|                                                          |   |                                |
|---------------------------------------------------------------|--------|-------------------------------------|
| Delaware                                                      |   | 04-3332304                          |
| (State or other jurisdiction ofincorporation or organization) |   | (I.R.S. EmployerIdentification No.) |

|                                         |   |       |
|----------------------------------------------|--------|------------|
| 100 Cummings Center, Suite 235M, Beverly, MA |   | 01915      |
| (Address of principal executive offices)     |   | (Zip Code) |

----

|                            |  Table of Contents                                                                                           |      |
|---------------------------------|-------------------------------------------------------------------------------------------------------------------|-----------|
|                            |                                                                                                              | Page      |
|                            |                                                                                                              |      |
|  PART I                    |                                                                                                              |      |
|                            |                                                                                                              |      |
|    ITEM 1             | Description of Business                                                                                           |   1  |
|                            |                                                                                                              |      |
|    ITEM 1A  | Risk Factors                                                                                                      | 6         |
|                            |                                                                                                              |      |
|    ITEM 2             | Description of Property                                                                                           | 9         |
|                            |                                                                                                              |      |
|    ITEM 3             | Legal Proceedings                                                                                                 | 10        |
|                            |                                                                                                              |      |
|    ITEM 4             | Submission of Matters to a vote of Security Holders                                                               | 11        |
|                            |                                                                                                              |      |
| PART II                         |                                                                                                              |      |
|                            |                                                                                                              |      |
|    ITEM 5             | Market for Common Equity and Related Stockholder Matters                                                          | 12        |
|                            |                                                                                                              |      |
|    ITEM 6             | Management's Discussion and Analysis of Financial Condition and Results of Operations                             | 14        |
|                            |                                                                                                              |      |
|    ITEM 7             | Financial Statements                                                                                              |   19 |
|                            |                                                                                                    |      |
|    ITEM 8             | Changes In and Disagreements with Accountants and Financial Disclosure                                            | 19        |
|                            |                                                                                                              |      |
|    ITEM 8A            | Controls and Proceedures                                                                                          | 20        |
|                            |                                                                                                              |      |
| PART III                        |                                                                                                              |      |
|                            |                                                                                                              |      |
|    ITEM 9             | Directors, Executive Officers, Promotoers, and Control Persons; Compliance with Section 16(a) of the Exchange Act |   21 |
|                            |                                                                                                              |      |
|    ITEM 10            | Executive Compensation                                                                                            |   24 |
|                            |                                                                                                              |      |
|    ITEM 11            | Security Ownership and Certain Beneficial Owners and Management                                                   |   25 |
|                            |                                                                                                              |      |
|    ITEM 12            | Certain Relationships and Related Transactions                                                                    |   26 |
|                            |                                                                                                              |      |
|    ITEM 13            | Exhibits and Reports on Form 8-K                                                                                  |  26  |
|                            |                                                                                                              |      |
|    ITEM 14            | Principal Accountant Fees and Services                                                                            | 28        |

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Table of Contents

Part I

Item 1 - Description of Business

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Table of Contents

| ·   | crime and terrorism investigation |
|--------------------|-----------------------------------|

| ·   | detection of fraud |
|--------------------|--------------------|

| ·   | “skip tracing” |
|--------------------|----------------------------|

| ·   | background checks |
|--------------------|-------------------|

| ·   | legal due diligence |
|--------------------|---------------------|

| ·   | Identity self-certification |
|--------------------|-----------------------------|

| ·   | Private security |
|--------------------|------------------|

| ·   | Risk-management |
|--------------------|-----------------|

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Table of Contents

| Level | Industry Users                                                                | Sample Datasets Available to Users                                                                                    |
|-------|-------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------|
| I     | General Business                                                              | Names, Addresses and Phone NumbersPast Residences, Neighbors and AffiliatesReal Property                              |
| II    | Private InvestigatorsInsuranceAttorneys/Law FirmsGovernmentCorporate Security | Level I Data, plus:Liens and JudgmentsDrivers’ RecordsCertain Motor Vehicle Records                        |
| III   | Law Enforcement                                                               | Level I and II Data, plus:Comprehensive Criminal RecordsRestricted Motor Vehicle RecordsCertain Credit Reporting Data |

| ·   | Positively Identify our clients candidate |
|--------------------|-------------------------------------------|

| ·   | Validate the SSN# |
|--------------------|-------------------|

| ·   | Determine if the candidate has  been involved in litigation, bankruptcy, or have tax liens |
|--------------------|------------------------------------------------------------------------------------------------------|

| ·   | Scan for any criminal records or sex offender listings |
|--------------------|--------------------------------------------------------|

| ·   | Education Verification |
|--------------------|------------------------|

| ·   | Employment References |
|--------------------|-----------------------|

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| Consideration                                                              |                                                                |
|----------------------------------------------------------------------------|---------------------------------------------------------------------|
|                                                                       |                                                                |
| Equity Instruments (9,000,000 common shares of LocatePlus Holdings)        | $       900,000                  |
|                                                                       |                                                                |
| Fair value of total consideration transferred                              | $       900,000                  |
|                                                                       |                                                                |
| Recognized amounts of identifiable assets acquired and liabilities assumed |                                                                |
|                                                                       |                                                                |
| Financial assets                                                           |   $        14,578 |
| Property, plant, and equipment                                             |  $        40,837            |
| Note Payable                                                               | $  (148,000)                                         |
| Financial liabilities                                                      |  $       (5,828)            |
|                                                                       |                                                                |
|  Total identifiable net assets                                        | $     (98,413)                                  |
|                                                                       |                                                                |
| Goodwill                                                                   | $     998,413                                   |
|                                                                       | $     900,000                                   |

|                                              |   Revenue                                                  |  Earnings                                                      |
|---------------------------------------------------|-----------------------------------------------------------------|---------------------------------------------------------------------|
|                                              |                                                            |                                                                |
| Actual from 9/24/2009 - 12/31/2009                | $          272,714 | $          44,693 |
|                                              |                                                            |                                                                |
| Supplemental pro forma from 1/1/2009 - 12/31/2009 | $       7,685,933            |        $  (1,969,626)  |
|                                              |                                                            |                                                                |
| Supplemental pro forma for 1/1/2008 - 12/31/2008  |    $       9,382,807         |        $  (1,358,151)  |
|                                              |                                                            |                                                                |

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Item 1A.  Risk Factors

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Table of Contents

| · | fluctuations in its customers' businesses;                                                                                                                                             |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | timing and market acceptance of new products or enhancements introduced by the Company or its competitors;                                                                             |
| · | timing and level of expenditures for sales, marketing and product development; changes in the prices of the Company's or its competitors'  products; and general industry trends; |
| · | fluctuations in overall economic activity                                                                                                                                              |

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Item 2 - Description of Property

----

Table of Contents

Item 3 - Legal Proceedings

----

Table of Contents

Item 4 - Submission of Matters to a Vote of Security Holders

----

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PART II

Item 5 - Market for Common Equity and Related Stockholder Matters

|    | 2008               |
|---------|--------------------|
|    | Three months ended |
|    | March 31           | June 30 | September 30 | December 31 |
|    | High               | Low | High | Low | High | Low | High | Low |
| LPHC.PK | .15                | .04 | .28 | .04 | .14 | .02 | .05 | .01 |

|    | 2009               |
|---------|--------------------|
|    | Three months ended |
|    | March 31           | June 30 | September 30 | December 31 |
|    | High               | Low | High | Low | High | Low | High | Low |
| LPHC.PK | .05                | .01 | .15 | .02 | .17 | .08 | .19 | .10 |

|    | 2010               |
|---------|--------------------|
|    | Three months ended |
|    | March 31           | June 30 | September 30 | December 31 |
|    | High               | Low | High | Low | High | Low | High | Low |
| LPHC.PK | .15                | .10 | .11 | .06 | .09 | .05 | .08 | .03 |

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| 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                                            | 226,987                                                                                     | $38.83                                                                      | 964,210                                                                                         |

