
Latorella,, Carl Green et al v
LocatePlus Holdings et al, Delaware Court of ChanceryC.A. No 4032-CC. . The defendants have moved
to dismiss and moved for a more definite statement. The Plaintiffs generally
allege that the individual defendants somehow acted wrongfully when they agreed
to allow certain debt to be exchanged for stock. The Plaintiffs allege against
the individual defendants that as directors they breached their duty of loyalty
by "enriching and entrenching" themselves and that they engaged in self-dealing
by diluting the shares of the Company for the purpose of entrenching themselves.
Against the Company the plaintiffs allege that the Company failed to allow an
inspection of books and records. .The Company and the individual defendants,
through their counsel , intend to contest the case vigorously.


On April 3, 2009, a lawsuit styled LocatePLUS Holdings Corp., v.
Dutchess Capital Management, LLC, et al., was filed in Suffolk County
Superior Court, in Massachusetts (Case No. 09-385-A).  LocatePLUS is
seeking the return and cancelation of 19,866,461 shares of stock improperly
converted by Dutchess Capital Management, LLC and its related entities
(“Dutchess”).  Specifically, the lawsuit alleges that Dutchess
breached the debenture agreements between LocatePLUS and Dutchess by converting
more stock than the maximum allowable under the agreements
(4.99%).  In addition, the lawsuit alleges that Dutchess violated
Massachusetts state law by charging usurious interest and by knowingly and
willfully committing unfair and deceptive acts or practices. The suit also names
the former President and CEO, James Fields as an improper transferee of these
shares. The lawsuit seeks, among others, a temporary restraining order and a
preliminary injunction enjoining Dutchess and Fields from transferring the
improperly-converted stock and from voting the stock on any corporate matters
until an arbitration can be completed , seeks the return and destruction of the
improperly-converted stock, requests unspecified compensatory damages and costs,
and prays for such other relief as the court deems proper.  Dutchess
and Fields have answered denying liability. Fields has counter-claimed for
amounts due under the severance provisions in his employment
agreement.    LocatePLUS intends to pursue the claims
vigorously and to defend against the counter-claim to protect the interests of
its shareholders.
  5
 Table of
Contents
    Item 4 - Submission of Matters to a Vote of Security
Holders





On September
15, 2008, the Company hosted its Annual Shareholder meeting where the following
individuals proposed by management were elected by a majority of those shares of
Common stock present and voting:





James
Fields, to serve a three year term.


Rich
Nagle, to serve a three year term.


Ralph
Caruso, to serve a two year term.


Paul
DeRoche, to serve a one year term.


David
Skerrett, to serve a one year term.





In
addition, at the Annual Meeting, a proposition set forth by Management and the
Board to increase the authorized shares of Common Stock of the Company from
twenty five million shares to one hundred million shares was not
approved.
   Effective
January 26, 2009 the Company obtained the consent of a majority of the record
holders of its Common Stock to elect a new Board of Directors, each for a
one-year term and until a successor is elected and qualifies, as
follows:
 
 Christian Williamson,
Chairman
 Richard Pyle
 David Skerrett
 Ralph Caruso
 Patrick Murphy
 James Ahearn
 George Isaac
 
 In
addition, effective January 26, 2009 the Company obtained the consent of a
majority of the record holders of its Common Stock  to increase the
authorized shares of Common Stock of the Company from twenty five million shares
to fifty million shares.









PART II




Item 5 - Market for Common Equity and Related Stockholder
Matters




Market
Information





Prior to December 5, 2005, the Company
had outstanding two classes of stock, Class A Voting Common Stock of which there
were 150,000,000 shares authorized with 111,424,416 issued, and Class B
Non-Voting Common Stock of which there were 250,000,000 shares authorized with
74,505,730 issued.  At the annual meeting of the shareholders held on
November 12, 2005, the shareholders approved a plan of recapitalization whereby
1) each outstanding share of our Class A Voting Common Stock and our Class B
Non-Voting Common Stock combine into a single class of voting common stock with
400,000,000 authorized and 185,930,146 issued, 2) effect a one-for-fifty reverse
split of this new class of common stock resulting in a 8,000,000 authorized and
3,718,603 issued, and 3) increase the authorized from 8,000,000 to
25,000,000.  The combination of the two classes of stock was completed
on December 5, 2005.  The reverse split and change in authorized
shares was completed on December 12, 2005.  In addition, the
completion of the recapitalization triggered the mandatory conversion of certain
notes payable in the amount of $8,965,000 into 1,793,000 of the new Common
Stock.





We had
three securities that began trading on the Over-the-Counter Bulletin Board on
December 12, 2002:





·
            shares
      of our Class A Voting Common Stock are quoted under the symbol
      “LPLHA”;





·
            shares
      of our Class B Non-Voting Common Stock are quoted under the symbol
      “LPLHB”; and





·
            our
      public warrants (redeemable warrants to purchase one share of our Class A
      Voting Common Stock with an exercise price of $0.50 per share) are quoted
      under the symbol “LPLHW”.





Post the plan of recapitalization, on
December 12, 2005, we had two securities trading on the Over-the-Counter
Bulletin Board as follows:


·
            shares
      of our Common Stock, quoted under the symbol “LPHC”;
  and





·
            our
      public warrants expired April 12,
2007.


6
 Table of Contents







The following tables set forth the high
and low closing sales prices per share (and per public warrant), for our
Class A Voting Common Stock, Class B Non-Voting Common Stock and public
warrants for each quarter during fiscal years 2006, and 2007, as reported by the
Over-the-Counter Bulletin Board and 2008 as reported by the
Over-the-Counter.





2006Three
      months endedMarch
      31
              
              
              June
      30
              
              
              September
      30
              
              
              December
      31High
              
              
              Low
              
              
              High
              
              
              Low
              
              
              High
              
              
              Low
              
              
              High
              
              
              LowLPHC
              
              
              3.50
              
              
              
              1.43
              
              
              
              2.8
              
              
              
              .45
              
              
              
              1.70
              
              
              
              .76
              
              
              
              .91
              
              
              
              .36LPHCW
              
              
              .023
              
              
              
              .012
              
              
              
              .020
              
              
              
              .006
              
              
              
              .065
              
              
              
              .003
              
              
              
              N/A
              
              
              
              N/A





2007Three
      months endedMarch
      31
              
              
              June
      30
              
              
              September
      30
              
              
              December
      31High
              
              
              Low
              
              
              High
              
              
              Low
              
              
              High
              
              
              Low
              
              
              High
              
              
              LowLPHC
              
              
              .42
              
              
              
              .18
              
              
              
              .22
              
              
              
              .09
              
              
              
              .15
              
              
              
              .08
              
              
              
              .12
              
              
              
              .04





2008Three
      months endedMarch
      31
              
              
              June
      30
              
              
              September
      30
              
              
              December
      31High
              
              
              Low
              
              
              High
              
              
              Low
              
              
              High
              
              
              Low
              
              
              High
              
              
              LowLPHC
              
              
              .15
              
              
              
              .04
              
              
              
              .28
              
              
              
              .04
              
              
              
              .14
              
              
              
              .02
              
              
              
              .05
              
              
              
              .01











Holders


As of
December 31, 2008 there were:





·
            approximately
      438 holders of record of our Common
Stock,







Dividends




We have never declared or paid a cash
dividend.  At this time, we do not anticipate paying dividends in the
future.  We are under no legal or contractual obligation to declare or
to pay dividends, and the timing and amount of any future cash dividends or
distributions is at the discretion of our Board of Directors and will depend,
among other things, on our future after-tax earnings, operations, capital
requirements, borrowing capacity, financial condition and general business
conditions.  We plan to retain any earnings for use in the operation
of our business and to fund future growth.





Securities
Authorized for Issuance Under Equity Compensation Plans





The
following table reflects equity compensation granted or issued by us as of
December 31, 2008, to employees and non-employees (such as directors,
consultants, advisors, vendors, customers, suppliers and lenders) in exchange
for consideration in the form of goods or services.





Plan
      Category
            Number
      of securities to be issued upon exercise of outstanding options, warrants
      and rights
            Weighted-average
      exercise price of Outstanding options, Warrants and rights
            Number
      of securities remaining available for future issuance under equity
      compensation plans(1)Equity
      Compensation Plans approved by security holders:Common
      Stock
            699,976
            $30.54
            491,221Equity
      Compensation plans not approved by security holders:Common
      Stock
            3,088,342
            $6.55
            N/ATotal:
            
            
            N/ACommon
      Stock
            3,788,318
            $10.98
            N/A





(1)
            Excludes
      securities reflected in column titled “Number of securities to be issued
      upon exercise of outstanding options, warrants and
  rights”.


7
 Table of
Contents


Recent
Sales of Unregistered Securities





The
following is a list of our securities sold within the past three years without
registration under the Securities Act of 1933, as amended.




On December 29, 2005, the Company
entered into an Investment Agreement with Dutchess Private Equities Fund II,
L.P.  Pursuant to that Investment Agreement, we received proceeds of
$1,500,000 by issuing a twelve-month note payable convertible into 300,000
shares of Common Stock at $5.00 per share and 200,000 founders shares and Common
Stock purchase warrant for 750,000 shares with an exercise price of $5.00 per
share. The remaining balance of $892,226 of this Debenture as amended effective
October 18, 2006 is convertible into shares of our Common Stock at the lesser of
$.70 per share or 75% of the lowest closing bid price during the 20 trading days
next preceding the date of conversion.  On July 21, 2006 we issued a
Debenture to Dutchess Private Equities Fund, LP , a related private equities
fund and received proceeds of $750,000. The Debenture is due on July 21, 2011
and pays twelve per cent (12%) interest. Interest and principal are payable at
such times and under such conditions are outlined in the Debenture. The
Debenture is convertible into shares of our Common Stock at the lesser of $.70
per share or 75% of the lowest closing bid price during the 20 trading days next
preceding the date of conversion (collectively, the two funds
“Dutchess”).  The holder may not convert if it would cause the holder
to own more than 4.9% of the outstanding Common Stock of the
Company.
 
 Also in
connection with the sale and issuance of the Debentures, the Company entered
into a settlement agreement with Dutchess Private Equities Fund, Ltd. for the
settlement of a dispute regarding the amount due under debt instruments issued
by the Company to Dutchess during 2005 and 2006.  Pursuant to the
terms of the Settlement, the Company immediately paid a cash amount of
$1,500,000 with two additional cash payments in the amount of $300,000 each to
be made on the date that (i) the Company files the Registration Statement (or,
if earlier, within 45 days) and (ii) the Registration Statement is declared
effective (or, if earlier, within 145 days).  The Company also issued
a Note in the amount of $1,500,000 and agreed to reduce to $0.10 per share the
exercise price of the warrants issued to Dutchess.  Dutchess agreed to
terminate any security interest in the Company’s assets upon the Initial
Payment. The Company is mounting a legal challenge to the legitimacy of
indebtedness owed to Dutchess Private Equities Fund. See Item 3 – Legal
Proceedings.
  On March
20, 2007, we issued a secured convertible debenture to Cornell Capital Partners
(now YA Global Investments L.P.) in the aggregate principal amount of $6,000,000
of which $3,000,000 was advanced immediately.  The second installment
of $2,000,000 will be advanced immediately prior to the filing by the Company
with the Securities and Exchange Commission (the "Commission") of the
Registration Statement.  The last installment of $1,000,000 will be
advanced immediately prior to the date the Registration Statement is declared
effective by the Commission.   The Debentures mature on the third
anniversary of the date of issuance. The holder of the Debentures may convert at
any time amounts outstanding under the Debentures into shares of common stock of
the Company at a fixed conversion price per share equal to
$0.314.  Under the Purchase Agreement the debentures are secured by
substantially all of the Company's, and its wholly owned subsidiaries’
assets.
  Under the Purchase Agreement, we also issued to Cornell five-year warrants in
six separate series as follows:





A
Warrants to purchase 2,384,814 shares of common stock at $0.314 per
share;


B
Warrants to purchase 2,186,079 shares of common stock at $0.343 per
share;


C
Warrants to purchase 2,017,919 shares of common stock at $0.372 per
share;


D
Warrants to purchase 1,748,863 shares of common stock at $0.429 per
share;


E
Warrants to purchase 1,499,026 shares of common stock at $0.50 per
share;


F
Warrants to purchase 1,500,000 shares of common stock at $0.01 per
share.




On
December  11,  2007,  the Company received a
letter dated December 6, 2007 ( the "Notice Letter"),
from  YA  Global  Investments,  L.P.,  (formerly  known  as
Cornell Capital
Partners,  L.P.)  notifying  the  Company  of
certain Events of Default under the
Secured  Convertible  Debenture  dated  March  20,  2007  of  the  Company  (the
"Debenture").  As a result of this default, the entire note has been
re-classified as short term.


Small
Business Issuer Purchases of Equity Securities





We did
not repurchase any of our securities during 2008 .


8
 Table of
Contents


Item 6 - Management’s Discussion and Analysis of Financial Condition
and Results of Operations




MANAGEMENT’S
DISCUSSION AND ANALYSIS OF


FINANCIAL
CONDITION AND RESULTS OF OPERATIONS





You
should read the following discussion and analysis of our consolidated financial
condition and results of operations together with “Selected Financial Data” and
our consolidated financial statements and related notes included elsewhere in
this Annual Report.  This discussion and analysis contains
forward-looking statements that involve risks, uncertainties and
assumptions.  Our actual results may differ materially from those
anticipated in these forward-looking statements because of certain factors,
including, but not limited to, those presented below.





Overview





The
LocatePLUS Group is a business-to-business and business-to-government provider
of public information via our proprietary data integration
solutions.  Since 1996, we have sold a CD-ROM-based product, which we
refer to as Worldwide InformationTM, that enables users to search certain motor
vehicle records and driver’s license information in multiple states through a
dynamic search engine, using complete or partial information.  Since
March 1, 2000, we have maintained a database that is accessible through the
Internet, known as LocatePLUSÔ.  Our
LocatePLUSÔ product
contains searchable and cross-referenced public information on individuals
throughout the United States, including individuals’ names, addresses, dates of
birth, Social Security numbers, prior residences, and, in certain circumstances,
real estate holdings, recorded bankruptcies, liens, judgments, drivers’ license
information and motor vehicle records.  Since September 2003, our
wholly-owned subsidiary, Entersect Corporation, f.k.a Certifion, has offered
personal information for self-certification purposes through its EntersectÔ product.





We
distribute our content both directly (through the Internet in the case of our
LocatePLUSÔ product
and through the mail in the case of our Worldwide InformationTM CD-ROM) and
through “channel partner” arrangements, by which third-party database providers
obtain access to our databases in consideration for a royalty (such as job
search and on-line dating sites, in the case of our EntersectÔ product).





On
September 1, 2003, through our newly formed wholly-owned subsidiary Entersect
Corporation, f.k.a Certifion Corporation, we acquired all the assets of Project
Entersect Corporation in consideration for $62,662.  The acquisition
was accounted for as a purchase and is recorded and reflected with our
operations from the time of purchase.  The subsidiary operates under
the trade name Entersect.  Entersect provides a self-identification
and validation service for online job posting and dating sites.





On
October 17, 2003, through our newly formed wholly-owned subsidiary, Dataphant,
Inc., we acquired Voice Power Technologies, Inc., a Texas-based provider of data
technology.  In connection with this acquisition, Voice Power
Technologies, Inc. merged with and into Dataphant, Inc.  As
consideration for the merger, shareholders of Voice Power Technologies, Inc.
received an aggregate of 2,500,000 shares of LocatePLUS Class B Non-voting
Common Stock.  Through this acquisition, we now have information
concerning virtually all landline phone numbers in the United States and
approximately 25% of United States cell phone numbers.  This data has
been integrated into our current product lines.





Although
our products generally consist primarily of publicly available – and therefore
non-proprietary – information, we integrate data in our products in a
proprietary manner that allows users to access data rapidly and
efficiently.  In addition, our LocatePLUSTM product utilizes
proprietary methodologies to link data from different sources associated with a
given individual to a single background report, even though the sources of data
with respect to a given individual may be incomplete or contain only partial
information with respect to that individual.  We have also sought
patent protection with respect to aspects of our marking and search technology
(referred to as our “Bull’s Eye” feature) and aspects of our CareerScanÔ and TrustmeIDÔ products.


