UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
  
 FORM
10-Q
 
 (Mark
One)
  Q
              QUARTERLY
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
  For the
quarter ended February 28, 2009
  o
              TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
  Commission
File Number 333-139395
  LOCATION
BASED TECHNOLOGIES, INC.
 (Name of
small business issuer in its charter)
  Nevada
              
              20-4854758(State
      of incorporation)
              
              (I.R.S.
      Employer Identification No.)
  4989 E. La Palma Avenue,
Anaheim, California 92807
 (Address
of principal executive offices)
  888-600-1044
 (Issuer’s
telephone number)
  
 Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.  Yes Q  No
o
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer”, “accelerated
filer” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act.
  Large
      accelerated filer
               ̈
              Accelerated
      filer
               ̈Non-accelerated
      filer
                (Do
      not check if a smaller reporting company)
               ̈
              Smaller
      reporting company
              Q
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).  Yes o  No Q
 
 There are
88,244,270 shares outstanding of the issuer’s common stock as of April 3,
2009.
  1
  TABLE
OF CONTENTS
  PAGEPART
      I
              
              FINANCIAL
      INFORMATION
              
              3ITEM 1.
              
              FINANCIAL
      STATEMENTS (UNAUDITED)
              
              3ITEM
      2.
              
              MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS
              
              33ITEM
      3.
              
              QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
              
              42ITEM
      4T.
              
              CONTROLS
      AND PROCEDURES
              
              43PART
      II
              
              OTHER
      INFORMATION
              
              42ITEM 1.
              
              LEGAL
      PROCEEDINGS
              
              42ITEM
      1.A.
              
              RISK
      FACTORS
              
              42ITEM 2.
              
              UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
              
              42ITEM 3.
              
              DEFAULTS
      UPON SENIOR SECURITIES
              
              42ITEM 4.
              
              SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS
              
              12ITEM
      5.
              
              OTHER
      INFORMATION
              
              42ITEM 6.
              
              EXHIBITS
              
              45SIGNATURE
              
              47
  2
  PART
I – FINANCIAL INFORMATION
 
  ITEM
1.  FINANCIAL STATEMENTS
   Location
Based Technologies, Inc.
 (A
Development Stage Company)
 CONSOLIDATED
BALANCE SHEET
 February
28, 2009 and August 31, 2008
   February
      28,
                
                
                August
      31,2009
                
                
                2008(Unaudited)ASSETSCURRENT
      ASSETSCash
      and cash equivalents
                
                $
                103,745
                
                
                $
                20,569Accounts
      receivable
                
                
                735
                
                
                
                -Prepaid
      expenses
                
                
                122,421
                
                
                
                86,616Deferred
      financing costs
                
                
                2,375,000
                
                
                
                -Total
      current assets
                
                
                2,601,901
                
                
                
                107,185Property
      and equipment, net of accumulated depreciation
                
                
                1,312,099
                
                
                
                1,043,861OTHER
      ASSETSPatents
      and trademarks, net of accumulated amortization
                
                
                1,168,916
                
                
                
                1,120,728Deposits
                
                
                20,458
                
                
                
                20,458Total
      other assets
                
                
                1,189,374
                
                
                
                1,141,186TOTAL
      ASSETS
                
                $
                5,103,374
                
                
                $
                2,292,232LIABILITIES
      AND STOCKHOLDERS' EQUITY (DEFICIT)CURRENT
      LIABILITIESAccounts
      payable and accrued expenses
                
                $
                837,694
                
                
                $
                634,822Accrued
      officer compensation
                
                
                418,403
                
                
                
                268,403Unearned
      revenue
                
                
                29,953
                
                
                
                -Advances
      from officers
                
                
                3,388,410
                
                
                
                159,409Accrued
      interest, advances from officers
                
                
                9,526
                
                
                
                -Notes
      payable
                
                
                925,000
                
                
                
                -Accrued
      interest, note payable
                
                
                18,937
                
                
                
                -Notes
      payable, related party
                
                
                634,000
                
                
                
                -Accrued interest, related party notes payable
                
                
                27,550
                
                
                
                -Total
      current liabilities
                
                
                6,289,473
                
                
                
                1,062,634TOTAL
      LIABILITIES
                
                
                6,289,473
                
                
                
                1,062,634Commitments
      and contingencies
                
                
                -
                
                
                
                -STOCKHOLDERS'
      EQUITY (DEFICIT)Preferred stock, $0.001 par value, 10,000,000 sharesauthorized;
      no shares issued or outstanding
                
                
                -
                
                
                
                -Common stock, $0.001 par value; 300,000,000 shares
    authorized;88,244,270
      and 87,091,914 shares issued and outstandingat
      February 28, 2009 and August 31, 2008, respectively
                
                
                25,845
                
                
                
                24,693Additional
      paid-in capital
                
                
                13,919,756
                
                
                
                11,228,750Deficit accumulated during the development stage
                
                
                (15,131,700
                )
                
                
                (10,023,845
                )Total
      stockholders' equity (deficit)
                
                
                (1,186,099
                )
                
                
                1,229,598TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
                
                $
                5,103,374
                
                
                $
                2,292,232
   See
accompanying notes to unaudited financial statements.
  3
  Location
Based Technologies, Inc.
 (A
Development Stage Company)
 CONSOLIDATED
STATEMENT OF OPERATIONS
 For the
three and six months ended February 28, 2009 and February 29, 2008
 and for the period from Inception
(September 16, 2005) to February 28, 2009
 (Unaudited)
   InceptionFor
      the three months ended
                
                
                For
      the six months ended
                
                
                (Sept
      16, 2005)February
      28,
                
                
                February
      29,
                
                
                February
      28,
                
                
                February
      29,
                
                
                to
      February 28,2009
                
                
                2008
                
                
                2009
                
                
                2008
                
                
                2009RevenueConsulting
                
                $
                70,782
                
                
                $
                5,818
                
                
                $
                70,782
                
                
                $
                5,818
                
                
                $
                76,600Cost
      of revenueConsulting
                
                
                50,608
                
                
                
                -
                
                
                
                50,608
                
                
                
                -
                
                
                
                50,608Gross
      profit (loss)
                
                
                20,174
                
                
                
                5,818
                
                
                
                20,174
                
                
                
                5,818
                
                
                
                25,992Operating
      expensesGeneral
      and administrative
                
                
                143,138
                
                
                
                239,946
                
                
                
                311,076
                
                
                
                404,948
                
                
                
                1,280,784Officer
      compensation
                
                
                90,000
                
                
                
                90,000
                
                
                
                180,000
                
                
                
                180,000
                
                
                
                1,395,000Professional
      fees
                
                
                471,300
                
                
                
                318,548
                
                
                
                833,558
                
                
                
                1,416,327
                
                
                
                3,116,906Rent
                
                
                33,900
                
                
                
                28,693
                
                
                
                67,800
                
                
                
                46,971
                
                
                
                281,805Research
      and development
                
                
                221,353
                
                
                
                262,749
                
                
                
                797,464
                
                
                
                548,441
                
                
                
                3,435,817Total
      operating expenses
                
                
                959,691
                
                
                
                939,936
                
                
                
                2,189,898
                
                
                
                2,596,687
                
                
                
                9,510,312Net
      operating loss
                
                
                (939,517
                )
                
                
                (934,118
                )
                
                
                (2,169,724
                )
                
                
                (2,590,869
                )
                
                
                (9,484,320
                )Other
      income (expense)Interest
      income (expense), net
                
                
                (37,609
                )
                
                
                18,940
                
                
                
                (56,333
                )
                
                
                63,556
                
                
                
                (354,710
                )Interest
      forgiven, net
                
                
                -
                
                
                
                125,008
                
                
                
                -
                
                
                
                58,206
                
                
                
                58,206Debt
      issuance costs - commissions
                
                
                -
                
                
                
                (173,006
                )
                
                
                -
                
                
                
                (491,775
                )
                
                
                (491,775
                )Debt
      issuance costs - warrants
                
                
                -
                
                
                
                (1,141,998
                )
                
                
                -
                
                
                
                (1,971,791
                )
                
                
                (1,971,791
                )Financing
      costs
                
                
                (1,032,000
                )
                
                
                -
                
                
                
                (2,877,549
                )
                
                
                -
                
                
                
                (2,877,549
                )Foreign
      currency gain (loss), net
                
                
                (6,552
                )
                
                
                -
                
                
                
                (3,449
                )
                
                
                -
                
                
                
                (3,788
                )Loss
      on asset disposal
                
                
                -
                
                
                
                (373
                )
                
                
                -
                
                
                
                (373
                )
                
                
                (373
                )Total
      other income (expense)
                
                
                (1,076,161
                )
                
                
                (1,171,429
                )
                
                
                (2,937,331
                )
                
                
                (2,342,177
                )
                
                
                (5,641,780
                )Net
      loss before income taxes
                
                
                (2,015,678
                )
                
                
                (2,105,547
                )
                
                
                (5,107,055
                )
                
                
                (4,933,046
                )
                
                
                (15,126,100
                )Provision
      for income taxes
                
                
                -
                
                
                
                -
                
                
                
                800
                
                
                
                1,600
                
                
                
                5,600Net
      Loss
                
                $
                (2,015,678
                )
                
                $
                (2,105,547
                )
                
                $
                (5,107,855
                )
                
                $
                (4,934,646
                )
                
                $
                (15,131,700
                )Accumulated
      Deficit:Balance,
      beginning of period
                
                
                (13,116,022
                )
                
                
                (5,118,442
                )
                
                
                (10,023,845
                )
                
                
                (2,289,343
                )
                
                
                -Balance,
      end of period
                
                $
                (15,131,700
                )
                
                $
                (7,223,989
                )
                
                $
                (15,131,700
                )
                
                $
                (7,223,989
                )
                
                $
                (15,131,700
                )Basic
      - Earnings (loss) per share
                
                $
                (0.02
                )
                
                $
                (0.02
                )
                
                $
                (0.06
                )
                
                $
                (0.07
                )Basic
      - Weighted Average Numberof
      Shares Outstanding
                
                
                87,867,126
                
                
                
                84,619,392
                
                
                
                87,518,279
                
                
                
                73,039,347
  See
accompanying notes to unaudited financial statements.
  4
 Location
Based Technologies, Inc.
 (A
Development Stage Company)
 CONSOLIDATED
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
 For the period from
Inception (September 16, 2005) to February 28, 2009
 (Unaudited)
 DeficitAccumulated
                
                
                TotalPreferred
      Stock
                
                
                Common
      Stock
                
                
                
                
                
                Additional
                
                
                During
      the
                
                
                StockholdersNumber
                
                
                
                
                
                Number
                
                
                To
      be
                
                
                
                
                
                Paid-In
                
                
                Development
                
                
                Equityof
      Shares
                
                
                Amount
                
                
                of
      Shares
                
                
                issued
                
                
                Amount
                
                
                Capital
                
                
                Stage
                
                
                (Deficit)Balance,
      September 16, 2005
                
                
                -
                
                
                $
                -
                
                
                
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                -Cash
      received for 20,000 shares of common stock to be issued, November 30,
      2005
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                20
                
                
                
                19,980
                
                
                
                -
                
                
                
                20,000Cash
      received for 30,000 shares of common stock to be issued, November 30,
      2005
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                30
                
                
                
                29,970
                
                
                
                -
                
                
                
                30,000Cash
      received for 25,000 shares of common stock to be issued, March 14,
      2006
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                25
                
                
                
                24,975
                
                
                
                -
                
                
                
                25,000Cash
      received for 50,000 shares of common stock to be issued, August 4, 2006,
      net of offering costs
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                50
                
                
                
                -
                
                
                
                46,950
                
                
                
                -
                
                
                
                47,000Cash
      received for 50,000 shares of common stock to be issued, August 18,
      2006
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                50
                
                
                
                -
                
                
                
                49,950
                
                
                
                -
                
                
                
                50,000Issuance
      of common stock for services, July 2006
                
                
                -
                
                
                
                -
                
                
                
                225,000
                
                
                
                -
                
                
                
                75
                
                
                
                74,925
                
                
                
                -
                
                
                
                75,000Additional
      paid-in capital in exchange for services
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                150,000
                
                
                
                -
                
                
                
                150,000Net
      loss
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (783,596
                )
                
                
                (783,596
                )Balance,
      August 31, 2006
                
                
                -
                
                
                
                -
                
                
                
                225,000
                
                
                
                100
                
                
                
                150
                
                
                
                396,750
                
                
                
                (783,596
                )
                
                
                (386,596
                )Issuance
      of common stock, net of offering costs, for cash, September
      2006
                
                
                -
                
                
                
                -
                
                
                
                450,000
                
                
                
                -
                
                
                
                150
                
                
                
                110,600
                
                
                
                -
                
                
                
                110,750Issuance
      of common stock, net of offering costs, for cash, November
      2006
                
                
                -
                
                
                
                -
                
                
                
                90,000
                
                
                
                -
                
                
                
                30
                
                
                
                22,470
                
                
                
                -
                
                
                
                22,500Issuance
      of common stock, net of offering costs, for cash, February
      2007
                
                
                -
                
                
                
                -
                
                
                
                750,000
                
                
                
                -
                
                
                
                250
                
                
                
                181,750
                
                
                
                -
                
                
                
                182,000Issuance
      of common stock, net of offering costs, for cash, March
    2007
                
                
                -
                
                
                
                -
                
                
                
                75,000
                
                
                
                -
                
                
                
                25
                
                
                
                18,725
                
                
                
                -
                
                
                
                18,750
   See
accompanying notes to unaudited financial statements.
  5
  Location
Based Technologies, Inc.
 (A
Development Stage Company)
 CONSOLIDATED
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
 For the period from
Inception (September 16, 2005) to February 28, 2009
 (Unaudited)
  DeficitAccumulated
                
                
                TotalPreferred
      Stock
                
                
                Common
      Stock
                
                
                
                
                
                Additional
                
                
                During
      the
                
                
                StockholdersNumber
                
                
                
                
                
                Number
                
                
                To
      be
                
                
                
                
                