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

----

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|   | 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.  |

| a)   | Through the last quarter of 2010, during any calendar quarter not to exceed fifteen thousand dollars ($15,000) per quarter payable monthly at the lesser of 1) $3,000 per month or 2) six percent (6%) of Net Operating Income; |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b)   | Through the last quarter of 2011, during any calendar quarter not to exceed twenty five thousand dollars ($25,000) per quarter payable monthly at the lesser of 1) $3,000 per month or 2) six percent (6%) of Net Operating Income; |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| c)   | After 2011, during any calendar quarter not to exceed thirty five thousand dollars ($35,000) per quarter payable monthly at the lesser of 1) $3,000 per month or 2) six percent (6%) of Net Operating Income; |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                     |   |   |      |   |                  |   |      |           |   |   |           |   |
|------------------------------------------|--------|--------|-----------|--------|-----------------------|--------|-----------|----------------|--------|--------|----------------|--------|
| Contractual Obligations                  |   | Total  |      |   | Less than 1 Year |   |      | 1-3 Years |   |   | 3-5 Years |   |
| Long-Term Debt including current portion |   | $      | 6,339,108 |   |                  | $      | 3,939,108 |           |   | $      | 2,400,000      |   |   | $ | 0 |   |
| Operating Leases                         |   |   | 1,613,879 |   |                  |   | 397,820   |           |   |   | 1,122,516      |   |   |   | 93,543 |   |
| License Agreements                       |   |   | 300,000   |   |                  |   | 300,000   |           |   |   | 0              |   |   |   | 0 |   |
| Total                                    |   | $      | 8,252,987 |   |                  | $      | 4,636,928 |           |   | $      | 3,522,516      |   |   | $ | 93,543 |   |

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Item 7 - Financial Statements

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

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Item 8A – Controls and Procedures

| 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. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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PART III

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

| Executive Officers and Directors | Age      | Positions                                                         |
|----------------------------------|----------|-------------------------------------------------------------------|
| Richard L. Pyle                  | 66       | Director, Governance Committee Chairman, Audit Committee Member   |
| Patrick Murphy                   | 57       | Director and Secretary                                            |
| James Ahern                      | 70       | Director, Compensation Committee Chairman                         |
| George Isaac                     | 66       | Director, Audit Committee Chairman, Compensation Committee Member |
| Anthony Spatorico                | 70       | Director                                                          |
| Ronald Lifton                    |  52 | Director, Chief Executive Officer, President                      |
| Brian McHugh                     |  53 | Chief Financial Officer, Treasurer                                |
| Kenneth Kaiser                   |  55 | Executive Vice President, Chief Risk Officer                      |

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Item 10 - Executive Compensation

|  Name andPrincipal Position        |   Year  |   Salary($) | Non-EquityIncentivePlanComp ($) | AllOtherComp($) | Totals($)     |
|----------------------------------------------|------------------------|-----------------------|---------------------------------|-----------------|---------------|
| Ronald Lifton                                | 2010                   | 76,854                | 0                               | 26,654          | 103,508       |
| Chief Executive Officer, President           |                   |                  |                            |            |          |
|                                         |                   |                  |                            |            |          |
| Brian McHugh                                 | 2010                   | 39,406                |   0                        | 6,754           | 46,150        |
| Chief Financial Officer, Treasurer           |                   |                  |                            |            |          |
|                               |                   |                  |                            |            |          |
| Kenneth Kaiser                               |   2010            |   58,154         |   0                        |   12,475   |   70,629 |
| Executive Vice President, Chief Risk Officer |                   |                  |                            |            |          |
|                                         |                   |                  |                            |            |          |
| Geoffrey Lee                                 | 2010                   | 67,055                | 0                               | 5,507           | 74,462        |
| Former Interim Chief Executive Officer       | 2009                   |  125,000         | 39,773                     | 0               | 164,773       |
|                                         |                   |                  |                            |            |          |
| James Fields                                 |  2009             | 49,038                | 0                               | 0               | 49,038        |
| Former Chief Executive Officer               |                   |                  |                            |            |          |
| Former Acting Chief Financial Officer        |                   |                  |                            |            |          |

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|     1.   | Salary amounts represent base salary only. |
|----------------------------------------|--------------------------------------------|

|      2.   | Other compensation costs include consulting salary, and payment for vacation, holidays, and sick days. |
|----------------------------------------------|--------------------------------------------------------------------------------------------------------|

| 3.   | No bonuses were paid in the fiscal years in which services were provided. |
|----------------|---------------------------------------------------------------------------|

| 4.   | All Executives joined the Company during 2010 (July 2010 for Mr. Lifton and Mr. McHugh, March 2010 for Mr. Kaiser). Mr. Kaiser was engaged in 2009 as a consultant and his consulting fees are included in the 2009 other comp. number. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5.   | Mr. McHugh and Mr. Kaiser deferred part of their salary for 2010. Mr. McHugh took in payment initially $85,000 of his $110,000 salary, and then increased the cash element in Q4 2010 to $100,000. Mr. Kaiser is accruing $45,500 of his agreed $127,500 annual salary. The deferred amount is non-interest bearing. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6.   | Mr. Lifton did not receive cash or stock compensation for his services on the Company’s Board. |
|----------------|-----------------------------------------------------------------------------------------------------------|

| 7.   | Under the terms of his employment agreement, Mr. Lifton was to receive $5,400 in the form of an auto allowance in 2010 of which he used $680. In addition, Mr. Lifton was to receive a housing allowance of $5,400 for 2010, of which he used $0 |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8.   | Under the terms of Mr. Lifton’s employment agreement, he is to be awarded stock options in the following fashion: |
|----------------|-------------------------------------------------------------------------------------------------------------------------|

| §   | July 2010: 500,000 stock options on date of hire at the prevailing stock price ($0.07). |
|--------------------|-----------------------------------------------------------------------------------------|

| §   | July 2011: 500,000 stock options with an option exercise price of $0.20 per unit of stock. |
|--------------------|--------------------------------------------------------------------------------------------|

| §   | July 2012: 500,000 stock options with an option exercise price of $0.30 per unit of stock. |
|--------------------|--------------------------------------------------------------------------------------------|

| §   | July 2013: 500,000 stock options with an option exercise price of $0.45 per unit of stock. |
|--------------------|--------------------------------------------------------------------------------------------|

Item 11 - Security Ownership of Certain Beneficial Owners and Management

|   | -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.                                           |

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Table of Contents

|                                                        | Common Stock                                        |
|-------------------------------------------------------------|-----------------------------------------------------|
|  Beneficial Owner                                      | Number of Shares Beneficially Owned                 | Percentageof Class |
| Directors                                                   |                                                |   |
| Christian Williamson**                                      | 2,789,299                                           | 5.5% |
| Anthony Spatorico                                           | 2,140,664                                           | 4.3% |
|     Patrick Murphy                           |  1,401,919                                     |  2.8% |
| James Ahearn                                                |   277,560                                      |   * |
| George Isaac                                                |   244,227                                      |   * |
|                                                        |                                                |   |
|                                                        |                                                |   |
| 5% or More Shareholders                                     |                                                |   |
| The Spatorico Family Blind Trust                            | 10,692,753                                          | 21.4% |
| All directors and executive officers as a group (5 persons) |        7,418,458 | 14.8% |

| * | Less than one percent of outstanding shares. |
|---|----------------------------------------------|

| ** | On April 8, 2011, we filed a Form 8-K and reported under item 5.02 that the Board of Directors accepted the resignation of Christian Williamson as Director and Chairman of the Board. |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Item 12 - Certain Relationships and Related Transactions

Item 13- Exhibits and Reports on Form 8-K

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|   | 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) |
|--------------------------------------------------|-----------------------------------------------------------------------------------------------------------|

|         10.18 | Debt Conversion Agreement dated As of November 4, 2009 by and between the Company and Dutchess Private Equities Fund, Ltd., (6) |
|-------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------|

|         10.19 | Series A Convertible Stock Purchase Agreement dated as of November 4, 2009 by and between the Company and Dutchess Private Equities Fund, Ltd., (6) |
|--------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

|         10.20 | Purchase and Sale Agreement dated September 25, 2009 by and among the Company, Employment Screening Profiles, Inc., (“Trubackgrounds”) and Derrick Spatorico. (6) |
|--------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|         10.21 | Escrow Agreement dated as of November 25, 2009 by and between the Company and Derrick Spatorico (6) |
|--------------------------------------------------|-----------------------------------------------------------------------------------------------------|

|   | 21.1 | Subsidiaries of LocatePLUS Holdings Corporation.(1) |
|--------|------|-----------------------------------------------------|