Revenue
associated with our Worldwide InformationÔ product is recognized upon
delivery to the customer of a CD-ROM, provided that no significant obligations
remain, evidence of the arrangement exists, the fee
is fixed or determinable and collectability is reasonably
assured.  Information in our Worldwide InformationÔ product is updated and
released either quarterly or twice a year.  In the case of our
LocatePLUSÔ product,
we charge a fee to customers, which varies based upon the type and quantity of
information requested.  Capitalizing on the synergies gained through
the Companies acquisitions, in 2004, Worldwide was able to utilize the
technology acquired through Voicepower Technologies, when it merged into
Dataphant, to develop the industry's first ever searchable non-published and
cell phone CD-ROM.  This product became Worldwide's fastest growing
CD-ROM product to date.  In addition, Worldwide, using the search
capabilities built into the CD-ROM search engine, has expanded beyond
CD-ROMs.  Worldwide recently entered into an exclusive partnership
with the State of New Hampshire's Department of Safety to implement its
technology on the state's Intranet.  Sonia Bejjani, Company co-founder
and President of Worldwide, was profiled in "Women to Watch in 2005" by Women's
Business Boston, January 2005 issue.





Revenue
from our LocatePLUSÔproduct
is recognized when there is either an agreed upon royalty fee or the requested
information is downloaded, there is evidence of an arrangement, the fee is fixed
or determinable, and collectability is reasonably assured.  We charge
our fees to customers’ credit cards (approximately 60% of our current
LocatePLUSÔcustomer
base) or invoice customers for such fees on a monthly basis (approximately 40%
of our LocatePLUSÔ
customer base). Within this customer base, subscriptions for ChoicePlan billing
plans, which are billing plans for committed revenue per customer ranging from
$25 per month to $5,000 per month, increased to 1,200 customers.





Revenue
from our EntersectÔproduct
is recognized when certifications are purchased online (and paid for via credit
card) or the requested information is downloaded, there is evidence of an
arrangement, the fee is fixed or determinable, and collectability is reasonably
assured.





Revenue
from Dataphant is generated exclusively through inter-company sales to our other
wholly owned subsidiaries and eliminated on consolidation.





Our costs
of revenue consist primarily of our costs to obtain data and software
maintenance expenses, which consist primarily of payroll and related expenses
for information technology personnel, Internet access and hosting charges, and
expenses relating to Web content and design.  We obtain our data from
multiple sources and we have entered into various license agreements with the
related data providers.  In 2008 and 2007, we recorded $1,546,546 and
$1,577,157, respectively, in costs related to these agreements.  In
the event that any of our primary sources of data became unavailable to us, we
believe that we would be able to integrate alternate sources of data without
significant disruption to our business or operations, as there are currently a
number of providers of such data.





Our
selling and marketing expenses consist of salaries and commissions paid to sales
representatives for the products that we offer, as well as direct mail
advertising campaigns and magazine and Internet-banner
advertisements.





9
 Table of Contents







General
and administrative expenses consist of payroll and related expenses for
non-sales, non-research and development and executive and administrative
personnel, facilities expenses, insurance, professional services expenses,
travel and other miscellaneous expenses.





Interest
income consists of earnings on our cash, cash equivalents and short term
investments.  Interest expense is primarily attributable to various
notes issued through the year ended December 31, 2008.  As of December
31, 2008, we had gross notes payable (current and long-term) totaling
$4,972,829.


We have
incurred significant net losses since our inception.  We incurred net
losses of approximately $1.3 million in 2008 and $7.2 million in
2007.  Our accumulated deficit as of December 31, 2008 was
approximately $50 million.





Our
ultimate success is still dependent upon our ability to secure additional
financing to meet our working capital and ongoing project development
needs.  We anticipate that our sales and marketing, product
development and general and administrative expenses will stabilize during 2008
and for the foreseeable future.  To achieve our business objectives,
we must raise additional capital, which may consist of future debt or equity
offerings.  Any such financings may be dilutive to existing
investors.





Results
of Operations





Year
Ended December 31, 2008 Compared to Year Ended December 31, 2007





Revenues.Revenue from our
Worldwide Information TM CD-ROM
product decreased to $439,621 for the year ended December 31, 2008 from $498,366
for the year ended December 31, 2007, a decrease of 12%  Revenue from
our LocatePLUSÔ and
EntersectÔ online
products, decreased to $5,456,026 for the year ended December 31, 2008 as
compared to $5,537,453 for the year ended December 31, 2007, a decrease of
1.5%.  Revenue from our channel partners decreased to $2,111,816 for
the year ended December 31, 2008 as compared to $2,302,550 for the year ended
December 31, 2007 a decrease of 8%.  This decrease is attributed to
the expiration of a major channel partner agreement.  We recognized
wireless revenue of $6,137 in 2008 as compared to $9,393 in 2007, a decrease of
35%. This decrease is attributable to decreased marketing and promotion efforts
associated with the wireless product. We expect online, channel, CD-ROM revenue
to be stable during the next twelve months.





Costs of revenues.For the year
ended December 31, 2008, our costs of revenue for Worldwide Information TM were
$90,710 as compared to $48,219 for the year ended December 31, 2007, an increase
of 88%.  This increase is due to expansion of data sets for this
product.  For the year ended December 31, 2008, our costs of revenue
associated with LocatePLUSTM and channel partner sales were $1,546,546, as
compared to $1,577,157 for the year ended December 31, 2007, a decrease of 1.5%.
Costs of revenues are expected to stabilize at about $1.8 million annually, as
that amount represents the cost for the required data sets.  As
revenue increases, costs of revenue are not expected to increase
proportionately.





Selling and marketing
expenses.  Selling and
marketing expenses for the year ended December 31, 2008 were $1,591,405, as
compared to $1,462,923 for the year ended December 31, 2007, an increase of
approximately 9%.  We expect selling and marketing expenses to
stabilize  over the next twelve months as we focus greater efforts on
the acquisition of new customers and increasing our per user usage on a monthly
basis to increase revenues.





General and administrative
expenses.General and
administrative expenses for the year ended December 31, 2008 were $5,366,167 as
compared to $6,047,279 for the year ended December 31, 2007, a decrease of
11%.  This decrease is attributable to a reduction in non-essential
personnel.





Research and development
expenses.Research and
development expenses for the year ended December 31, 2008 were $194,728 as
compared to $157,867 for the year ended December 31, 2007, an increase of 23%.
These expenses are a result of investigation of new biometric data products
through the creation of Metrigenics.  We anticipate these expenses
will stabilize for the foreseeable future.





Interest income.This income is
attributable to interest payments being made on notes receivable. No interest
income for the year ended December 31, 2008 was recorded.  Interest
income for the year ended December 31, 2007 was $48,383.





Interest expense.Interest expense
decreased to $511,542 for the year ended December 31, 2008, from $555,017 for
the year ended December 31, 2007,a
decrease of 8%.  The interest expense is attributable to the payoff of
certain notes payable issued in 2004 and the interest expense associated with
additional financing during 2007.





Other Income.Other income decreased
to $7,924 for the year ended December 31, 2008, from $10,310 for the year ended
December 31, 2007, a decrease of 23%. Other income is derived from the
collection of previously written off bad debt.




10
 Table of
Contents


Liquidity
and Capital Resources




From our incorporation in 1996 through December 31, 2008, we raised
approximately $43 million through a series of private placements and public
offerings of equity and convertible debt to fund marketing and sales efforts and
develop our products and services.





As of
December 31, 2008, our cash and cash equivalents totaled $92,465





In connection with an offering that closed on August 15, 2005 we entered into a
Purchase Agreement with certain institutional and accredited investors relating
to the private placement of convertible term notes issued by the Company in the
principal amount of $8,965,000 and warrants to purchase up to 41,189,000 shares
of our capital stock. Of the proceeds from this offering, approximately $4.1
million was used to retire current secured convertible notes, and the remainder
will be used for general working capital.





All of the notes are convertible, and
the warrants are exercisable, first into as many shares of our Class A Voting
Common Stock, par value $0.01 per share, as are available for issuance at the
time of conversion or exercise, and then into shares of our Class B Non-Voting
Common Stock, par value $0.01 per share.  As part of our agreement
with these investors, we have agreed to seek the approval from our stockholders
of the recapitalization of each outstanding share of our Class A Voting Common
Stock and our Class B Non-Voting Common Stock into a single class of voting
common stock, as well as a one-for-fifty reverse split of this new class of
common stock.  If our stockholders approve these measures, the notes
will automatically convert into shares of the new class of common stock, and any
unexercised warrants will be exercisable for shares of that class of stock as
well.  As there are currently no unissued shares of our Class A Voting
Common Stock that are not otherwise reserved for issuance, we anticipate that
these notes and warrants will be exercisable for shares of either our Class B
Non-Voting Common Stock or the newly created class of common stock, if
approved.  Without taking into consideration interest payable on the
notes, the


notes are
convertible into 89,650,000 shares of our common stock (regardless of class) at
a current conversion rate of $0.10 per share and the warrants are exercisable
for ten years from the date they were issued for up to 41,189,000 shares of our
common stock (regardless of class) at a current exercise price of $0.15 per
share.  The conversion price of the notes and the exercise price of
the warrants are each subject adjustment for a variety of events, including, for
example, payment of dividends, certain mergers or asset sales, and certain
securities issuances.  In conjunction with this offering, we also
entered into related Registration Rights and Voting Agreements.  On
November 14, 2005, at the annual meeting of the shareholders, the
recapitalization was approved by a majority of the outstanding shares of both
classes of stock.  On December 12, 2005, we completed the plan of
recapitalization which triggered the mandatory conversion of certain notes
payable in the amount of $8,965,000 into 1,793,000 of the new common
stock.





On December 29, 2005, we entered into
an Investment Agreement with Dutchess Private Equities Fund II,
L.P.  Pursuant to that Investment Agreement, we received proceeds of
$1,500,000 by issuing a note payable convertible into 300,000 shares of Common
Stock at $5.00 per share and 200,000 founders shares and Common Stock purchase
warrant for 750,000 shares with an exercise price of $5.00 per
share.  We also entered into an agreement where we may, at our
discretion, periodically “put” or require Dutchess to purchase shares of our
Common Stock.  The aggregate amount that Dutchess is obligated to pay
for our





shares
will not exceed $10.0 million.  For each share of  Common
Stock purchased under the Investment Agreement, Dutchess will pay 93% of the
lowest closing bid price on the Over-the-Counter Bulletin Board (or other
principal market on which our Common Stock is traded) during the ten day period
immediately following the date on which we give notice to Dutchess of our
intention to put such stock.  Our ability to put the shares under the
Investment Agreement is conditioned upon us registering the shares of Common
Stock with the Securities and Exchange Commission and satisfaction of certain
other customary closing conditions.





On July 21, 2006 we issued a Debenture
to Dutchess Private Equities Fund, LP, a related private equities fund and
received proceeds of $750,000. The Debenture is due on July 21, 2011 and pays
twelve percent (12%) interest. Interest and principal are payable at such times
and under such conditions are outlined in the Debenture. The Debenture is
convertible into shares of our Common Stock at the lesser of $.70 per share or
75% of the lowest closing bid price during the 20 trading days next preceding
the date of conversion (collectively, the two funds “Dutchess”).  The
holder may not convert if it would cause the holder to own more than 4.9% of the
outstanding Common Stock of the Company.




Also
in connection with the sale and issuance of the Debentures, the Company entered
into a settlement agreement with Dutchess Private Equities Fund, Ltd. for the
settlement of a dispute regarding the amount due under debt instruments issued
by the Company to Dutchess during 2005 and 2006.  Pursuant to the
terms of the Settlement, the Company immediately paid a cash amount of
$1,500,000 with two additional cash payments in the amount of $300,000 each to
be made on the date that (i) the Company files the Registration Statement (or,
if earlier, within 45 days) and (ii) the Registration Statement is declared
effective (or, if earlier, within 145 days).  The Company also issued
a Note in the amount of $1,500,000 and agreed to reduce to $0.10 per share the
exercise price of the warrants issued to Dutchess.  Dutchess agreed to
terminate any security interest in the Company’s assets upon the Initial
Payment
 .
 The Company is mounting a legal
challenge to the legitimacy of indebtedness owed to Dutchess Private Equities
Fund. See Item 3 – Legal Proceedings.
  On March 20, 2007, we issued a secured convertible debenture to Cornell Capital
Partners Partners
( now YA Global Investments, L.P. )in the aggregate principal amount of
$6,000,000 of which $3,000,000 was advanced immediately.  The second
installment of $2,000,000 will be advanced immediately prior to the filing by
the Company with the Securities and Exchange Commission (the "Commission") of
the Registration Statement.  The last installment of $1,000,000 will
be advanced immediately prior to the date the Registration Statement is declared
effective by the Commission.   The Debentures mature on the third
anniversary of the date of issuance. The holder of the Debentures may convert at
any time amounts outstanding under the Debentures into shares of common stock of
the Company at a fixed conversion price per share equal to
$0.314.  Under the Purchase Agreement the debentures are secured by
substantially all of the Company's, and its wholly owned subsidiaries’
assets.





Under the
Purchase Agreement, we also issued to Cornell five-year warrants in six separate
series as follows:





A
Warrants to purchase 2,384,814 shares of common stock at $0.314 per
share;


B
Warrants to purchase 2,186,079 shares of common stock at $0.343 per
share;


C
Warrants to purchase 2,017,919 shares of common stock at $0.372 per
share;


D
Warrants to purchase 1,748,863 shares of common stock at $0.429 per
share;


E
Warrants to purchase 1,499,026 shares of common stock at $0.50 per
share;


F
Warrants to purchase 1,500,000 shares of common stock at $0.01 per
share.




On December  11,  2007,  the Company received a
letter dated December 6, 2007 ( the "Notice Letter"),
from  YA  Global  Investments,  L.P.,  (formerly  known  as
Cornell Capital
Partners,  L.P.)  notifying  the  Company  of
certain Events of Default under the
Secured  Convertible  Debenture  dated  March  20,  2007  of  the  Company  (the
"Debenture").  As a result of this default, the entire note has been
re-classified as short term.
  On
January 26, 2009 the Company announced that it had received the consent of a
majority  of  the  shareholders  of  record  to
amend the Certificate of Incorporation to increase the number of shares of
Common Stock authorized for issuance by the
Corporation  from  25,000,000  shares  to  50,000,000  shares.  The
reason for increasing the number of authorized shares was to ensure that shares
were available to allow for conversions of debt into equity.
 
 11
 Table of Contents
  
 Commitments
and Contingencies





Operating
Leases





We lease
office space and equipment under various operating lease agreements which
terminate on various dates through 2012.  Rent expense amounted to
$544,199 and $584,513 during 2008 and 2007, respectively.  This
increase is due to the rising of market rates.





Capital
Leases





Through
December 31, 2008, we entered into certain long-term equipment lease
agreements.  These agreements are classified as capital leases and
expired in 2008.




License
Agreements





The
following represents the contractual obligation and commercial commitments as of
December 31, 2008.





Contractual
      Obligations
              
              -
                Total
              
              
              Less
      than
                1
      Year
              
              
              1-3
                Years
              
              
              3-5
                YearsLong-Term
      Debt including current portion
              
              $
              4,792,738
              
              
              $
              3,292,738
              
              
              $
              1,500,000
              
              
              
              -Operating
      Leases
              
              
              1,590,455
              
              
              
              544,199
              
              
              
              1,046,256
              
              
              
              -License
      Agreements
              
              
              1,542,495
              
              
              
              304,166
              
              
              
              718,331
              
              
              
              519,998Total
              
              $
              7,925,688
              
              
              $
              4,141,103
              
              
              $
              3,264,587
              
              
              $
              519,998







Critical
Accounting Policies





We have
identified the policies below as critical to our business operations and the
understanding of our results of operations.  The impact and any
associated risks related to these policies on our business operations are
discussed throughout this section where such policies affect our reported and
expected financial results.  For a detailed discussion on the
application of these and other accounting policies, see Note 2 in the Notes to
the Consolidated Financial Statements included elsewhere in this Annual
Report.  Note that our preparation


of our
Consolidated Financial Statements requires us to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of our


financial
statements, and the reported amounts of revenue and expenses during the
reporting period.  There can be no assurance that actual results will
not differ from those estimates.





Our
accounting policies that are the most important to the portrayal of our
financial condition and results, and which require the highest degree of
management judgment relate to revenue recognition and the provision for
uncollectible accounts receivable.  We estimate the likelihood of
customer payment based principally on a customer’s credit history and our
general credit experience.  To the extent our estimates differ
materially from actual results, the timing and amount of revenues recognized or
bad debt expense recorded may be materially misstated during a reporting
period.