                Paid-In
                
                
                Development
                
                
                Equityof
      Shares
                
                
                Amount
                
                
                of
      Shares
                
                
                issued
                
                
                Amount
                
                
                Capital
                
                
                Stage
                
                
                (Deficit)
 Issuance
      of 525,000 shares of common stock, June 2007
                
                
                -
                
                
                
                -
                
                
                
                525,000
                
                
                
                (100
                )
                
                
                100
                
                
                
                -
                
                
                
                -
                
                
                
                -Issuance
      of 165,000 shares of common stock for cash proceeds of $55,000, June
      2007
                
                
                -
                
                
                
                -
                
                
                
                165,000
                
                
                
                -
                
                
                
                55
                
                
                
                54,945
                
                
                
                -
                
                
                
                55,000Issuance
      of 50,400,000 shares of common stock for cash proceeds of $168, June
      2007
                
                
                -
                
                
                
                -
                
                
                
                50,400,000
                
                
                
                -
                
                
                
                16,800
                
                
                
                (16,632
                )
                
                
                -
                
                
                
                168Issuance
      of common stock for conversion of note payable, August
2007
                
                
                -
                
                
                
                -
                
                
                
                45,000
                
                
                
                -
                
                
                
                15
                
                
                
                14,985
                
                
                
                -
                
                
                
                15,000Net
      loss
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (1,505,747
                )
                
                
                (1,505,747
                )Balance,
      August 31, 2007
                
                
                -
                
                
                
                -
                
                
                
                52,725,000
                
                
                
                -
                
                
                
                17,575
                
                
                
                783,593
                
                
                
                (2,289,343
                )
                
                
                (1,488,175
                )Issuance
      of Series A warrants, September 2007
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                1,408,167
                
                
                
                -
                
                
                
                1,408,167Issuance
      of Series B warrants, September 2007
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                563,624
                
                
                
                -
                
                
                
                563,624Issuance
      of common stock for services, October 2007
                
                
                -
                
                
                
                -
                
                
                
                18,000
                
                
                
                -
                
                
                
                6
                
                
                
                5,994
                
                
                
                -
                
                
                
                6,000Issuance
      of common stock for conversion of related party note payable, October
      2007
                
                
                -
                
                
                
                -
                
                
                
                2,410,500
                
                
                
                -
                
                
                
                804
                
                
                
                802,696
                
                
                
                -
                
                
                
                803,500Share
      exchange with Springbank Resources resulting in recapitalization, October
      2007
                
                
                -
                
                
                
                -
                
                
                
                13,012,500
                
                
                
                -
                
                
                
                -
                
                
                
                419
                
                
                
                -
                
                
                
                419Issuance
      of common stock for services, November 2007
                
                
                -
                
                
                
                -
                
                
                
                1,276,632
                
                
                
                -
                
                
                
                426
                
                
                
                425,118
                
                
                
                -
                
                
                
                425,544Issuance
      of common stock for services, November 2007
                
                
                -
                
                
                
                -
                
                
                
                600,000
                
                
                
                -
                
                
                
                200
                
                
                
                829,800
                
                
                
                -
                
                
                
                830,000Issuance
      of common stock for conversion of notes payable, November and December
      2007
                
                
                -
                
                
                
                -
                
                
                
                15,726,000
                
                
                
                -
                
                
                
                5,242
                
                
                
                5,236,758
                
                
                
                -
                
                
                
                5,242,000Issuance
      of common stock for conversion of accrued interest on related party note
      payable, February 2008
                
                
                -
                
                
                
                -
                
                
                
                361,797
                
                
                
                -
                
                
                
                120
                
                
                
                120,479
                
                
                
                -
                
                
                
                120,599
  See
accompanying notes to unaudited financial statements.
  6
 
  Location
Based Technologies, Inc.
 (A
Development Stage Company)
 CONSOLIDATED
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
 For the period from
Inception (September 16, 2005) to February 28, 2009
 (Unaudited)
 DeficitAccumulated
                
                
                TotalPreferred
      Stock
                
                
                Common
      Stock
                
                
                
                
                
                Additional
                
                
                During
      the
                
                
                StockholdersNumber
                
                
                
                
                
                Number
                
                
                To
      be
                
                
                
                
                
                Paid-In
                
                
                Development
                
                
                Equityof
      Shares
                
                
                Amount
                
                
                of
      Shares
                
                
                issued
                
                
                Amount
                
                
                Capital
                
                
                Stage
                
                
                (Deficit)
 Issuance
      of common stock for conversion of accrued officer compensation, February
      2008
                
                
                -
                
                
                
                -
                
                
                
                811,485
                
                
                
                -
                
                
                
                270
                
                
                
                270,225
                
                
                
                -
                
                
                
                270,495Issuance
      of common stock for services, June 2008
                
                
                -
                
                
                
                -
                
                
                
                150,000
                
                
                
                -
                
                
                
                50
                
                
                
                373,950
                
                
                
                -
                
                
                
                374,000Issuance
      of Series C warrants, June 2008
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                353,447
                
                
                
                -
                
                
                
                353,447Issuance
      of Series D and E warrants, August 2008
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                54,480
                
                
                
                -
                
                
                
                54,480Net
      loss
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (7,734,502
                )
                
                
                (7,734,502
                )Balance,
      August 31, 2008
                
                
                -
                
                
                
                -
                
                
                
                87,091,914
                
                
                
                -
                
                
                
                24,693
                
                
                
                11,228,750
                
                
                
                (10,023,845
                )
                
                
                1,229,598Issuance
      of common stock for services, October 2008
                
                
                -
                
                
                
                -
                
                
                
                184,856
                
                
                
                -
                
                
                
                184
                
                
                
                453,088
                
                
                
                -
                
                
                
                453,272Issuance
      of common stock for services, November 2008
                
                
                -
                
                
                
                -
                
                
                
                100,000
                
                
                
                -
                
                
                
                100
                
                
                
                112,900
                
                
                
                -
                
                
                
                113,000Issuance
      of Series G warrants, November 2008
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                160,939
                
                
                
                -
                
                
                
                160,939Issuance
      of Series H warrants, November 2008
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                1,115,361
                
                
                
                -
                
                
                
                1,115,361Issuance
      of common stock for services, December 2008
                
                
                -
                
                
                
                -
                
                
                
                401,500
                
                
                
                -
                
                
                
                402
                
                
                
                398,828
                
                
                
                -
                
                
                
                399,230Issuance
      of common stock for services, January 2009
                
                
                -
                
                
                
                -
                
                
                
                136,000
                
                
                
                -
                
                
                
                136
                
                
                
                140,021
                
                
                
                -
                
                
                
                140,157Issuance
      of common stock for services, February 2009
                
                
                -
                
                
                
                -
                
                
                
                330,000
                
                
                
                -
                
                
                
                330
                
                
                
                309,870
                
                
                
                -
                
                
                
                310,200Net
      loss
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (5,107,855
                )
                
                
                (5,107,855
                )Balance,
      February 28, 2009
                
                
                -
                
                
                $
                -
                
                
                
                88,244,270
                
                
                
                -
                
                
                $
                25,845
                
                
                $
                13,919,756
                
                
                $
                (15,131,700
                )
                
                $
                (1,186,099
                )
  See
accompanying notes to unaudited financial statements.
  7
  Location
Based Technologies, Inc.
 (A
Development Stage Company)
 CONSOLIDATED
STATEMENT OF CASH FLOWS
 For the
six months ended February 28, 2009 and February 29, 2008
 and for the period from
Inception (September 16, 2005) to February 28, 2009
 (Unaudited)
 InceptionFor
      the six months ended
                
                
                (Sept
      16, 2005)February
      28,
                
                
                February
      29,
                
                
                to
      February 28,2009
                
                
                2008
                
                
                2009Cash
      Flows from Operating ActivitiesNet
      loss
                
                $
                (5,107,855
                )
                
                $
                (4,934,646
                )
                
                $
                (15,131,700
                )Adjustment
      to reconcile net loss to net cash used in operating
      activities:Depreciation
      and amortization
                
                
                18,617
                
                
                
                4,381
                
                
                
                34,825Common
      stock issued for services
                
                
                1,415,859
                
                
                
                1,261,544
                
                
                
                3,306,403Warrants
      issued for services
                
                
                1,276,299
                
                
                
                1,971,791
                
                
                
                3,656,017Recapitalization
      adjustment
                
                
                -
                
                
                
                419
                
                
                
                419Changes
      in operating assets and liabilities:(Increase)
      decrease in accounts receivable
                
                
                (735
                )
                
                
                (5,818
                )
                
                
                (735
                )(Increase)
      decrease in prepaid expenses
                
                
                (35,805
                )
                
                
                13,992
                
                
                
                (122,421
                )(Increase)
      decrease in debt issuance/financing costs
                
                
                475,000
                
                
                
                446,776
                
                
                
                475,000(Increase)
      decrease in deposits
                
                
                -
                
                
                
                (13,398
                )
                
                
                (20,458
                )Increase
      (decrease) in accounts payable and accrued expenses
                
                
                202,872
                
                
                
                (627,165
                )
                
                
                837,694Increase
      (decrease) in accrued officer compensation
                
                
                150,000
                
                
                
                40,020
                
                
                
                688,898Increase
      (decrease) in unearned revenue
                
                
                29,953
                
                
                
                -
                
                
                
                29,953Increase
      (decrease) in accrued interest
                
                
                56,013
                
                
                
                (58,206
                )
                
                
                176,612Net
      cash used in operating activities
                
                
                (1,519,782
                )
                
                
                (1,900,310
                )
                
                
                (6,069,493
                )Cash
      Flows from Investing ActivitiesPurchase
      of property and equipment
                
                
                (286,621
                )
                
                
                (337,349
                )
                
                
                (1,346,274
                )Additions
      to patents and trademarks
                
                
                (48,422
                )
                
                
                (101,998
                )
                
                
                (269,566
                )Net
      cash used in investing activities
                
                
                (335,043
                )
                
                
                (439,347
                )
                
                
                (1,615,840
                )Cash
      Flows from Financing ActivitiesProceeds
      from issuance of common stock, net of offering costs
                
                
                -
                
                
                
                -
                
                
                
                404,168Proceeds
      from common stock be to issued
                
                
                -
                
                
                
                -
                
                
                
                142,000Advances
      / (repayments) from officers
                
                
                379,001
                
                
                
                (25,020
                )
                
                
                538,410Proceeds
      from convertible notes payable
                
                
                -
                
                
                
                350,000
                
                
                
                5,242,000Proceeds
      from notes payable
                
                
                925,000
                
                
                
                -
                
                
                
                925,000Proceeds
      from notes payable, related party
                
                
                1,300,000
                
                
                
                -
                
                
                
                1,350,000Repayment
      on notes payable, related party
                
                
                (666,000
                )
                
                
                -
                
                
                
                (812,500
                )Net
      cash provided by financing activities
                
                
                1,938,001
                
                
                
                324,980
                
                
                
                7,789,078Net
      increase (decrease) in cash and cash equivalents
                
                
                83,176
                
                
                
                (2,014,677
                )
                
                
                103,745Cash
      and cash equivalents, beginning of period
                
                
                20,569
                
                
                
                3,671,900
                
                
                
                -Cash
      and cash equivalents, end of period
                
                $
                103,745
                
                
                $
                1,657,223
                
                
                $
                103,745
  See
accompanying notes to unaudited financial statements.
  8
  Location
Based Technologies, Inc.
 (A
Development Stage Company)
 CONSOLIDATED
STATEMENT OF CASH FLOWS
 For the
six months ended February 28, 2009 and February 29, 2008
 and for the period from
Inception (September 16, 2005) to February 28, 2009
 (Unaudited)
 InceptionFor
      the six months ended
                
                
                (Sept
      16, 2005)February
      28,
                
                
                February
      29,
                
                
                to
      February 28,2009
                
                
                2008
                
                
                2009Supplemental
      disclosure of cash flow information:Income
      taxes paid
                
                $
                -
                
                
                $
                -
                
                
                $
                1,600Interest
      paid
                
                $
                -
                
                
                $
                -
                
                
                $
                -Supplemental
      disclosure of noncash financing and investing activities:Deferred
      costs paid for with debt
                
                $
                2,850,000
                
                
                $
                -
                
                
                $
                2,850,000Issuance
      of shares of common stock for services
                
                $
                1,415,859
                
                
                $
                1,261,544
                
                
                $
                3,306,403Issuance
      of warrants for services
                
                $
                1,276,299
                
                
                $
                1,971,791
                
                
                $
                3,656,017Acquisition
      of patents for note payable
                
                $
                -
                
                
                $
                -
                
                
                $
                900,000Issuance
      of common stock for conversion of notes payable
                
                $
                -
                
                
                $
                5,242,000
                
                
                $
                5,512,000Issuance
      of common stock for conversion of related party note
    payable
                
                $
                -
                
                
                $
                803,500
                
                
                $
                803,500Issuance
      of common stock for conversion of accrued interest on related party note
      payable
                
                $
                -
                
                
                $
                120,599
                
                
                $
                120,599Issuance
      of common stock for conversion of accrued officer
    compensation
                
                $
                -
                
                
                $
                270,495
                
                
                $
                270,495
   See
accompanying notes to unaudited financial statements.
  9
  LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008
 1.
                  NATURE OF OPERATIONS
      AND SUMMARY OF SIGNIFICANT ACCOUNTING
  POLICIES
 
 Organization
 
 Location Based Technologies, Inc.
(formerly known as Springbank Resources, Inc.) (the “Company,” “our,” or “LBT”)
was incorporated under the laws of the State of Nevada on April 10,
2006.
 
 Location
Based Technologies, Corp. (formerly known as PocketFinder, Inc.) was
incorporated under the laws of the State of California on September 16, 2005. On
July 7, 2006, it established PocketFinder, LLC (“LLC”), a California Limited
Liability Company. On May 29, 2007, PocketFinder, Inc. filed amended articles
with the Secretary of State to change its name to Location Based Technologies,
Corp.
 
 Merger
 
 On August
24, 2007, Location Based Technologies, Corp. merged with PocketFinder, LLC. The
merger was approved by the shareholders of Location Based Technologies, Corp.
and PocketFinder, LLC by unanimous written consent. Location Based Technologies,
Corp. was the survivor of the merger with PocketFinder, LLC.
 