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|   | 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 |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------|

|   | (6) | Filed herewith |
|--------|-----|----------------|

Item 14. Principal Accountant Fees and Services

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| LocatePLUS Holdings Corporation                                                                                                     |   |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|
| Consolidated Condensed Balance Sheets                                                                                               |   |
|                                                                                                                                |   |
|                                                                                                                                |   | December 31,2010 |   |   | December 31,2009 |   |
| Assets                                                                                                                              |   |   |   |   |   |   |
| Current assets:                                                                                                                     |   |   |   |   |   |   |
|   Cash and cash equivalents                                                                                               |   | $ | 207,912 |   |   | $ | 53,546 |   |
|   Accounts receivable, net                                                                                                |   |   | 836,943 |   |   |   | 760,933 |   |
|   Prepaid expenses and other current assets                                                                               |   |   | 33,854 |   |   |   | 3,017 |   |
|                                                                                                                                |   |   |   |   |   |   |   |   |
|       Total current assets                                                                            |   |   | 1,078,709 |   |   |   | 817,496 |   |
|                                                                                                                                |   |   |   |   |   |   |   |   |
| Property and equipment, net                                                                                                         |   |   | 28,585 |   |   |   | 68,371 |   |
| Intangible Assets                                                                                                                   |   |   | 0 |   |   |   | 24,584 |   |
| Goodwill                                                                                                                            |   |   | 998,413 |   |   |   | 998,413 |   |
| Other assets                                                                                                                        |   |   | 104,028 |   |   |   | 100,468 |   |
|                                                                                                                                |   |   |   |   |   |   |   |   |
|       Total assets                                                                                    |   | $ | 2,209,735 |   |   | $ | 2,009,332 |   |
|                                                                                                                                |   |   |   |   |   |   |   |   |
| Liabilities and Stockholders’ (Deficit) Equity                                                                                |   |   |   |   |   |   |   |   |
| Current liabilities:                                                                                                                |   |   |   |   |   |   |   |   |
|   Accounts payable                                                                                                        |   | $ | 1,692,646 |   |   | $ | 1,370,805 |   |
|   Accrued expenses                                                                                                        |   |   | 2,043,986 |   |   |   | 3,992,513 |   |
|   Deferred revenue                                                                                                        |   |   | 294,679 |   |   |   | 284,360 |   |
|   Notes Payable                                                                                                           |   |   | 609,999 |   |   |   | 148,000 |   |
|   Convertible notes payable                                                                                               |   |   | 3,329,109 |   |   |   | 3,288,419 |   |
|                                                                                                                                |   |   |   |   |   |   |   |   |
|       Total current liabilities                                                                       |   |   | 7,970,419 |   |   |   | 9,084,097 |   |
|                                                                                                                                |   |   |   |   |   |   |   |   |
| Long term convertible notes payable                                                                                                 |   |   | 2,400,000 |   |   |   | 119,565 |   |
| Shares subject to mandatory redemption                                                                                              |   |   | 1,785,000 |   |   |   | 1,800,000 |   |
|                                                                                                                                |   |   |   |   |   |   |   |   |
|       Total liabilities                                                                               |   |   | 12,076,800 |   |   |   | 11,003,662 |   |
|                                                                                                                                |   |   |   |   |   |   |   |   |
| Commitments and contingencies                                                                                                       |   |   |   |   |   |   |   |   |
|                                                                                                                                |   |   |   |   |   |   |   |   |
| Stockholders’ (deficit) equity:                                                                                               |   |   |   |   |   |   |   |   |
|    Preferred Stock , $1.00 par value,      1,000,000 shares authorized and             |   |   |   |   |   |   |   |   |
|       71,400 and 72,000 shares issued and outstanding at December 31, 2010 and 2009 respectively |   |   | - |   |   |   | - |   |
|    Common Stock , $0.01 par value,50,000,000 shares authorized,                                                      |   |   |   |   |   |   |   |   |
| 49,980,089 shares issued andoutstanding at December 31, 2010 and 2009 respectively                                             |   |   | 499,801 |   |   |   | 499,937 |   |
|   Additional paid-in capital                                                                                              |   |   | 41,279,759 |   |   |   | 39,206,050 |   |
|   Warrants                                                                                                                |   |   | 3,094,436 |   |   |   | 3,627,194 |   |
|   Shares pending issuance                                                                                                      |   |   | 0 |   |   |   | 900,000 |   |
|   Accumulated deficit                                                                                                     |   |   | (54,819,679 | ) |   |   | (53,227,511 | ) |
|                                                                                                                                |   |   |   |   |   |   |   |   |
|       Total stockholders’ equity                                                                |   |   | (9,945,683 | ) |   |   | (8,994,330 | ) |
|                                                                                                                                |   |   |   |   |   |   |   |   |
|       Total liabilities and stockholders’ equity                                                |   |  $ | 2,209,735 |   |   |  $ | 2,009,332 |   |

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Table of Contents

| LocatePLUS Holdings Corporation                                      |   |
|----------------------------------------------------------------------|--------|
| Consolidated Statements of Operations                                |   |
|                                                                 |   |   |   |
|                                                                 |   | For the twelvemonths endedDecember 31, |   |
|                                                                 |   | 2010 |   |   | 2009 |   |
|                                                                 |   |   |   |   |   |   |
|                                                                 |   |   |   |   |   |   |
| Revenue                                                              |   | $ | 7,892,377 |   |   | $  | 7,260,952 |   |
|                                                                 |   |   |   |   |   |   |   |   |
| Cost of Revenue                                                      |   |   | 2,734,030 |   |   |   | 1,760,298 |   |
|                                                                 |   |   |   |   |   |   |   |   |
| Gross Profit                                          |   | $ | 5,158,347 |   |   | $ | 5,500,654 |   |
|                                                                 |   |   |   |   |   |   |   |   |
| Operating expenses:                                                  |   |   |   |   |   |   |   |   |
|    Sales and marketing                                |   |   | 758,751 |   |   |   | 1,179,221 |   |
|    General and administrative                         |   |   | 4,951,159 |   |   |   | 4,998,011 |   |
|    Research and development                           |   |   | 0 |   |   |   | 29,645 |   |
|                                                                 |   |   |   |   |   |   |   |   |
|       Total operating expenses         |   | $ | 5,709,910 |   |   | $ | 6,206,877 |   |
|                                                                 |   |   |   |   |   |   |   |   |
| Operating loss                                                       |   |   | (551,562 | ) |   |   | (706,223 | ) |
|                                                                 |   |   |   |   |   |   |   |   |
| Other income (expense):                                              |   |   |   |   |   |   |   |   |
|    Interest expense                                   |   | $  | (839,796 | ) |   | $  | (514,714 | ) |
|    Other income                                       |   |   | 4,698 |   |   |   | 4,466 |   |
|    Finance related expenses                                |   |   | (222,335 | ) |   |   | (294,765 |   |
|    Gain on Fixed Assets                                    |   |   | 1,828 |   |   |   | 0 |   |
|    Loss on termination of research and development project |   |   | 0 |   |   |   | (586,334 |   |
|    Gain on extinguishment of debt                          |   |   | 0 |   |   |   | 127,000 |   |
|    Loss on permanent impairment of investment              |   |   | 0 |   |   |   | (875,000 |   |
|                                                                 |   |   |   |   |   |   |   |   |
| Net loss                                                             |   | $ | (1,607,168 | ) |   | $ | (2,845,570 | ) |
|                                                                 |   |   |   |   |   |   |   |   |
| Basic and diluted net loss per share                                 |   | $ | (0.03) |   |   | $ | (0.06) |   |
|                                                                 |   |   |   |   |   |   |   |   |
| Shares used in computing basicand diluted net loss per share         |   |   | 49,992,003 |   |   |   | 44,445,410 |   |