Company
policy for Research and Development is that all expenses are initially
capitalized.  Once a project reaches testing phases, all expenses will
be amortized over the useful life of the item.





Certain
Related Party Transactions





None








Use
of Our Assets





Certain
of our executives are allowed use of company owned or leased vehicles for both
business and personal purposes.  The owned vehicles have been
capitalized as assets of the Company, totaling $22,343 as of December 31,
2008.




12
 Table of Contents







Recently
Issued Accounting Pronouncements




In March
2006, the FASB issued Statement of Financial Accounting Standard 156 -
Accounting for Servicing of Financial Assets (“SFAS 156”), which requires all
separately recognized servicing assets and servicing liabilities be initially
measured at fair value. SFAS 156 permits, but does not require, the subsequent
measurement of servicing assets and servicing liabilities at fair value.
Adoption is required as of the
beginning of the first fiscal year that begins after September 15, 2006. Early
adoption is permitted. The adoption of SFAS 156 is not expected to have a
material effect on our consolidated financial position, results of operations or
cash flows In December 2004, the FASB issued SFAS No. 153, "Exchanges of
Non- monetary
Assets, an amendment of APB Opinion No. 29." APB Opinion No. 29, "Accounting for
Non-monetary Transactions," is based on the principle that exchanges of
non-monetary assets should be measured based on
the fair value of the assets exchanged. SFAS No. 153 amends APB Opinion No. 29,
eliminating the exception to fair value accounting for non-monetary exchanges of
similar productive assets and replaces it with a general exception to fair value
accounting for non-monetary exchanges that do not have commercial substance. A
non-monetary exchange has commercial substance if the future cash flows of the
entity are expected to change significantly as a result of the exchange. The
statement is effective for non-monetary asset exchanges occurring in fiscal
periods beginning after June 15, 2005. The Company does not expect this
statement to have a material impact on its financial statements.




On January 1,
2008, the Company adopted Statement of Financial Accounting Standards (SFAS) No.
157 “Fair Value Measurements” (SFAS No. 157), which provides a consistent
definition of fair value that focuses on exit price and prioritizes, within a
measurement of fair value, the use of market-based inputs over company-specific
inputs.  SFAS No. 157 requires expanded disclosures about fair value
measurements and establishes a three-level hierarchy for fair value measurements
based on the observable inputs to the valuation of an asset or liability at the
measurement date.  The standard also requires that a company consider
its own nonperformance risk when measuring liabilities carried at fair value,
including derivatives.  In February 2008 the Financial Accounting
Standards Board (FASB) approved the FASB Staff Position (FSP) No. FAS 157-2,
“Effective Date of FASB Statement No. 157” (FSP No. FAS 157-2), that permits
companies to partially defer the effective date of SFAS No. 157 for one year for
nonfinancial assets and nonfinancial liabilities that are recognized or
disclosed as fair value in the financial statements on a nonrecurring
basis.  FSP No. FAS 157-2 does not permit companies to defer
recognition and disclosure requirements for financial assets and financial
liabilities or for nonfinancial assets and nonfinancial liabilities that are
remeasured at least annually.  SFAS No. 157 is effective for financial
assets and financial liabilities and for nonfinancial assets and nonfinancial
liabilities that are remeasured at least annually for fiscal years beginning
after November 15, 2007.  The provisions of SFAS No. 157 are applied
prospectively.  The Company has decided to defer adoption of SFAS No.
157 for one year for nonfinancial assets and nonfinancial liabilities that are
recognized or disclosed at fair value in the financial statements on a
nonrecurring basis.  These include fixed assets.  The effect
of adopting SFAS No. 157 on January 1, 2008 was not material and no adjustment
to Accumulated deficit was required.  The Company is currently unable
to quantify the effect, if any, that the adoption of SFAS No. 157 for
nonfinancial assets and nonfinancial liabilities will have on its financial
condition and results of operations.
  The carrying
amounts of cash, accounts receivable, prepaid expenses and other current assets,
accounts payable, accrued expenses, deferred revenue, current portion of capital
lease obligations, current portion of notes payable and convertible notes
payable approximate fair value because the best valuation for them is the use in
the business and the short maturity of those instruments.  The
long-term portion of notes payable is at 12% per annum and approximates fair
value.


Off-Balance-Sheet
Arrangements





The
Company has no off-balance-sheet arrangements currently in effect or in effect
during the year ended December 31, 2008, including but not limited to any
guarantee contracts that has the characteristics defined in paragraph 3 of FASB
Interpretation No. 45 (November 2002), as amended; any retained or contingent
interest in assets transferred to an unconsolidated entity or similar
arrangement, any obligation that could be accounted for as a derivative
instrument, or any obligation arising out of a variable interest (as referenced
in FASB Interpretation No. 46, as amended).







Item 7 - Financial Statements




Our
financial statements as of and for the twelve months ended December 31, 2008 are
set forth in the section of this Annual Report beginning on page
F-1.




13
 Table of Contents







Item 8 - Changes In and Disagreements with Accountants on Accounting
and Financial Disclosure





None





Item 8A – Controls and Procedures





Evaluation
of disclosure controls and procedures.




Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting.  Disclosure controls and procedures
are designed with the objective of ensuring that information required to be
disclosed in our reports filed under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), is recorded, processed, summarized and reported
within the time periods specified in the SEC's rules and
forms.  Disclosure controls are also designed with the objective of
ensuring that such information is accumulated and communicated to our
management, including the CEO and CFO, as appropriate to allow timely decisions
regarding required disclosure.






Internal
control over financial reporting is defined as a process designed by, or under
the supervision of, the issuer's principal executive and principal financial
officers, or persons performing similar functions, and effected by the issuer's
board of directors, management and other personnel,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles and includes those policies and
procedures that:






1.
            Pertain to the maintenance of records that in reasonable detail
      accurately and fairly reflect the transactions and dispositions of the
      assets of the issuer;




2.
            Provide reasonable assurance that transactions are recorded as
      necessary to permit preparation of financial statements in accordance with
      generally accepted accounting principles, and that receipts and
      expenditures of the issuer are being made only in accordance with
      authorizations of management and directors of the issuer;
      and




3.
            Provide reasonable assurance regarding prevention or timely
      detection of unauthorized acquisition, use or disposition of the issuer's
      assets that could have a material effect on the financial
      statements.





Our
management, including the Chief Financial Officer and Chief Executive Officer
evaluated the effectiveness of our internal control over financial reporting as
of December 31, 2008, based on the standards and framework established by the
Committee of Sponsoring Organizations of the Treadway Commission,
COSO.  Based upon the evaluation performed it was concluded that our
disclosure controls and procedures were not effective as of December 31,
2008.





Based on our
evaluation for the period ended December 31, 2008, our Chief Executive
Officer and Chief Financial Officer, have concluded that at the end of this
reporting period we have identified matters that would constitute material
weakness (as such term is defined under the Public Company Accounting Oversight
Board Auditing Standard No.  2) in
our  internal  controls  over  financial
reporting. It is concluded that because material weaknesses exist, internal
controls over financial reporting are not effective at this time.





The material
weakness relate to the financial closing process, a lack of segregation of
financial responsibilities and the need for additional qualified financial
accounting personnel. Based on the evaluation performed, disclosure controls and
procedures were not effective for the twelve months ended December 31,
2008.





This annual
report does not include an attestation report of the company’s registered public
accounting firm regarding internal control over financial
reporting.  Management’s report was not subject to attestation by the
Company’s registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the Company to provide only
management’s report in this annual report.





Changes
In Internal Control Over Financial Reporting




There were no changes
in our internal controls over financial reporting that occurred during the year
ended December 31, 2008, that have materially affected, or are reasonably likely
to materially affect, our internal controls over financial
reporting.





Following the
twelve months ended December 31, 2008, we have taken specific actions to
remediate the reportable conditions and material weakness, including the
devotion of additional resources to the quarterly closing process, and
realignment of certain financial responsibilities to achieve stronger
segregation of financial duties.  We intend to continue to further
strengthen our controls and procedures regarding the closing  process
over the next twelve months.





14
 Table of Contents










PART III




Item 9 - Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the Exchange Act




The
following table sets forth specific information regarding our executive officers
and directors as of May 11, 2009.





Executive Officers and
      Directors
            Age
            PositionsChristian
      Williamson
            43
            Chairman
      of the BoardRichard
      Pyle
            64
            DirectorDavid
      Skerrett
            58
            DirectorPatrick
      Murphy
            55
            Director,
      SecretaryJames
      Ahearn
            68
            DirectorGeorge
      Isaac
            63
            Director,
      Audit Committee ChairmanBart
      Valdez
            46
            DirectorGeoffrey
      Lee
            42
            Interim
      President, Chief Executive Officer,
Treasurer





Current
Directors and Officers





Christian
Williamson, Chairman, is
currently  Vice  President  of  Global
Market Strategies at Danaher Corporation, a $10 Billion industrial conglomerate
which operates within
multiple  platforms  including  water treatment.
Mr. Williamson joined the Trojan Technologies Division of Danaher in
2001  through  the  acquisition  of  Advanced  UV  Solutions
and was promoted to
Vice-President,  Global  Market  Strategies  in  January  2008  -
Executive Team
Member.  Prior  to  that,  Mr.  Williamson  was
Managing Director, Environmental
Contaminant  Treatment  since  2001.  Prior  to
that Mr. Williamson was Managing
Partner  for  Advanced  UV  Solutions,  LLP,
a "spin-off" of the consulting firm Hydro  Geo Chem, Inc. The main
goal of AUVS was to liquidate the asset for Hydro
Geo  Chem  through  the sale of the AUVS Company.
Mr. Williamson holds a B.S. in Engineering Mathematics and a Doctorate in
Hydrology with an emphasis in Systems
Engineering  from  The  University  of  Arizona





Richard Pyle,
Director,  is


David Skerrett,
Director,





Patrick
Murphy, Secretary and Director,isChairman of the
Pulsar
Network,  Inc.  Board  of  Directors.  A  graduate  of  the  Harvard  Law
School
practicing  in  Massachusetts,  he  also
provides consulting services to growing businesses.  He is familiar
with government relations, public relations, and has experience in developing
resources and assets. Prior to his career in law he was
a  manager  at  a  prominent  social  service  agency  and
handled personnel and
operation  issues  in  a  crisis-based  environment.
For the past ten (10) years since September of 1998, Mr. Murphy has been an
attorney for the Commonwealth of Massachusetts  Department of Mental
Retardation.


James Ahern,
Director,is the COO of the Tracy Group, a Casino
Management  and  Development  Company.  The  Tracy  Group  focuses  on  work-out
strategies,  development  of  management and
marketing strategies, and ground-up
development  for  a  variety  of  clients.
Prior to joining the Tracy Group, Mr.
Ahearn  had  extensive  experience in executive
management in a variety of areas including  30 years experience with
the Federal Bureau of Investigation where he
was  nominated  by  the  Director of the
FBI for the highest award for executive
service  in  the  U.S. Department of
Justice.  Mr. Ahearn recently served on the
Board  of  Directors,  and  acted as a
consultant to Trackpower, Inc., a company
operating  two  race  tracks/casinos  in  New  York  State.  He  has
held gaming licenses  in  New  York, Arizona,
Oregon and Washington, as well as the National
Indian  Gaming  Commission.


George
Isaac, Director and Audit Committee Chairman isa Massachusetts
Certified Public Accountant and is affiliated with
the  Massachusetts  Board  of  Certified  Public  Accountants  and  the
American Institute  of  Certified Public Accountants. He is
well experienced in all areas
of  financial  management  having  practiced  as  a  CPA  for  25
years within a
financial  career  that  reaches  back  nearly
40 years. His experience includes
management,  business  consulting,  budgeting,  managerial  accounting,  risk
management,  internal  controls,  tax advice and
preparation, financial planning
and  reporting,  audit  functions, banking
functions, and all treasury functions
including  SEC  compliance. Specifically, his current
practice involves services
as  a  consulting  CFO.  In  the
past he has served as CFO for a publicly traded
company,  a  managing  partner  of  a  public  accounting  firm,  has  managed
a commercial office building. As a board member of a community bank and a
publicly traded company he has served as a member and is familiar with the
functioning of board  audit  committees, executive
committees, and compensation committees. His
experience  includes  the negotiation of significant
expansion and growth credit availability  but  also
downsizing to maintain profitability where necessary. He
is  proficient  in  Russian  and  German.  For
the past five years Mr. Isaac has
served  as  a  consulting  Chief  Financial  Officer  for  several  closely
held businesses  in  Massachusetts with responsibility for
all financial planning and reporting,  tax  preparation,
banking and related treasury functions for each of
his  clients.





Bart Valdez,
Director, joined the Board on April 15, 2009 upon the resignation
of Ralph Caruso. He is the
former President of the Employee Screening Segment of First Advantage, a
leading risk mitigation and business solutions provider. Mr. Valdez began his
career at First Advantage in 2001 where he developed and executed a strategic
plan that improved an $18M regional employment verification company into a $253M
global talent acquisition business.  Additionally, Mr. Valdez has been
credited with improving financial performance from an EBITDA loss of $5M in 2003
to an EBITDA gain of $36M in 2006. Prior to his employment with First Advantage,
Mr. Valdez worked as Vice President of Business Development at Employee
Information Services, Inc., where he managed all aspects of finance, information
services, sales partnerships, and operations. Mr. Valdez has a B.S. in
Management  from Colorado State University and a Masters of Business
Administration with a concentration in Finance from the University of
Colorado.





Geoffrey Lee, Interim
President Chief Executive Officer and Treasurer,Mr.  Lee
became Interim President, CEO and Treasurer on February 18, 2009 to replace
James Fields. He  had served as the President of Entersect, a wholly
owned subsidiary of the
Company  since  July  2003  and  Vice  President
of the Company Holdings since
January,  2008.  Mr.  Lee joined the
Company  in July 2007 as the Vice President of
Online  Services.  Prior  to  joining  the
Company,  Mr.  Lee  was a key business
development  executive with CDB Infotek; a pioneer in the
investigative database
market.  After  years  of  significant  growth,  CDB  Infotek  was  acquired  by
Choicepoint  as  their  initial  entry
into the public records industry. Mr. Lee
served  with  several  other  public  record  providers
and has over 18 years of experience  in  the record
retrieval industry. Mr. Lee is a former municipal and military police officer
having served with the United States Army, Reserve for 8
years.  He  is active in the community as a board member
with various non-profit
organizations  including  youth  sports,  medical  outreach  and  juvenile
rehabilitation  programs.  Mr. Lee has a Bachelor of Arts in
Psychology from the
California  State  University,  Fullerton.





Each of the
directors holds such his or her office until his or her successor is duly chosen
and qualified, or until his or her earlier resignation or removal. Mr. Lee holds
his position under an interim employment agreement. The Company is not aware of
any family relationships between any of the officers and any of the Company’s
directors. Each of the officers holds such office until his or her successor
shall have been duly chosen and shall have been qualified, or until his earlier
resignation or removal.  We do not have any employment agreements with
any of our employees.


15
 Table of Contents









Former
Directors and Officers





Chris
Romeo, a former member of our Board of Directors, resigned from the Board on
June 21, 2007.





Mike
Ryan, a former member of our Board of Directors, resigned from the Board on June
21, 2007.




John R.
Latorella, a former Chairman of our Board of Directors, ceased to be a member of
the Board on January 26, 2009.
 
 Sonja P.
Bejjani, a former member of our Board of Directors, ceased to be a member of the
Board on January 26, 2009.
 
 James C.
Fields, a former member of our Board of Directors, ceased to be a member of the
Board on January 26, 2009.
 
 Ralph
Caruso, a former member of our Board of Directors, resigned from the Board on
April 15, 2009.





Section
16 Compliance





Section
16(a) of the Securities Exchange Act of 1934 requires our officers and
directors, and persons who own more than 10% of a registered class of our equity
securities, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission. Officers, directors and greater than 10%
beneficial owners are required to furnish us with copies of all forms they file
pursuant to Section 16(a).







Except as
set forth in the preceding paragraph, and based solely on review of the copies
of such reports furnished to us and written representations from reporting
persons that no other reports were required, to our knowledge, all such persons
complied with all of the Section 16(a) filing requirements applicable to them
with respect to 2008.




