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 November 30, 2008
  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)
  800-615-0869
 (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 87,814,270 shares outstanding
of the issuer’s common stock as of December 29, 2008.





Transitional
Small Business Disclosure Format (Check
one):    Yes o No Q









TABLE
OF CONTENTS




PAGEPART
      I
            
            FINANCIAL
      INFORMATION
            
            1ITEM 1.
            
            FINANCIAL
      STATEMENTS (UNAUDITED)
            
            1ITEM
      2.
            
            MANAGEMENT’S
      DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
            
            29ITEM
      3.
            
            QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
            
            36ITEM
      4T.
            
            CONTROLS
      AND PROCEDURES
            
            36PART
      II
            
            OTHER
      INFORMATION
            
            37ITEM 1.
            
            LEGAL
      PROCEEDINGS
            
            37ITEM 2.
            
            UNREGISTERED
      SALES OF EQUITY SECUITIES AND USE OF PROCEEDS
            
            37ITEM 3.
            
            DEFAULTS
      UPON SENIOR SECURITIES
            
            37ITEM 4.
            
            SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS
            
            37ITEM
      5.
            
            OTHER
      INFORMATION
            
            37ITEM 6.
            
            EXHIBITS
            
            38SIGNATURE
            
            40









PART
I – FINANCIAL INFORMATION






ITEM 1.  FINANCIAL
STATEMENTS (UNAUDITED)






Location
Based Technologies, Inc.


(A
Development Stage Company)


CONSOLIDATED
BALANCE SHEETS


November
30, 2008 and August 31, 2008




November
      30,
              
              
              August
      31,2008
              
              
              2008(Unaudited)ASSETSCURRENT
      ASSETSCash
      and cash equivalents
              
              $
              60,106
              
              
              $
              20,569Prepaid
      expenses
              
              
              78,292
              
              
              
              86,616Total
      current assets
              
              
              138,398
              
              
              
              107,185Property
      and equipment, net of accumulated depreciation
              
              
              1,243,858
              
              
              
              1,043,861OTHER
      ASSETSPatents
      and trademarks, net of accumulated amortization
              
              
              1,143,786
              
              
              
              1,120,728Deposits
              
              
              20,458
              
              
              
              20,458Total
      other assets
              
              
              1,164,244
              
              
              
              1,141,186TOTAL
      ASSETS
              
              $
              2,546,500
              
              
              $
              2,292,232LIABILITIES
      AND STOCKHOLDERS' EQUITY (DEFICIT)CURRENT
      LIABILITIESAccounts
      payable and accrued expenses
              
              $
              843,164
              
              
              $
              634,822Accrued
      officer compensation
              
              
              328,403
              
              
              
              268,403Advances
      from officer
              
              
              426,409
              
              
              
              159,409Notes
      payable, related party
              
              
              950,000
              
              
              
              -Accrued
      interest, related party notes payable
              
              
              18,532
              
              
              
              -Total
      current liabilities
              
              
              2,566,508
              
              
              
              1,062,634TOTAL
      LIABILITIES
              
              
              2,566,508
              
              
              
              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;87,376,770
      and 87,091,914 shares issued and outstandingat
      November 30, 2008 and August 31, 2008, respectively
              
              
              24,977
              
              
              
              24,693Additional
      paid-in capital
              
              
              13,071,037
              
              
              
              11,228,750Deficit
      accumulated during the development stage
              
              
              (13,116,022
              )
              
              
              (10,023,845
              )Total
      stockholders' equity (deficit)
              
              
              (20,008
              )
              
              
              1,229,598TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY
              
              $
              2,546,500
              
              
              $
              2,292,232




See
accompanying notes to unaudited financial statements.




1




Location
Based Technologies, Inc.