 Each
Class A Membership Unit of the LLC was converted into 150,000 shares of common
stock of the Company or fraction thereof and each Class C Membership Unit of the
LLC was cancelled. Upon consummation of the merger, 10.9 Class A Membership
Units of the LLC were converted into 1,635,000 shares of common stock of the
Company.
 
 Stock Exchange
Agreement
 
 On
October 11, 2007, Location Based Technologies, Corp. effected a stock exchange
agreement and plan of reorganization (the “Agreement”) with Springbank
Resources, Inc. (“SRI”) whereby SRI acquired all of the issued and outstanding
shares of Location Based Technologies, Corp. in exchange for shares of SRI’s
common stock.
 
 Subject
to the terms and conditions of the Agreement, SRI issued, and the stockholders
of Location Based Technologies, Corp. accepted 55,153,500 shares of SRI’s common
stock in consideration for all of the issued and outstanding shares of Location
Based Technologies, Corp. The shares of SRI’s common stock were allocated to the
shareholders of Location Based Technologies, Corp. in accordance with the
Agreement.
  10
 LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008
 1.          
  NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
 
 Stock
Exchange Agreement (Continued)
 
 The
former shareholders of Location Based Technologies, Corp. acquired control of
SRI upon the closing of the stock exchange transaction. The exchange was
accounted for as a reverse acquisition. Accordingly, for financial statement
purposes, Location Based Technologies, Corp. was considered the accounting
acquiror, and the related business combination was considered a recapitalization
of Location Based Technologies, Corp. rather than an acquisition by SRI. The
historical financial statements prior to the Agreement are those of Location
Based Technologies, Corp., and the name of the consolidated company was changed
to Location Based Technologies, Inc.
 
 Consolidation
Policy
 
 The
accompanying financial statements include the operations of the Company and its
wholly owned subsidiary. Intercompany balances and transactions have been
eliminated in consolidation.
 
 Stock
Split
 
 All share
and per-share amounts in the accompanying financial statements, unless otherwise
indicated, have been retroactively restated to reflect a 3 for 1 stock split
approved by the Board in October 2008, as if the split had been in effect since
inception.
 
 Nature of
Business
 
 The
Company is in the final development stage of creating PocketFinder® personal
locators. PocketFinders® are small
personal location devices designed to give parents, guardians, and pet owners
peace of mind. Utilizing the U.S. Department of Defense’s multi-billion dollar
Global Positioning System (GPS) satellites and existing wireless technology, our
team of engineers have developed technology which allows our network of members
to locate anyone carrying our device, whether that person is inside of a
building/structure or in the great outdoors (Systems and Method Patent pending).
PocketFinders® are
small, rugged, and water tight. The devices can be used to locate children,
elderly or disabled persons and pets as well as for the tracking of valued
personal property.
  11
 LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008
 1.
                  NATURE
      OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (Continued)
 
 Basis of
Presentation
 
 The
unaudited financial statements included herein have been prepared in accordance
with accounting principles generally accepted in the United States for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. They do not include all information and notes required by
generally accepted accounting principles for complete financial statements.
However, except as disclosed herein, there has been no material changes in the
information disclosed in the notes to financial statements included in the
annual report on Form 10-KSB of Location Based Technologies, Inc. for the year
ended August 31, 2008. In the opinion of management, all adjustments
(including normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the six months ended
February 28, 2009, are not necessarily indicative of the results that may be
expected for any other interim period or the entire year. For further
information, these unaudited financial statements and the related notes should
be read in conjunction with the Company’s audited financial statements for the
year ended August 31, 2008, included in the Company’s report on Form
10-KSB.
  Use of
Estimates
 
 The
preparation of consolidated financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements, and the reported amounts of revenues and
expenses during the reported periods. Actual results could materially differ
from those estimates.
 
 Cash and Cash
Equivalents
 
 For
purposes of the balance sheets and statements of cash flows, the Company
considers all highly liquid debt instruments purchased with maturity of three
months or less to be cash equivalents.
  12
  LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008
 1.
                  NATURE
      OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (Continued)
 
 Concentration of Credit
Risk
 
 Cash and Cash
Equivalents– The cash and cash
equivalent balances at February 28, 2009, are principally held by one
institution which insures our aggregated accounts with the Federal Deposit
Insurance Corporation ("FDIC") up to $250,000. At times, the Company has
maintained bank balances which have exceeded FDIC limits. The Company has not
experienced any losses with respect to its cash balances.
 
 Revenues– For the six months
ended February 28, 2009, the Company transacted its business with two
customers. The Company’s largest customer accounted for 99% of total
revenues. Total revenues from this customer were $70,047 for the six months
ended February 28, 2009.
 
 Allowance for Doubtful
Accounts
 
 The
allowance for doubtful accounts on accounts receivable is charged to operations
in amounts sufficient to maintain the allowance for uncollectible accounts at a
level management believes is adequate to cover any probable losses. Management
determines the adequacy of the allowance based on historical write-off
percentages and the current status of accounts receivable. Accounts receivable
are charged off against the allowance when collectibility is determined to be
permanently impaired. As of February 28, 2009, there was no allowance for
doubtful accounts recorded, as all of the Company’s receivables were considered
collectible.
 
 Fair Value of Financial
Instruments
 
 Pursuant
to Statement of Financial Accounting Standards No. 107, Disclosures About Fair Value of
Financial Instruments, the Company is required to estimate the fair value
of all financial instruments included on its balance sheet. The carrying value
of cash, accounts receivable, prepaid expenses, accounts payable and accrued
expenses approximate their fair value due to the short period to maturity of
these instruments.
  13
 LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008
 1.           
 NATURE OF
OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
 
 Intangible Assets – Patents
and Trademarks
 
 The
Company capitalizes internally developed assets related to certain costs
associated with patents and trademarks. These costs include legal and
registration fees needed to apply for and secure patents. The intangible assets
acquired from other enterprises or individuals in an “arms length” transaction
are recorded at cost. As of February 28, 2009 and August 31, 2008, the Company
capitalized $1,075,548 and $1,055,396 for patent related expenditures,
respectively. As of February 28, 2009 and August 31, 2008, the Company has
capitalized $94,018 and $65,748 for trademark related expenditures,
respectively.
 
 Patents
are subject to amortization upon issuance by the United States Patent and
Trademark Office. Intangible assets are amortized in accordance with Statement
of Financial Accounting Standards No. 142, Goodwill and Other Intangible
Assets, using the straight-line method over the shorter of their
estimated useful lives or remaining legal life. Amortization expense totaled
$234 and $0 for the six months ended February 28, 2009 and February 29, 2008,
respectively.
 
 Property and
Equipment
 
 Property
and equipment are stated at cost less accumulated depreciation and amortization.
Depreciation and amortization are calculated using the straight-line method and
with useful lives used in computing depreciation ranging from 2 to 5 years. When
property and equipment are retired or otherwise disposed of, the related cost
and accumulated depreciation are removed from the respective accounts, and any
gain or loss is included in operations. Expenditures for maintenance and repairs
are charged to operations as incurred; additions, renewals and betterments are
capitalized.
 
 Internal Website Development
Costs
 
 Under
Financial Accounting Standards Board (“FASB”) Emerging Issues Task Force
Statement 00-2 ("EITF 00-2"), Accounting for Web Site Development
Costs, costs and expenses incurred during the planning and operating
stages of the Company's web site development are expensed as incurred. Under
EITF 00-2, costs incurred in the web site application and infrastructure
development stages are capitalized by the Company and amortized to expense over
the web site's estimated useful life or period of benefit. As of February 28,
2009 and August 31, 2008, the Company capitalized costs totaling $1,221,959 and
$985,122, respectively, related to its website development. The website
development costs will be depreciated when the website is completed and ready
for use.
  14
 LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008
 1.         
   NATURE OF
OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
 
 Long-Lived
Assets
 
 The
Company accounts for its long-lived assets in accordance with Statement of
Financial Accounting Standards No. 144 (“SFAS No. 144”), Accounting for the Impairment or
Disposal of Long-Lived Assets. SFAS No. 144 requires that long-lived
assets be reviewed for impairment whenever events or changes in circumstances
indicate that the historical cost carrying value of an asset may no longer be
appropriate. The Company assesses recoverability of the carrying value of an
asset by estimating the future net cash flows expected to result from the asset,
including eventual disposition. If the future net cash flows are less than the
carrying value of the asset, an impairment loss is recorded equal to the
difference between the asset's carrying value and fair value or disposable
value. As of February 28, 2009, the Company did not deem any of its long-term
assets to be impaired.
 
 Revenue
Recognition
 
 Revenues are recognized in accordance
with Staff Accounting Bulletin (“SAB”) No. 101,Revenue Recognition
in Financial Statements,
as amended by SAB No. 104,Revenue
Recognition,when (a)
persuasive evidence of an arrangement exists, (b) the products or services have
been provided to the customer, (c) the fee is fixed or determinable, and (d)
collectibility is reasonably assured. In instances where the customer, at its
discretion, has the right to reject the product or services prior to final
acceptance, revenue is deferred until such acceptance
occurs.
 
 Consulting
Revenue – The  Company’s consulting revenue consists of
software customization and consulting service contracts recognized utilizing the
percentage-of-completion method in accordance with Accounting Research
Bulletin No. 45, Long-Term Construction-Type
Contracts and the relevant guidance of Statement of Position (“SOP”)
No. 81-1, Accounting for
Performance of Construction-Type and Certain Production-Type Contracts,
as prescribed by SOP 97-2, Software Revenue Recognition.
For fixed fee contracts the percentage-of-completion is measured by the
percentage of software customization or consulting hours incurred to date to
total estimated hours. This method is used because management believes that
hours expended is the best measure of progress on these engagements. Revisions
in total estimated hours are reflected in the accounting period in which the
required revisions become known. Anticipated losses on contracts are charged to
income in their entirety when such losses become evident.
  15
  LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008
 1.
                  NATURE
      OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (Continued)
 
 Research and
Development
 
 Research
and development costs are clearly identified and are expensed as incurred in
accordance with Statement of Financial Accounting Standards No. 2, Accounting for Research and
Development Costs. For the six months ended February 28, 2009 and
February 29, 2008, the Company incurred $797,464 and $548,441 of research and
development costs, respectively.
 
 Provision for Income
Taxes
 
 The
Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109 (“SFAS No. 109”), Accounting for Income Taxes.
Under the asset and liability method of SFAS No. 109, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statements’ carrying amounts of existing
assets and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. Under SFAS No. 109, the effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period the
enactment occurs. A valuation allowance is provided for certain deferred tax
assets if it is more likely than not that the Company will not realize tax
assets through future operations. The Company has included its $800 franchise
fee in its provision for income taxes for the six months ended February 28, 2009
and February 29, 2008.
 
 Earnings/ Loss Per
Share
 
 The
Company computes basic earnings (loss) per share using the weighted average
number of common shares outstanding during the period in accordance with
Statement of Financial Standards No. 128 ("SFAS No. 128"), Earnings Per Share, which
specifies the compilation, presentation, and disclosure requirements for income
per share for entities with publicly held common stock or instruments which are
potentially common stock. Under SFAS No. 128, diluted earnings (loss) per share
are computed using the weighted average number of common shares outstanding and
the dilutive potential common shares outstanding during the period. Dilutive
potential common shares primarily consist of stock options and warrants issued
by the Company. These potential common shares are excluded from diluted loss per
share as their effect would be anti-dilutive.
  16
 LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008
 1.
                  NATURE
      OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (Continued)
 
 Recent Accounting
Pronouncements
 
 FASB Interpretation No.
48 – In July 2006, the FASB issued Interpretation No. 48 (“FIN No. 48”),
Accounting for Uncertainty in
Income Taxes, which supplements SFAS No. 109, Accounting for Income Taxes,
by defining the confidence level that a tax position must meet in order to be
recognized in the financial statements. The Interpretation requires that the tax
effects of a position be recognized only if it is “more-likely-than-not” to be
sustained based solely on its technical merits as of the reporting date. The
more-likely-than-not threshold represents a positive assertion by management
that a company is entitled to the economic benefits of a tax position. If a tax
position is not considered more-likely-than-not to be sustained based solely on
its technical merits, no benefits of the position are to be recognized. This
Interpretation is effective for fiscal years beginning after December 15, 2006.
The Company has adopted this interpretation.
 
 SFAS No. 157 – In
September 2006, the FASB issued Statement of Financial Standards No. 157 (“SFAS
No. 157”), Fair Value
Measurements. This Statement defines fair value, establishes a framework
for measuring fair value in generally accepted accounting principles (“GAAP”),
and expands disclosures about fair value measurements. This Statement applies
under other accounting pronouncements that require or permit fair value
measurements, the Board having previously concluded in those accounting
pronouncements that fair value is the relevant measurement attribute.
Accordingly, this Statement does not require any new fair value measurements.
However, for some entities, the application of this Statement will change
current practice. In February 2008, the FASB staff issued Staff Position No.
157-2, Effective Date of FASB
Statement No. 157 ("FSP FAS 157-2"). FSP FAS 157-2 delayed the effective
date of SFAS No. 157 for nonfinancial assets and nonfinancial liabilities,
except for items that are recognized or disclosed at fair value in the financial
statements on a recurring basis (at least annually). The provisions of FSP FAS
157-2 are effective for the Company's fiscal year beginning September 1, 2009.
The Company believes that the adoption of this standard will not have a material
impact on its financial statements.
  17
  LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008
 1.
                  NATURE
      OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (Continued)
 
 Recent
Accounting Pronouncements (Continued)
 
 SFAS No. 158 – In
September 2006, the FASB issued Statement of Financial Standards No. 158 (“SFAS
No. 158”), Employers’
Accounting for Defined Benefit Pension and Other Postretirement Plans - an
amendment of FASB Statements No. 87, 88, 106, and 132(R). This Statement
improves financial reporting by requiring an employer to recognize the
overfunded or underfunded status of a defined benefit postretirement plan (other
than a multiemployer plan) as an asset or liability in its statement of
financial position and to recognize changes in that funded status in the year in
which the changes occur through comprehensive income of a business entity or
changes in unrestricted net assets of a not-for-profit organization. This
Statement also improves financial reporting by requiring an employer to measure
the funded status of a plan as of the date of its year-end statement of
financial position, with limited exceptions. An employer with publicly traded
equity securities is required to initially recognize the funded status of a
defined benefit postretirement plan and to provide the required disclosures as
of the end of the fiscal year ending after December 15, 2006. An employer
without publicly traded equity securities is required to recognize the funded
status of a defined benefit postretirement plan and to provide the required
disclosures as of the end of the fiscal year ending after June 15, 2007. The
Company presently has no such defined benefit pension or other post retirement
plan. If and at such time the Company establishes a defined benefit pension or
other post retirement plan, the Company will apply SFAS No. 158.
 