Audit
Committee




The Audit
Committee of the Board of Directors is responsible for the appointment,
compensation and oversight of our independent auditors, reviews the scope of the
audit services provided by our independent accountants, and reviews our
accounting practices and internal accounting controls.  Mr Isaac is
the Chairman of the Audit Committee There is one vacancy on the Audit Committee
of the Board of Directors.
 ­


Compensation
Committee





The
Compensation Committee of the Board of Directors reviews and recommends to the
Board of Directors the salaries, benefits and stock option grants of all
employees, consultants, directors and other individuals
compensated by us.  The Compensation Committee also administers our
equity compensation plan and other employee benefits plans that we may adopt
from time to time.





Code
of Ethics





The
Company adopted a Code of Ethics at the meeting of the Board of Directors held
May 2004.





16
 Table of
Contents






Item 10 - Executive Compensation




Summary
Compensation Table





The
following table sets forth, for 2008, 2007, and 2006, certain compensation paid
by us, including salary, bonuses and certain other compensation, to our Chief
Executive Officer and all other executive officers whose annual compensation for
the years ended December 31, 2008, 2007 and 2006 exceeded $100,000 (the “Named
Executive Officers”).








Name
      and
              Principal
      Position
            Year
            Salary
              ($)
            Bonus
              ($)
            Severance
              ($)
            Options
              Awards
              (shares)
            Non-Equity
              Incentive
              Plan
              Comp
      ($)
            Non-
              Qualified
              Deferred
              Comp
      ($)
            All
              Other
              Comp
              ($)
            Totals
              ($)Jon
      R. Latorella
            2007
            60,215
            
            250,000
            
            
            
            15,000(2)
            352,215Chairman
      of the Board,
            2006
            231,468
            325,0000
            -
            -
            -
            -
            15,000(2)
            571,468Former
      CEO
            
            
            -James C. Fields(3)
            2008
            252,190
            
            
            
            
            
            13,200(4)
            265,390President
      & CEO,
            2007
            212,631
            -
            -
            600,000(1)-
            -
            -
            13,200(4)
            225,831Acting
      CFO, Secretary
            2006
            142,690
            –
            -
            -
            -
            -
            13,200(4)
            155,890


(1)   On
November 8, 2007, Mr. Fields was issued stock options to purchase 600,000 shares
of our Common Stock with an exercise price of $0.11 per


share.


(2)   Mr.
Latorella and his family were allowed use of company vehicles, the value of
which is approximately $1,100 per month to Mr. Latorella.


(3)   Mr.
Fields commenced his employment with us in 2001. Mr. Fields became an executive
officer with the Company on March 31, 2003.


(4)   Beginning
in April 2004, Mr. Fields was allowed the use of a company-leased vehicle, the
value of which is approximately $1,100 per month.





In
March  2007, Mr. Latorella resigned from the position of President and
CEO. Mr. Latorella ceased to be a Board Member January 26, 2009





In May
2007, Mr. Fields was elected by the Board of Directors to the position of
President and CEO. Mr. Fields ceased to be a Board Member January 26, 2009 and
was terminated as an officer on February 18, 2009.




OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END





OPTION
      AWARDSName
            Number
      of
              Securities
              Underlying
              Unexercised
              Options
              (#)
              Exercisable
            Number
      of
              Securities
              Underlying
              Unexercised
              Options
              (#)
              Unexercisable
            Equity
              Incentive
              Plan
              Awards:
              Number
              of
              Securities
              Underlying
              Unexercised
              Unearned
              Options
              (#)
            Option
              Exercise
              Price
              ($)
            Option
              Expiration
              DateJon R. Latorella(1)
            35,000
            -
            -
            $12.50
            12/18/08Former
      Chairman of the Board and CEO
            50,000
            -
            -
            $12.50
            12/18/08100,000
            -
            -
            $50.00
            12/18/0820,000
            -
            -
            $75.00
            05/19/0950,000
            -
            -
            $19.50
            05/19/092,000
            -
            -
            $10.00
            11/03/08240,000
            -
            -
            $
      0.50
            12/29/09James C. Fields(2)
            600,000
            
            
            0.11
            11/08/0710,000
            
            
            10.00
            06/01/11Former
      President & CEO,
            10,000
            
            
            7.50
            03/28/13Acting
      CFO
            15,000
            
            
            12.50
            12/18/13Secretary
            20,000
            
            
            19.50
            05/19/1420,000
            
            
            0.50
            12/29/14





(1)
            All
      options issued to Mr. Latorella expire five years from issue
      date.  As such, the issue date is five years prior to expiration
      and all options were immediately vested upon
  issue.


(2)
            All
      options issued to Mr. Fields expire ten years from issue
      date.  As such, the issue date is ten years prior to
      expiration.  With the exception of the 10,000 share grant issued
      6/1/2001 which vested 25% per year on its anniversary, all options were
      immediately vested upon issue.





In
March  2007, Mr. Latorella resigned from the position of President and
CEO. Mr. Latorella remains the Chairman of the Board.





In May
2007, Mr. Fields was elected by the Board of Directors to the position of
President and CEO. Mr. Fields remains the Acting CFO.


17
 Table of Contents







DIRECTOR
COMPENSATION





Compensation
to independent members of the Board for services rendered during 2006 and
through 2007 have been distributed in 2007.   Compensations for
services rendered during 2008 have not yet been distributed.





Item 11 - Security Ownership of Certain Beneficial Owners and
Management




As of the close of business on May 11,
2009, there were 49,770,826 shares of Common Stock issued and
outstanding.





The following table sets forth certain
information known to us with respect to the beneficial ownership of our Common
Stock as of the close of business on May 11, 2009, by:




-Each
      of our directors;


-Each
      of our executive officers;


-Each
      person known to us to beneficially own more than 5% of either class of our
      common stock; and


-All
      of our directors and executive officers as a
  group.




Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission.  In computing the number of shares beneficially
owned by a person and the percentage of ownership of that person, shares of
common stock underlying options or warrants held by that person that are
currently exercisable or will become exercisable within 60 days of December 31,
2008 are deemed outstanding, while such shares are not deemed outstanding for
computing percentage ownership of any other person.  To our knowledge,
except as indicated in the footnotes to this table, each stockholder identified
in the table possesses sole voting and investment power with respect to all
shares shown as beneficially owned by such stockholder.  Each of our
directors and executive officers can be contacted at 100 Cummings Center, Suite
235M, Beverly, Massachusetts 01915.





Common
      StockBeneficial Owner
                                              Number
      of Shares Beneficially
      Owned
                                              Percentage
                                                of ClassDirectorsChristian
      Williamson
                                              858,880
                                              1.7%Richard
      Pyle
                                              57,182
                                              *David Skerrett (1)
                                              1,995
                                              *Patrick
      Murphy
                                              -
                                              *James Ahearn
                                              -
                                              *George Isaac
                                              -
                                              *Bart Valdez
                                              -
                                              *OfficersGeoffrey Lee
                                              -5%
      or More ShareholdersJames C. Fields
      (3)
                                              20,845,166
                                              42%Special Situation Funds (2)
                                              1,410,000
                                              2.8%All
      directors and executive officers as a group (8 persons)
                                              918,057
                                              1.8%







*
            Less
      than one percent of outstanding
shares.




(1)   Consists
of 225 held in IRA and 1,770 in trusts for which he is the
custodian.


(2)   Includes
505,000 shares and 200,000 shares issuable upon the exercise of warrants with an
exercise price of $7.50 per share held by Special


Situations
Fund III, L.P. and 505,000 shares 200,000 shares issuable upon the exercise of
warrants with an exercise price of $7.50 per share held


by
Special Situations Private Equity Fund, L.P.


(3)  With
respect to 19,866,461 of these shares, the Company understands that they were
originally issued by the Company’s transfer agent to


Dutchess
Private Equities Fund, II LP in conversion of outstanding indebtedness and
subsequently transferred to Mr. Fields. The issuance of these


shares
and their transfer to Mr. Fields is the subject of legal challenge by the
Company. See Item 3, Legal Proceedings







Item 12 - Certain Relationships and Related
Transactions




On June
17, 2002, the Board of Directors adopted our Interested Parties Transaction
Policy, pursuant to which the Company will not enter into any agreement,
arrangement or understanding with any director, officer, or 5% or greater
stockholder of unless (i) the terms of such
agreement, arrangement or understanding are consistent with the terms of
equivalent agreements or arrangements that the Company could obtain from third
parties; and (ii) the
agreement, arrangement or understanding is fair to the Company.





Jon
R. Latorella





The Board
of Directors accepted the resignation of its President and Chief Executive
Officer, Jon Latorella, effective March 23, 2007. Effective January 26, 2009 he
ceased to be a member of our Board.   As part of his 2007
severance agreement, Mr. Latorella received $250,000.  He also entered
into a consulting agreement with the Company where he was to receive $20,000 per
month during his term of service.  As Chairman of the Board, Mr.
Latorella was allowed to remain under LocatePlus Holdings Corporations health
insurance policies with a monthly value of $1,240. Effective January 26, 2009,
Mr. Latorella is no longer a member of the Board and all benefits associated
with that position have ceased.





Incentive
Stock Option





None





Use
of Company Cars.





While
Chairman of the Board, Mr. Latorella and his family were allowed use of two
company cars, the value of which is approximately $15,000 annually.





James
C. Fields





On
February 23, 2009, Mr. Fields was removed as Chief Executive Officer by the
Board of Directors.





On
December 18, 2003, Mr. Fields was issued incentive stock options to purchase
10,000 shares of our Class A Voting Common Stock with an exercise price of
$12.50 per share on a post recapitalization basis.  In 2004, Mr.
Fields was issued incentive stock options to purchase 20,000 shares of our Class
A Voting Common Stock with an exercise price of $19.50 per share on a post
recapitalization basis.   On November 8, 2007, Mr. Fields was
issued stock options to purchase 600,000 shares of our Common Stock with an
exercise price of $0.11 per share.





Use
of Company Cars.





Through February 23, 2009, Mr.
Fields received a vehicle allowance of $1,000 per month in accordance
with his employment agreement.




18
 Table of Contents






Item 13- Exhibits and Reports on Form 8-K





Reports
of Form 8-K – 2008





On
December 12, 2008, we filed a Form 8-K and reported under item 5.02 that at a
meeting of the Board of Directors on December 1, 2008, the Board voted to extend
an offer for the position of Director to George Isaac.  On December
11, 2008, Mr. Isaac accepted.





On
November 7, 2008, we filed a Form 8-K and reported under item 5.02 that at a
meeting of the Board of Directors on November 3, 2008, the Board voted to
appoint current member, Christian Williamson as Chairman of the
Board.





On
October 9, 2008, we filed a Form 8-K and reported under item 5.02 that at a
meeting for the Board of Directors on October 2, 2008, the Board voted to
increase its size to nine members and authorized its CEO to offer the new Board
seats to Christian Williamson and Richard Pyle to serve a one year
term.








On
September 30, 2008, we filed a Form 8-K and reported under item 8.01 that at the
Annual Meeting, the individuals proposed by Management were elected and
appointed to the Board of Directors.





On August
14, 2008, we filed a Form 8-K and reported under item 5.02 that Mr. Latorella
had stepped down as Chairman of the Board and that James C. Fields, the current
President and CEO had been appointed to the position of Chairman.





On August
14, 2008, we filed a Form 8-K and reported under item 2.02 reporting unaudited
second quarter financial results. In addition, we also attached under item 7.01
a shareholder letter.





On June
2, 2008, we filed a Form 8-K and reported under item 1.01 that the Board of
Directors has entered into an employment agreement with James C. Fields, its
current President and Chief Executive Officer.   Additionally, we
reported under item 5.02 that the Board of Directors had elected two new members
to the Board.





On
January 7, 2008, we filed a Form 8-K and reported under item 2.04 that
by  letter  received  December  11,  2007,  dated
December 6, 2007 ( the "Notice
Letter"),  YA  Global  Investments,  L.P.,  (formerly  known  as
Cornell Capital
Partners,  L.P.)  notified  the  Company  of
certain Events of Default under the
Secured  Convertible  Debenture  dated  March  20,  2007  of  the  Company  (the
"Debenture").





Exhibits





3.1
            Second
      Amended and Restated Certificate of Incorporation of LocatePLUS Holdings
      Corporation, as filed with the Secretary of State of the State of Delaware
      on March 19, 2002.(1)


3.2
            By-Laws
      of LocatePLUS Holdings
Corporation.(1)


4.1
            Warrant
      and Unit Agreement by and between LocatePLUS Holdings Corporation and
      Transfer Online, Inc., dated March 22,
2002.(1)


4.2
            Form
      of Warrant Certificate.(2)


4.3
            Form
      of Unit Certificate.(2)


4.4
            Form
      of Class A Voting Common Stock
Certificate.(2)


4.5
            Form
      of Class B Non-voting Common Stock
  Certificate.(2)


4.6
            Form
      of Restricted Warrant Agreement (Warrant to Purchase Shares of Class A
      Voting Common Stock).(1)


4.7
            Form
      of Restricted Warrant Agreement (Warrant to Purchase Shares of Class B
      Non-voting Common Stock).(2)


4.8
            $10,000
      Convertible Promissory Note, dated March 9,
  2001.(1)


4.9
            Amended
      Form of Warrant Certificate.(3)


4.10
            Amendment
      to $10,000 Convertible Promissory Note, dated July 23,
      2002.(3)


5.1
            Opinion
      of Geoffrey T. Chalmers, Esq. (5)


10.1
            Master
      Lease Agreement between Cummings Properties, Inc. and Worldwide
      Information, Inc., dated November 20,
1999.(1)


10.2
            Secured
      Note, dated June 1, 2001.(1)


10.3
            Purchase
      Agreement dated July 8, 2005, by and between LocatePLUS Holdings
      Corporation and certain Investors named therein, as amended August 12,
      2005.(4)


10.4
            Form
      of 3% Senior Convertible Note dated July 8, 2005 and August 15, 2005, by
      and between LocatePLUS Holdings Corporation and each of the Investors
      named in Exhibit 10.26. (4)


10.5
            Registration
      Rights Agreement dated July 8, 2005, by and between LocatePLUS Holdings
      Corporation and certain Investors named therein, as amended August 12,
      2005. (4)


10.6
            Form
      of Common Stock Purchase Warrant issued to the Investors named in Exhibit
      10.26. (4)


10.7
            Debenture,
      dated December 29, 2005, by and between LocatePLUS Holdings Corporation
      and Dutchess Private Equities Fund II, L.P.
(5)


10.8
            Debenture
      Registration Rights Agreement, dated December 29, 2005 by and between
      LocatePLUS Holdings Corporation and Dutchess Private Equities Fund II,
      L.P. (5)


10.9
            Warrant
      Agreement Dated December 30,
2005(5)


10.10
            Security
      Agreement Dated December 30,
2005(5)


10.11
            Subscription
      Agreement Dated December 30,
2005(5)


10.12
            Debenture,
      dated July 21, 2006, by and between LocatePLUS Holdings Corporation and
      Dutchess Private Equities Fund, L.P.
(5)


10.13
      Debenture Registration Rights Agreement, dated July 21, 2006 by and
      between LocatePLUS Holdings Corporation and Dutchess Private Equities
      Fund, L.P. (5)


10.14
            Warrant
      Agreement Dated July 21, 2006 (5)


10.15
            Security
      Agreement Dated July 21, 2006(5)


10.16
            Subscription
      Agreement Dated July 21, 2006(5)


10.17
            Addendum
      Dated October 18, 2006 to Debenture Dated December 29, 2005 and Debenture
      Dated July 21, 2006(5)


21.1
            Subsidiaries
      of LocatePLUS Holdings
Corporation.(1)


23.1
            Consent
      of Geoffrey T. Chalmers, Esq. (filed with exhibit
  5.1)


23.2
            Consent
      of Livingston and Haynes P.C. (5)





23.5
            Consent
      of Livingston & Haynes, P.C.


31.1
            302
      Certification of the Chief Executive
Officer


31.2
            302
      Certification of the Chief Financial
Officer


32
            906
      Certification of C.E.O. and C.F.O.





(1)
            Filed
      as an Exhibit to Form SB-2, filed with the Securities and Exchange
      Commission on March 28, 2002 (Registration No.
  333-85154).


(2)
            Filed
      as an Exhibit to Form SB-2/A, filed with the Securities and Exchange
      Commission on June 21, 2002 (Registration No.
  333-85154).


(3)
            Filed
      as an Exhibit to Form SB-2/A, filed with the Securities and Exchange
      Commission on July 24, 2002 (Registration No.
  333-85154).