(A
Development Stage Company)


CONSOLIDATED
STATEMENTS OF OPERATIONS


For the
three months ended November 30, 2008 and 2007


and for
the period from Inception (September 16, 2005) to November 30, 2008


(Unaudited)




InceptionFor
      the three months ended
              
              
              (Sept
      16, 2005)November
      30,
              
              
              November
      30,
              
              
              to
      November 30,2008
              
              
              2007
              
              
              2008Net
      revenue
              
              $
              -
              
              
              $
              -
              
              
              $
              5,818Operating
      expensesGeneral
      and administrative
              
              
              167,938
              
              
              
              165,002
              
              
              
              1,137,646Officer
      compensation
              
              
              90,000
              
              
              
              90,000
              
              
              
              1,305,000Professional
      fees
              
              
              362,258
              
              
              
              1,097,779
              
              
              
              2,645,606Rent
              
              
              33,900
              
              
              
              18,278
              
              
              
              247,905Research
      and development
              
              
              576,111
              
              
              
              285,692
              
              
              
              3,214,464Total
      operating expenses
              
              
              1,230,207
              
              
              
              1,656,751
              
              
              
              8,550,621Net
      operating loss
              
              
              (1,230,207
              )
              
              
              (1,656,751
              )
              
              
              (8,544,803
              )Other
      income (expense)Interest
      income (expense), net
              
              
              (18,724
              )
              
              
              (1,170,748
              )
              
              
              (317,101
              )Interest
      forgiven, net
              
              
              -
              
              
              
              -
              
              
              
              58,206Debt
      issuance costs - commissions
              
              
              -
              
              
              
              -
              
              
              
              (491,775
              )Debt
      issuance costs - warrants
              
              
              -
              
              
              
              -
              
              
              
              (1,971,791
              )Financing
      costs
              
              
              (1,845,549
              )
              
              
              -
              
              
              
              (1,845,549
              )Foreign
      currency gain (loss), net
              
              
              3,103
              
              
              
              -
              
              
              
              2,764Loss
      on asset disposal
              
              
              -
              
              
              
              -
              
              
              
              (373
              )Total
      other income (expense)
              
              
              (1,861,170
              )
              
              
              (1,170,748
              )
              
              
              (4,565,619
              )Net
      loss before income taxes
              
              
              (3,091,377
              )
              
              
              (2,827,499
              )
              
              
              (13,110,422
              )Provision
      for income taxes
              
              
              800
              
              
              
              1,600
              
              
              
              5,600Net
      Loss
              
              
              (3,092,177
              )
              
              
              (2,829,099
              )
              
              
              (13,116,022
              )Accumulated
      DeficitBalance,
      beginning of period
              
              
              (10,023,845
              )
              
              
              (2,289,343
              )
              
              
              -Balance,
      end of period
              
              $
              (13,116,022
              )
              
              $
              (5,118,442
              )
              
              $
              (13,116,022
              )Basic
      - Earnings (loss) per share
              
              $
              (0.04
              )
              
              $
              (0.05
              )Basic
      - Weighted Average Numberof
      Shares Outstanding
              
              
              87,173,267
              
              
              
              61,459,300




See
accompanying notes to unaudited financial statements.




2




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 November 30, 2008


(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.
  3
  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 November 30, 2008
 (Unaudited)
 (Continued)
  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
                
                
                
                -
                
                
                
                5,242,000
  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 November 30, 2008
 (Unaudited)
 (Continued)
 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 interest on related party note
      payable, February 2008
                
                
                -
                
                
                
                -
                
                
                
                361,797
                
                
                
                -
                
                
                
                120
                
                
                
                120,479
                
                
                
                -
                
                
                
                120,599
 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
                
                
                
                -
                
                
                
                1,115,361Net
      loss
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (3,092,177
                )
                
                
                (3,092,177
                )Balance,
      November 30, 2008
                
                
                -
                
                
                $
                -
                
                
                
                87,376,770
                
                
                
                -
                
                
                $
                24,977
                
                
                $
                13,071,037
                
                
                $
                (13,116,022
                )
                
                $
                (20,008
                )
  See
accompanying notes to unaudited financial statements.
  5
  Location
Based Technologies, Inc
 (A
Development Stage Company)
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 For the
three months ended November 30, 2008 and 2007
 and for
the period from Inception (September 16, 2005) to November 30, 2008
 (Unaudited)
  InceptionFor
      the three months ended
                
                
                (Sept
      16, 2005)November
      30,
                
                
                November
      30,
                
                
                to
      November 30,2008
                
                
                2007
                
                
                2008Cash
      Flows from Operating ActivitiesNet
      loss
                
                $
                (3,092,177
                )
                
                $
                (2,829,099
                )
                
                $
                (13,116,022
                )Adjustment
      to reconcile net loss to net cash used in operating
      activities:Depreciation
      and amortization
                
                
                7,925
                
                
                
                1,792
                
                
                
                24,133Common
      stock issued for services
                
                
                566,272
                
                
                