 SAB No. 108
– In September 2006, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 108 (“SAB No. 108”), Considering the Effects of Prior
Year Misstatements when Quantifying Misstatements in Current Year Financial
Statements. The guidance in SAB No. 108 requires Companies to
base their materiality evaluations on all relevant quantitative and qualitative
factors. This involves quantifying the impact of correcting all misstatements,
including both the carryover and reversing effects of prior year misstatements,
on the current year financial statements. The Company has adopted this
standard.
  18
 LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008
 1.
                  NATURE
      OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (Continued)
 
 Recent
Accounting Pronouncements (Continued)
 
 SFAS No. 141(R) – In
December 2007, the FASB issued Statement of Financial Accounting Standards
No. 141(R) (“SFAS No. 141(R)”), Business Combinations.SFAS
No. 141(R) requires the acquiring entity in a business combination to recognize
all assets acquired and liabilities assumed in the transaction, establishes the
acquisition-date fair value as the measurement objective for all assets acquired
and liabilities assumed, and requires the acquirer to disclose the nature and
financial effect of the business combination. SFAS No. 141(R) is effective for
fiscal years beginning on or after December 15, 2008. If and when the
Company acquires one or more entities in the future, it will apply SFAS No.
141(R) for the purposes of accounting for such acquisitions.
 
 SFAS No. 160 – In
December 2007, the FASB issued Statement of Financial Accounting Standards
No. 160 (“SFAS No. 160”), Noncontrolling Interests in
Consolidated Financial Statements.SFAS No. 160 amends Accounting
Research Bulletin No. 51, Consolidated Financial
Statements, to establish accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. SFAS No. 160 is effective for fiscal years beginning on or after
December 15, 2008. The Company presently has no such noncontrolling
interests. If and at such time as such an interest exists, it will apply SFAS
No. 160.
 
 SFAS No. 161 – In
March 2008, the FASB issued Statement of Financial Accounting Standards
No. 161 (“SFAS No. 161”), Disclosures about Derivative
Instruments and Hedging Activities.SFAS No. 161 amends and expands the
disclosure requirements of SFAS No. 133, Accounting for Derivative
Instruments and Hedging. SFAS No. 161 is effective for fiscal years
beginning after November 15, 2008. The Company believes that the adoption
of this standard will not a have a material impact on its financial
statements.
 
 FSP No. 142-3 – In
April 2008, the FASB issued Staff Position No. 142-3 (“FSP No.
142-3”), Determination of the
Useful Life of Intangible Assets. FSP No. 142-3 amends the factors that
should be considered in developing renewal or extension assumptions used to
determine the useful life of a recognized intangible asset under Statement of
Financial Accounting Standards No. 142, Goodwill and Other Intangible
Assets. The FSP is effective for financial statements issued for fiscal
years beginning after December 15, 2008, and interim periods within those fiscal
years. Early adoption is prohibited. The Company is currently assessing the
potential effect of FSP No. 142-3 on its financial statements.
  19
 LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008
 1.
                  NATURE
      OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (Continued)
 
 Recent
Accounting Pronouncements (Continued)
 
 SFAS No. 162 – In
May 2008, the FASB issued Statement of Financial Accounting Standards
No. 162 (“SFAS No. 162”), The Hierarchy of Generally Accepted
Accounting Principles. SFAS No. 162 identifies the sources of accounting
principles and the framework for selecting the principles to be used in the
preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles in the
United States. SFAS No. 162 will become effective 60 days following
Securities and Exchange Commission (“SEC”) approval of the Public Company
Accounting Oversight Board (“PCAOB”) amendments to AU Section 411,
The Meaning of Present Fairly
in Conformity With Generally Accepted Accounting Principles. The Company
does not anticipate the adoption of SFAS No. 162 to have a material impact on
its financial statements.
  EITF No. 03-6-1 – In
June 2008, the FASB issued Staff Position No. EITF 03-6-1 (“EITF No.
03-6-1”), Determining Whether
Instruments Granted in Share-Based Payment Transactions Are Participating
Securities. EITF No. 03-6-1 addresses whether instruments granted in
share-based payment transactions are participating securities prior to vesting,
and therefore, need to be included in the earnings allocation in calculating
earnings per share under the two-class method described in Statement of
Financial Accounting Standards No. 128, Earnings per Share. EITF No.
03-6-1 requires companies to treat unvested share-based payment awards that have
non-forfeitable rights to dividend or dividend equivalents as a separate class
of securities in calculating earnings per share. EITF No. 03-6-1 is effective
for fiscal years beginning after December 15, 2008. The Company is
currently assessing the potential effect of EITF No. 03-6-1 on its financial
statements.
  20
 LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008
 2.
                  PROPERTY AND
      EQUIPMENT
 
 Property
and equipment at February 28, 2009 and August 31, 2008 consists of the
following:
 
 February
      28,
                          
                          
                          August
      31,2009
                          
                          
                          2008Website
      development costs
                          
                          $
                          1,221,959
                          
                          
                          $
                          985,122Machinery
      and equipment
                          
                          
                          63,388
                          
                          
                          
                          38,990Computer
      software
                          
                          
                          27,316
                          
                          
                          
                          -Computer
      and video equipment
                          
                          
                          21,216
                          
                          
                          
                          21,216Office
      furniture
                          
                          
                          11,546
                          
                          
                          
                          11,546Leasehold
      improvements
                          
                          
                          2,445
                          
                          
                          
                          2,4451,347,870
                          
                          
                          
                          1,059,319Less:
      accumulated depreciation
                          
                          
                          (35,771
                          )
                          
                          
                          (15,458
                          )Total
      property and equipment
                          
                          $
                          1,312,099
                          
                          
                          $
                          1,043,861
  Depreciation
expense for the six months ended February 28, 2009 and February 29, 2008
amounted to $18,383 and $4,381, respectively.
 
 
 3.          
  ADVANCES
FROM OFFICERS
 
 From time
to time, the Company’s officers advance funding to the Company to cover
operating expenses. Beginning December 1, 2008, existing advances from officers
and all future advances will accrue interest at the rate of 8% per annum. The
advances from officers have no formal repayment terms. In January 2009, officers
of the Company transferred 2,500,000 shares of their personally owned LBT common
stock to certain advisors in exchange for capital raising services to be
provided in 2009.  The amount recorded totaled $2,850,000, which
represents the fair value of the stock transferred, and of the services to be
received. For the six months ended February 28, 2009, cash advances from
officers totaling $412,000 were provided to the Company to cover operating
expenses. As of February 28, 2009, advances from officers and accrued interest
amounted to $3,388,410 and $9,526, respectively.
  21
 LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008
 4.         
   CONVERTIBLE NOTES
PAYABLE
 
 From
March 2007 through October 2007, the Company entered into convertible note
agreements totaling $5,242,000. Under the terms of the agreements, amounts
borrowed must be repaid by March 31, 2008 and accrue interest at the rate of 8%
per annum. At the option of the Company or the convertible note holder, the
notes plus any accrued and unpaid interest may be converted into shares of the
Company’s common stock on the basis of $0.33 per share. The notes may be prepaid
at any time, at the option of the Company, in whole or in part without
penalty.
 
 From
November 2007 through December 2007, all of the convertible notes payable
totaling $5,242,000 were converted into 15,726,000 shares of the Company’s
common stock on the basis of $0.33 per share. In connection with the note
payable conversions, each note holder agreed to forgive accrued interest on the
notes totaling $168,989.
 
 
 5.          
  NOTES
PAYABLE
  On
November 18, 2008, the Company entered into a senior secured promissory note
agreement for $625,000, the proceeds from which were used to pay down related
party debt (see note 6). Under the terms of the promissory noteagreement, principal and any unpaid interest shall be repaid by February
18, 2009, or upon a minimum of $1,500,000 being raised by the Company. The note
bears interest at 12% per annum through February 18, 2009, may be repaid at any
time before the repayment date, in part or in full, without penalty, and is
secured by common stock personally owned by an officer of the Company. In
addition, the Company issued 50,000 shares of common stock valued at $55,000 on
the date of issuance. On January 30, 2009, the promissory note agreement was
extended for an additional three months and due on May 18, 2009. As
consideration for the promissory note extension, the Company issued an
additional 50,000 shares of common stock valued at $47,000 on the date of
issuance. As of February 28, 2009, the note payable balance and accrued interest
totaled $625,000 and $12,329,
respectively.
 On
December 24, 2008, the Company entered into a promissory note agreement for
$300,000. Under the terms of the promissory note agreement, principal and any
unpaid interest shall be repaid by March 24, 2009, or upon a minimum of
$1,500,000 being raised by the Company. The note bears interest at 12% per annum
through March 24, 2009, and may be repaid at any time before the repayment date,
in part or in full, without penalty. In addition, the Company issued 100,000
shares of common stock valued at $94,000 on the date of issuance. As of February
28, 2009, the note payable balance and accrued interest totaled $300,000 and
$6,608, respectively.
  22
 LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008
 6.        
    NOTES PAYABLE – RELATED
PARTY
 
 On
November 28, 2005, the Company entered into a promissory note agreement with the
Company’s CEO and stockholder for $900,000 in exchange for the assignment of
certain intellectual property and trademark rights. Under the terms of the
promissory note agreement, the principal and any unpaid interest shall not
become due until the Company attains financial stability, defined as strong
revenue generation and cash flow. Up to twelve quarterly payments may be made to
fulfill payment of this note. The note may be prepaid without premium or
penalty. The note bears interest at 8% per annum and is payable at any time
before the repayment date. The note is secured by all intellectual property,
trademarks, ongoing research and development and all other assets owned by the
Company. On October 29, 2007, the CEO elected to convert the outstanding balance
on the promissory note agreement into common stock of the Company. The note
payable balance totaling $803,500 was converted into 2,410,500 shares of the
Company’s common stock on the basis of $0.33 per share. In February 2008,
accrued interest on the note payable totaling $120,599 was converted into
361,797 shares of the Company’s common stock on basis of $0.33 per
share.
 
 On
September 3, 2008, the Company entered into an unsecured promissory note
agreement with the Company’s Co-President and stockholder for $950,000. Under
the terms of the promissory note agreement, the principal and any unpaid
interest shall be repaid by March 3, 2009, six months from the date of issuance.
The note bears interest at 8% per annum and may be repaid at any time before the
repayment date, in part or in full, without penalty. On November 18, 2008, the
Company entered into a senior secured promissory note with an unrelated party
for $625,000. The proceeds of $625,000 were used to pay down the $950,000
related party promissory note payable in the second quarter. As of February 28,
2009, the note payable balance and accrued interest totaled $284,000 and
$24,942, respectively.
 
 On
January 26, 2009, the Company entered into an unsecured promissory note
agreement with the Company’s Co-President and stockholder for $350,000. Under
the terms of the promissory note agreement, the principal and any unpaid
interest shall be repaid by April 26, 2009, three months from the date of
issuance. The note bears interest at 8% per annum and may be repaid at any time
before the repayment date, in part or in full, without penalty. As of February
28, 2009, the note payable balance and accrued interest totaled $350,000 and
$2,608, respectively.
 
 
 7.            
COMMITMENTS AND
CONTINGENCIES
 
 Consulting
Agreements
 
 In July
2007, the Company entered into a financial consulting agreement whereby the
consultant will be compensated 2% of the Company’s first ten million dollars of
sales and 1% of the second ten million dollars of sales. The agreement expires
July 16, 2010.
  23
  LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008
 7.         
   COMMITMENTS AND
CONTINGENCIES
 
 Consulting
Agreements (Continued)
 
 In
January 2008, the Company entered into a consulting and sales representative
agreement whereby the consultant will be compensated 5% of certain product
sales. In addition, the consultant may earn warrants to purchase up to 600,000
shares of the Company’s common stock upon meeting certain sales targets. The
agreement expires December 31, 2008, and shall automatically renew from year to
year until terminated by either party.
 
 In
February 2008, the Company entered into a framework, platform development and
assistance services agreement related to technological developments of the
database and website. Under the terms of the agreements, the Company is
obligated to pay approximately $270,000 from March 2008 through January 2009.
The agreements expire February 2011.
 
 In March
2008, the Company entered into a consulting services agreement for business
development and capital raising services. Under the agreement, the consultant
will be compensated $10,000 per month in cash or in the form of warrants. In
addition, the consultant will be paid a 7% commission for capital raised and
sales commissions ranging from 3% to 7% of net revenue from certain customers.
The agreement expires August 1, 2008 and may be extended for an additional
six-month period. In February 2009, the agreement was extended for an additional
six-month period expiring August 1, 2009.
 
 Other
Commitments
 
 On
September 26, 2008, the Company received a purchase order for approximately
$3,700,000 from TagWorks LLC for PetFinderTMdevices. The Company
expects to begin delivery in June 2009. TagWorks LLC was co-founded by a
shareholder of the Company.
 
 Operating
Leases
 
 The
Company leases approximately 7,000 square feet of general office space in
Anaheim, California, for base rent of $11,300. The Company is also responsible
for its share of lease related operating expenses approximating $1,500 per
month. The lease expires on December 31, 2009.
  24
  LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008
 7.          
  COMMITMENTS
AND CONTINGENCIES (Continued)
 
 Operating
Leases (Continued)
 
 Total
rental expense on operating leases for the six months ended February 28, 2009
and February 29, 2008 was $67,800 and $46,971, respectively.
 
 As of
February 28, 2009, the future minimum lease payments on operating leases for the
year ended February 28, 2010 amounted to $116,390.
 