(4)
            Filed
      as Exhibit to Form 8-K, filed with the Securities and Exchange Commission
      on July 13, 2005.


(5)
            Filed
      as Exhibit to Form SB-2/A, filed with the Securities and Exchange
      Commission on January 4, 2007, (Registration No.
  333-138311





Item 14. Principal Accountant Fees and Services




Audit
Fees


During
2008, our principal accountant, Livingston & Haynes, P.C. (L&H) billed
$87,500 in connection with the audit of our annual financial statements and the
review of our quarterly financial statements.


Tax
Fees


During
2008, L&H billed us $13,250 for tax related services.


19
 Table of Contents
 
  
 Signatures
 
 In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
 
 LOCATEPLUS HOLDINGS
CORPORATION
 
 
 /s/ Geoffrey Lee
 Geoffrey Lee, Interim President,
Chief Executive Officer, and Treasurer
 
 May 14, 2009
 
 
  20
 Table of Contents
  I, Geoffrey Lee, certify
that:
 
 1.  I have reviewed
this annual report on Form 10-K of LocatePlus Holdings Corporation for the
period ended December 31, 2008.
 
 2.   Based on
my knowledge, this annual report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this annual
report;
 
 3.   Based on
my knowledge, the financial statements, and other financial information included
in this annual report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this annual report;
 
 4.   The
registrant's other certifying officers and I are responsible for establishing
and maintaining disclosure controls and procedures (as defined in Securities
Exchange Act of 1934, as amended, Rules 13a-14 and 15d-14) for the registrant
and we have:
 
 (a)   designed
such disclosure controls and procedures to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in
which this annual report is being prepared;
 
 (b)   evaluated
the effectiveness of the registrant's disclosure controls and procedures as of a
date within 90 days prior to the filing date of this annual report (the
“Evaluation Date”); and
 
 (c)   presented
in this annual report our conclusions about the effectiveness of the disclosure
controls and procedures based on our evaluation as of the Evaluation
Date;
 
 5.   The
registrant's other certifying officers and I have disclosed, based on our most
recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
 
 (a)all
significant deficiencies in the design or operation of internal controls which
could adversely affect the registrant's ability to record, process, summarize
and report financial data and have identified for the registrant's auditors any
material weaknesses in internal controls; and
 
 (b)   any
fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant's internal controls; and
 
 6.   The
registrant's other certifying officers and I have indicated in this annual
report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
 
 
 /s/ Geoffrey Lee
 Geoffrey Lee
 Interim President, Chief Executive
Officer, and Treasurer
 
 May 14, 2009
 
  21
 Table of Contents
    * *
*
 
 In
connection with the Annual Report of the Company on Form 10-K for the period
ended December 31, 2008 as filed with the Securities and Exchange Commission on
the date hereof (the "Report"), each of the undersigned, in the capacities and
on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that
to his knowledge:
 
 1.The Report fully complies
with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act
of 1934; and
 
 2.  The information
contained in the Report fairly presents, in all material respects, the financial
condition and results of operation of the Company.
 
 
 
 /s/ Geoffrey Lee
 Geoffrey Lee
 Interim President, Chief Executive
Officer, and Treasurer
 May 14, 2009
 
 
 
  
 
  22
 Table of Contents
  Independent
Auditors' Report
 
 
 To the
Stockholders and Board of Directors of
 LocatePLUS
Holdings Corporation
 Beverly,
Massachusetts
 
 We have
audited the accompanying consolidated balance sheet of LocatePLUS Holdings
Corporation as of December 31, 2008, and the related consolidated statements of
operations, stockholders’ equity (deficit) and cash flows for the year ended
December 31, 2008 and December 31, 2007.  These financial statements
are the responsibility of the Company’s management.  Our
responsibility is to express an opinion on these financial statements based on
our audit.
 
 We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.  We believe that our audit provides a reasonable basis
for our opinion.
 
 In our
opinion, the financial statements referred to above present fairly, in all
material respects, the consolidated financial position of LocatePLUS Holdings
Corporation and its subsidiaries as of December 31, 2008, and the results of its
consolidated operations and its consolidated cash flows for the years ended
December 31, 2008, and December 31, 2007, in conformity with accounting
principles generally accepted in the United States of America.
 
 The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern.  As disclosed in the financial
statements, the Company has an accumulated deficit at December 31, 2008 and has
suffered substantial net losses in each of the last two years, which raise
substantial doubt about the Company’s ability to continue as a going
concern.  Management’s plans in regard to these matters are disclosed
in Note 1.  The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
 
 
 
 
 /s/LIVINGSTON
& HAYNES, P.C.
 Livingston
& Haynes, P.C.
 Wellesley,
Massachusetts
 
 April 1,
2009
  F-1
 Table of Contents
  
 LocatePLUS
      Holdings CorporationConsolidated
      Balance Sheet
                            December
      31, 2008AssetsCurrent
      assets:Cash
      and cash equivalents
                          
                          $
                          92,465Accounts
      receivable, trade – net of allowance
                          
                          
                          510,964Prepaid
      expenses and other current assets
                          
                          
                          222,820Total
      current assets
                          
                          $
                          826,249Property
      and equipment, net
                          
                          
                          715,553Other
      assets
                          
                          
                          79,464Total
      assets
                          
                          $
                          1,621,266Liabilities
      and Stockholders’ EquityCurrent
      liabilities:Accounts
      payable
                          
                          
                          1,139,317Accrued
      expenses
                          
                          
                          3,474,152Deferred
      revenue
                          
                          
                          306,875Current
      portion of capital lease obligation
                          
                          
                          -Notes
      Payable
                          
                          
                          607,883Convertible
      notes payable
                          
                          
                          2,586,992Total
      current liabilities
                          
                          $
                          8,115,219Long
      Term notes payable
                          
                          
                          247Long
      Term Convertible notes payable
                          
                          
                          1,500,000Total
      liabilities
                          
                          $
                          9,615,466Commitments
      and contingenciesStockholders’
      equity:Common
      Stock , $0.01 par value, 25,000,000 shares authorized23,795,527
      shares issued and outstanding at December 31, 2008
                          
                          
                          237,955Additional
      paid-in capital
                          
                          
                          39,395,136Warrants
                          
                          
                          3,627,194Impairment
      on assets
                          
                          
                          (873,500
                          )Accumulated
      deficit
                          
                          
                          (50,380,985
                          )Total
      stockholders’ equity
                          
                          $
                          (7,994,200
                          )Total
      liabilities and stockholders’ equity
                          
                          $
                          1,621,266
 
 
 See
      Independent Auditors’ Report and Notes to Consolidated Financial
      Statements.
  F-2
 Table of Contents
  LocatePLUS
      Holdings CompanyConsolidated
      Statements of OperationsFor
      the years endedDecember
      31,2008
                                  
                                  
                                  2007RevenuesInformation
      sales – CD Rom
                                  
                                  
                                  439,621
                                  
                                  
                                  
                                  498,366Information
      sales - online
                                  
                                  
                                  5,456,026
                                  
                                  
                                  
                                  5,537,453Information
      sales - channel
                                  
                                  
                                  2,111,816
                                  
                                  
                                  
                                  2,302,550Information
      sales - wireless
                                  
                                  
                                  6,137
                                  
                                  
                                  
                                  9,393Total
      revenues
                                  
                                  
                                  8,013,600
                                  
                                  
                                  
                                  8,347,762Costs
      and expenses:Costs
      of revenuesCD
      Rom
                                  
                                  
                                  90,710
                                  
                                  
                                  
                                  48,219Online
      and channel
                                  
                                  
                                  1,600,583
                                  
                                  
                                  
                                  1,577,157Selling
      and marketing
                                  
                                  
                                  1,591,405
                                  
                                  
                                  
                                  1,462,923General
      and administrative
                                  
                                  
                                  5,366,167
                                  
                                  
                                  
                                  6,047,279Research
      and Development
                                  
                                  
                                  194,728
                                  
                                  
                                  
                                  157,867Severance
      Expense
                                  
                                  
                                  -
                                  
                                  
                                  
                                  250,000Total
      operating expenses
                                  
                                  
                                  8,843,593
                                  
                                  
                                  
                                  9,543,445Operating
      loss
                                  
                                  
                                  (829,993)
                                  
                                  
                                  
                                  (1,195,683)Other
      income (expense):Interest
      income
                                  
                                  
                                  -
                                  
                                  
                                  
                                  48,383Interest
      expense
                                  
                                  
                                  (511,542)
                                  
                                  
                                  
                                  (555,017)Other
      income
                                  
                                  
                                  7,924
                                  
                                  
                                  
                                  10,310Write
      Down of LT Accounts Receivable
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (2,365,997)Finance
      Related Expenses
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (3,189,413)Net
      loss
                                  
                                  
                                  (1,333,611)
                                  
                                  
                                  $
                                  (7,247,417)Basic
      and diluted net loss per share
                                  
                                  
                                  (.08)
                                  
                                  
                                  
                                  (.76)Shares
      used in computing basic and diluted net loss per share
                                  
                                  
                                  16,538,323
                                  
                                  
                                  
                                  9,536,248
 
 See
Independent Auditors’ Report and Notes to Consolidated Financial
Statements.
  F-3
 Table of Contents
  
 LocatePLUS Holdings CorporationConsolidated
      Statements of Stockholders’ Equity (Deficit)Additional
                  
                  
                  Warrants
                  
                  
                  Stock
                  
                  
                  
                  
                  
                  
                  
                  
                  TotalCommon
      stock
                  
                  
                  paid-in
                  
                  
                  
                  
                  
                  subscription
                  
                  
                  Impairment
                  
                  
                  Accum
                  
                  
                  stockholders’Shares
                  
                  
                  Amount
                  
                  
                  capital
                  
                  
                  
                  
                  
                  receivable
                  
                  
                  on
      assets
                  
                  
                  deficit
                  
                  
                  equity
      (deficit)Balance
      at December 31, 2006
                  
                  
                  7,363,857
                  
                  
                  
                  73,639
                  
                  
                  
                  38,957,425
                  
                  
                  
                  3,107,702
                  
                  
                  
                  -
                  
                  
                  
                  (842,000
                  )
                  
                  
                  (41,799,957
                  )
                  
                  
                  (503,191
                  )Issuance
      of shares
                  
                  
                  4,033,800
                  
                  
                  
                  40,338
                  
                  
                  
                  260,991
                  
                  
                  
                  584,676
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  886,005Services
      performed for StockAdjustment
      to impairment
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (19,350
                  )
                  
                  
                  
                  
                  
                  
                  (19,350
                  )Net
      loss for the twelve months ended December 31, 2007
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (7,247,418
                  )
                  
                  
                  (7,247,418
                  )Balance
      at December 31, 2007
                  
                  
                  11,397,657
                  
                  
                  
                  113,977
                  
                  
                  
                  39,218,416
                  
                  
                  
                  3,692,378
                  
                  
                  
                  -
                  
                  
                  
                  (861,350
                  )
                  
                  
                  (49,047,375
                  )
                  
                  
                  (6,883,954
                  )Issuance
      of shares
                  
                  
                  12,397,870
                  
                  
                  
                  123,978
                  
                  
                  
                  176,720
                  
                  
                  
                  (65,184
                  )
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  235,514Services
      performed for StockAdjustment
      to impairment
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (12,150
                  )
                  
                  
                  
                  
                  
                  
                  (12,150
                  )Net
      loss for the twelve months ended December 31, 2008
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (1,333,611
                  )
                  
                  
                  (1,333,611
                  )Balance
      at December 31, 2008
                  
                  
                  23,795,527
                  
                  
                  
                  237,955
                  
                  
                  
                  39,395,136
                  
                  
                  
                  3,627,194
                  
                  
                  
                  -
                  
                  
                  
                  (873,500
                  )
                  
                  
                  (50,380,985
                  )
                  
                  
                  (7,994,200
                  )
 
 
 See
      Independent Auditors’ Report and Notes to Consolidated Financial
      Statements.
  F-4
 Table of Contents
  LocatePLUS
      Holdings CorporationConsolidated
      Statements of Cash FlowsFor
      the years endedDecember
      31,2008
                  
                  
                  
                  2007Cash
      flows from operating activities:Net
      loss
                  
                  
                  (1,333,611
                  )
                  
                  
                  
                  (7,247,417
                  )Adjustments
      to reconcile net loss to net cash used inoperating
      activities:Depreciation
      and amortization of property and equipment
                  
                  
                  562,728
                  
                  
                  
                  
                  722,575Loss
      on disposal of fixed assets
                  
                  
                  1,836Provision
      for doubtful accounts
                  
                  
                  (72,164
                  )
                  
                  
                  
                  23,219Interest
      expense related to warrants issued with debt
                  
                  
                  343,225
                  
                  
                  
                  
                  2,475,910Services
      performed and interest expense in exchange for stock
                  
                  
                  -
                  
                  
                  
                  
                  224,761Stock
      Based Compensation Expense
                  
                  
                  26,636
                  
                  
                  
                  
                  76,568Value
      Allowance for notes receivable
                  
                  
                  -
                  
                  
                  
                  
                  2,365,997Amortization
      of intangible assets
                  
                  
                  -
                  
                  
                  
                  
                  -Changes
      in assets and liabilities:Accounts
      receivable
                  
                  
                  282,722
                  
                  
                  
                  
                  51,743Prepaid
      expenses and other assets
                  
                  
                  169,789
                  
                  
                  
                  
                  (47,880
                  )Security
      Deposits
                  
                  
                  192,574
                  
                  
                  
                  
                  2,212,872Accounts
      payable
                  
                  
                  (129,850
                  )
                  
                  
                  
                  (539,498
                  )Accrued
      expenses
                  
                  
                  47,652
                  
                  
                  
                  
                  877,247Deferred
      revenue
                  
                  
                  147,574
                  
                  
                  
                  
                  (153,125
                  )Net
      cash used in operating activities
                  
                  
                  238,851
                  
                  
                  
                  
                  (1,039,334
                  )Cash
      flows from investing activities:Principal
      repayment of purchased note receivable
                  
                  
                  -
                  
                  
                  
                  
                  41,617Purchase
      of note receivable
                  
                  
                  -
                  
                  
                  
                  
                  -Purchases
      of property and equipment
                  
                  
                  -
                  
                  
                  
                  
                  (14,712
                  )Net
      cash provided by investing activities
                  
                  
                  -
                  
                  
                  
                  
                  26,905Cash
      flows from financing activities:Repayment
      of debt
                  
                  
                  (204,650
                  )
                  
                  
                  
                  (1,647,163
                  )Proceeds
      from issuance of debt
                  
                  
                  -
                  
                  
                  
                  
                  2,780,000Payments
      of obligations under capital lease
                  
                  
                  (37,878
                  )
                  
                  
                  
                  (54,088
                  )Proceeds
      from issuance of common stock and collection of stocksubscriptions
      receivable, net of issuance costs
                  
                  
                  -
                  
                  
                  
                  
                  -Net
      cash provided by financing activities
                  
                  
                  (242,528
                  )
                  
                  
                  
                  1,078,749Net
      (decrease) increase in cash and cash equivalents
                  
                  
                  (3,677
                  )
                  
                  
                  
                  66,320Cash
      and cash equivalents, beginning of period
                  
                  
                  96,142
                  
                  
                  
                  
                  29,822Cash
      and cash equivalents, end of period
                  
                  
                  92,465
                  
                  
                  
                  
                  96,142Supplemental
      disclosures of cash flows information:Cash
      paid for interest
                  
                  
                  -Supplemental
      disclosure of non-cash investing and financing activities:Relative
      fair value of detachable warrants issued in conjunction with convertible
      debt
                  
                  
                  -
 
 See
      Independent Auditors' Report and Notes to Consolidated Financial
      Statements.
  F-5
 Table of Contents
 LocatePLUS
      Holdings Corporation
 Notes
to Consolidated Financial Statements -(continued)
  LocatePLUS
      Holdings Corporation
 Notes
      to Consolidated Financial
Statements
 
 1.
              Nature
      of Business and Basis of
Presentation
 
 LocatePLUS
      Holdings Corporation (the “Company”) was initially incorporated in
      Massachusetts in 1996 as Worldwide Information, Inc.  In July
      1999, the Company reincorporated in Delaware and changed its name to
      LocatePLUS.com, Inc.  On August 1, 2001, the Company changed its
      name from LocatePLUS.com, Inc. to LocatePLUS Holdings Corporation as part
      of a corporate restructuring.  Also, as part of the
      restructuring, the Company created two wholly-owned subsidiaries,
      LocatePLUS Corporation and Worldwide Information, Inc.  The
      restructuring was completed by commonly-controlled entities and,
      accordingly, was accounted for based on historical cost.  In
      September 2003, the Company, through its newly formed wholly owned
      subsidiary Entersect Corporation, f.k.a Certifion Corporation, acquired
      all of the assets of Project Entersect Corporation.  The
      acquisition was accounted for as a purchase and is recorded with the
      Company's operations from the date of purchase through December 31,
      2003.  In October 2003, the Company merged Voice Power
      Technology into its newly formed wholly owned subsidiary Dataphant,
      Inc.  There were no assets acquired in this acquisition and the
      Company issued 2,500,000 shares of its Class B Non-Voting common stock to
      the stock holders of Voice Power Technology in consideration for a two
      year non-competition agreement with these stock holders.  All
      intercompany accounts and transactions have been eliminated in
      consolidation.
 