                1,261,544
                
                
                
                2,456,816Warrants
      issued for services
                
                
                1,276,299
                
                
                
                1,971,791
                
                
                
                3,656,017Recapitalization
      adjustment
                
                
                -
                
                
                
                419
                
                
                
                419Changes
      in operating assets and liabilities:(Increase)
      decrease in prepaid expenses
                
                
                8,324
                
                
                
                (4,523
                )
                
                
                (78,292
                )(Increase)
      decrease in debt issuance costs
                
                
                -
                
                
                
                (868,228
                )
                
                
                -(Increase)
      decrease in deposits
                
                
                -
                
                
                
                -
                
                
                
                (20,458
                )Increase
      (decrease) in accounts payable and accrued expenses
                
                
                208,342
                
                
                
                (615,084
                )
                
                
                843,164Increase
      (decrease) in accrued officer compensation
                
                
                60,000
                
                
                
                50,000
                
                
                
                598,898Increase
      (decrease) in accrued interest
                
                
                18,532
                
                
                
                66,802
                
                
                
                139,131Net
      cash used in operating activities
                
                
                (946,483
                )
                
                
                (964,586
                )
                
                
                (5,496,194
                )Cash
      Flows from Investing ActivitiesPurchase
      of property and equipment
                
                
                (207,805
                )
                
                
                (334,292
                )
                
                
                (1,267,458
                )Additions
      to patents and trademarks
                
                
                (23,175
                )
                
                
                (62,064
                )
                
                
                (244,319
                )Net
      cash used in investing activities
                
                
                (230,980
                )
                
                
                (396,356
                )
                
                
                (1,511,777
                )Cash
      Flows from Financing ActivitiesProceeds
      from issuance of common stock, net of offering costs
                
                
                -
                
                
                
                -
                
                
                
                404,168Proceeds
      from common stock be to issued
                
                
                -
                
                
                
                -
                
                
                
                142,000(Repayments)
      / advances from officer
                
                
                267,000
                
                
                
                (20,000
                )
                
                
                426,409Proceeds
      from convertible notes payable
                
                
                -
                
                
                
                350,000
                
                
                
                5,242,000Proceeds
      from notes payable, related party
                
                
                950,000
                
                
                
                -
                
                
                
                1,000,000Repayment
      on notes payable, related party
                
                
                -
                
                
                
                -
                
                
                
                (146,500
                )Net
      cash provided by financing activities
                
                
                1,217,000
                
                
                
                330,000
                
                
                
                7,068,077Net
      increase (decrease) in cash and cash equivalents
                
                
                39,537
                
                
                
                (1,030,942
                )
                
                
                60,106Cash
      and cash equivalents, beginning of period
                
                
                20,569
                
                
                
                3,671,900
                
                
                
                -Cash
      and cash equivalents, end of period
                
                $
                60,106
                
                
                $
                2,640,958
                
                
                $
                60,106
  See
accompanying notes to unaudited financial statements.
  6
 Location
Based Technologies, Inc
 (A
Development Stage Company)
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 For the
three months ended November 30, 2008 and 2007
 and for
the period from Inception (September 16, 2005) to November 30, 2008
 (Unaudited)
 (Continued)
  InceptionFor
      the three months ended
                
                
                (Sept
      16, 2005)November
      30,
                
                
                November
      30,
                
                
                to
      November 30,2008
                
                
                2007
                
                
                2008Supplemental
      disclosure of cash flow information:Income
      taxes paid
                
                $
                -
                
                
                $
                -
                
                
                $
                1,600Interest
      paid
                
                $
                -
                
                
                $
                -
                
                
                $
                -Supplemental
      disclosure of noncash financing and investing activities:Issuance
      of shares of common stock for services
                
                $
                566,272
                
                
                $
                1,261,544
                
                
                $
                2,456,816Issuance
      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
                
                $
                -
                
                
                $
                1,067,500
                
                
                $
                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
                
                $
                -
                
                
                $
                -
                
                
                $
                120,599Issuance
      of common stock for conversion of accrued officer
    compensation
                
                $
                -
                
                
                $
                -
                
                
                $
                270,495
  See
accompanying notes to unaudited financial statements.
  7




LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED NOVEMBER 30, 2008 AND 2007
 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.
  8
  LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED NOVEMBER 30, 2008 AND 2007
 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.
 