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Table of Contents

| LocatePLUS Holdings Corporation                                 |   |
|-----------------------------------------------------------------|--------|
| Consolidated Statements of Stockholders’ Equity (Deficit) |   |
|                                                            |   |   |   |   |   |   |   | Additional |   |   | Warrants |   |   |   |   |   |   |   |   | Total |   |
|                                                            |   | Common stock |   |   | Share Pending |   |   | paid-in |   |   |   |   |   | Impairment |   |   | Accum |   |   | stockholders’ |   |
|                                                            |   | Shares |   |   | Amount |   |   | Issuance |   |   | capital |   |   |   |   |   | on assets |   |   | deficit |   |   | equity (deficit) |   |
| Balance at December 31, 2008                                    |   |   | 23,795,527 |   |   | $ | 237,955 |   | $ |   |   |   | $ | 39,395,136 |   |   | $ | 3,627,194 |   |   | $ | (873,500 | ) |   | $ | (50,380,985 | ) |   | $ | (7,994,200 | ) |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of shares                                              |   |   | 26,198,190 |   |   |   | 261,982 |   |   |   |   |   |   | (189,086 | ) |   |   | - |   |   |   |   |   |   |   | (956 | ) |   |   | 71,940 |   |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |
| Services performed for Stock                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |
| Adjustment to impairment                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 873,500 |   |   |   |   |   |   |   | 873,500 |   |
| Shares Pending Issuance                                         |   |   |   |   |   |   |   |   |   |   | 900,000 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 900,000 |   |
| Net loss for the twelve months ended December 31, 2009          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (2,845,570 | ) |   |   | (2,845,570 | ) |
| Balance at December 31, 2009                                    |   |   | 49,993,717 |   |   |   | 499,937 |   |   |   | 900,000 |   |   |   | 39,206,050 |   |   |   | 3,627,194 |   |   |   | 0 |   |   |   | (53,227,511 | ) |   |   | (8,994,330 | ) |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of shares                                              |   |   | (13,628 | ) |   |   | (136 | ) |   |   |   |   |   |   | 2,073,709 |   |   |   | (532,758 | ) |   |   |   |   |   |   |   |   |   |   | 1,540,815 |   |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |
| Shares Pending Issuance                                         |   |   |   |   |   |   |   |   |   |   | (900,000 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (900,000 | ) |
| Consolidation Elimination Reclass                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 15,000 |   |   |   | 15,000 |   |
| Net loss for the twelve months ended December 31, 2010          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (1,607,168 | ) |   |   | (1,607,168 | ) |
| Balance at December 31, 2010                                    |   |   | 49,980,089 |   |   | $ | 499,801 |   |   | $ | 0 |   |   | $ | 41,279,759 |   |   | $ | 3,094,436 |   |   | $ | 0 |   |   | $ | (54,819,679 | ) |   | $ | (9,945,683 | ) |

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Table of Contents

|                                                                                                                     |   |
|--------------------------------------------------------------------------------------------------------------------------|--------|
| LocatePLUS Holdings Corporation                                                                                          |   |
| Consolidated Statements of Cash Flows                                                                                    |   |
|                                                                                                                     |   | For the year ended December 31,2010 |   |   | For the year ended December 31,2009 |   |
| Cash flows from operating activities:                                                                                    |   |   |   |   |   |   |
| Net loss                                                                                                                 |   | $ | (1,607,169 | ) |   | $ | (2,845,570 | ) |
|    cash used in operating activities:                                                                     |   |   |   |   |   |   |   |   |
|       Depreciation and amortization                                                        |   |   | 64,535 |   |   |   | 101,613 |   |
|       Gain / Loss on termination of property and equipment                                      |   |   | (1,828 | )  |   |   | 459,334 |   |
|        Provision for doubtful accounts                                                     |   |   |   5,919 |   |   |   | (7,000 | ) |
|       Interest expense related to warrants  issued with debt                          |   |   | 57,398 |   |   |   | 345,457 |   |
|       Loss on investment                                                                        |   |   |   |   |   |   | (1,500 | )  |
|       Loss on permanent impairment of investment                                                |   |   |   |   |   |   | 875,000 |   |
|       Services performed in exchange for stock                                             |   |   | 28,803 |   |   |   |   |   |
|       Changes in assets and liabilities:                                                   |   |   |   |   |   |   |   |   |
|          Accounts receivable                                                     |   |   | (81,929 | ) |   |   | (242,968 | )  |
|         Prepaid expenses and other assets                                        |   |   | (30,837 | )  |   |   | 250,634 |   |
|         Accounts payable                                                         |   |   | 321,838 |   |   |   | 331,490 |   |
|         Accrued expenses                                                         |   |   | 1,285,143 |   |   |   | 449,595 |   |
|         Deferred revenue                                                         |   |   | 10,319 |   |   |   | (22,516 | )  |
|         Other assets                                                             |   |   | 16,740 |   |   |   | (21,004 | )  |
|                                                                                                                     |   |   |   |   |   |   |   |   |
|           Net cash provided (used by) by operating activities          |   |   | 68,934 |   |   |   | (327,435 | )  |
|                                                                                                                     |   |   |   |   |   |   |   |   |
| Cash flows from investing activities:                                                                                    |   |   |   |   |   |   |   |   |
|          Purchases of property and equipment                                     |   |   |   |   |   |   | (40,837 | )  |
|          Proceeds from sale of property and equipment                            |   |   | 1,828 |   |   |   |   |   |
|                                                                                                                     |   |   |   |   |   |   |   |   |
|            Net cash provided (used) in  investing activities |   |   | 1,828 |   |   |   | (40,837 | )  |
|                                                                                                                     |   |   |   |   |   |   |   |   |
| Cash flows from financing activities:                                                                                    |   |   |   |   |   |   |   |   |
|        Repayment of debt                                                                   |   |   | (49,098 | ) |   |   | (20,647 | ) |
|       Proceeds from issuance of debt                                                       |   |   | 162,500 |   |   |   | 350,000 |   |
|       Payments of shares subject to mandatory redemption                                   |   |   | (15,000 | ) |   |   |   |   |
|       Financing fees on issuance of debt                                                   |   |   | (14,799 | )  |   |   | 0 |   |
|                                                                                                                     |   |   |   |   |   |   |   |   |
|              Net cash provided in financing activities       |   |   | 83,603 |   |   |   | 329,353 |   |
|                                                                                                                     |   |   |   |   |   |   |   |   |
| Net increase (decrease) in cash and cash equivalents                                                                |   |   | 154,365 |   |   |   | (38,919 | ) |
|                                                                                                                     |   |   |   |   |   |   |   |   |
| Cash and cash equivalents, beginning of period                                                                           |   |   | 53,546 |   |   |   | 92,465 |   |
|                                                                                                                     |   |   |   |   |   |   |   |   |
| Cash and cash equivalents, end of period                                                                                 |   |  $ | 207,912 |   |   |  $ | 53,546 |   |
|                                                                                                                     |   |   |   |   |   |   |   |   |
|                                                                                                                     |   |   |   |   |   |   |   |   |
| Cash paid for income taxes                                                                                               |   |   | 0 |   |   |   |  0 |   |
| Cash payments for interest                                                                                               |   |   | 18,024 |   |   |   |  133,645 |   |
|                                                                                                                     |   |   |   |   |   |   |   |   |
| Reclassification of accrued liability                                                                                    |   |   | 2,750,000 |   |   |   |   |   |
| Note obtained for ownership rights of equity                                                                             |   |   | 278,619 |   |   |   |   |   |
| Conversion of payable to debt                                                                                            |   |   | 20,000 |   |   |   |   75,000 |   |
| Payment of obligations with equity                                                                                       |   |   | 119,939 |   |   |   |   |   |
| Payment on notes payable with equity                                                                                     |   |   | 295,500 |   |   |   |   85,062 |   |
| Acquisition of Goodwill                                                                                                  |   |   |   |   |   |   |  (998,413 | )  |
| Shares pending issuance                                                                                                  |   |   |   |   |   |   |  900,000 |   |