 The
      Company provides access to public information such as bankruptcies, real
      estate transactions, motor vehicles, and drivers’ licenses to commercial,
      private sector and law enforcement entities in the United
      States.  In 1999 and prior periods, this information was
      delivered to customers on compact disks.  In March 2000, the
      Company began providing information through the Internet and in 2002 began
      providing information through the use of handheld wireless
      devices.
 
 Liquidity
      and Operations
 The
      accompanying consolidated financialstatements have
      been prepared assuming the Company will continue as a going concern, which
      contemplates continuity of operations, realization of assets and the
      satisfaction of liabilities and commitments in the normal course of
      business.  The Company has incurred substantial losses in each
      of the last two years, and has incurred an accumulated deficit of
      approximately $50 million through December 31, 2008.  These
      circumstances raise substantial doubt about the Company's ability to
      continue as a going concern.  These financial statements do not
      include any adjustments that might result from the outcome of this
      uncertainty.
 
 The
      Company raised approximately $3 million and $1.3 million through the
      issuance of debt and equity during 2007 and 2006
      respectively.  The ultimate success of the Company is still
      dependent upon its ability to secure additional financing to meet its
      working capital and ongoing project development needs..  The
      ultimate success of the Company is still dependent upon its ability to
      secure additional financing to meet its working capital and ongoing
      project development needs.
 
 On
      December 29, 2005, the Company entered into an Investment Agreement where
      the Company received proceeds of $1,500,000 by issuing a note payable
      convertible into 300,000 shares of Common Stock at $5.00 per
      share.  The Company also issued a put to one investor through an
      equity agreement, which provides that the Company, subject to certain
      limitations, has the right to sell, at its discretion, up to $10 million
      in shares of the Company’s Common Stock to the investor at a purchase
      price equal to 93% of the lowest closing bid price for the Company’s
      Common Stock during a ten-day pricing period.  The number of
      shares that the Company may sell to
that
  F-6
 Table of Contents
 LocatePLUS
      Holdings Corporation
 Notes
to Consolidated Financial Statements -(continued)
  investor
      is limited by the trading volume of the Company’s Common Stock and certain
      customary closing conditions.  No shares have yet been sold
      under this agreement
 
 On July
21, 2006 the Company entered into an Investment Agreement where the Company
received proceeds of $750,000 by issuing a note payable convertible into shares
of Common Stock at the lesser of $.70 per share or 75% of the lowest closing bid
price during the 20 trading days next preceding the date of
conversion.
 
 On March
20, 2007, the Company issued a secured convertible debenture to Cornell Capital
Partners in the aggregate principal amount of $6,000,000 of which $3,000,000 was
advanced immediately.  The second installment of $2,000,000 will be
advanced immediately prior to the filing by the Company with the Securities and
Exchange Commission (the "Commission") of the Registration
Statement.  The last installment of $1,000,000 will be advanced
immediately prior to the date the Registration Statement is declared effective
by the Commission.   The Debentures mature on the third
anniversary of the date of issuance. The holder of the Debentures may convert at
any time amounts outstanding under the Debentures into shares of common stock of
the Company at a fixed conversion price per share equal to
$0.314.  Under the Purchase Agreement the debentures are secured by
substantially all of the Company's, and its wholly owned subsidiaries’
assets.  The second and third installments have not been advanced and
both parties have agreed that they will not be.
 
 Under
      the Purchase Agreement, we also issued to Cornell five-year warrants in
      six separate series as follows:
 
 A
      Warrants to purchase 2,384,814 shares of common stock at $0.314 per
      share;
 B
      Warrants to purchase 2,186,079 shares of common stock at $0.343 per
      share;
 C
      Warrants to purchase 2,017,919 shares of common stock at $0.372 per
      share;
 D
      Warrants to purchase 1,748,863 shares of common stock at $0.429 per
      share;
 E
      Warrants to purchase 1,499,026 shares of common stock at $0.50 per
      share;
 F
      Warrants to purchase 1,500,000 shares of common stock at $0.01 per
      share.
 
 
 2.
              Summary
      of Significant Accounting Policies
 
 Cash
      Equivalents
 The
      Company considers all money market funds, bank certificates of deposit,
      and short term investments with original maturities of three months or
      less at the date of purchase to be cash
  equivalents.
 
 Concentration
      of Credit Risk
 Financial
instruments that subject the Company to credit risk consist of cash and cash
equivalents, accounts receivable and notes receivable.  The risk with
respect to cash and cash equivalents is minimized by the Company’s policies in
which such investments are placed only with highly rated financial institutions
and in instruments with relatively short maturities.  The financial
stability of these financial institutions is constantly reviewed by senior
management.  The notes receivable are placed with unrelated companies
that are also reviewed by management.  Consequently, the carrying
value of cash and cash equivalents, and notes receivable approximates their fair
value based on the short-term maturities of these instruments.
 
 
 
 Property
      and Equipment
 Property
      and equipment are carried at cost less accumulated
      depreciation.  Depreciation is calculated using the
      straight-line method at rates sufficient to write off the cost of the
      assets over their estimated useful
lives.
 
 Intangible
      Assets
 Costs
      of acquiring businesses, such as customer lists and non-compete
      agreements, are being amortized on a straight-line basis over 2-3 years,
      while deferred financing costs are being amortized over the term of the
      related debt.
 
 Income
      Taxes
 The
      Company accounts for income taxes using the liability method under which
      deferred tax assets and liabilities are determined based on differences
      between financial reporting and income tax bases of assets and liabilities
      and are measured using the enacted tax rates and laws that
      will
 be in
effect when the differences are expected to reverse.  The majority of
the Company’s deferred tax asset has been established for the expected future
benefit of net operating tax loss and credit carryforwards.  A
valuation reserve against net deferred tax assets is required if, based upon
available evidence, it is more likely than not that some or all of the deferred
tax assets will not be realized.
 
 Revenue
      Recognition
 The
      Company provides access to public information such as bankruptcies, real
      estate transactions and motor vehicles and drivers’
      licenses.  The Company provides this information as an online
      service through its website, wirelessly to handheld wireless devices, via
      XML over the Internet to Channel Partners, or through licenses of the
      information on compact disks.
 
 The
      Company updates the information contained in compact disks (CD ROMs)
      either quarterly or semi-annually.  Revenue is recognized upon
      delivery to the customer of a compact disk, provided that no significant
      obligations remain, evidence of the arrangement exists, the fees are fixed
      or determinable, and collectability is reasonably assured.  In
      October 2002, the Company changed its method of selling compact
      disks.  Prior to October, compact disks were sold with an
      upfront purchase of an annual supply of compact disks, with the purchase
      price allocated equally based on the number of compact disks to which the
      customer was entitled.  Deferred revenue principally related to
      undelivered compact disks.  Subsequent to October 2002, compact
      disks are sold individually.  Customers may choose to have the
      disks automatically shipped and
billed.
 
 Online
      customers are charged fees which vary based on the type of information
      requested.  Revenue is recognized when the information requested
      is downloaded, there is evidence of an arrangement, the fees are fixed or
      determinable, and collectability is reasonably
  assured.
 Wireless
      customers using LocatePLUS Anywhere are charged a monthly subscription fee
      billed in arrears.  Revenue is recognized on a monthly basis
      when there is evidence of an arrangement, the fees are fixed or
      determinable, and collectability is reasonably
  assured.
 
 Channel
      partners are charged royalty fees, which vary based on the type of
      information requested.  Revenue is recognized when the
      information requested is downloaded, there is evidence of an arrangement,
      the fees are fixed or determinable, and collectability is reasonably
      assured.
 
 Engineering
      services relate to integration services provided to a third party database
      provider with whom the Company has an arrangement whereby the Company
      provides the third party access to the Company’s
      database.  Revenue is recognized over the term of the contract
      when there is evidence of an arrangement, the fees are fixed or
      determinable, and collectability is reasonabily
  assured.
  F-7
 Table of Contents
 LocatePLUS
      Holdings Corporation
 Notes
to Consolidated Financial Statements -(continued)
   Costs
      of Revenues and Software Development
Costs
 Costs
      of revenues relating to CD Rom sales consist primarily of costs for data
      acquisition, materials and costs associated with compilation of compact
      disks, such as labor.  Costs of revenues relating to online
      sales consist primarily of costs for license agreements related to data
      acquisition, software development and maintenance costs and costs
      associated with delivery of such services that include labor and
      depreciation.
 
 Software
      development costs are generally charged to operations as incurred, as they
      relate to ongoing maintenance of data and the Company’s
      website.  The Company evaluates certain software development
      costs for capitalization in accordance with the American Institute of
      Certified Public Accountants Statement of Position 98-1 (“SOP 98-1”),
      “Accounting for the Costs of Computer Software Developed or Obtained for
      Internal Use.”  Costs incurred relating to the Company’s own
      personnel and outside consultants who are directly associated with
      software
 developed
for internal use may be capitalized.  Costs eligible for
capitalization under SOP 98-1 have been immaterial to date.
 
 Stock
      Compensation Plans
 Prior to
January 1, 2006, the Company accounted for its stock-based compensation plans
under the recognition and measurement provisions of Accounting Principles Board
Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB Opinion No.
25”) and related interpretations, as permitted by Statement of Financial
Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (“SFAS
No. 123”). The Company applied the disclosure only provisions of the Statement
of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123") and SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition Disclosure" (SFAS 148") for employee stock option
awards for the twelve months ended December 31, 2005.  Had
compensation cost for the Company's stock option plan been determined in
accordance with the fair value-based method prescribed under SFAS 123, the
Company's net loss and basic and diluted net loss per share would have
approximated the pro forma amounts indicated below.
 
 Year Ended December 312005Net
      loss – reported
                  $ (
      5,600,176)Amortization
      of stock compensation expense
                  (1,289,122)Pro
      forma net loss
                  $
      (6,889,298)Pro
      forma net loss per share – basic and diluted
                  $(1.92)
 
 In
      2005, the fair value of stock options used to compute pro forma net loss
      and net loss per share disclosures was estimated on the date of grant
      using the Black-Scholes option-pricing model with the following weighted
      average assumptions: dividend yield of 0%; expected volatility of 30%;
      average risk-free interest rate of 4.37%; and an expected option holding
      period of 6 years.
 
 Effective
January 1, 2006, the Company adopted the fair value recognition provisions of
Statement of Financial Accounting Standards No. 123(R), “Share Based Payment”
(“SFAS No. 123(R)”) using the modified prospective transition
method.  No stock-based compensation expense was recognized in the
income statement for the year ended December 31, 2005, as all options granted
under the Company’s stock-based employee compensation plans had an exercise
price equal to the market value of the underlying common stock on the date of
grant. As
  F-8
 Table of Contents
 LocatePLUS
      Holdings Corporation
 Notes
to Consolidated Financial Statements -(continued)
  permitted
by SFAS No. 123, stock-based compensation was included as a pro forma disclosure
in the notes to the Company’s financial statements for the year ended December
31, 2005.
 
 Under
that transition method, compensation cost recognized in the year ended December
31, 2006 includes: (a) compensation cost for all stock-based payments granted
prior to, but not yet vested as of January 1, 2006, based on the grant date fair
value estimated in accordance with the original provisions of SFAS No. 123, and
(b) compensation cost for all stock-based payments granted subsequent to January
1, 2006, based on the grant date fair value estimated in accordance with the
provisions of SFAS No. 123(R). Results for prior periods have not been restated,
as provided for under the modified-prospective method.  Total
stock-based compensation expense recognized in the income statement for the year
ended December 31, 2006 was $102,558
 
 Prior to
the adoption of SFAS No. 123(R), the Company presented all tax benefits of
deductions resulting from the exercise of stock options as operating cash flows
in the consolidated statements of cash flows. SFAS No. 123(R) requires the tax
benefits resulting from tax deductions in excess of the compensation cost
recognized for those options (“excess tax benefits”) to be classified
and
 reported
as both an operating cash outflow and a financing cash inflow on a prospective
basis upon adoption.
 
 SFAS No.
123R requires the use of a valuation model to calculate the fair value of
stock-based awards. The Company has elected to use the Black-Scholes-Merton
(“BSM”) option valuation model, which incorporates various assumptions including
volatility, expected life, and interest rates. The assumptions used for the
years ended December 31, 2007 and 2006 and the resulting estimates of
weighted-average fair value per share of options granted during those periods
are as follows:
 
 For
      the twelve
                  months
      endedDecember
      312008
                2007Expected
      life
                6
      years
                6
      yearsVolatility
                33%
                31%Risk
      free interest rate
                4.54
      %
                4.86
      %Dividend
      yields
                -
                -Weighted-average
      fair value of
                  options
      granted during the period
                -
                -
 
 The
expected life of the options represents the estimated period of time until
exercise and is based on historical experience of similar awards, giving
consideration to the contractual terms, vesting schedules and expectations of
future employee behavior. For 2006, expected stock price volatility is based on
a combination of historical volatility of the Company’s stock and the one-year
implied volatility of its traded options, for the related vesting periods. Prior
to the adoption of SFAS 123R, expected stock price volatility was estimated
using only historical volatility of the Company’s stock. The risk-free interest
rate is based on the implied yield available on U.S. Treasury zero-coupon issues
with an equivalent remaining term. The Company has not paid dividends in the
past and does not plan to pay any dividends in the near future.
 
  F-9
 Table of Contents
 LocatePLUS
      Holdings Corporation
 Notes
to Consolidated Financial Statements -(continued)
  Earnings
      Per Share
 Basic
      earnings per share is based upon the weighted average number of common
      shares outstanding during each period.  Diluted earnings per
      share gives effect to all dilutive potential common shares outstanding
      during the period.  The computation of diluted earnings per
      share does not assume the issuance of potential common shares that have an
      anti-dilutive effect.  Diluted per share computations are not
      presented since the effect would be
  anti-dilutive.
 
 Use
      of Estimates
 The
      preparation of financial statements in conformity with accounting
      principles generally accepted in the United States of America requires
      management to make estimates and assumptions that 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 reporting
      period.  Actual results could differ from those
      estimates.
 