 Forward 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 forward 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-billon 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.
  9
 LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED NOVEMBER 30, 2008 AND 2007
 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 three
months ended November 30, 2008, 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 combined 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.
 
 Reclassifications
  Certain
reclassifications have been made in the 2007 financial statements to conform
with the 2008 presentation.
  10
 LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED NOVEMBER 30, 2008 AND 2007
 1.
              NATURE
      OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (Continued)
 
 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.
 
 Concentration of Credit
Risk
 
 Cash and cash equivalents –
The cash and cash equivalent balances at November 30, 2008, 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.
 
 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, prepaid expenses, accounts payable and accrued expenses
approximate their fair value due to the short period to maturity of these
instruments.
  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 November 30, 2008 and August 31, 2008, the Company
capitalized $1,060,308 and $1,055,396 for patent related expenditures,
respectively.  As of November 30, 2008 and August 31, 2008, the
Company has capitalized $84,011 and $65,748 for trademark related expenditures,
respectively.
  11
 LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED NOVEMBER 30, 2008 AND 2007
 1.
              NATURE
      OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (Continued)
 
 Intangible
Assets – Patents and Trademarks (Continued)
 
 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 $117 and $0 for the three months ended November 30, 2008 and 2007,
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 3 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 November 30,
2008, the Company had capitalized costs of $1,189,529 related to its website
development.  The website development costs will be depreciated when
the website is completed and ready for use.
  12
 LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED NOVEMBER 30, 2008 AND 2007
 1.
              NATURE
      OF OPERATIONS AND SUMMARY OF SIGNIFICANTACCOUNTINGPOLICIES (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 November 30, 2008, 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.
 
 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 three months ended November 30,
2008 and 2007, the Company incurred $576,111 and $285,692 of research and
development costs, respectively.
  13
 LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED NOVEMBER 30, 2008 AND 2007
 1.
              NATURE
      OF OPERATIONS AND SUMMARY OF SIGNIFICANTACCOUNTINGPOLICIES (Continued)
 
 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 three months ended
November 30, 2008 and 2007.
 
 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.
  14
 LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED NOVEMBER 30, 2008 AND 2007
 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.
  15
 LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED NOVEMBER 30, 2008 AND 2007
 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.
  16
  LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED NOVEMBER 30, 2008 AND 2007
 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.
  17
 LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED NOVEMBER 30, 2008 AND 2007
 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.
  18
 LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED NOVEMBER 30, 2008 AND 2007
 2.
              PROPERTY AND
      EQUIPMENT
 
 Property
and equipment at November 30, 2008 and August 31, 2008 consists of the
following:
 
 November
      30,
              
              
              August
      31,2008
              
              
              2008Website
      development costs
              
              $
              1,189,529
              
              
              $
              985,122Machinery
      and equipment
              
              
              42,388
              
              
              
              38,990Computer
      and video equipment
              
              
              21,216
              
              
              
              21,216Office
      furniture
              
              
              11,546
              
              
              
              11,546Leasehold
      improvements
              
              
              2,445
              
              
              
              2,4451,267,124
              
              
              
              1,059,319Less:
      accumulated depreciation
              
              
              (23,266
              )
              
              
              (15,458
              )Total
      property and equipment
              
              $
              1,243,858
              
              
              $
              1,043,861
  Depreciation
expense for the three months ended November 30, 2008 and
2007  amounted to $7,808 and $1,792, respectively.
  3.
                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.
  19
 
 LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED NOVEMBER 30, 2008 AND 2007
 4.
                  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.
  5.
                    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.
 
 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.
  20
 LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED NOVEMBER 30, 2008 AND 2007
   5.
                      COMMITMENTS AND CONTINGENCIES
      (Continued)
 Consulting
Agreements (Continued)
 
 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 August 2008, the
agreement was extended for an additional six-month period expiring February 1,
2009.
 
 Other
Commitments
 
 On
September 26, 2008, the Company received a purchase order for approximately
$3,700,000 from TagWorks LLC for PetFinderTMdevices to be delivered
in January 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.
 