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Table of Contents

|   | LocatePLUS Holdings Corporation            |
|--------|--------------------------------------------|
|   | Notes to Consolidated Financial Statements |

|   | Consolidation |
|--------|---------------|

|   | The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, LocatePLUS Corporation, Worldwide Information, Inc., Entersect Corporation, Dataphant, Inc., Metrigenics, Inc., and Employment Screening Profiles, Inc. d/b/a TruBackgrounds.  All intercompany transactions and balances have been eliminated in consolidation. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 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 carrying value of cash and cash equivalents approximates their fair value. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Accounts Receivable |
|--------|---------------------|

|   | The Company carries its accounts receivable at cost less an allowance for doubtful accounts.  On a periodic basis, the Company evaluates its accounts receivable and establishes an allowance for doubtful accounts, based on a history of past write-offs and collections, when deemed necessary. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Property and Equipment |
|--------|------------------------|

|   | Property and equipment are recorded at cost.  Maintenance and repairs are charged to expense as incurred; major renewals and betterments are capitalized.  When items of property or equipment are sold or retired, the related cost and accumulated depreciation is removed from the accounts and any gain or loss is included in the results of operations.  Depreciation is calculated on a straight-line basis over the estimated useful lives of the respective assets as follows: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                              |                   |
|-----------------------------------|------------------------|
|                              | Estimated Useful Lives |
| Software, vehicles, and equipment | 3 - 5 years            |
| Furniture and fixtures            | 7 years                |
| Leasehold improvements            | Over the lease term    |

|   | The modified accelerated cost recovery system is used for federal income tax purposes. |
|--------|----------------------------------------------------------------------------------------|

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Table of Contents

|   | Intangible Assets |
|--------|-------------------|

|   | Intangible assets consist of deferred financing and goodwill. |
|--------|---------------------------------------------------------------|

|   | The Company had incurred costs when obtaining financing through Cornell Funding which are capitalized and are being amortized using the straight-line method over the three-year term of the related financing agreement.  For tax purposes, these costs will be amortized over the same three-year term. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company acquired goodwill through the acquisition of the assets and liabilities of ESP (TruBackgrounds). |
|--------|--------------------------------------------------------------------------------------------------------------|

|   | Goodwill |
|--------|----------|

|   | The Company has elected to account for goodwill resulting from the acquisition of assets, in accordance with FASB ASC 350-45 “Accounting for Goodwill and Intangible Assets”, which prohibits the amortization for goodwill since it has an indefinite life. The statement requires that goodwill be tested for impairment on an annual basis. If goodwill is impaired, an impairment loss will be recognized and charged against earnings in the year in which goodwill becomes impaired. There was no impairment for the years ended December 31, 2010 or 2009. However, for tax purposes, goodwill is being amortized ratably over a fifteen-year period. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Income Taxes |
|--------|--------------|

|   | The Company uses the asset and liability method of accounting for income taxes, as set forth in accounting principles generally accepted in the United States of America.  Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities at currently enacted tax rates.  These temporary differences primarily relate to the accumulating of net operating losses to offset future taxable income as well as tax to book differences between stock based compensation, reserves for bad debt, and investment losses and other timing differences in recognition of expenses for tax and book purposes.  Valuation allowances are established, if necessary, to reduce a deferred tax asset to the amount that will more likely than not be realized. The Company recognizes tax benefits from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the tax position. Any tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. There are no uncertain tax benefits that have been recognized in the accompanying financial statements.  Each of the tax years in the three-year period ended December 31, 2010 remains subject to examination by the Internal Revenue Service.  The Company’s policy is to recognize interest and penalties related to uncertain tax benefits (if any) in income tax expense. No such interest and penalties have been accrued as of December 31, 2010 and 2009. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Sales Tax |
|--------|-----------|

|   | The sales taxes charged by the Company to customers are presented in the financial statements on a net basis and, accordingly, excluded from revenues and costs. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Revenue Recognition |
|--------|---------------------|

|   | The Company derives its revenue by providing access to public information such as names, addresses, phone number, bankruptcies, real estate transactions and motor vehicles and background check services. The Company recognizes revenue when all of the following conditions are met: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        ·   | There is persuasive evidence of an arrangement; |
|--------------------------------------------------------------|-------------------------------------------------|

|        ·   | The product or service has been provided to the customer; |
|--------------------------------------------------------------|-----------------------------------------------------------|

|        ·   | The collection of the fees is reasonably assured; and |
|--------------------------------------------------------------|-------------------------------------------------------|

|        ·   | The amount of fees to be paid by the customer is fixed or determinable. |
|--------------------------------------------------------------|-------------------------------------------------------------------------|

|   | Throughout our various subsidiary product lines, the majority of revenue is recognized on a monthly basis for search results which are delivered over the internet under the terms of customer agreements. Some products are developed specifically for law enforcement which are typically billed and prepaid on an annual basis at a fixed rate. For these agreements, revenue is recognized appropriately throughout the term of the agreement per accepted GAAP procedures. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Advertising Expenses |
|--------|----------------------|

|   | It is the Company’s policy to expense advertising and marketing costs as incurred. |
|--------|------------------------------------------------------------------------------------------|

|   | Costs of Revenues and Software Development Costs |
|--------|--------------------------------------------------|

|   | Costs of revenues consist primarily of costs for data acquisition, materials and expenses associated with compact disks and costs for license agreements related to data acquisition, software development and maintenance costs. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table of Contents

|   | Software development costs are charged to operations as incurred, as they relate to ongoing maintenance of data and the Company’s websites.  The Company evaluates certain software development costs for capitalization in accordance with the FASB Accounting Standards Codification (ASC).  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 FASB Accounting Standards Codification (ASC) have been immaterial to date. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Stock Compensation Plans |
|--------|--------------------------|

|   | The Company accounts for its stock-based compensation in conformity with accounting principles generally accepted in the United States of America which requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model.  In connection with valuing stock options, the Company utilizes the Black-Scholes model, which requires certain subjective assumptions.  The key assumptions include the expected volatility of the Company’s stock, term of the award and expected forfeiture rate.  Valuation assumptions are reviewed periodically and, as a result, may lead to a significant change in the expense recognized in connection with share-based payments and may change the valuation assumptions used to value share-based awards granted in future periods. No stock-based compensation expense was recognized in the income statement for the years ended December 31, 2010 and 2009. There are currently no options granted under the Company’s stock-based employee compensation plans. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company has elected to use the Black-Scholes option valuation model, which incorporates various assumptions including volatility, expected life, and interest rates. The assumptions used for the years ended December 31, 2010 and 2009 and the resulting estimates of weighted-average fair value per share of options granted during those periods are as follows: |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                             | For the twelve months ended |
|------------------------------------------------------------------|-----------------------------|
|                                                             | December 31                 |
|                                                             | 2010                        | 2009 |
| Expected life                                                    | 6 years                     | 6 years |
| Volatility                                                       | 33%                         | 31% |
| Risk free interest rate                                          | 0.45%                       | 0.45% |
| 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 2010 and 2009, 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. 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. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Preferred Stock |
|--------|-----------------|

|   | The Company applies the guidance enumerated in ASC Topic No. 480, “Distinguishing Liabilities from Equity” and “Classification and Measurement of Redeemable Securities”, when determining the classification and measurement of preferred stock. Preferred shares subject to mandatory redemption are classified as liability instruments and are measured at fair value.  The Company issued Series A Preferred Stock on November 4, 2009, which is mandatorily redeemable and therefore is classified as a liability as of December 31, 2010 and 2009. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 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. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Fair Value |
|--------|------------|

|   | 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. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table of Contents

|   | Recent Pronouncements |
|--------|-----------------------|

|   | Codification |
|--------|--------------|

|   | In June 2009, the FASB codified existing accounting standards.  The FASB Accounting Standards Codification (ASC) is the source of authoritative accounting principles generally accepted in the United States of America (GAAP) recognized by the FASB and supersedes all existing non-SEC accounting and reporting standards.  All ASC content carries the same level of authority and anything outside of the ASC is non-authoritative.  The Company adopted the new guidance for the years ended December 31, 2010 and 2009, which changed the way the Company references accounting standards. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3. | Accounts Receivable, Trade |
|----|----------------------------|

|   | Trade accounts receivable are presented net of an allowance for doubtful collections of $100,918 at December 31, 2010 and $95,000 at December 31, 2009.  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. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4. | Property and Equipment |
|----|------------------------|