 Recent
      Pronouncements


In
      March 2006, the FASB issued Statement of Financial Accounting Standard 156
      - Accounting for Servicing of Financial Assets (“SFAS 156”), which
      requires all separately recognized servicing assets and servicing
      liabilities be initially measured at fair value. SFAS 156 permits, but
      does not require, the subsequent measurement of servicing assets and
      servicing liabilities at fair value. Adoption is required as of the
      beginning of the first fiscal year that begins after September 15, 2006.
      Early adoption is permitted. The adoption of SFAS 156 is not expected to
      have a material effect on our consolidated financial position, results of
      operations or cash flows In December 2004, the FASB issued SFAS No. 153,
      "Exchanges of Non-monetary Assets, an amendment of APB Opinion No. 29."
      APB Opinion No. 29, "Accounting for Non-monetary Transactions," is based
      on the principle that exchanges of non-monetary assets should be measured
      based on the fair value of the assets exchanged. SFAS No. 153 amends APB
      Opinion No. 29, eliminating the exception to fair value accounting for
      non-monetary exchanges of similar productive assets and replaces it with a
      general exception to fair value accounting for non-monetary exchanges that
      do not have commercial substance. A non-monetary exchange has commercial
      substance if the future cash flows of the entity are expected to change
      significantly as a result of the exchange. The statement is effective for
      non-monetary asset exchanges occurring in fiscal periods beginning after
      June 15, 2005. The Company does not expect this statement to have a
      material impact on its financial
statements.
  On
      January 1, 2008, the Company adopted Statement of Financial Accounting
      Standards (SFAS) No. 157 “Fair Value Measurements” (SFAS No. 157), which
      provides a consistent definition of fair value that focuses on exit price
      and prioritizes, within a measurement of fair value, the use of
      market-based inputs over company-specific inputs.  SFAS No. 157
      requires expanded disclosures about fair value measurements and
      establishes a three-level hierarchy for fair value measurements based on
      the observable inputs to the valuation of an asset or liability at the
      measurement date.  The standard also requires that a company
      consider its own nonperformance risk when measuring liabilities carried at
      fair value, including derivatives.  In February 2008 the
      Financial Accounting Standards Board (FASB) approved the FASB Staff
      Position (FSP) No. FAS 157-2, “Effective Date of FASB Statement No. 157”
      (FSP No. FAS 157-2), that permits companies to partially defer the
      effective date of SFAS No. 157 for one year for nonfinancial assets and
      nonfinancial liabilities that are recognized or disclosed as fair value in
      the financial statements on a nonrecurring basis.  FSP No. FAS
      157-2 does not permit companies to defer recognition and disclosure
      requirements for financial assets and financial liabilities or for
      nonfinancial assets and nonfinancial liabilities that are remeasured at
      least annually.  SFAS No. 157 is effective for financial assets
      and financial liabilities and for nonfinancial assets and nonfinancial
      liabilities that are remeasured at least annually for fiscal years
      beginning after November 15, 2007.  The provisions of SFAS No.
      157 are applied prospectively.  The Company has decided to defer
      adoption of SFAS No. 157 for one year for nonfinancial assets and
      nonfinancial liabilities that are recognized or disclosed at fair value in
      the financial statements on a nonrecurring basis.  These include
      fixed assets.  The effect of adopting SFAS No. 157 on January 1,
      2008 was not material and no adjustment to Accumulated deficit was
      required.  The Company is currently unable to quantify the
      effect, if any, that the adoption of SFAS No. 157 for nonfinancial assets
      and nonfinancial liabilities will have on its financial condition and
      results of operations.
 
 The
      carrying amounts of cash, accounts receivable, prepaid expenses and other
      current assets, accounts payable, accrued expenses, deferred revenue,
      current portions of capital lease obligations, current portion of notes
      payable and convertible notes payable approximate fair value because the
      best valuation for them is the use in the business and the short maturity
      of those instruments.  The long-term portion of notes payable is
      at 12% per annum and approximates fair
value.
 3.
              Accounts
      Receivable, Trade
 Trade
      accounts receivable are presented net of an allowance for doubtful
      collections of $102,000 at December 31, 2008.  In determining
      this allowance, objective evidence that a single receivable is
      uncollectible as well as a historical pattern of collections of accounts
      receivable that indicate that the entire face amount of a portfolio of
      accounts receivable may not be collectible is considered at each balance
      sheet date.
  F-10
 Table of Contents
 LocatePLUS
      Holdings Corporation
 Notes
to Consolidated Financial Statements -(continued)
  4.
              Prepaid
      Expenses and other Current Assets
 Prepaid
      expenses and other current assets consists of approximately $122,917 in
      fees for financing that are being amortized over the length of the term
      and a $75,000 note payable due for services to be rendered through a
      consulting agreement..
 
 5.
              Notes
      Receivable
 
 Demand
      promissory note receivable from an unrelated leasing company, with
      interest at 11%.  One million dollars was advanced to the
      leasing company near the end of 2002 as proceeds from the Company’s
      initial public offering were collected.  There is no business
      relationship between the Company and this leasing company or any officers
      or directors of either company. At December 31, 2004, substantial doubt
      existed on collectability of these balances.  An allowance of
      $500,000 was recorded against the outstanding balance.  The
      remaining principal balance at December 31, 2005 was $358,508. As of
      December 31, 2006, the Company fully allowed for the remaining principal
      balance. At December 31, 2007 there was no activity on this receivable and
      management chose to write the receivable
off.
 
 7.
              Property
      and Equipment
 Property and equipment at December 31,
2008, consists of the following:
 
 Equipment
                  
                  $
                  4,597,245Vehicles
                  
                  
                  22,343Software
                  
                  
                  918,920Furniture
      and fixtures
                  
                  
                  389,783Leasehold
      improvements
                  
                  
                  624,1426,552,433Less
      accumulated depreciation andamortization
                  
                  
                  5,836,880Property
      and equipment, net
                  
                  $
                  715,553
 
 Depreciation
      and amortization expense was $503,908 and $722,575 for the years ended
      December 31, 2008 and 2007,
respectively.
 
 8.
              Prepaid
      expenses and other current assets
 Prepaid
      expenses and other current assets consist of the following at December 31,
      2008:
 
 Deferred
      financing costs
                122,917ST
      Note Payable
                75,000Other
                24,903Total
                $
      222,820
 
 9.
              Long
      –Term Receivable
 At
year-end, December 2006, under the terms of a negotiated agreement, the Company
converted $4.2 million held by one customer that it was carrying in accounts
receivable into a long term receivable with a net carrying value of $2.3
million.  At December 31, 2007, based on payment history, the Company
was unable to determine the likelihood of collecting on this
receivable.  As a result, the Company has written down the remaining
balance to $0 expensing $2.3 million during 2007.  Any future payments
received by the Company under the terms of this receivable will be recognized as
other income.  As of December 31, 2008, no additional payments had
been received.
  F-11
 Table of Contents
 LocatePLUS
      Holdings Corporation
 Notes
to Consolidated Financial Statements -(continued)
  10.
                Other
      Assets
 
 Other
      assets consist of the following at December 31,
  2008
 
 
 Restricted
      trading securities
                $  1,500Security
      deposits
                77,964Total
                $
      79,464
  Restricted
trading securities consist of 200,000 restricted shares of common stock in Data
Evolution Holdings, Inc. (DEH), which trades over the counter under the symbol
DTEV.  These shares were acquired as part of an agreement to provide
service and data to DEH.  The service and data was at valued at
$875,000.  At the time the service and data was valued, November 22,
2004, the trailing 10 day average closing price of DTEV was $5.96 per share, or
$1,192,000.  Due to the fact that these shares were restricted, a
mutually agreed upon 25% liquidity discount was applied to the value, or
$894,000, as such 200,000 shares were exchanged for the service.  At
December 31, 2007, the 10-day trailing average closing price was $.09 per share,
or the value of the
shares was $18,200. An impairment to the current value has been recorded to
adjust the security carrying value to the original 25% discount.  The
company recorded an impairment of $873,500 and the adjusted carrying value is
now $1,500.
  11.
              Accrued
      Expenses
 
 Accrued
      expenses consist of the following at December 31,
  2008:
 
 Payroll
      and related taxes
                $  87,931Accounting,
      legal and professional fees
                91,000Finance
      Related Expenses
                3,227,400Other
                67,821Total
                $
      3,474,152
 
 12.
              Notes
      Payable
 
 
 Convertible
promissory note, due on demand that bears interest at the rate of 12% per
annum.  The note is convertible into 44,444 shares of Class A Voting
Common Stock at the note holder’s option.  The note requires quarterly
payment of interest until the principal is repaid or
converted.
  During
2003, the Company received $2.3 million, by issuing subordinated promissory
notes bearing simple interest ranging from 10% and 12% per annum.  The
balance of this debt at December 31, 2008, is $102,000.  In 2007, the
terms of these notes were re-negotiated and now bear interest ranging from 19%
to 30%. As of December 31, 2008 the balance on these notes remains unpaid and
the notes are now classified as demand.
 
 In
connection with an offering that closed on August 15, 2005 we entered into a
Purchase Agreement with certain institutional and accredited investors relating
to the private placement of convertible term notes issued by the Company in the
principal amount of $8,965,000 and warrants to purchase up to 41,189,000 shares
of our capital stock. Of the proceeds from this offering, approximately $4.1
million was used to retire current secured convertible notes, and the remainder
will be used for general working capital.
 
 All of
the notes are convertible, and the warrants are exercisable, first into as many
shares of our Class A Voting Common Stock, par value $0.01 per share, as are
available for issuance at the time of conversion or exercise, and then into
shares of our Class B Non-Voting Common Stock,
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      Holdings Corporation
 Notes
to Consolidated Financial Statements -(continued)
  par value
$0.01 per share.  As part of our agreement with these investors, we
have agreed to seek the approval from our stockholders of the recapitalization
of each outstanding share of our Class
 A Voting
Common Stock and our Class B Non-Voting Common Stock into a single class of
voting common stock, as well as a one-for-fifty reverse split of this new class
of common stock.  If our stockholders approve these measures, the
notes will automatically convert into shares of the new class of common stock,
and any unexercised warrants will be exercisable for shares of that class of
stock as well.  As there are currently no un-issued shares of our
Class A Voting Common Stock that are not otherwise reserved for issuance, we
anticipate that these notes and warrants will be exercisable for shares of
either our Class B Non-Voting Common Stock or the newly created class of common
stock, if approved.  Without taking into consideration interest
payable on the notes, the notes are convertible into 89,650,000 shares of our
common stock (regardless of class) at a current conversion rate of $0.10 per
share and the warrants are exercisable for ten years from the date they were
issued for up to 41,189,000 shares of our common stock (regardless of class) at
a current exercise price of $0.15 per share.  The conversion price of
the notes and the exercise price of the warrants are each subject adjustment for
a variety of events, including, for example, payment of dividends, certain
mergers or asset sales, and certain securities issuances.  In
conjunction with this offering, we also entered into related Registration Rights
and Voting Agreements.  On November 14, 2005, at the annual meeting of
the shareholders, the recapitalization was approved by a majority of the
outstanding shares of both classes of stock.  Effective December 2005
that debt was converted to common stock.
 
 On March
20, 2007, the Company issued a secured convertible debenture to Cornell Capital
Partners in the aggregate principal amount of $6,000,000 of which $3,000,000 was
advanced immediately.  The second installment of $2,000,000 will be
advanced immediately prior to the filing by the Company with the Securities and
Exchange Commission of the Registration Statement.  The last
installment of $1,000,000 will be advanced immediately prior to the date the
Registration Statement is declared effective by the
Commission.   The Debentures mature on the third anniversary of
the date of issuance. The holder of the Debentures may convert at any time
amounts outstanding under the Debentures into shares of common stock of the
Company at a fixed conversion price per share equal to $0.314.  Under
the Purchase Agreement the debentures are secured by substantially all of the
Company's, and its wholly owned subsidiaries’ assets.
 
 Under
      the Purchase Agreement, we also issued to Cornell five-year warrants in
      six separate series as follows:
 
 A
      Warrants to purchase 2,384,814 shares of common stock at $0.314 per
      share;
 B
      Warrants to purchase 2,186,079 shares of common stock at $0.343 per
      share;
 C
      Warrants to purchase 2,017,919 shares of common stock at $0.372 per
      share;
 D
      Warrants to purchase 1,748,863 shares of common stock at $0.429 per
      share;
 E
      Warrants to purchase 1,499,026 shares of common stock at $0.50 per
      share;
 F
      Warrants to purchase 1,500,000 shares of common stock at $0.01 per
      share.
 
 Also in
connection with the sale and issuance of the Debentures, the Company entered
into a settlement agreement with Dutchess Private Equities Fund, Ltd. for the
settlement of a dispute regarding the amount due under debt instruments issued
by the Company to Dutchess during 2005 and 2006.  Pursuant to the
terms of the Settlement, the Company immediately paid a cash amount of
$1,500,000 with two additional cash payments in the amount of $300,000 each to
be made on the date that (i) the Company files the Registration Statement (or,
if earlier, within 45 days) and (ii) the Registration Statement is declared
effective (or, if earlier, within 145 days).  The Company also issued
a Note in the amount of $1,500,000 and agreed to reduce to $0.10 per share the
exercise price of the warrants issued to Dutchess.  Dutchess agreed to
terminate any security interest in the Company’s assets upon the Initial
Payment.
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      Holdings Corporation
 Notes
to Consolidated Financial Statements -(continued)
  
 On
December  11,  2007,  the Company received a
letter dated December 6, 2007 ( the "Notice
 Letter"),
from  YA  Global  Investments,  L.P.,  (formerly  known  as
Cornell Capital
Partners,  L.P.)  notifying  the  Company  of
certain Events of Default under the
Secured  Convertible  Debenture  dated  March  20,  2007  of  the  Company  (the
"Debenture").  As a result of this default, the entire note has been
re-classified as short term.
 
 
 13.           Commitments
and Contingencies
 
 Operating
Leases
 The
      Company leases office space and equipment under various non-cancelable
      operating lease agreements which terminate on various dates through
      2012.  Rent expense amounted to $544,199and $584,513 during 2008
      and 2007, respectively.
 
 Future
      minimum payments under non-cancelable operating leases are as
      follows:
 
 Year
      ending December 31,2009
                482,8872010
                482,8872011
                482,8872012
                80,481Total
                $
      1,529,144
 
 Capital
      Leases
 The
      Company acquired equipment under long-term capital leases.  The
      economic substance of the leases is that the Company is financing the
      acquisition of the assets through the
leases.
 
 As
      of December 31, 2008 no balance remained due on capital
      leases.
 
 
 License
      Agreements
 The
      Company obtains its data from multiple sources and has entered into
      various license agreements with the related data providers.  In
      2008 and 2007, the Company recorded $1,600,583 and $1,577,157 respectively
      in costs related to these agreements.  In the event that any of
      the primary sources of data are no longer available to the Company,
      management believes that it would be able to integrate alternate sources
      of data without significant disruption to the business or operations, as
      there are currently a number of providers of such data.  The
      Company is required to make minimum payments under these agreements as
      follows:
 
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      Holdings Corporation
 Notes
to Consolidated Financial Statements -(continued)
  The
following represents the contractual obligation and commercial commitments as of
December 31, 2008.
 
 Contractual
      Obligations
                    Total
                    Less
      than
                      1
      Year
                    1-3
                      Years
                    3-5
                      YearsLong-Term
      Debt including current portion
                    $4,792,738
                    $  3,292,738
                    $
      1,500,000
                    -Operating
      Leases
                    1,590,455
                    544,199
                    1,046,256
                    -License
      Agreements
                    1,542,495
                    304,166
                    718,331-
                    519,998Total
                    $
      7,925,688
                    $
      4,141,103
                    $
      3,264,587
                    $
      519,998
 
 
 
 The
      Company’s operations depend upon information that includes public
      records.  If material changes were to occur in federal or state
      laws regulating or prohibiting the distribution of public records,
      particularly credit header records, the Company’s financial condition and
      results of operations could be materially affected.  In the
      event that such a termination occurred, management believes it could
      acquire replacement data from other sources; however, such termination
      might have an adverse effect on the Company’s
  operations.
 
 Legal
      Proceedings
 The
      Company is from time to time subject to legal proceedings and claims which
      arise in the normal course of its business.  Management believes
      the outcome of any pending or known matters will not have a materially
      adverse effect on the Company’s financial position or results of
      operations.
 
 14.           Income
Taxes
 
 Deferred
      tax assets consist of the following at December
  31:
 
 2008Net
      operating loss carry forwards
                    $14,735,000Stock
      based compensation
                    450,000Bad
      debt reserve
                    44,400Investment
      loss
                    5,000Gross
      deferred tax assets
                    15,234,400Valuation
      allowance
                    (15,234,400)$               -
 
 The
Company has provided a valuation allowance for the full amount of the deferred
tax assets since realization of these future benefits is not sufficiently
assured.  As the Company achieves
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      Holdings Corporation
 Notes
to Consolidated Financial Statements -(continued)
  profitability,
these deferred tax assets may be available to offset future income tax
liabilities and expenses.
 
 At
December 31, 2008, the Company had net operating loss carryforwards for federal
and state income tax reporting purposes of approximately $37 million and $20
million respectively.  The federal and state net operating loss
carryforwards expire through 2026.
 
 Certain
substantial changes in the Company’s ownership may occur.  As a
result, under the provisions of the Internal Revenue Code, the amount of net
operating loss carryforwards available annually to offset future taxable income
may be limited.  The amount of this annual limitation is determined
based upon the Company’s value prior to the ownership changes taking
place.  Subsequent ownership changes could further affect the
limitation in future years.
 
 15.
              Common
      Stock
 
 Description
      of Common Stock
 On
      March 23, 2001, the Company amended its articles of incorporation wherein
      it renamed all of the authorized 150,000,000 shares of common stock, par
      value $0.01 per share, Class A Voting Common Stock and authorized the
      issuance of 250,000,000 shares of Class B Non-voting Common
      Stock.
 