 Contingencies – Convertible
Note Shares
 
 In 2007,
the Company sold convertible notes to accredited investors in reliance on an
exemption from registration provided by Section 4(2) of the Securities Act and
similar state exemptions. Management has been advised by counsel that the
availability of those exemptions cannot be determined with legal certainty due
to the fact that the company or its predecessors may not have complied with all
of the provisions of exemption safe-harbors for such sales offered by rules
promulgated under the Securities Act by the SEC. Thus, it is possible that
a right of rescission may exist for shares underlying the convertible notes for
which the statute of limitations has not run.  As disclosed in note 4,
convertible notes totaling $5,242,000 were exchanged for common shares, and
subsequently, some of the shares were sold in the open market. Management has
performed an analysis under FAS 5, Accounting for Contingencies,
and concluded that the likelihood of a right of rescission being successfully
enforced on the remaining convertible note shares is remote, and consequently,
has accounted for these shares in permanent equity in the financial
statements.
 
 8.  EQUITY
 
 Common Stock (Reflects 3 for
1 stock split distributed October 20, 2008)
 
 All
shares of common stock for amounts received during the period from inception
(September 16, 2005) through August 31, 2006 were issued in June
2007.
 
 In
November 2005, the Company performed a private placement and agreed to issue
60,000 shares of common stock at $0.33 per share for an aggregate total of
$20,000.
 
 In
November 2005, the Company agreed to issue 90,000 shares of its common stock in
exchange for legal services related to patents. The shares were valued at
$30,000, which represents the fair market value on the date the services were
rendered.
  25
  LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008
 8.          
  EQUITY(Continued)
 
 Common
Stock (Continued)
 
 In March
2006, the Company performed a private placement and agreed to issue 75,000
shares of common stock at $0.33 per share for an aggregate total of
$25,000.
 
 In August
2006, the Company performed a private placement and agreed to issue 300,000
shares of common stock at $0.33 per share for an aggregate total of $100,000.
The Company received cash proceeds totaling $97,000.
 
 In July
2006, the Company issued 225,000 shares of common stock in exchange for $25,000
of accounting services and $50,000 in legal services. The shares were valued at
$75,000, which represents the fair market value of the services provided on the
date of issuance.
 
 In July
2006, the Company received services valued at $150,000 and treated it as
additional paid-in capital.
 
 In
September 2006, the Company issued 450,000 shares of common stock for net cash
of $110,850 which is net of offering costs of $39,250, in cash
proceeds.
 
 In
November 2006, the Company issued 90,000 shares of common stock for net cash of
$22,500, which is net of offering costs of $7,500, in cash
proceeds.
 
 In
February 2007, the Company issued 750,000 shares of common stock in exchange for
net cash of $182,000, which is net of offering costs of $68,000, in cash
proceeds.
 
 In March
2007, the Company issued 75,000 shares of common stock in exchange for net cash
of $18,750, which is net of offering costs of $6,250 in cash
proceeds.
 
 In June
2007, the Company issued 165,000 shares of common stock for $55,000 in cash
proceeds.
 
 In June
2007, the Company issued 50,400,000 shares of its common stock for cash proceeds
of $168.
 
 In August
2007, the Company issued 45,000 shares of common stock in exchange for the
conversion of a $15,000 note payable.
  26
 LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008
 8.           
 EQUITY(Continued)
 
 Common
Stock (Continued)
 
 In
October 2007, the Company issued 18,000 shares of common stock in exchange for
$6,000 of legal services. The shares were valued at $6,000, which represents the
fair market value of the services provided.
 
 In
October 2007, the Company issued 2,410,500 shares of common stock in exchange
for the conversion of a $803,500 related party note payable (see Note
6).
 
 In
November 2007, the Company issued 1,276,632 shares of common stock in exchange
for $425,544 of consulting services. The shares were valued at $425,544, which
represents the fair market value of the services provided.
 
 In
November 2007, the Company issued 600,000 shares of common stock in exchange for
$830,000 of consulting services. The shares were valued at $830,000, which
represents the fair market value of the services provided on the date of
issuance.
 
 In
November 2007, the Company issued 3,202,500 shares of common stock in exchange
for the conversion of $1,067,500 in notes payable (see Note 4).
 
 In
December 2007, the Company issued 12,523,500 shares of common stock in exchange
for the conversion of $4,174,500 in notes payable (see Note 4).
 
 In
February 2008, the Company issued 361,797 shares of common stock in exchange for
the conversion of $120,599 in accrued interest on a related party note payable
(see Note 6).
 
 In
February 2008, the Company issued 811,485 shares of common stock in exchange for
the conversion of $270,495 in accrued officer compensation.
 
 In June
2008, the Company issued 150,000 shares of common stock in exchange for
consulting services related to research and development. The shares were valued
at $374,000, which represents the fair market value of the services provided on
the date of issuance.
  27
 LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008
 8.            
EQUITY(Continued)
 
 Common
Stock (Continued)
 
 On
October 13, 2008, the Board of Directors declared a 3 for 1 stock split to be
effected in the nature of a 200% stock dividend, whereby the holders of each
share of common stock received an additional two shares of common stock. The
record date for the stock dividend was October 20, 2008 and resulted in the
issuance of an additional 58,061,276 (pre-split) shares of common stock. In
addition, the Company’s articles of incorporation were amended to increase its
authorized shares in an amount that corresponds to the stock split, thereby
increasing the authorized shares of common stock from 100,000,000 to
300,000,000. Unless otherwise indicated, all share and per-share amounts in
these financial statements have been retroactively restated to reflect the 3 for
1 stock split as if the split had been in effect since inception.
 
 In
October 2008, the Company issued 1,500 shares of common stock in exchange for
consulting services related to technology development. The shares were valued at
$4,050, which represents the fair market value of the services provided on the
date of issuance.
 
 In
October 2008, the Company issued 50,000 shares of common stock in exchange for
financial related advisory services. The shares were valued at $122,500, which
represents the fair market value of the services provided on the date of
issuance.
 
 In
October 2008, the Company issued 125,000 shares of common stock in exchange for
capital raising advisory services. The shares were valued at $306,250, which
represents the fair market value of the services provided on the date of
issuance.
 
 In
October 2008, the Company issued 8,356 shares of common stock in exchange for
legal advisory services. The shares were valued at $20,472, which represents the
fair market value of the services provided on the date of issuance.
 
 In
November 2008, the Company issued 100,000 shares of common stock in exchange for
consulting services related to capital raising efforts. The shares were valued
at $113,000, which represents the fair market value of the services provided on
the date of issuance.
 
 In
December 2008, the Company issued 250,000 shares of common stock in exchange for
consulting services related to capital raising efforts. The shares were valued
at $275,000, which represents the fair market value of the services provided on
the date of issuance.
  28
 LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008
 8.            
EQUITY(Continued)
 
 Common
Stock (Continued)
 
 In
December 2008, the Company issued 101,500 shares of common stock in exchange for
consulting services related to technology development. The shares were valued at
$83,230, which represents the fair market value of the services provided on the
date of issuance.
 
 In
December 2008, the Company issued 50,000 shares of common stock in exchange for
sales consulting services. The shares were valued at $41,000, which represents
the fair market value of the services provided on the date of
issuance.
 
 In
January 2009, the Company issued 36,000 shares of common stock in exchange for
legal advisory services. The shares were valued at $33,157, which represents the
fair market value of the services provided on the date of issuance.
 
 In
January 2009, the Company issued 100,000 shares of common stock in exchange for
sales and business advisory services. The shares were valued at $107,000, which
represents the fair market value of the services provided on the date of
issuance.
 
 In
February 2009, the Company issued 30,000 shares of common stock in exchange for
legal advisory services. The shares were valued at $28,200, which represents the
fair market value of the services provided on the date of issuance.
 
 In
February 2009, the Company issued 100,000 shares of common stock in exchange for
consulting services related to capital raising efforts. The shares were valued
at $94,000, which represents the fair market value of the services provided on
the date of issuance.
 
 In
February 2009, the Company issued 100,000 shares of common stock in connection
with a debt issuance. The shares were valued at $94,000, which represents the
fair market value of the debt issuance costs on the date of
issuance.
 
 In
February 2009, the Company issued 100,000 shares of common stock in exchange for
business advisory services. The shares were valued at $94,000, which represents
the fair market value of the services provided on the date of
issuance.
  29
  LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008
 8.       
     EQUITY(Continued)
 
 Warrants
 
 In August
2007, the Company issued a “Series A” warrant to purchase 1,500,000 common
shares at $0.33 per share and a “Series B” warrant to purchase 750,000 common
shares at $0.67 per share, in exchange for consulting services related to the
sale of the Company’s convertible promissory notes. The fair value of the
warrants using the Black-Scholes option pricing model amounted to $1,408,167 and
$563,624 for the “Series A” and “Series B” warrants, respectively (see Note
9).
 
 In June
2008, the Company issued “Series C” warrants to certain technology and legal
consultants to purchase a total of 180,000 common shares at $2.00 per share, in
exchange for consulting and advisory services related to developing the PocketFinder®. The fair value
of the warrants using the Black-Scholes option pricing model amounted to
$353,447 (see Note 9).
 
 In August
2008, the Company issued a “Series D” warrant to purchase 18,405 common shares
at $4.89 per share and a “Series E” warrant to purchase 15,000 common shares at
$2.00 per share, to a sales consultant in exchange for advisory services related
to product sales. The fair value of the warrants using the Black-Scholes option
pricing model amounted to $18,088 and $36,392 for the “Series D” and “Series E”
warrants, respectively (see Note 9).
 
 In
November 2008, the Company issued “Series G” warrants to certain consultants to
purchase 81,724 common shares at $2.45 per share in exchange for consulting
services related to capital raising efforts. The fair value of the warrants
using the Black-Scholes option pricing model amounted to $160,939 (see Note
9).
 
 In
November 2008, the Company issued “Series H” warrants to certain consultants to
purchase 1,528,410 common shares at $0.88 per share in exchange for consulting
services related to capital raising efforts. The fair value of the warrants
using the Black-Scholes option pricing model amounted to $1,115,361 (see Note
9).
  30
 LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008
 8.         
   EQUITY(Continued)
 
 Stock Incentive
Plan
 
 On
September 10, 2007, the directors and shareholders adopted a 2007 Stock
Incentive Plan.  The plan reserves 2,250,000 shares of common stock of
the Company for issuance pursuant to options, grants of restricted stock or
other stock-based awards.  The plan is administered by the board of
directors which has the power, pursuant to the plan, to delegate the
administration of the plan to a committee of the board.  There were
219,356 shares of common stock granted under the plan for the six months ended
February 28, 2009.
 
 
 9.           STOCK OPTIONS AND
WARRANTS
 
 On August
15, 2007, the Company issued a “Series A” warrant to a consultant to purchase
1,500,000 shares of the Company’s common stock at $0.33 per share and a “Series
B” warrant to purchase 750,000 shares of the Company’s common stock at $0.67 per
share. Both warrants terminate at the earlier of August 14, 2012 or upon the
Company’s sale and issuance of stock in a public offering with gross proceeds in
excess of $10 million. The fair value of the Series A and Series B warrants is
capitalized as debt issuance costs, and will be amortized over the remaining
life of the note payable. For the year ended August 31, 2008, the Company
recognized debt issuance cost amortization totaling $1,971,791 for the Series A
and Series B warrants. The Company calculated the fair value of the warrants by
using the Black-Scholes option pricing model. No warrants were exercised as of
February 28, 2009.
  On June
2, 2008, the Company issued “Series C” warrants to six technology and legal
consultants to purchase a total of 180,000 common shares at $2.00 per share, in
exchange for consulting and advisory services related to developing the PocketFinder®. The warrants
expire June 2, 2013. The fair value of the warrants using the Black-Scholes
option pricing model amounted to $353,447 and is included in general and
administrative operating expenses for the year ended August 31, 2008. No
warrants were exercised as of February 28, 2009.
  31
 LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008
 9.          
  STOCK
OPTIONS AND WARRANTS (Continued)
 
 On August
29, 2008, the Company issued a “Series D” warrant to purchase 18,405 common
shares at $1.63 per share and a “Series E” warrant to purchase 15,000 common
shares at $2.00 per share, to a sales consultant in exchange for advisory
services related to the sale of the Company’s PocketFinder®family of
products.The “Series
D” warrants and “Series E” warrants expire March 3, 2013 and June 2, 2013,
respectively. The fair value of the warrants using the Black-Scholes option
pricing model amounted to $18,088 and $36,392 for the “Series D” and “Series E”
warrants, respectively. No warrants were exercised as of February 28,
2009.
  On
November 3, 2008, the Company issued “Series G” warrants to certain consultants
to purchase 81,724 common shares at $2.45 per share in exchange for consulting
services related to capital raising efforts. The warrants expire November 3,
2011. The fair value of the warrants using the Black-Scholes option pricing
model amounted to $160,939. No warrants were exercised as of February 28,
2009.
 
 On
November 24, 2008, the Company issued “Series H” warrants to certain consultants
to purchase 1,528,410 common shares at $0.88 per share in exchange for
consulting services related to capital raising efforts. The warrants expire
November 24, 2011. The fair value of the warrants using the Black-Scholes option
pricing model amounted to $1,115,361. No warrants were exercised as of February
28, 2009.
 
 10.           PROVISION FOR INCOME
TAXES
 
 Deferred
income taxes are reported using the liability method. Deferred tax assets are
recognized for deductible temporary differences and deferred tax liabilities are
recognized for taxable temporary differences. Temporary differences arise from
the difference between the reported amounts of assets and liabilities and their
tax basis. Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or all of
the deferred tax assets will not be realized.
 
 Deferred
tax assets and liabilities are adjusted for the effects of changes in tax laws
and tax rates on the date of enactment.
 