 Total
rental expense on operating leases for the three months ended November 30, 2008
and 2007 was $33,900 and $18,278, respectively.
  21
  LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED NOVEMBER 30, 2008 AND 2007
 5.
                    NOTES PAYABLE –
      RELATED PARTY
 Operating
Leases (Continued)
 
 As of
November 30, 2008, the future minimum lease payments are as
follows:
  For the Years Ending November
      30,2009
              
              $
              139,3292010
              
              
              11,639Total
              
              $
              150,968
  4.
                    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.
 
 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.
  22
  LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED NOVEMBER 30, 2008 AND 2007
  6.
                        EQUITY(Continued)
 Common
Stock (Continued)
 
 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.
 
 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
4).
 
 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 3).
  23
  LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED NOVEMBER 30, 2008 AND 2007
  6.
                        EQUITY(Continued)
 Common
Stock (Continued)
 
 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 3).
 
 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 4).
 
 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.
 
 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.
  24
  LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED NOVEMBER 30, 2008 AND 2007
  6.
                        EQUITY(Continued)
 Common
Stock (Continued)
 
 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.
 
 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
7).
 
 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 7).
 
 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 7).
 
 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 7).
  25
 LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED NOVEMBER 30, 2008 AND 2007
  6.
                        EQUITY(Continued)
 Warrants
(Continued)
 
 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 7).
 
 Stock Incentive
Plan
 
 On
September 10, 2007, the directors and shareholders adopted a 2007 Stock
Incentive Plan.  The plan reserves 750,000 shares 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 no grants made under the plan for
the three months ended November 30, 2008.
 7.
                    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 November 30,
2008.
  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 November 30,
2008.
  26
  LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED NOVEMBER 30, 2008 AND 2007
  7.
                        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
November 30, 2008.
  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 November 30, 2008.
 
 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 November 30, 2008.
 8.
                    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.
  27
  LOCATION
BASED TECHNOLOGIES, INC.
 (A
Development Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED NOVEMBER 30, 2008 AND 2007
 8.
                    PROVISION FOR INCOME
      TAXES (Continued)
 The
components of the Company’s deferred tax asset as of November 30, 2008, are as
follows:
  Net
      operating loss carry forward
              
              $
              4,512,000Valuation
      allowance
              
              
              (4,512,000
              )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 $1,064,000 for the three months ended
November 30, 2008.
 
 As of
November 30, 2008, the Company had federal and state net operating loss
carryforwards of approximately $13,000,000 which can be used to offset future
federal income tax.  The federal and state net operating loss
carryforwards expire at various dates through 2028.  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.
 9.
                    SUBSEQUENT
      EVENTS
 On
December 12, 2008, the Company issued 401,500 shares of common stock in exchange
for consulting services related to technology development.  The shares
were valued at $361,350, which represents the fair market value of the services
provided on the date of issuance.
 
 On
December 22, 2008, the Company issued 36,000 shares of common stock in exchange
for legal advisory services.  The shares were valued at $34,920, which
represents the fair market value of the services provided on the date of
issuance.
 
 28




ITEM
2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN 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® and PocketFinder® Luggage.  The
PocketFinder® is a small location device that enables a user to locate a device,
person, or pet, 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.





We are a
company focusing on sales, marketing, and delivery of our product with our
initial focus in the UK and selected parts of Europe.  Global System
for Mobile communications (“GSM”) testing concluded in June 2008 allowing us to
begin to sell our products throughout Europe.  In September 2008, the
Company secured its first Purchase Order of $3,700,000 for its PetFinder®
product with a delivery date in January 2009.  We have also begun
sales of the Android phone (Google, T-Mobile) application that allows the
cellular phone to act as a PocketFinder® with all of the features and
functionality of our devices.  Android applications will 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
Android phone will be able to seamlessly add those devices to its account and
optimize the family’s ability to stay connected.  A similar
application has been completed and approved by Apple for sales through the
iTunes store.  In the first quarter of 2009, we intend to develop
additional Global Positioning System (“GPS”) smartphones that can interact with
our easy to use web-based interface on any telecom network (GSM or Code Division
Multiple Access (“CDMA”)).





We are
negotiating an agreement with a leading strategic distribution partner
in Europe, which we anticipate will be finalized in early
2009. The Jabil facility in Meung-sur-Loire, France, completed the initial
pilot run of product in October 2008 and is ready for high quality, mass volume
production runs beginning in December 2008 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 have been submitted to RFI Labs in
November 2008 and Federal Communications Commission (“FCC”) and PCS Type
Certification Review Board (“PTCRB”) testing is underway.  Before
beginning sales in the United States we must also secure Carrier Network
approval from AT&T.  Carrier Network testing will begin upon
receiving FCC approvals.