 Each
Class A Voting Common stockholder is entitled to one vote for each share held on
all matters submitted to a vote of stockholders.  The holders of both
classes of common stock are entitled to dividends on a pro rata basis, when and
if declared by the Company’s board of directors.  Through December 31,
2004, no dividends have been declared or paid.
 
 On
      August 12, 2002, the Company commenced its initial public offering of
      securities (Registration No. 333-85154, effective August 12, 2002),
      pursuant to which the Company offered up 12,000,000 units for $0.30 per
      unit.  Each unit consisted of one share of Class B Non-voting
      Common Stock and a three year redeemable warrant to purchase one share of
      Class A Voting Common Stock with an exercise price of $0.50 per
      share.
 
 On
      December 5, 2005, the Company amended its articles of incorporation
      wherein it combined each outstanding share of our Class A Voting Common
      Stock and our Class B Non-Voting Common Stock into a single class of
      voting common stock with 400,000,000
authorized.
 
 On
      December 12, 2005, the Company amended its articles of incorporation to
      effect a one-for-fifty reverse split of the common stock and to increase
      the authorized from the resulting split of 8,000,000 to
      25,000,000.
 
 As
      of December 31, 2006, a total of 4,279,539 shares of Common Stock were
      reserved for issuance upon exercise of outstanding stock option and
      warrant agreements.
 
 Stock
      Options and Warrants
 During
      2005, the Company issued warrants to purchase 1,574,780 shares of Common
      Stock at an average exercise price of $6.31 per share to third parties in
      exchange for services.  The Company recorded a discount to Note
      payable or expense of $413,321 associated with these
    warrants.
 
 During
      2005, the fair value of the options and warrants to purchase shares of
      Class A Voting Common Stock was based on the Black-Scholes
      model.  The Black-Scholes calculation incorporated the following
      assumptions:  0% dividend yield, 20% volatility, 3.9% average
      risk-free interest rate, a ten-year life and an underlying Class A Voting
      Common Stock average value of $5.00 per
share.
 
 During
      2006, the fair value of the options and warrants to purchase shares of
      Class A Voting Common Stock was based on the Black-Scholes
      model.  The Black-Scholes
calculation
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      Holdings Corporation
 Notes
to Consolidated Financial Statements -(continued)
  incorporated
      the following assumptions:  0% dividend yield, 34% volatility,
      4.1% average risk-free interest rate, a ten-year life and an underlying
      Common Stock.
 
 As
      of December 31, 2006, there were a total of 3,088,342 options and warrants
      outside the Stock Plans.
 
 16.
              Stock
      Option Plans
 
 On
      November 16, 1999, the Board of Directors approved the Incentive and
      Non-Qualified Stock Option Plan as amended (the “1999
      Plan”).  Under the terms of the 1999 Plan, the Company is
      authorized to grant incentive and nonqualified stock options to purchase
      shares of common stock to its employees, officers and directors, and
      consultants or advisors.  The Board of
  Directors
 administers
the Plan.  A maximum of 15,000,000, shares, or 300,000 after adjusting
for the reverse split, of Class A Voting Common Stock has been approved for
issuance under the 1999 Plan of which 6,061 post split shares are available for
grant at December 31, 2008.  The options are not transferable except
by will or domestic relations order.
 
 On
      March 28, 2003, the Board of Directors approved the Incentive and
      Non-Qualified Stock Option Plan (the “2003 Plan”) which was approved by
      the stockholders at the May 29, 2003 annual meeting.  Under the
      terms of the 2003 Plan, the Company is authorized to grant incentive and
      nonqualified stock options to purchase shares of common stock to its
      employees, officers and directors, and consultants or
      advisors.  The Board of Directors administers the 2003
      Plan.  A maximum of 25,000,000 shares, or 500,000 after
      adjusting for the reverse split, of Class A Voting Common Stock and
      25,000,000 shares, or 500,000 after adjusting for the reverse split, of
      Class B Non-Voting Common Stock, or a combined total of 1,000,000 post
      split shares have been approved for issuance under the 2003 Plan of which
      486,000 are available for grant at December 31, 2008.  The
      options are not transferable except by will or domestic relations
      order.
 
 The
      Board of Directors determines the exercise price and vesting period of the
      options at the date of grant.  The exercise price for incentive
      stock options shall not be less than 100% of the fair market value of the
      Company’s stock on the date of grant.  The option exercise
      period will not exceed ten years from the date of grant.  The
      options are generally fully exercisable when issued to directors and
      consultants and exercisable 25% per year and continuing over four years
      for employees (based on continual employment). If a grantee owns stock
      representing more than 10% of the outstanding shares on the date such an
      incentive option is granted, the price shall be at least 110% of fair
      market value and the maximum term of the options will be five
      years.  The following table presents activity under the Plans
      adjusting for the reverse split for the years ended December 31, 2006,
      2005, and 2004:
 
 WeightedaverageexerciseShares
                priceOutstanding
      at December 31, 2004
                693,290
                30.96Issued
                10,200
                17.00Exercised
                -
                -Canceled
                (3,364)
                11.00Outstanding
      at December 31, 2005
                700,126
                30.86Issued
                -
                -Exercised
                -
                -Canceled
                (150)
                10.00Outstanding
      at December 31, 2006
                700,126
                30.54
 
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      Holdings Corporation
 Notes
to Consolidated Financial Statements -(continued)
  The
      following summarizes information relating to options outstanding at
      December 31, 2008:
 
 Options
      outstanding
                
                Options
      exercisableWeightedaverage
                
                Weighted
                
                
                
                WeightedRange
      of
                
                
                
                remaining
                
                average
                
                
                
                averageexercise
                
                
                
                contractual
                
                exercise
                
                
                
                exerciseprice
                
                Shares
                
                life
      (years)
                
                price
                
                Shares
                
                price$0.00
      - 10.00
                
                234,151
                
                4.20
                
                $     9.66
                
                207,076
                
                $      9.65$10.00
      - 15.00
                
                109,625
                
                5.85
                
                $   12.51
                
                109,275
                
                $    12.51$15.00-75.00
                
                356,000
                
                6.26
                
                $   49.88
                
                348,000
                
                $    50.59699,976
                
                5.51
                
                $   30.56
                
                664,351
                
                $    31.56
 
 
 17.
              Defined
      Contribution Retirement Plan
 The
      Company sponsors a defined contribution retirement plan under the
      provisions of Section 401(k) of the Internal Revenue Code, which covers
      substantially all employees.  The Company may make discretionary
      matching contributions up to 1% of employee
      contributions.  Company contributions vest ratably over a
      six-year period.  Company matching contributions amounted to
      $9,416 and $6,214 in 2008 and 2007,
  respectively.
 
 18.
              Segment
      Information
 The
      Company has two reportable segments which management operates as distinct
      sales organizations; these two segments are segregated by the nature of
      products and services provided.  The Company measures and
      evaluates its two reportable segments based on revenues and costs of
      revenues.  The CD ROM segment provides information on motor
      vehicles and drivers’ licenses, contained on compact disks.  The
      online segment provides information on individuals throughout the United
      States of America through the Company’s website.  No material
      operating costs, other than costs of revenues, or assets and liabilities
      relate to the CD ROM segment.
 
 For
      the year ended
                  December
      31,2008
                
                2007Reportable
      segment sales:CD
      Rom
                439,621
                
                498,366Online
      and Channel
                7,567,842
                
                7,840,003Total
      reportable segment sales
                8,007,463
                
                8,338,369Costs
      of Segment sales:CD
      Rom
                90,710
                
                48,219Online
      and Channel
                1,600,583
                
                1,577,157Total
      costs of reportable segment sales
                1,691,293
                
                1,625,376
 
 
 19.
              Subsequent
      Events
 
 The
Company filed an 8-K on January 26, 2009 announcing that it had received the
consent of a
majority  of  the  shareholders  of  record  to
amend the Certificate of Incorporation to increase the number of shares of
Common Stock authorized for issuance by the
Corporation  from  25,000,000  shares  to  50,000,000  shares
and to  the  elimination of the current
classification  of  the  Directors  into  different
terms and replacement with a
uniform  one  year  term  for all
directors, the reduction of the Board to seven members and the election of the
following individuals to the Board of Directors:
 
 Dr.
Christian T. Williamson
 Richard
L. Pyle
 David
Skerrett
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      Holdings Corporation
 Notes
to Consolidated Financial Statements -(continued)
  Ralph
Caruso
 Patrick
F. Murphy
 James
Ahern
 George G.
Isaac
 
 CHRISTIAN
T. WILLIAMSON, Ph.D., 35, Chairman of the Board, is currently Vice President of
Global Market Strategies at Trojan Technologies a subsidiary of Danaher
Corporation, a $10 Billion industrial conglomerate which operates within
multiple platforms including water treatment. Dr. Williamson joined Trojan in
2001 through the acquisition of Advanced UV Solutions and was promoted to
Vice-President, Global Market Strategies in January 2008 - Executive Team
Member. Prior to that, Dr. Williamson was Managing Director, Environmental
Contaminant Treatment since 2001 in Trojan. Prior to that Dr. Williamson was
Managing Partner for Advanced UV Solutions, LLP, a "spin-off" of the consulting
firm Hydro Geo Chem, Inc. The main goal of AUVS was to liquidate the asset for
Hydro Geo Chem through the sale of the AUVS Company. Dr. Williamson holds a B.S.
in Engineering Mathematics and a Doctorate in Hydrology with an emphasis in
Systems Engineering from The University of Arizona.
 
 RICHARD
L. PYLE, Ph.D., 64, Director, holds a bachelors in physics, an MBA, and a
doctorate in business. He is a former professor of management in the University
of Massachusetts system. In addition to an academic and theoretical perspective
on business management, he also brings years of management experience across a
broad range of manufacturing industries. In particular, he brings the sales /
manufacturing / distribution perspective and experience of being an
owner/manager of a sales and marketing related business. He also provides
consulting services to other businesses and is a commercial real estate investor
and property manager. Dr. Pyle also enjoys philanthropic work and public
service. The focus of his charitable work has been with children, youth, and in
higher education. Dr. Pyle has been the CEO of Continental Consolidated, Inc. of
Worcester, MA. since January 1993
 
 DAVID
SKERRETT, 57, has been Vice President of the Middlesex Corporation for 23 years.
Middlesex Corporation is in the top 400 heavy civil construction companies in
the nation with $140 million in revenue. Mr. Skerrett holds a Bachelor of
Engineering from College of Technology. Mr. Skerrett is currently a member of
the Board of Directors and is being nominated to serve an additional one year
term.
 
 RALPH
CARUSO 57, is the founder and President of Caruso Companies, a conglomerate
involved in many facets of industrial construction that has been in business for
over 25 years. Mr. Caruso is currently a member of the Board of Directors and is
being nominated to serve an additional two year term.
 
 PATRICK
F. MURPHY, J.D.,55, Director, is the Chairman of the Pulsar Network, Inc. Board
of Directors. A graduate of the Harvard Law School practicing in Massachusetts,
he also provides consulting services to growing businesses. He is familiar with
government relations, public relations, and has experience in developing
resources and assets. Prior to his career in law he was a manager at a prominent
social service agency and handled personnel and operation issues in a
crisis-based environment. For the past ten (10) years since September of 1998,
Mr. Murphy has been an attorney for the Commonwealth of Massachusetts Department
of Mental Retardation. Mr. Murphy beneficially owns no shares of the Common
Stock of the Company. The business address of Mr. Murphy is 68 N. Main St. Ste.
101 Carver, MA 02330.
 
 JAMES
AHERN, 68, Director, is the COO of the Tracy Group, a Casino Management and
Development Company. The Tracy Group focuses on work-out strategies, development
of management and marketing strategies, and ground-up development for a variety
of clients. Prior to joining the Tracy Group, Mr. Ahearn had extensive
experience in executive management in a variety of areas including 30 years
experience with the Federal Bureau of Investigation where he was nominated by
the Director of the FBI for the highest award for executive service in the U.S.
Department of Justice. Mr. Ahearn recently served on the Board of Directors, and
acted as a consultant to Trackpower, Inc., a company operating two
race
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      Holdings Corporation
 Notes
to Consolidated Financial Statements -(continued)
  tracks/casinos
in New York State. He has held gaming licenses in New York, Arizona, Oregon and
Washington, as well as the National Indian Gaming Commission.
 
 GEORGE G.
ISAAC, CPA , 63, Director and Audit Committee Chairman is a Massachusetts
Certified Public Accountant and is affiliated with Massachusetts Board of
Certified Public Accountants and the American Institute of Certified Public
Accountants. He is well experienced in all areas of financial management having
practiced as a CPA for 25 years within a financial career that reaches back
nearly 40 years. His experience includes management, business consulting,
budgeting, managerial accounting, risk management, internal controls, tax advice
and preparation, financial planning and reporting, audit functions, banking
functions, and all treasury functions including SEC compliance. Specifically,
his current practice involves services as a consulting CFO. In the past he has
served as CFO for a publicly traded company, a managing partner of a public
accounting firm, has managed a commercial office building. As a board member of
a community bank and a publicly traded company he has served as a member and is
familiar with the functioning of board audit committees, executive committees,
and compensation
committees. His experience includes the negotiation of significant expansion and
growth credit availability but also downsizing to maintain profitability where
necessary. He is proficient in Russian and German. For the past five years Mr.
Isaac has served as a consulting Chief Financial Officer for several closely
businesses in Massachusetts with responsibility for all financial planning and
reporting, tax preparation, banking and related treasury functions for each of
his clients.
 
 
 On
January 30, 2009 the Company announced that at a meeting of the Board of
Directors held on January 29, 2009, the Board voted to appoint current Director,
Patrick Murphy to the position of Corporate Secretary.
 
 On  February  23,  2009,
the Company announced that at a meeting of the Board of
Directors  held  on February 18, 2009, the Board of
Directors voted to terminate the  employment  of James C.
Fields, the then current President, Chief Executive Officer,  Acting
Chief Financial Officer and Treasurer. Following this decision,
the  Board voted to appoint Geoffrey Lee, President of Entersect, a
wholly owned
subsidiary  of  LocatePLUS  Holdings  and  Vice
President of Online Services for LocatePLUS  as Interim Chief
Executive Officer and President. At a Board meeting held  on February
24, 2009, the Board elected Mr. Lee to the additional position
of  Acting  Treasurer.  It  is  the
intent of the Board of Directors to actively pursue  and interview
qualified candidates within a reasonable amount of time to
fill  the  permanent  position  of
President and CEO and the position of CFO and Treasurer.
 
 Mr.  Lee  has
served as the President of Entersect, a wholly owned subsidiary of
LocatePLUS  since  July  2003  and  Vice  President
of LocatePLUS Holdings since
January  2008.  Mr.  Lee joined LocatePLUS in July
2007 as the Vice President of
Online  Services.  Prior  to  joining  LocatePlus,  Mr.  Lee  was
a key business development  executive with CDB Infotek; a pioneer in
the investigative database
market.  After  years  of  significant  growth,  CDB  Infotek  was  acquired  by
Choicepoint  as  their  initial  entry
into the public records industry. Mr. Lee
served  with  several  other  public  record  providers
and has over 18 years of experience  in  the record
retrieval industry. Mr. Lee is a former municipal and military police officer
having served with the United States Army, Reserve for 8
years.  He  is active in the community as a board member
with various non-profit
organizations  including  youth  sports,  medical  outreach  and  juvenile
rehabilitation  programs.  Mr. Lee has a Bachelor of Arts in
Psychology from the
California  State  University.
  LocatePLUS Holdings Corp., v.
Dutchess Capital Management, LLC, et al
 
 At this
time management does not feel it is necessary to record any liabilities or
assets  in conjunction with the above referenced case and
counter.
 
 See
Independent Auditors Report
  F-20
 Table of Contents
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      Holdings Corporation
 Notes
to Consolidated Financial Statements -(continued)
  Exhibit
23.5
 
 
 
 We
consent to the use in this Annual Report on Form 10-K of our report dated April
1, 2009 relating to the consolidated financial statement of LocatePLUS Holdings
Corporation for the year ended December 31, 2008, which appear in such Annual
Report.
 
 
 
 
 
 
 --------------------------------
 LIVINGSTON
AND HAYNES, P.C
 Wellesley,
Massachusetts
 May 14,
2009
  F-21