 The
Company did not provide any current or deferred U.S. federal income taxes or
benefits for any of the periods presented because the Company has experienced
operating losses since inception. The Company provided a full valuation
allowance on the net deferred tax asset, consisting of net operating loss carry
forwards, because management has determined that it is more likely than not that
we will not earn sufficient income to realize the deferred tax assets during the
carry forward period.
  32
  LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008
 10.           PROVISION
FOR INCOME TAXES (Continued)
 
 The
components of the Company’s deferred tax asset as of February 28, 2009, are as
follows:
  Net
      operating loss carry forward
                  
                  $
                  4,149,000Valuation
      allowance
                  
                  
                  (4,149,000
                  )Net
      deferred tax asset
                  
                  $
                  -
 
 A
reconciliation of the combined federal and state statutory income taxes rate and
the effective rate is as follows:
  Federal
      tax at statutory rate
                  
                  $
                  34.00
                  %State
      income tax net of federal benefit
                  
                  
                  5.83
                  %Valuation
      allowance
                  
                  
                  (39.83
                  %)$
                  -
 
 
 The
Company’s valuation allowance increased by $701,000 for the six months ended
February 28, 2009.
 
 As of
February 28, 2009, the Company had federal and state net operating loss
carryforwards of approximately $10,417,000 which can be used to offset future
federal income tax. The federal and state net operating loss carryforwards
expire at various dates through 2029. Deferred tax assets resulting from the net
operating losses are reduced by a valuation allowance, when, in the opinion of
management, utilization is not reasonably assured. These carryforwards may be
limited upon a change in ownership or consummation of a business combination
under IRC Sections 381 and 382.
 
 
 11.           SUBSEQUENT
EVENT
 
 On March
3, 2009, the Company extended the terms of the $950,000 promissory note
agreement with the Company’s Co-President and stockholder for an additional six
months.  The extended promissory note is due on September 3, 2009, and
will continue to accrue interest at a rate of 8% per annum.
 33
  ITEM
2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 
 General
  Information
in this report contains “forward looking statements” which may be identified by
the use of forward-looking terminology, such as “may”, “shall”, “will”, “could”,
“expect”, “estimate”, “anticipate”, “predict”, “probable”, “possible”, “should”,
“continue”, or similar terms, variations of those terms or the negative of those
terms. The forward-looking statements specified in the following information
have been compiled by our management on the basis of assumptions made by
management and considered by management to be reasonable. Our future operating
results, however, are impossible to predict and no representation, guaranty, or
warranty is to be inferred from those forward-looking statements.
  The
assumptions used for purposes of the forward-looking statements specified in the
following information represent estimates of future events and are subject to
uncertainty as to possible changes in economic, legislative, industry, and other
circumstances. As a result, the identification and interpretation of data and
other information and their use in developing and selecting assumptions from and
among reasonable alternatives requires the exercise of judgment. To the extent
that the assumed events do not occur, the outcome may vary substantially from
anticipated or projected results, and, accordingly, no opinion is expressed on
the achievability of those forward-looking statements. No assurance can be given
that any of the assumptions relating to the forward-looking statements specified
in the following information are accurate, and we assume no obligation to update
any such forward-looking statements.
  Unless otherwise noted, the terms
"LBT ", the "Company", "we", "us", and "our" refer to the ongoing business
operations of Location Based Technologies,
Inc.
 
 Overview.  We are a
corporation incorporated in Nevada on April 20, 2006.  We are
qualified to do business in California.  Our shares of common stock
are currently traded in the over-the-counter market and our stock price is
reported on the OTC Bulletin Board under the symbol “LBAS.”  We are
headquartered in Anaheim, California.
 
 Our
Business.  Location Based Technologies, Inc. designs and
develops personal locator devices and services. We are the developer of the
PocketFinder® Family of Products and the PocketFinder® Network.  The
PocketFinder® Family of Products currently includes the PocketFinder®,
PetFinder®, PocketFinder® Luggage, and PocketFinder’s fleet management system
that also provides environmental monitoring of temperatures in refrigeration
trailers.  The PocketFinder® is a small location device that enables a
user to locate a device, person, or pet, at anytime from almost
anywhere.  PocketFinder® Personal Locator devices are completely
wireless.  Users can monitor the safety and location of family
members, pets, and valuables using GPS and GPRS technologies.
 
 Our
Company is focusing on sales, marketing, and delivery of our product in the
United States (“US”), the United Kingdom (“UK”), and selected parts of
Europe.  We have begun to generate consulting revenue from the
LoadRack agreement (described below) as well as sales from mobile application
downloads.  In September 2008, the Company secured its first Purchase
Order of $3,700,000 for its PetFinder® product and will deliver the first
PetFinder products in the US to fill this order upon securing approval from our
wireless carrier for our device.  We have begun sales from mobile
applications that allow the Android phone (Google, T-Mobile), Apple’s iPhone,
Blackberry’s Bold and Curve, and GPS enabled smartphones using the Windows
Mobile Professional 6.0 Operating System  to act as a PocketFinder®
with all of the features and functionality of our devices.  These
mobile applications work world-wide as long as the phone has access to a
network.  Furthermore, as the actual PocketFinder® and PetFinder®
devices enter the US market, the mobile applications will be able to seamlessly
add those devices to its account and optimize the family’s ability to stay
connected.  In the first quarter of 2009, we developed these Global
Positioning System (“GPS”) mobile applications so that they interact with our
easy to use web-based interface from any telecom network (GSM or Code Division
Multiple Access (“CDMA”)).
  34
  In
January 2009, we signed a Professional Services Agreement with LoadRack, LLC,
for $1,250,000 to customize our Web interface to optimize existing truck
tracking and monitoring hardware. Payment for interface customization has begun
and we expect an order for the hardware components in the very near future. The
Jabil facility in Meung-sur-Loire, France, is ready for high quality, mass
volume production runs which, pursuant to existing purchase orders, we expect to
begin in May 2009 and expanding over the following five months. The Company has
the option of opening additional manufacturing lines at other Jabil plants as
demand requires. PocketFinder® devices were submitted to RFI Global Services,
Ltd. (“RFI”) labs in November 2008, but were withdrawn by the Company to improve
upon the accuracy of the devices. Over the intervening months, we have been
working with our geospatial provider and our device software engineers in Europe
in order to achieve the level of accuracy that will merit recognition as a
highly reliable and dependable Personal or Asset Location Device. The Company
resubmitted its devices to RFI in late February 2009 and expects to secure
Federal Communications Commission (“FCC”) certification during the month of
April with PCS Type Certification Review Board (“PTCRB”) testing underway.
Before beginning sales in the US we must also secure Carrier Network approval
from AT&T.
  We have
secured sufficient funds (revenues and shareholder loans) to continue operations
for an additional 60 to 90 days and are in discussion with a small number of
strategic individuals/companies with interest in providing significant cash
infusion as debt or equity investments to fund inventory, support sales and
marketing initiatives, and for general operational expenses. However, there is
no assurance that we will be successful in the fundraising efforts. The desired
outcome is to form long-term relationships that deliver both immediate and
long-term mutual benefit to all parties.
 We will
continue to enhance the functional capability of our products on an ongoing
basis as new vertical market opportunities are regularly being
discovered.  OEM opportunities are also an element of our strategic
direction.
  In spite
of the dramatic downturn in the economy and the financial markets, we continue
to see evidence of the market demand for location-based services that will allow
family members to keep in touch with one another in an increasingly busy world
and for products that allow companies to more efficiently utilize their vehicles
and their mobile workforce.  ABI Research reports that the North
American and worldwide personal navigation device (“PND”) market will remain
flat in 2009 as the impact of the economy and the narrow range of applications
has its effect.  The main offering of PNDs are real-time traffic or
Internet access.
 
 At the
same time, navigation on cellular phones is gaining
momentum.  According to ABI Research, in the long-term, PNDs will face
increasing competition from new form factors such as mobile Internet devices
(“MID”), portable media players, and multipurpose, large-screen, connected
portable devices.
  We
believe that the PocketFinder family of products represents the sought for
application that ABI recognizes is missing to stimulate the growth of personal
location or navigation devices.  By taking advantage of the latest in
GPS, GSM, and Internet technology, small and medium sized businesses will be
able to more effectively and efficiently manage their mobile assets and human
resources.  In addition, the PocketFinder® will optimize the ability
for families to stay connected.  A 2008 national survey by the Pew
Internet & American Life Project has found that the Internet and cell phones
have become central to modern family life.  Rather than hurt families,
Pew said, new technologies allow new forms of connectivity.  Pew also
reports positive impacts from the high rates of technology ownership in today’s
families.
  "Some
analysts have worried that new technologies hurt family togetherness, but we see
that technology allows for new kinds of connectedness built around cell phones
and the Internet," said Tracy Kennedy, author of a new report about the survey
called Networked Families. "Family members touch base with each other frequently
with their cell phones, and they use those phones to coordinate family life on
the fly during their busy lives."
  Time
Deal, a senior analyst at Pike & Fischer, remembers that when he was a kid,
he'd disappear on his bike for most of Saturday, he said, and maybe check-in
with his parents for lunch and dinner. The times have changed -- and so have
safety concerns. "We are much more concerned about threats of a number of types
against our children today," Deal said. "Wireless devices have enabled us to
enjoy greater connectivity when we are not physically together. I can't imagine
a world now where I can't contact my wife or son via cell phone to check on
their location and to see if they can pick something up."
  35
  The
Mobile Web provides people with access to the Internet anytime and anywhere
mobile phone service is available -- at its most basic, it enables you to browse
the Internet with a mobile device.  IBM envisions a substantial
build-out of the Mobile Web and a significant shift in the way the majority of
people will interact with the Web over the next 5-10 years.  Their own
business think-tank predicts the Mobile Web market for consumer services such as
entertainment and email is expected to reach $80 billion by 2011, more than 36
percent annual growth.  This enhanced capability greatly increases the
benefits of the PocketFinder® products.  This research was conducted
prior to the substantial economic downturn that we are now
experiencing.  It is unclear how the finds will or will not be
affected by current economic conditions.
  The
PocketFinder® family of products enhances the ability for families with young
children to stay connected and to meet the demands of a fast-paced
life.  Knowing the whereabouts of family members is a crucial step to
coordination and planning.
  In
addition, vertical applications may include: outdoor and extreme sports
enthusiasts, parents, adult children of the elderly, elder care providers of
patients with Alzheimer’s and dementia, special needs providers for those with
disabilities, pet owners, and for the tracking and recovery of valuable property
and luggage while traveling.  Our device is fifty millimeters in
diameter or about 2 inches.  It fits easily into a child’s pocket,
their backpack, or onto a belt.  The PocketFinder® and PetFinder®
devices will come with a form fitting silicone pouch that can easily slide onto
a belt or a pet’s collar.
 
 We
operate with an “outsourced” model of highly selected individuals and
organizations that have quick growth capacity to keep pace with our anticipated
fast growth.  We have a small number of employees, yet have
approximately 80 full and part time contractors working on our
endeavor.  It allows us to tightly control our overhead and ensures
that we have the right resources in place at the right time.  The
infrastructure and critical organizations for success are in
place.  We have a very talented senior management team that brings the
right knowledge, skills and abilities to deliver world-class products and
services.  Distribution opportunities are expanding and we are
carefully analyzing each market opportunity against potential growth, economic
value, and support capability metrics.  Our contract with 24-7 INtouch
will handle our call-center customer services demand in the US and
Canada.  We are developing a business model for international market
opportunities and are in discussions with distributors in at least eleven
countries at this time.
  The
government-owned global positioning satellite, or GPS, system is neither
patentable nor exclusive in source.  As a result, other entrants may
utilize the same capability as well as existing wireless
technologies.  However, it is not GPS and wireless technologies that
differentiate our product from the competition.  Rather, it is the
proprietary software that transforms available technologies into an intuitive
and user-friendly interface that offers greater value, capabilities, and
convenience to the customer.
  Our Personal Locator
Services.  We have begun the manufacturing process of the
PocketFinder®.  We have entered into a manufacturing agreement with
Jabil to produce the PocketFinder® devices in France.  Jabil is one of
the world’s largest original equipment manufacturer (OEM) of electronics with
facilities in China, Mexico, the US and Europe.  We will provide
end-user customer service and support in the US and Canada through 24-7 INtouch,
headquartered in Toronto, Ontario.  We anticipate exploring multiple
vertical markets including the following:
  Parents
  of young children (primarily 5 to 12 years of age) who seek the peace of mind
  of being able to know that their children are where they are supposed to be
  when they are supposed to be there;
        Families
  with members who are Autistic or have Down Syndrome, Alzheimer’s,
  etc.;
        Elder
  Care support and applications;
        Pet
  care and location capability; and
        Asset
  tracking and location capability: cars, trucks, fleet management,
  luggage, and other personal assets. We signed
a contract with KORE Telematics, a provider of “Machine-to-Machine” or M2M
protocol access, on November 26, 2007 and have been testing our devices and our
systems for more than a year.  Our products will offer wide network
coverage throughout North America via KORE Telematics utilizing the largest
GSM carrier networks in the United States and Canada.  With this
agreement, our personal locators will have the ability to roam seamlessly on the
networks of 400 wireless providers in over 220 countries.  In
addition, our locators have the ability to work on any GSM network in the
world.
  36
 
 Our Intellectual Property
Investment.  We have invested significantly, and continue to
invest, in intellectual properties, which consist of apparatus patents and
applications and system and method patents and applications.  We have
filed claims that cover all aspects of the PocketFinder®, its operating system
and user interface.  We have expanded and filed additional claims this
fiscal year that cover new aspects of the personal locator, its operating system
and user interface.  We received Trademark approvals for the
following: PetFinder; PocketFinder and the associated Service Mark; Your World
Located; iTalk; Luggage Tracker; the avatars (or stylized heads) found on our
website and on the product’s box.
 
 We own
the Internet domain name www.pocketfinder.com
as well as the names of other related domains that could have use in future
business and vertical marketing initiatives.  Under current domain
name registration practices, no one else can obtain an identical domain name,
but someone might obtain a similar name, or the identical name with a different
suffix, such as “.org,” or with a country designation.  The regulation
of domain names in the United States and in foreign countries is subject to
change, and we could be unable to prevent third parties from acquiring domain
names that infringe or otherwise decrease the value of our domain
names.
 