29





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.




We are in
discussion with a small number of strategic individuals/companies with interest
in providing significant cash infusion as a debt or equity investment 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
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. In October 2008, Consumer Electronics’ economist stated that retail
sales for consumer electronics were up 1.2% in August 2008 from the same period
last year. In spite of the impact from the recession on other products,
flat-panel TV sets were up 40% and GPS systems sales were up
95%.  Earlier in the year, “GPS World” projected that location based
devices will increase by 168% this year and that revenue will grow by 169%
according to market research group, Gartner, Inc.  They further
projected that subscribers worldwide will rise from 16 million in 2007 to 43.2
million in 2008.  They also forecast that the number of subscribers
will reach nearly 300 million in 2011 with revenue to top $8 billion in
2011.




By taking
advantage of the latest in GPS, GSM, and Internet technology, the PocketFinder®
will optimize the ability for families to stay connected.  A 2008
national survey by the Pew Internet & American Life Project has found that
the Internet and cell phones have become central to modern family life. Rather
than hurt families, Pew said, new technologies allow new forms of connectivity.
  Pew also reports positive impacts from the high rates of technology
ownership in today’s families.




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




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




The
Mobile Web provides people with access to the Internet anytime and anywhere
mobile phone service is available -- at its most basic, it enables you to browse
the Internet with a mobile device.  IBM envisions a substantial
build-out of the Mobile Web and a significant shift in the way the majority of
people will interact with the Web over the next 5-10 years. Their own business
think-tank predicts the Mobile Web market for consumer services such as
entertainment and email is expected to reach $80 billion by 2011, more than 36
percent annual growth.  This enhanced capability greatly increases the
benefits of the PocketFinder® products.




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.




30





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.  Our products will offer wide
network coverage throughout North America via KORE Telematics utilizing the
largest GSM carrier networks in the United States and Canada.  With
this agreement, our personal locators will have the ability to roam seamlessly
on the networks of 400 wireless providers in over 220 countries.  In
addition, our locators have the ability to work on any GSM network in the
world.





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





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




31




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.  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 their first two products, the
PocketFinder® and PetFinder®, 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.




Location
Based Technologies marketing initiatives will include:





·
            Licensing
      opportunities for the products in other areas or
  regions;


·
            Self
      branded or “white label” opportunities for niche market or vertical market
      sales;


·
            Affinity
      group marketing and outreach
opportunities;


·
            Utilization
      of direct response sales due to public relations outreach in special
      interest magazines and newsletters;
and


·
            Retail
      distribution initiatives.




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




·
            Potential
      licensing fees;


·
            Organizations
      that will self-brand the PocketFinder® for specialized niche markets
      (“white label”);


·
            Personal
      Locator device sales to Retailers;


·
            Personal
      Locator device sales through Affinity groups and through our web
      site;


·
            Personal
      Locator device accessory sales; and


·
            Monthly
      re-occurring service fees.




Our Growth
Strategy.  Our objective is to become one of the major
providers of personal and asset location services on the 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:




32





·
            A
      mass market retail price of under
$150.00;


·
            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, and Spot.  These competitors may be better financed,
or have greater marketing and scientific resources than we do.




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




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




Our Research and
Development.  We are currently in the final steps of the
research and development phase.  Preparation for the Certification
processes began in the first calendar quarter of 2008 (initial
certifications will include FCC, IC, CE, PTCRB, and Carrier Network
certification).  Our initial pilot manufacturing run was completed in
October 2008.  We will continue to work with 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 in the next three months, with selective and
controlled growth commensurate with significant increases in our
revenues.  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 contracts with independent service providers during
the quarter ended November 30, 2008:




33





·
            Consulting
      Agreement, dated October 8, 2008, with Michael Dautermann to assist with
      the design of the Android phone PocketFinder® application.  The
      agreement remains in effect until the assigned tasks are completed, but in
      any event no longer than two weeks.  Mr. Dautermann receives an
      hourly amount for his services and is entitled to earn 500 shares of
      common stock upon successful completion of the project.  Shares
      issued to Mr. Dautermann 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
three months ended November 30, 2008 as compared to the three months ended
November 30, 2007.




Revenues.




There was
no revenue generated for the three months ended November 30, 2008 and
2007.