|   | Property and equipment consist of the following at December 31, 2010 and 2009: |
|--------|--------------------------------------------------------------------------------|

|                                           | December 31,                                                        |
|------------------------------------------------|---------------------------------------------------------------------|
|                                           | 2010                                                                |   | 2009 |
|                                           |                                                                |   |   |
| Equipment                                      |  $     4,638,081                      |   |  $     4,638,081 |
| Vehicles                                       | 22,343                                                              |   | 22,343 |
| Software (see note below)                      | 332,587                                                             |   | 332,587 |
| Furniture and fixtures                         | 389,783                                                             |   | 389,783 |
| Leasehold improvements                         | 624,142                                                             |   | 624,142 |
|                                           | 6,006,936                                                           |   | 6,006,936 |
| Less accumulated depreciation and amortization | 5,978,351                                                           |   | 5,938,565 |
| Property and equipment, net                    |  $         28,585 |   |  $       68,371 |

|   | Depreciation and amortization expense was $39,786 and $101,613 for the years ended December 31, 2010 and 2009, respectively. |
|--------|------------------------------------------------------------------------------------------------------------------------------|

|   | Note:  Management determined that it no longer made sense from a strategic or economic perspective to continue to include in the Company’s future product plans a development project which was initiated in 2005 and which had subsequently been put on hold.  Accordingly, the capitalized costs recorded to date were written off, resulting in a net loss on disposal of $586,334 which was recorded in the year ended December 31, 2009. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table of Contents

| 5. | Prepaid expenses and other current assets |
|----|-------------------------------------------|

|   | Prepaid expenses and other current assets consist of the following at December 31, 2010 and 2009: |
|--------|---------------------------------------------------------------------------------------------------|

|              | December 31,                                                        |
|-------------------|---------------------------------------------------------------------|
|              | 2010                                                                |   | 2009 |
|              |                                                                |   |   |
| Prepaid Insurance | $   29,354                                           |   | $               - |
| Other             | 4,500                                                               |   | 3,017 |
|              |                                                                |   |   |
| Total             |  $         33,854 |   |  $       3,017 |

| 6. | Intangible Assets |
|----|-------------------|

|   | Intangible assets consist of the following at December 31, |
|--------|------------------------------------------------------------|

|                           | December 31, |
|--------------------------------|--------------|
|                           | 2010         |   | 2009 |
|                           |         |   |   |
| Deferred financing costs       | $295,000     |   | $295,000 |
| Less: accumulated amortization | $295,000     |   | $270,416 |
|                           | 0            |   | 0 |

| 2011 |  $           0 |
|------|----------------------------------------------------------------------------|
| 2012 |  $           0 |
| 2013 |  $           0 |
| 2014 |  $           0 |
| 2015 |  $           0 |

| 7. | Other Assets |
|----|--------------|

|   | Other assets consist of the following at December 31, 2010 and 2009: |
|--------|----------------------------------------------------------------------|

|              | December 31,                                       |
|-------------------|----------------------------------------------------|
|              | 2010                                               |   | 2009 |
|              |                                               |   |   |
| Security Deposits | 101,000                                            |   | 100,468 |
| Other             | 3,028                                              |   | 0 |
|              |                                               |   |   |
| Total             |  $      104,028 |   |  $         100,468 |

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Table of Contents

| 8. | Accrued Expenses |
|----|------------------|

|   | Accrued expenses consist of the following at December 31, 2010 and 2009: |
|--------|--------------------------------------------------------------------------|

|                   | December 31,                                   |
|------------------------|------------------------------------------------|
|                   | 2010                                           |   | 2009 |
|                   |                                           |   |   |
| Interest               |  $     1,181,051 |   |  $     3,233,902 |
| Legal settlements      | 190,193                                        |   | 292,351 |
| Board of Director fees | 196,936                                        |   | 210,049 |
| Accounting fees        | 97,250                                         |   | 91,000 |
| Corporate taxes        | 65,017                                         |   | 0 |
| Accounts payable       | 62,845                                         |   | 0 |
| Payroll                | 233,275                                        |   | 165,211 |
| Other                  | 17,419                                         |   | 0 |
|                   |                                           |   |   |
| Total                  |  $     2,043,986 |   |  $     3,992,513 |

| 9. | Notes Payable |
|----|---------------|

|   | 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.  |

----

Table of Contents

On December 

| a)   | Through the last quarter of 2010, during any calendar quarter not to exceed fifteen thousand dollars ($15,000) per quarter payable monthly at the lesser of 1) $3,000 per month or 2) six percent (6%) of Net Operating Income; |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b)   | Through the last quarter of 2011, during any calendar quarter not to exceed twenty five thousand dollars ($25,000) per quarter payable monthly at the lesser of 1) $3,000 per month or 2) six percent (6%) of Net Operating Income; |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| c)   | After 2011, during any calendar quarter not to exceed thirty five thousand dollars ($35,000) per quarter payable monthly at the lesser of 1) $3,000 per month or 2) six percent (6%) of Net Operating Income; |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table of Contents

| 10. | 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 2015.  Rent expense amounted to $426,225 and $421,387 during 2010 and 2009, respectively. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Future minimum payments under non-cancelable operating leases are as follows: |
|--------|-------------------------------------------------------------------------------|

| Year ending December 31, |        |
|--------------------------|-------------|
| 2011                     | 397,820     |
| 2012                     | 374,172     |
| 2013                     | 374,172     |
| 2014                     | 374,172     |
| 2015                     | 93,543      |
| Total                    | $ 1,613,879 |

|   | Capital Leases |
|--------|----------------|

|   | As of December 31, 2010, no balance remained due on capital leases. |
|--------|---------------------------------------------------------------------|

|   | Contractual Obligations |
|--------|-------------------------|

|   | The Company obtains its data from multiple sources and has entered into various license agreements with the related data providers.  In 2010 and 2009, the Company recorded $2,326,925 and $1,760,299 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: |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The following represents the contractual obligation and commercial commitments as of December 31, 2010. |
|--------|---------------------------------------------------------------------------------------------------------|

|                                     |   |   |      |   |                  |   |      |           |   |   |           |   |
|------------------------------------------|--------|--------|-----------|--------|-----------------------|--------|-----------|----------------|--------|--------|----------------|--------|
| Contractual Obligations                  |   | Total  |      |   | Less than 1 Year |   |      | 1-3 Years |   |   | 3-5 Years |   |
| Long-Term Debt including current portion |   | $      | 6,399,608 |   |                  | $      | 3,999,608 |           |   | $      | 2,400,000      |   |   | $ | 0 |   |
| Operating Leases                         |   |   | 1,613,879 |   |                  |   | 397,820   |           |   |   | 1,122,516      |   |   |   | 93,543 |   |
| License Agreements                       |   |   | 300,000   |   |                  |   | 300,000   |           |   |   | 0              |   |   |   | 0 |   |
| Total                                    |   | $      | 8,313,487 |   |                  | $      | 4,697,428 |           |   | $      | 3,522,516      |   |   | $ | 93,543 |   |

|   | 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. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | Legal Proceedings |
|--------|-------------------|