 Our Target Markets and Marketing
Strategy.  Location Based Technologies provides wireless
location based solutions for global positioning products and its proprietary
“friendly user interface” software system.  Its PocketFinder® family
of products delivers rugged, compact products with real-time location-based
information over its proprietary server architecture.  Our products
simplify the ability for families to stay connected with one another, for pet
owners to know where their pets are on demand, and solutions for asset tracking
– such as LoadRack’s trucking solution.  The Company has the ability
to provide platform support for the integration of other location-based GPS
services within its applications in order to simplify the customers need to
locate all location-based devices in one easy tool.
  The
Company is preparing for the launch of our first three products, the
PocketFinder® and PetFinder® as well as PocketFinder’s fleet management system,
while also involved in numerous other “white label” marketing
opportunities.  In addition, several licensing opportunities are being
explored.
  For our
PocketFinder® family of products, the Company believes that the primary target
market will consist of parents with school-aged children from ages five to
thirteen.  Secondary markets may include medical and elder care
providers, campers, hikers, backpackers, adventure seekers, extreme sports
enthusiasts, freight and cargo carriers, delivery services, pet owners, vehicle
finance companies, auto dealerships, law enforcement agencies, military
organizations and individuals wishing to track valuable personal
items.
  Based on
census information, there are over 37,000,000 children in the 5 to 13 year old
market segment in the United States with an additional 4,000,000 in the prime
focus areas in Canada.  The European Community has an additional
42,500,000 children in this primary age group.  Adding in the elder
care market this represents a target market of more than 109,200,000 potential
customers in our focus age group.
  Closely
related to personal locators is the desire for pet locators as it is estimated
there are 70,000,000 pets in the US.  A locator device will give a pet
owner the ability to locate their pet if it were to become lost or missing as
well as to ensure that services paid for are received, i.e., that a walking service
or pet care facility actually provide the outdoor activity contractually agreed
to.  In addition, we are finding significant interest in the
PetFinder® product in European countries.
  Location
Based Technologies marketing initiatives will include:
 Licensing
  opportunities for the products in other areas or regions;
        Self
  branded or “white label” opportunities for niche market or vertical market
  sales;
        Affinity
  group marketing and outreach opportunities;
        Utilization
  of direct response sales due to public relations outreach in special interest
  magazines and newsletters; and
        Retail
  distribution initiatives. 37
  Our Revenue
Sources.  We expect our revenues to be based on the following
sales and revenue sources:
 Potential
  licensing fees;
        Organizations
  that will self-brand the PocketFinder® for specialized niche markets (“white
  label”);
        Personal
  Locator device sales to Retailers;
        Personal
  Locator device sales through Affinity groups and through our web
  site;
        Personal
  Locator device accessory sales;
        Monthly
  re-occurring service fees; and
        GPS
  Smartphone mobile application sales (one-time or monthly fees as
  applicable) Our Growth
Strategy.  Our objective is to become a major provider of
personal and asset location services in the Location Based Services
market.  Our strategy is to provide high quality devices that meet the
market’s requirements whether it is for their children, their pets, or asset
tracking (luggage, vehicles, boats, etc.).  Key elements of our
strategy include:
 
 A mass
  market retail price of under $150.00 for Personal Location devices (customized
  trucking solutions with additional features and capabilities will be sold at a
  higher cost);
        A basic
  monthly service fee of under $20.00 with multiple convenient access points
  (mobile phone, land line, or via the internet);
        Ease of
  use at the location interface point as well as with the device;
  and
        Rugged
  design that meets the rigors of an active child or
  pet. Our Website.  Our
corporate website, www.locationbasedtech.com,
provides a description of our corporate business along with our contact
information including address, telephone number and e-mail
address.  Our website also provides prospective customers with
relevant information about our products, pricing and payment options,
pre-ordering capability, frequently asked questions and access to corporate
investor relations information.  Information contained on our website
is not a part of this report.
  Our
Competition.  Personal location and property tracking devices
are just beginning to significantly penetrate the marketplace.  We
believe this condition represents a tremendous opportunity as customers will be
attracted in large numbers once the intrinsic value of such devices is
recognized and mass market adoption begins.
  Our
competitors include Geospatial Platform Providers, Application Developers,
Zoombak, Snitch, Lo-Jack, and Spot.  These competitors may be better
financed, or have greater marketing and scientific resources than we
do.
  In
related markets, GPS devices have become widely used for automotive and marine
applications where line-of-sight to GPS satellites is not a significant
issue.  Manufacturers such as Garmin, Navman, Magellan, TomTom,
Pharos, NovAtel and DeLorne are finding a market interested in using these
products for both business and leisure purposes.  As a result, use of
GPS technology in devices such as chart plotters, fitness and training devices,
fish finders, laptop computers, and personal digital assistant (“PDA”) location
devices are gaining significant market acceptance and
commercialization.  Prices range from $199.00 to several thousand
dollars.  We expect that increasing consumer demand in these markets
will drive additional applications and lower price points.
  Government
Regulation.  We are subject to federal, state and local laws
and regulations applied to businesses generally as well as FCC, Internationale
Canada (“IC”) and CE (European Economic Area) wireless device regulations and
controls.  We believe that we are in conformity with all applicable
laws in all relevant jurisdictions.  We do not believe that we are
subject to any environmental laws and regulations of the United States and the
states in which we operate.
  38
  Our Research and
Development.  We are currently in the final steps of the
research and development phase.  Certifications being finalized will
include FCC, IC, CE, PTCRB, and then we will move on to Carrier Network
certification for product coming into the United
States.  Our  manufacturing  will continue to work
with our company and several other entities that are conducting research on key
aspects of the device itself (including expanded antennae capability, battery
capacity, and enhanced location reliability and accuracy) in an ongoing effort
to provide the best quality product at the very best size and value on the
market.  We anticipate ongoing involvement with some level of
developmental activities throughout the foreseeable future.
  Employees and Outsourced
Assistance.  As of December 29, 2008, we are leveraging our
outsourcing model to world class partners and have three full-time employees and
approximately 80 contracted professionals engaged in hardware and software
development, early marketing and sales preparation, and will soon add customer
service contracted professionals.  Mr. Scalisi, our Co-President and
Chief Development Officer, Mr. Morse, our Co-President and Chief Executive
Officer, and Ms. Mejia, our Chief Operating Officer, currently devote 100% of
their business time to our operations.  We anticipate that we will
hire two to four key employees once significant revenues have been secured, with
selective and controlled growth commensurate with significant increases in our
revenues over time.  Remaining true to our “outsourced” model for
growth and expansion, any large personnel increases will be accomplished through
sales and customer support organizations contracted to provide respective
services.
 
 In
furtherance of our efforts to prepare to move into the marketplace, we have
entered into the following contract with an independent service provider during
the quarter ended February 28, 2009:
  Endorsement
Agreement, dated February 12, 2009, with John Riegger (a professional golfer) to
act as a spokesperson for the Company through endorsements.  The
agreement is in effect from March 1, 2009 through December 31,
2009.  Mr. Riegger will be compensated 10,000 shares of the Company’s
common stock.  Shares issued to Mr. Riegger will be issued in reliance
on the exemption provided by Section 4(2) of the Securities Act of
1933.  Such shares will be “restricted” securities as defined in SEC
Rule 144.
 
 RESULTS
OF OPERATIONS.
  For the
six months ended February 28, 2009 as compared to the six months ended February
29, 2008.
  Revenue.
  For the
six months ended February 28, 2009, we generated $70,782 of consulting and
service revenue primarily from the Professional Services Agreement with
LoadRack, LLC.  For the six months ended February 29, 2008, we
generated $5,818 of consulting revenue.  The LoadRack consulting
revenues were earned pursuant to a development agreement for the design,
construction and implementation of a location system for transportation
fleets.  We are recognizing this revenue according to our estimate of our
current progress to completion toward identifiable project milestones.  We
anticipate recognizing a total of $800,000 during the design, construction and
implementation phases.  The $450,000 balance of the contract is related to
hardware customization and will be fully earned upon delivery and client
acceptance.
  Cost
of Revenue.
  For the
six months ended February 28, 2009, cost of revenue totaled $50,608, resulting
in a 28.5% gross profit margin.  There was no cost of revenue for the
six months ended February 29, 2008.  As contract revenues are
recognized using management’s estimate of total costs to complete a project, it
is at least reasonably possible that the profit margin estimate could change in
the near term, although management is not aware of any factors which would have
a material bearing on its present revenue recognition.
  39
  Operating
Expenses.
  For the
six months ended February 28, 2009, our total operating expenses were $2,189,898
as compared to total operating expenses of $2,596,687 for the six months ended
February 29, 2008.  The decrease in operating expenses is attributed
to the following:
 A
  decrease in professional fees to $833,558 for the six months ended February
  28, 2009, as compared to $1,416,327 for the six months ended February 29,
  2008.  The decrease in professional fees is primarily due to the
  recognition of $830,000 in stock based compensation issued to consultants for
  technology services rendered during the six months ended February 29, 2008,
  whereby there were no such expenses were recognized during the six months
  ended February 28, 2009;
        An
  overall decrease in general and administrative costs for the six months ended
  February 28, 2009, to $311,076 as compared to $404,948 for the six months
  ended February 29, 2008 as significant efforts were made to control and reduce
  general and administrative costs; and
        An
  increase in research and development costs for the six months ended February
  28, 2009, to $797,464 as compared to $548,441 for the six months ended
  February 29, 2008, as significant efforts were made to finalize production
  ready devices and the website and mapping interface
services. Other
Expenses.
  For the
six months ended February 28, 2009, we reported other expenses consisting of net
interest expense, financing costs and foreign currency gains and losses totaling
$2,937,331 as compared to $2,342,177 for the six months ended February 29,
2008.  The increase at February 28, 2009, is primarily attributed to
an increase in stock based compensation paid to consultants providing capital
raising services.  In January 2009, the Company contracted for
professional capital raising services to be performed during 2009, at a total
cost to the Company of $2,850,000.  The cost of these services has
been deferred and is charged to operations ratably over a twelve month period
beginning January 2009.
  Net
Loss.
  For the
six months ended February 28, 2009, we reported a net loss of $5,107,855 as
compared to a net loss of $4,934,646 for the six months ended February 29, 2008,
due to a decrease in operating expenses and an increase in other expenses as
previously discussed.
  Liquidity
and Capital Resources.
  We had
cash and cash equivalents of $103,745 as of February 28, 2009, as compared to
$20,569 as of August 31, 2008.  Prepaid expenses totaled $122,421 as
of February 28, 2009, as compared to $86,616 as of August 31, 2008, and
primarily consisted of advisor retainers and prepaid manufacturing and
production costs.  Deferred financing costs totaled $2,375,000 as of
February 28, 2009, and consisted of unamortized fees paid to consultants for
capital raising advisory services
  As of
February 28, 2009, the total of our property and equipment, less accumulated
depreciation, was a net value of $1,312,099, compared to the net value of
$1,043,861 for our property and equipment, less accumulated depreciation, as of
August 31, 2008.  The increase is primarily due to the development of
the website and database during the six months ended February 28,
2009.  Amortization of the website and database has not commenced, and
will begin when our product line is launched.  We continue to assess
these assets for potential impairment and none has been recorded to
date.
  Other
assets, consisted of patents, trademarks and deposits, amounted to $1,189,374 as
of February 28, 2009, as compared to $1,141,186 as of August 31,
2008.  The increase is the result of increased legal fees to obtain
and secure additional international patents and trademarks.  We
periodically assess our patents and intellectual property for impairment; none
has been recorded to date.
  40
  Our total
assets as of February 28, 2009, were $5,103,374 as compared to our total assets
as of August 31, 2008, which were $2,292,232.  The increase in our
total assets as between the two years was due primarily to an increase in
deferred financing costs as of February 28, 2009.
  As of
February 28, 2009, our accounts payable and accrued expenses, including accrued
officer compensation, were $1,256,097 as compared to $903,225 as of August 31,
2008.  The increase in accounts payable and accrued expenses,
including accrued officer compensation, is primarily a result of cash flow
management that has resulted in extending payables and accruing officer
compensation.
  Advances
from officers including accrued interest, totaled $3,397,936 as of February 28,
2009, as compared to $159,409 as of August 31, 2008.  The increase is
primarily a result of $2,850,000 in capital raising costs being paid by the
officers on behalf of the Company in January 2009.  In addition, cash
advances made to the Company for the six months ended February 28, 2009,
amounted to $412,000.
  Related
party notes payable and accrued interest totaled $634,000 and $39,879,
respectively, as of February 28, 2009, whereby there were no such related party
notes payable at August 31, 2008.  The amount represents short term
borrowings by the Company in September 2008 and January 2009 which have been
used to fund operations, research and development.  The note holder
has agreed to extend the portion of these loans which became payable in March
2009 for an additional six months.
  Notes
payable and accrued interest totaled $925,000 and $18,937, respectively, as of
February 28, 2009, whereby there was no such note payable at August 31, 2008.
The $925,000 in promissory notes are short term, to be repaid out of potential
future permanent financing.
  In 2007,
we sold $5,242,000 in convertible notes that were subsequently converted into
5,242,000 shares of common stock.  The notes were sold to accredited
investors.  We made these sales in reliance on an exemption from
registration provided by Section 4(2) of the Securities Act and similar state
exemptions.  Our counsel has advised us that the availability of those
exemptions cannot be determined with legal certainty due to the fact that we may
not have complied with all of the form filings or other notice filing provisions
of safe-harbor exemptions for such sales offered by rules promulgated under the
Securities Act by the SEC and applicable state laws.  Thus, it is
possible that the sale of the convertible notes may have violated the
registration requirements of the Securities Act and applicable state
laws.  As to those sales, a right of rescission may exist on which the
statute of limitations has not run.  The Company performed an analysis
under FAS 5, Accounting
for Contingencies, and has concluded that the likelihood of a right of
rescission being successfully enforced on the convertible note sales is
remote.
  We had no
other long term liabilities, commitments or contingencies.
  Other
than the proposed increases in revenue and cost of revenue upon launching our
products into the market, we are not aware of any other known trends, events or
uncertainties, which may affect our future liquidity.
  Cash
Requirements.
  We are an
early stage wireless technology company focused on the marketing and sales of
the PocketFinder® family of products for retail distribution. Since our
inception, we have generated significant losses.  As of February 28,
2009, we had an accumulated deficit of $15,131,700 and we expect to incur
continual losses until sometime in calendar year 2009.
  We have a
limited history of operations.  To date, we have funded our operations
primarily through personal loans by the founders and the private placement of
our common stock and convertible notes.
  41
  As of
February 28, 2009, we had $103,745 in cash, cash equivalents and short-term
investments.  During the six months ended February 28, 2009, we
received loans totaling $1,600,000 of which $1,300,000 were related party loans,
to fund operations.  Over the next several quarters we expect to
invest significant amounts of funds (in addition to cooperative advertising
costs of approximately five percent which costs are included in the cost of
goods sold) to develop our sales, marketing and manufacturing programs
associated with the commercialization and launch of the PocketFinder® family of
products.  We expect to fund additional inventory and any necessary
general overhead requirements through capital raised through the sale of debt or
equity securities although there is no assurance that we will be successful in
that regard.
  We expect
to have to raise additional funds in the coming months to purchase and maintain
inventory and for related purposes such as packaging, shipping, and direct sales
and marketing costs.  We are not able to estimate the amount of funds
necessary as it will be determined by the volume represented by purchase orders
from targeted retailers who desire to sell our product.
  Our
funding requirements will depend on numerous factors, including:
 