Operating
Expenses.




For the
three months ended November 30, 2008, our total operating expenses were
$1,230,207 as compared to total operating expenses of $1,656,751 for the three
months ended November 30, 2007.  The decrease in operating expenses is
attributed to the following:




·
            A
      decrease in professional fees to $362,258 for the three months ended
      November 30, 2008, as compared to $1,097,779 for the three months ended
      November 30, 2007.  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 three
      months ended November 30, 2007, whereby there were no such expenses
      recognized during the three months ended November 30,
  2008;


·
            An
      increase in research and development costs for the three months ended
      November 30, 2008, to $576,111 as compared to $285,692 for the three
      months ended November 30, 2007, as significant efforts were made to
      finalize production ready devices and the website and mapping interface
      services.




Other
Expenses.




For the
three months ended November 30, 2008, we reported other expenses consisting of
net interest expense, financing costs and foreign currency gains and losses
totaling $1,861,170 as compared to $1,170,748 for the three months ended
November 30, 2007.  The increase is primarily attributed to the
recognition of stock based compensation issued to consultants for capital
raising services rendered during the three months ended November 30, 2008,
whereby there were no such expenses recognized during the three months ended
November 30, 2007.




Net
Loss.




For the
three months ended November 30, 2008, we reported a net loss of $3,092,377 as
compared to a net loss of $2,829,099 for the three months ended November 30,
2007, 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 $60,106 as of November 30, 2008, as compared to
cash and cash equivalents of $20,569 as of August 31, 2008.  Prepaid
expenses totaled $78,292 as of November 30, 2008, and primarily consisted of
prepaid manufacturing and production costs.




34




As of
November 30, 2008, the total of our property and equipment, less accumulated
depreciation, was a net value of $1,243,858, 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 three months ended November 30,
2008.




Other
assets, consisted of patents, trademarks and deposits, amounted to $1,164,244 as
of November 30, 2008, 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 patents and trademarks.




Our total
assets as of November 30, 2008, were $2,546,500 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
property and equipment and patents and trademarks as of November 30,
2008.




As of
November 30, 2008, our accounts payable and accrued expenses, including accrued
officer compensation, were $1,171,567 as compared to $903,225 as of August 31,
2008.  The increase in accounts payable and accrued expenses,
including accrued officer compensation, as of November 30, 2008, is primarily
due to an overall increase in accounts payable.




Advances
from officer and related party notes payable including accrued interest, totaled
$1,394,941 as of November 30, 2008, as compared to $159,409 as of August 31,
2008.  The increase is primarily the result of the promissory note
agreement with the Company’s Co-President and stock holder for $950,000 that was
received in September 2008.  We had no other long term liabilities,
commitments or contingencies.




Other
than the proposed increases in research and development expenses and the
increases in legal and accounting costs we expect due to the reporting
requirements of becoming a reporting company, we are not aware of any other
known trends, events or uncertainties, which may affect our future
liquidity.




PLAN
OF OPERATIONS




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 November 30,
2008, we had an accumulated deficit of $13,116,022 and we expect to incur
continual losses until sometime in calendar year 2009.




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




As of
November 30, 2008, we had $60,106 in cash, cash equivalents and short-term
investments.  In September 2008, we received a loan of $950,000 from
an officer of the Company to fund operations over the next several
months.   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.




35




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 first calendar
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 first 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
November 30, 2008, we had no off-balance sheet arrangements.




ITEM
3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK





Not
applicable.





ITEM4T. 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.




36





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




Changes
in Internal Controls Over Financial Reporting




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





PART
II – OTHER INFORMATION





ITEM 1.  LEGAL PROCEEDINGS




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




ITEM 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.





37




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)4.1
            
            Form
      of Convertible Note (convertible at the option of the Company) issued by
      PocketFinder, LLC, a company the liabilities of which were assumed by the
      registrant ($3,175,000 represented by six of such notes were issued)
      (3)4.2
            
            Form
      of Convertible Note (convertible at the option of the noteholder) issued
      by PocketFinder, LLC, a company the liabilities of which were assumed by
      the registrant ($2,067,000 represented by 26 of such notes were issued)
      (3)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)




38




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)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-B






39




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:
      January 9, 2009
            By:
            /s/ David
      M. MorseDavid
      M. Morse
              Co-
      President and Chief Executive Officer