|   | A claim was filed in Essex County Superior Court in Massachusetts on June 17, 2010 in the matter of Dun & Bradstreet v. LocatePLUS Holdings Corporation C.A.NO.ESCV2009-02421-D for $100,000. This suit involved the balance due for services rendered, plus interest from June 2006. The Company is in the process of completing discovery and is in discussions with the plaintiffs as to the settlement of this litigation. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | As a result of a Litigation filed in Dallas County, Texas on May 22, 2009 in the matter of E -Backgroundchecks.com, Inc.  (BGC) v. LocatePLUS Holdings Corporation C.A.NO.CC-09-03539-E a judgment for $55,158.75 was entered.  The suit involved the failure of LocatePLUS to make payments for services provided by BGC.    The Company has settled on this judgment and begun the process of paying down the remaining balance of $20,286.04. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | As a result of the settlement over the Company’s indebtedness to Dutchess Private Equities Fund, Ltd. (”Dutchess”) as of December 31, 2009, Dutchess agreed to place 19,866,461 shares of Common Stock of the Company issued to it by the Company in early 2009 in conversion of indebtedness (the “Dutchess Shares”) into escrow, pending the resolution of ongoing litigation between the Company and its former CEO James Fields (“Fields”) over the Shares. Fields had claimed an ownership interest in the Shares by purchase.  Fields renounced his claims to all the Dutchess Shares (except for 250,000 Shares retained in the escrow) on May 17, 2010 as part of a settlement of this litigation. The vast majority of the Dutchess Shares have been  re-allocated after being released from escrow in order to satisfy pre-existing obligations. An amount remains to continue to satisfy other pre-existing obligations. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | “On November 16, 2009, an execution was obtained against LocatePlus Holdings Corporation in a lawsuit styled Thomas Nolan v. LocatePlus Holdings Corporation, in the Essex County Superior Court in Massachusetts, C.A. No. ESCV2006-02125, in the amount of $160,269.  The execution was in connection with a default judgment entered against the Company on January 11, 2007.  The default judgment was appealed by the Company on or about April 1, 2009, and the appeal was subsequently dismissed on June 25, 2009.  A payment of $15,000 was made in 2010 reducing the principal balance  by that amount.  On May 7, 2010, Thomas Nolan filed a second complaint styled as, Thomas Nolan v. LocatePlus Holdings Corporation in the Essex Superior Court in Massachusetts, C.A. No. ESCU 2010-00961 seeking the appointment of a receiver. The motion seeking appointment of a receiver was denied.  The Company is actively engaged in payment discussions on the underlying judgment. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | A class action suit,  Sharon Taylor, et al. v. Biometric Access Company, et al., was brought in the US District Court for the Eastern District of Texas, C.A. No. 2:07-CV-00018.  The matter is styled as a suit brought by the plaintiff class against a group of defendant companies, including the Company,  under the Driver Privacy Protection Act, 18 USC §2721 et seq.  The defendants filed a joint Motion to Dismiss which was granted by the Court.  The plaintiff class filed an appeal of the dismissal of the case, which was denied.   |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | A similar class action suit,  Sam Wiles, Carol Watkins, Jackson Wills and Sarah Smith, Individually and on behalf of all others Similarly Situated, is pending in the US District Court for the Western District of Missouri, C.A. No. 09-4164-CV-C-NKL.  The matter is styled as a class action suit brought by the plaintiff class against the Company, alleging a violation of the Driver Privacy Protection Act, 18 USC §2721, et. seq., and is one of several similar actions brought by the class against a number of companies in the same industry as the Company.  The defendants filed a joint Motion to Dismiss which was granted by the Court.  The plaintiff class has not yet filed an appeal of the dismissal.   |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | On June 7, 2007 Special Situations Fund III, L.P and Special Situations Private Equity Fund, L.P. obtained a judgment in the amount of $1,948,631.18 (including interest and costs) against the Company in the Supreme Court of the State of New York, Index No. 06/6039989, based on amounts owing by the Company under notes issued to the plaintiffs. On October 24, 2007 the plaintiffs obtained a judgment for this amount in the Massachusetts Superior Court, Essex County, Index No. CIV- ESCV2007-01152.  On February 6, 2008 the plaintiffs obtained in the same Court an ex-parte trustee process attachment against all assets of the Company held at TD Bank North, Index No CIV-08-268. This litigation has not been dismissed, satisfied or resolved. Upon payment in full of all principal and accrued interest due pursuant to the notes issued as part of the settlement on August 23, 2010, Special Situations will execute and file a satisfaction of judgment.  Currently we are in default under the notes and renegotiations are ongoing. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | On September 2, 2010 an Employment Discrimination civil lawsuit was filed against the Company and certain officers, Sonia Bejjani v LocatePlus Holdings Corporation et al,  Mass. Superior Court, Essex County, Docket No. ESCV2010-01870-B.. On November 3, 2010 the Company answered denying any liability. To date, a Court appearance has not been scheduled. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table of Contents

|   | On October 14, 2010 the U.S. Securities and Exchange Commission filed a civil action against the Company in the United States District Court for the District of Massachusetts, Securities and Exchange Commission v. LocatePlus Holdings Corporation. The Complaint alleges violations of Section 17(a) of the Securities Act of 1933, Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934 and Rules 10b-5, 12b-20, 13a-1, 13a-11 and 13a-13 thereunder. The complaint alleges that the Company filed financial statements for the fiscal years 2005 and 2006 which were false and misleading. The action seeks the entry of a permanent injunction prohibiting the Company from engaging in future violations of the cited sections and rules; disgorgement and pre-judgment interest and civil monetary penalties. A motion to stay further proceedings has been filed by one of the parties and is currently pending. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 11. | Certain Related Party Transactions |
|-----|------------------------------------|

|   | On September 24, 2009 the Company acquired all the stock of Employment Screening Profiles, Inc.(d/b/a Trubackgrounds), a Florida corporation (“Trubackgrounds”), engaged in the business of developing and delivering integrated, customized Web-enabled solutions designed to aid in background verification, applicant management and human resource collaboration processes. Trubackgrounds was owned by Derrick Spatorico, who received 9,000,000 shares of the Company’s Common Stock in payment for Trubackgrounds. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | On September 25, 2009 Mr. Spatorico became a Director of the Company and on February 25, 2010 he became acting President and Chief Executive Officer. Mr. Spatorico’s stock was subject to an escrow agreement by the terms of which he was to receive all of the stock out of escrow no later than September 1, 2011. On August 5, 2010 the escrow terminated in settlement of certain pending litigation and the 9,000,000 shares were transferred to The Spatorico Family Blind Trust established by Mr. Spatorico. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In November, 2009 and January 2010, The Company entered into two separate notes with two former Board members and current shareholders. The company issued the notes in exchange for the pledged securities of LPHC common stock held by these shareholders to be used for settlement of debt with various note holders of the company as needed. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 12. | Income Taxes |
|-----|--------------|

|   | Deferred tax assets consist of the following at December 31: |
|--------|--------------------------------------------------------------|

|                              | 2010                                                                                                                       | 2009                                                                                                                       |
|-----------------------------------|----------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------|
|                              |                                                                                                                       |                                                                                                                       |
| Net operating loss carry forwards |  $         16,260,000                                                    |  $     15,000,000                                                                            |
| Stock based compensation          | 390,000                                                                                                                    | 390,000                                                                                                                    |
| Bad debt reserve                  | 36,000                                                                                                                     | 39,0000                                                                                                                    |
| Investment loss                   | 5,000                                                                                                                      | 5,000                                                                                                                      |
| Gross deferred tax assets         | 16,691,000                                                                                                                 | 15,434,400                                                                                                                 |
|                              |                                                                                                                       |                                                                                                                       |
| Valuation allowance               | (16,691,000)                                                                                                               | (15,434,400)                                                                                                               |
| Net deferred tax assets           |  $                   0 |  $                   0 |

|   | 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.  When the Company achievesprofitability, these deferred tax assets may be available to offset future income tax liabilities and expenses. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table of Contents

|                                                           | 2010                                                                    | 2009                                            |
|----------------------------------------------------------------|-------------------------------------------------------------------------|-------------------------------------------------|
|                                                           |                                                                    |                                            |
|    Current federal and state exepnse  (benefit) |  $         16,260,000 |  $     15,000,000 |
| Deferred:                                                      | 390,000                                                                 | 390,000                                         |
|    Stock compensation                                | 36,000                                                                  | 39,0000                                         |
|     Bad debt                                    |                                                                    |                                            |
|     Net operating loss carry forward            |                                                                    |                                            |
|     Change in valuation allowance               |                                                                    |                                            |
|                                                           |                                                                    |                                            |
| Total income tax expense (benefit)                             | (16,691,000)                                                            | (15,434,400)                                    |

|          | The net increase in the valuation allowance was $1,257,000 for 2010 and $199,600 in 2009. |
|--------------------------------------------------|-------------------------------------------------------------------------------------------|

|   | At December 31, 2010, the Company had net operating loss carryforwards for federal and state income tax reporting purposes of approximately $40 million and $14 million respectively.  The federal and state net operating loss carry forwards expire through 2030. 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.  |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

| 12. | Common Stock and Preferred Stock |
|-----|----------------------------------|