 Costs
  involved in production and manufacturing to fill Purchase Orders, software and
  interface customization for OEM partners, and the network necessary to
  commence the commercialization of the PocketFinder® Personal
  Locator;
        The
  costs of outsourced manufacturing;
        The
  costs of commercialization activities, including product marketing, sales and
  distribution; and customer service and support.
        Our
  revenues, if any, from successful commercialization of the PocketFinder®
  Personal Locator and the PocketFinder® Network platform services. As noted
above, we will need to raise additional external funds through the sale of
additional equity or debt securities.  We will need to raise
additional funds during the next three months to finance the inventory necessary
to meet current and anticipated demand and to support related marketing, sales,
and distribution expenses.  The sale of additional equity securities
may result in additional dilution to our shareholders.  Sale of debt
securities could involve substantial operational and financial covenants that
might inhibit our ability to follow our business plan.  Additional
financing may not be available in amounts or on terms acceptable to us or at
all.  If we are unable to obtain additional financing, we may be
required to reduce the scope of, delay or eliminate some or all of our planned
commercialization activities, which could harm our financial conditions and
operating results.
  Product
Research and Development
  Production
ready units are now available.  We plan to continue to develop new
product enhancements while we deliver the initial market launch of the
PocketFinder® and PetFinder® including manufacturing in the fourth quarter of
2009.  Our first purchase order was secured in September 2008, and
others are being negotiated at this time.  Many of our distributors
were waiting for the Company to deliver final production ready
product.  These were delivered by Jabil in late October
2008.  We anticipate that we will be prepared to begin delivery of
product to retailers in the fourth quarter of 2009, although there can be no
assurance that we will meet that target time period.
  Plant
and Equipment, Employees
  We do not
plan to purchase or sell any significant equipment, plant or properties during
the foreseeable future.  Our business operations are based on a
strategic outsourcing model, thereby negating the need for additional plant and
equipment, or significant numbers of employees.  Thus, we do not
anticipate hiring any significant number of additional employees during the next
12 months but will add a few selected and strategic employees.
  Off-Balance
Sheet Arrangements
  As of
February 28, 2009, we had no off-balance sheet arrangements.
  ITEM
3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
 
 Not
applicable.
  42
 
 ITEM
4T.  CONTROLS AND PROCEDURES
 
 Evaluation
of Disclosure Controls and Procedures
  Management
is responsible for establishing adequate internal controls and procedures
designed to ensure that information required to be disclosed in the reports that
we file or submit under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in the
rules and forms of the Securities and Exchange Commission.
 
 As of the
end of the period covered by this report, the company carried out an evaluation,
under the supervision and with the participation of the company's management,
including the company's chief executive officer and the company's chief
operating officer and principal financial officer, of the effectiveness of the
design and operation of the company's disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of
1934, as amended). Based on this evaluation, the company's chief executive
officer and principal financial officer concluded that the company's disclosure
controls and procedures were effective in ensuring that (i) information required
to be disclosed in the reports that the company files or submits under the
Securities Exchange Act of 1934, as amended, is recorded, processed, summarized
and reported, within the time periods specified in the rules and forms of the
Securities and Exchange Commission and (ii) information required to be disclosed
in the reports the company files or submits under the Securities Exchange Act of
1934, as amended, is accumulated and communicated to management, including the
company's chief executive officer and principal financial officer, or persons
performing similar functions, as appropriate to allow timely decisions regarding
required disclosure.
  Changes
in Internal Controls Over Financial Reporting
  There
were no changes in our internal controls over financial reporting during or that
could significantly affect these controls subsequent to the date of the
evaluation of those controls by the chief executive officer and principal
financial officer.
  43
  PART
II – OTHER INFORMATION
 
 ITEM 1.  LEGAL PROCEEDINGS
  We are
not aware of any pending or threatened litigation against us that we expect will
have a material adverse effect on our business, financial condition, liquidity,
or operating results. However, legal claims are inherently uncertain, and we
cannot assure you that we will not be adversely affected in the future by legal
proceedings.
  ITEM 1.A.  RISK FACTORS
 
 Not
applicable.
 
 ITEM
2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
  None.
 
 ITEM
3.  DEFAULTS UPON SENIOR SECURITIES
 
 None.
 
 ITEM
4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  None.
 
 ITEM
5.  OTHER INFORMATION
 
 (a)
              Not
      applicable.
  (b)
              We
      have no procedure in place for shareholders to nominate persons to serve
      on our Board of Directors other than nominations for the position of
      Director will be accepted from the floor as long as the person nominated
      has given written consent to his/her nomination and has agreed to serve if
      elected.
 
 44
  ITEM
6.  EXHIBITS
  Exhibit No.*
              Document Description3.1
              Articles
      of Incorporation of Springbank Resources, Inc. (now known as Location
      Based Technologies, Inc.) (1)3.1A
              Amended
      Articles of Incorporation, dated October 20, 2008 (15)3.2
              Amended
      and Restated By-Laws of Location Based Technologies, Inc.
    (2)10.1
              Executive
      Employment Agreement, dated October 11, 2007, between the Company and
      David Morse (3)10.2
              Executive
      Employment Agreement, dated October 11, 2007, between the Company and
      Joseph Scalisi (3)10.3
              Executive
      Employment Agreement, dated October 11, 2007, between the Company and
      Desiree Mejia (3)10.4
              Stock
      Option Award Agreement between Location Based Technologies, Corp. and
      David Morse, dated August 30, 2007 (obligation assumed by the Company)
      (3)10.5
              Stock
      Option Award Agreement between Location Based Technologies, Corp. and
      Joseph Scalisi, dated August 30, 2007 (obligation assumed by the Company)
      (3)10.6
              Stock
      Option Award Agreement between Location Based Technologies, Corp. and
      Desiree Mejia, dated August 30, 2007 (obligation assumed by the Company)
      (3)10.7
              Series
      A Warrant Agreement, dated August 15, 2007, in favor of Northstar
      Investments, Inc. (3)10.8
              Series
      B Warrant Agreement, dated August 15, 2007, in favor of Northstar
      Investments, Inc. (3)10.9
              Finder’s
      Fee Agreement, dated March 9, 2007, between Northstar Investments, Inc.
      and PocketFinder, LLC (obligation assumed by the Company)
    (3)10.10
              Consulting
      Agreement, dated July 16, 2007, between Northstar Investments, Inc. and
      PocketFinder, LLC (obligation assumed by the Company )
  (3)10.11
              2007
      Stock Incentive Plan of Location Based Technologies, Corp., adopted
      September 10, 2007 (obligation assumed by the Company)
  (3)10.12
              Product
      Design Agreement, dated May 1, 2007, between Location Based Technologies
      and Aero Technology UK, Ltd. (obligation assumed by the Company)
      (3)10.13
              PocketFinder
      Branding and Website – Control Agreement, dated September 20, 2006,
      between Coregenic LLC and PocketFinder, LLC (obligation assumed by the
      Company) (3)10.14
              Coregenic
      Professional Services Contract, dated September 27, 2006, between
      Coregenic LLC and PocketFinder, LLC (obligation assumed by the Company)
      (3)10.15
              Consulting
      Agreement, dated October 3, between Location Based Technologies and
      Michael Beydler (obligation assumed by the Company) (3)10.16
              Consulting
      Agreement, dated July 10, 2006, between Location Based Technologies and
      Roger Anderson (obligation assumed by the Company) (3)10.17
              Loan
      Promissory Note in the amount of $900,000, dated November 28, 2005, with
      PocketFinder, Inc. as maker and David Morse as payee, secured by the
      intellectual property of maker (obligation assumed by the Company)
      (3)10.18
              M2M
      Telecommunications Services Agreement (portions of Attachment D to this
      Exhibit 99.1 have been omitted pursuant to a request for confidential
      treatment which has been approved by the Commission)
(4)10.19
              Consulting
      Agreement between the Company and Brooks Secrest, dated December 10, 2007
      (13)10.20
              Consulting
      and Sales Representative Agreement, dated January 2, 2008, with WhizBiz,
      LLC, to act as the Company’s consultant and sales representative.
      (13)10.21
              Consulting
      Agreement, dated January 2, 2008, with Tina Florance, CPA, for services to
      serve as the Company’s Controller. (13)10.22
              Framework
      Agreement between the Company and NXP Software, B.V. (“NXP”), dated
      February 27, 2008. (6)10.23
              Technology
      License and Distribution Agreement between the Company and NXP, dated
      February 27, 2008. (7)10.24
              Platform
      Development Agreement between the Company and NXP, dated February 27,
      2008. (8)10.25
              Assistance
      Services Agreement between the Company and NXP, dated February 27, 2008.
      (9)10.26
              Call
      Center Services Contract between the Company and 24/7 INtouch, dated
      September 25, 2007. (14)10.27
              Manufacturing
      Services Agreement between the Company and Jabil Circuit, Inc., dated May
      30, 2008. (10)
  45
  10.28
              Business
      Development Consulting Agreement between the Company and The Scigliano
      Group, dated March 1, 2008. (14)10.29
              Consulting
      Services Agreement between the Company and Richard Mejia, Jr., dated
      August 15, 2008. (15)10.30
              Loan
      Promissory Note in the amount of $950,000, dated September 3, 2008, with
      the Company as maker and Joseph Scalisi as payee. (11)10.31
              Consulting
      Services Agreement between the Company and Michael Dautermann, dated
      October 16, 2008. (15)10.32
              Consent
      of Independent Registered Accounting Firm (15)10.33
              Loan
      Promissory Note in the amount of $625,000, dated November 18, 2008, with
      the Company as maker and Gemini Master Fund, Ltd. as payee.10.34
              Loan
      Promissory Note in the amount of $300,000, dated December 24, 2008, with
      the Company as maker and Steve Finley as payee.10.35
              Loan
      Promissory Note in the amount of $350,000, dated January 26, 2009, with
      the Company as maker and Joseph Scalisi as payee.10.36
              Professional
      Services Agreement between the Company and LoadRack, LLC, dated January
      28, 2009.10.37
              Loan
      Extension Agreement, dated January 30, 2009, between the Company and
      Gemini Master Fund, Ltd.10.38
              Endorsement
      Agreement between the Company and John Riegger, dated February 12,
      2009.31.1
              Sarbanes
      Oxley Act Section 302 Certification of Chief Executive
    Officer31.2
              Sarbanes
      Oxley Act Section 302 Certification of Principal Financial
      Officer32
              Sarbanes
      Oxley Act Section 906 Certification of Chief Executive Officer and
      Principal Financial Officer99.1
              Code
      of Ethics(5)
 (1)
                Filed
      as Exhibit 3.(I) to registrant’s registration statement on Form SB-2 filed
      with the SEC December 15, 2006 (Commission File No. 333-139395) (the “SRI
      SB-2”) and incorporated herein by this reference.(2)
                Filed
      as Exhibit 3.(II) to the SRI SB-2 and incorporated herein by this
      reference.(3)
                Filed
      as like-numbered exhibits to the registrant’s Current Report on Form 8-K
      filed with the SEC on October 12, 2007 (the “October 12, 2007 8-K”) and
      incorporated herein by this reference.(4)
                Filed
      as Exhibit 99.1 to registrant’s Current Report on Form 8-K filed with the
      SEC on December 5, 2007 and incorporated herein by this
      reference.(5)
                Filed
      as Exhibit 99.4 to the October 12, 2007 8-K.(6)
                Filed
      as Exhibit 10.1 to registrant’s Current Report on Form 8-K filed with the
      SEC on February 29, 2008 (“February 29, 2008 8-K”).(7)
                Filed
      as Exhibit 10.2 to registrant’s February 29, 2008 8-K.(8)
                Filed
      as Exhibit 10.3 to registrant’s February 29, 2008 8-K.(9)
                Filed
      as Exhibit 10.4 to registrant’s February 29, 2008 8-K.(10)
                Filed
      as Exhibit 99.1 to registrant’s Current Report on Form 8-K filed with the
      SEC on June 4, 2008 (“June 4, 2008 8-K”).(11)
                Filed
      as Exhibit 99.1 to registrants’ Current Report on Form 8-K filed with the
      SEC on September 12, 2008 (“September 12, 2008 8-K”)(12)
                Filed
      as Exhibit 3.01 to registrants’ Current Report on Form 8-K filed with the
      SEC on October 22, 2008 (“October 22, 2008 8-K”)(13)
                Filed
      as like-numbered exhibits to registrant’s Form 10-QSB filed with the SEC
      on April 10, 2008(14)
                Filed
      as like-numbered exhibits to registrant’s Form 10-QSB filed with the SEC
      on July 14, 2008(15)
                Filed
      as like-numbered exhibits to registrant’s Form 10-KSB filed with the SEC
      on December 12, 2008*
                Exhibit
      numbers follow the numbering pattern for exhibits set forth in Item 601 of
      Regulation S-K
  46
  SIGNATURE
  Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Issuer has duly caused this Quarterly Report on Form 10-Q to be signed
on its behalf by the undersigned, thereunto duly authorized.
  LOCATION
      BASED TECHNOLOGIES, INC.Date:
      April 14, 2009
              By:
              /s/ David
      M. MorseDavid
      M. MorseCo-
      President and Chief Executive Officer
    47