|   | As of December 31, 2010, the Company has authorized capital stock of 50,000,000 shares of Common Stock, par value $0.01 per share, and 1,000,000 shares of Preferred Stock, par value $1.00 per share (“Preferred Stock”).  As of the date hereof, there are outstanding 49,980,089 shares of Common Stock, 71,400 shares of Preferred Stock. In accordance with the FASB codification 480-10, the Preferred Stock has been classified on the balance sheet as shares subject to mandatory redemption. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Voting |
|--------|--------|

|   | The holders of Preferred Stock shall be entitled to the number of votes equal to the number of whole shares of Common Stock into which such shares of Preferred Stock be converted. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The holders of the Common Stock are entitled to one vote for each share held at all meetings of stockholders.  There shall be no cumulative voting. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Dividends |
|--------|-----------|

|   | Holders of shares of Preferred Stock shall be entitled to receive, cumulative dividends to be paid quarterly, in cash or in Preferred Stock, at the option of the Company, at the rate of twenty five cents ($.25) per share, prior and in preference to any declaration or payment of any dividend to the holders of shares of Common Stock. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Liquidation |
|--------|-------------|

|   | As of December 31, 2010 and 2009, the holders of shares of Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders before any payment will be made to the holders of the Common Stock or any other class or series of stock ranking on liquidation junior to the Preferred Stock, an amount in cash per share equal to the greater of: (i) the original purchase price paid with respect to each share of Preferred Stock held by such holder, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization affecting such share, plus any dividends declared but unpaid on such shares, or (ii) the amount such holder would receive if such shares of Preferred Stock are converted to Common Stock immediately prior to any such liquidation, dissolution or winding up of the Company. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | After payment has been made in full to the Preferred Stock, any remaining assets available for distribution will be distributed among Common Stock holders. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table of Contents

|   | Redemption Rights |
|--------|-------------------|

|   | On or after December 31, 2010, the Company shall redeem from the current holder (Dutchess Private Equity Fund)  of the Preferred Shares, at the beginning of each quarter, those amounts of Preferred Shares at a price of $25.00 per share set forth below subject to a modification to the agreement as further detailed above in Note 9, Notes Payable. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| From:          | Through:          |   | # of Preferred Shares                                                                                                                                                       |
|----------------|-------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|           |              |   |                                                                                                                                                                        |
| Closing Date   | December 31, 2010 |   |                             600 |
| March 31, 2011 | December 31, 2011 |   |                          1,000                 |
| March 31, 2012 | December 31, 2012 |   |                          1,400                 |

|   |   |
|--------|--------|

|   | Conversion Rights |
|--------|------------------------|

|   | At the option of the holders of Preferred Stock can convert at any time upon their Preferred Shares into 41.66 shares of the Company’s Common Stock, par value $0.01 per share. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 13. | 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. As of November 16, 2010, all options under this plan have expired. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 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 964,000 are available for grant at December 31, 2009.  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. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table of Contents

|   | The following table presents activity under the Plans adjusting for the reverse split for the years ended December 31, 2010 and 2009 |
|--------|--------------------------------------------------------------------------------------------------------------------------------------|

|                             |                                                                      | Weighted average                           |
|----------------------------------|---------------------------------------------------------------------------|--------------------------------------------|
|                             | Shares                                                                    | exercise price                             |
|                             |                                                                      |                                       |
| Outstanding at December 31, 2008 |           1,010,906     |  $     12.21 |
| Granted                          | 0                                                                         |  0                                    |
| Exercised                        | 0                                                                         | 0                                          |
| Forfeited / Canceled             | (783,919)                                                                 | $       4.60 |
|                             |                                                                      |                                       |
| Outstanding at December 31, 2009 |         226,987                   |  $     38.83 |
| Issued                           | 500,000                                                                   | $       0.07 |
| Exercised                        | 0                                                                         | 0                                          |
| Forfeited / Canceled             |           (5,550)       |  $     16.42 |
|                             |                                                                      |                                       |
| Outstanding at December 31, 2010 |            721,437 |  $     12.34 |

|   | The following summarizes information relating to options outstanding at December 31, 2010: |
|--------|--------------------------------------------------------------------------------------------|

|                    |   |                                  Options outstanding |   | Options exercisable        |
|-------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------|
|                    |   |                                                                                                                                                                                                                 |   |                       |   |   |   |   |   |   |
|                    |   |                                                                                                                                                                                                                 |   | weighted average remaining |   | Weighted average |   |   |   | Weighted average |
| Range of exercise price |   | Shares                                                                                                                                                                                                               |   | contractual life (years)   |   | exercise price |   | Shares |   | exercise price |
|                    |   |                                                                                                                                                                                                                 |   |                       |   |   |   |   |   |   |
| $0.07-$14.99            |   |   619,637                                                                                                                                                                                                  |   | 8.17                       |   | $     1.93 |   |  619,637 |   | $      8.17 |
| $15.00-$75.00           |   |  101,800                                                                                                                                                                                                        |   | 3.35                       |   | $   73.94 |   | 101,800 |   | $    73.94 |
|                    |   | 721,437                                                                                                                                                                                                              |   | 7.49                       |   | $   12.14 |   |  721,437 |   | $    12.14 |

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Table of Contents

| 14. | 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 $5,440 and  $15,582  in 2010 and 2009, respectively. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 15. | Segment Information |
|-----|---------------------|

|   | The Company operates in a single business segment |
|--------|---------------------------------------------------|

| 16. | Financial Statement Presentation |
|-----|----------------------------------|

|   | Certain amounts in the 2009 consolidated financial statements have been reclassified to conform to the 2010 presentation. |
|--------|---------------------------------------------------------------------------------------------------------------------------|

| 17. | Subsequent Events |
|-----|-------------------|

|   | On March 30, 2011, YA Global Investments notified the Company that it had completed the assignment of its secured convertible debenture to another party. The principal amount of this note at December 31, 2010 was $2,712,990. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | As of March 31, 2010, the Company is in default on the Special Situations Notes which required payments to be made in February 2011. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------|

|   | On April 8, 2011, we filed a Form 8-K reporting that the Board of Directors had accepted the resignation of Christian Williamson as Director and Chairman of the Board. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 18. | Going Concern |
|-----|---------------|

|   | The financial statements of the Company have been prepared on a "going concern" basis, which assumes the realization of assets and the liquidation of liabilities in the ordinary course of business. However, such realization of assets and liquidation of liabilities are subject to a significant number of uncertainties. There are a number of factors that have negatively impacted the Company's liquidity, and may impact the Company's ability to function as a going concern. The Company has sustained net losses of $1,595,284 and $2,845,571 for the years ended December 31, 2010 and 2009, respectively. The Company has an accumulated deficit of $54,822,795, a stockholders' deficit of $9,854,080 and a working capital deficit of $7,472,326 at December 31, 2010. The above factors raise substantial doubt about the Company's ability to continue as a going concern. The Company has taken a number of actions to reduce operating expenses, and to improve the salability of its products. The Company's major objective is to increase its order volume. Short and long-term liquidity needs require either significant improvement in operating results and/or the obtaining of additional capital. There can be no assurance that the Company's plans to achieve adequate liquidity will be successful. |
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| 19. | Other Legal Notes |
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|   | Two former officers of the Company and its subsidiaries have been indicted by the U.S. Department of Justice. The indictment alleges that these individuals caused the issuance of fraudulent financial statements of the Company for the years ended December 31, 2006 and 2005. The alleged fraudulent transactions, if true, may have resulted in a misstatement of approximately $650,000 between retained earnings and additional paid-in capital as reflected in the consolidated balance sheets and consolidated statements of equity of the Company. The Company has been unable to produce documents which satisfy its auditing firm as to the nature of these transactions. The indictment alleges that the two former officers created a fictitious customer and then improperly recognized payments from this fictitious customer as revenue.  The indictment alleges that as part of the transactions in questions, certain debt payments by the Company were mis-directed to appear as cash revenue receipts from the fictitious customer.   These allegedly improper payments were reflected in the financial statement of the Company included in the quarterly and annual reports for the fiscal years 2005 and 2006 filed with the U.S. Securities and Exchange Commission. The payments were written off prior to the issuance and filing of financial statements for later periods. |
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